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DELTA PROPERTY FUND LIMITED - Reviewed provisional condensed consolidated results for the year ended 28 February 2019

Release Date: 03/06/2019 07:05
Code(s): DLT     PDF:  
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Reviewed provisional condensed consolidated results for the year ended 28 February 2019

Delta Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/005129/06)
Share code: DLT ISIN: ZAE000194049
("Delta" or "the Fund" or "the Group")
(REIT status approved)

Reviewed provisional condensed consolidated results for the year ended 28 February 2019

Company profile
Delta is a JSE listed Real Estate Investment Trust ("REIT") with a property portfolio of R11.4 billion as 
at 28 February 2019. The Fund is black managed and is one of the most empowered funds in the sector with a 
level 2 B-BBEE rating, maintaining its status as the dominant sovereign listed property fund in South Africa. 

The primary focus of the Fund is long-term investment in quality, rental income-generating properties 
situated in strategic nodes attractive to sovereign entities and other tenants requiring empowered 
landlords.

Performance
- Full year distributable earnings of 73.84 cents  per share
- Distribution of 55.39 cents per share declared for the year
- Capital expenditure of R115 million to attract and retain tenants
- Extended R2.1 billion in expiring debt facilities
- Renewed and concluded 151 018m2 expiring leases
- Concluded 12 537m2 new leases

Commentary
Financial results
Delta achieved full year distributable earnings of 73.84 cents per share (2018: 97.24 cents per share) in line 
with its revised guidance to the market. The Board has decided to retain 25% of distributable earnings to 
facilitate capital expenditure and working capital requirements in the business, resulting in a full year 
distribution of 55.39 cents per share (2018: 97.24 cents per share) being declared.

Net property income decreased by 9.7%, largely affected by provisions raised during the year which had a direct
bearing on the gross cost to income ratio and net cost to income ratio increasing to 32.2% and 18.3% respectively.
Net property income grew 1.8% on a like-for-like basis and declined 3.2% including the effect of the provisions. 

Administrative expenses for the period increased by 49.5%, largely as a result of the reclassification of asset
management fees from property operating expenses. On a normalised basis administrative expenses increased by 5.5%.

Fair value adjustment was negatively impacted by property valuations which decreased by R227 million and was affected
by the slow pace of lease renewals by the Department of Public Works. Our investment in Grit Real Estate Income Group
Limited ("Grit") increased by R80 million post its listing on the London Stock Exchange.

Finance costs increased by 11.4% due to new debt facilities, higher interest rates and debt structuring fees incurred
on extended debt facilities. Interest income increased by 32.2% primarily due to interest levied on arrear trade
receivables.

Dividend income from Grit increased by 9.9% benefiting from the foreign currency conversion due to the weakening of
the rand, while other income decreased by 68.7% due to once-off reinstatement charges to the Department of Statistics 
in the prior year. 

Property portfolio
Delta's property portfolio is valued at R11.4 billion and consists of 104 properties with a total gross lettable area
("GLA") of 950 442m2, including assets held-for-sale comprising 20 properties with a total GLA of 147 188m2 and a
combined value of R1.4 billion. 

An additional 10 buildings, comprising the Bloemfontein provincial portfolio with a total GLA of 59 427m2 and a book
value of R483.4 million, have been added to the existing non-current assets held-for-sale. Management has constantly 
been receiving unsolicited offers on the assets from potential buyers and have considered disposing some of the 
properties due to the increasing vacancies and competition in the node. The provincial government of the Free State 
province has been actively supporting the empowerment of their local B-BBEE property companies which has proven a 
barrier for management to renew expired leases. 

Acquisitions and disposals
Delta did not conclude any acquisitions during the current year. Significant effort was focused on renewing leases.
Aligned with our sovereign and diversification strategy, we did, however, explore opportunities within the Southern 
African Development Community ("SADC") and will update the market upon further progression of these opportunities. 

In terms of disposals, the sale of 12 New Street was concluded during the year for R15.8 million and Top Trailers
site 1 transferred, post-year-end, for R45 million. Disposal proceeds were utilised to settle debt and support 
capital expenditure. The transfer of Block G, Broadcast House and Protea Coin Cape Town, totalling a GLA of 
18 625m2 and with a fair value of R273 million, is expected to be concluded within the new financial year. 

Major capital projects
Capital investment remains a high priority to ensure quality assets that meet the tenants' requirements. 
The following major capital projects were either recently completed, are in progress or are close to completion:
- Embassy Building (Durban) - completed at a total cost of R28 million.
- Beacon Hill (King Williams Town) - investment of R40 million due to the conclusion of a five-year lease.
- Commission House (Pretoria) - completed at a total cost of R16 million.
- Poyntons Fire Project - fire compliance project of R32.5 million expected to be to be completed by June 2019.
- 17 Harrison Street - completed at a total cost of R4.5 million.

With the conclusion of the bulk lease renewals, further major capital projects on tenant installations and other
building upgrades will be initiated in the new financial year.

Letting and vacancies
The lease expiry profile of the portfolio at 28 February 2019 was as follows:

                         Month-                                                                              Beyond     
                            to-   29 February   28 February   28 February   28 February   29 February   29 February     
Segment         Vacant    month          2020          2021          2022          2023         2024           2024    
Office                                                                                                 
- government     10.9%    40.4%         15.1%         18.5%          8.0%          2.4%         3.9%           0.9%    
Office                                                                                                 
- other          24.3%    15.4%         20.9%         20.4%         10.9%          3.5%         0.6%           4.0%    
Retail            5.7%    11.2%         14.2%          3.6%          8.5%          0.0%         1.5%          55.2%    
Industrial       33.1%    27.8%          0.0%         39.1%          0.0%          0.0%         0.0%           0.0%    

Vacancies increased to 14.4% (GLA of 136 986m2). The weighted average rental achieved was R119.3/m2 across the portfolio. 
During the year under review, 50 leases representing 46 833m2 were renewed at an average rental of R107.9/m2. 
Totalling 12 537m2, 63 new leases were concluded at average rentals of R102.8/m2.

Vacancies in our dominant nodes of Pretoria CBD and Durban CBD are 8.5% (SAPOA 4.3%) and 16.9% (SAPOA 21.6%)
respectively. The vacancy in the Durban CBD is lower than the SAPOA last quarter average for "B" grade office space. 

Delta has seen an improvement in the renewal of leases by National Department of Public Works ("DPW") and the process
is gaining momentum. We have signed 37 leases totalling 88 185m2 from the bulk renewal of 227 550m2 to date and have
agreed on rentals and tenure on the remaining 139 365m2 with DPW and the user departments. We anticipate concluding 
further lease renewals between June and July of this year. 

Funding
Loan to value ("LTV") increased to 45.1% (2018: 41.3%), impacted by the negative fair value adjustment of investment
properties and increased borrowings of R424.9 million. The conclusion of long-term leases and corresponding capital
expenditure on the portfolio should increase the fair value of investment property thereby reducing LTV in the short to
medium term. 

Despite the challenging operating environment during the period, we successfully managed to extend expiring facilities
of R2.1 billion and concluded new facilities of R0.2 billion. The weighted average cost of funding increased to 10.2%
(2018: 9.2%) with the interest cover ratio at 2.1 (2018: 2.4). The average debt facility expiry period and average
fixed debt ratio decreased to 0.8 years (2018: 1.5 years) and 59.8% (2018: 85.4%) respectively, impacted by the passage
of time and short-term refinance of facilities. 

Management intends to diversify its funding sources and negotiate pricing at more competitive rates, term out the debt
facility expiry, increase the debt fix ratio and reduce LTV during the year post the conclusion of the bulk lease
renewals.

Provision of financial assistance
Delta shareholders are referred to special resolution number 4 relating to the provision of direct or indirect
financial assistance in terms of section 45 of the Companies Act, No 71 of 2008 ("the Companies Act") to related 
or inter-related companies, which was approved at the Annual General Meeting of Delta on 21 September 2017.

Further to the above, Delta shareholders are notified in terms of section 45(5)(a) of the Companies Act, that the
Board of directors of the Company ("the Board") passed a resolution on 31 May 2019 ("the Board resolution") granting
financial assistance to the following related companies:
- Somnipoint Proprietary Limited - R23.7 million in respect of a loan to a company with common directors.
- Delta Property Asset Management Proprietary Limited - R18.6 million in respect of a loan to a company with 
  common directors.
- Hestitrix Proprietary Limited - R248.5 million in the ordinary course of business.
- K2014000273 Proprietary Limited - R157.6 million in the ordinary course of business.
- 277 Vermeulen Street Properties Proprietary Limited - R32.9 million in the ordinary course of business.
- Hendisa Investments Proprietary Limited - R33 614 in the ordinary course of business.

The financial assistance provided, as detailed above, is greater than one-tenth of 1% of Delta's net worth as 
at the date of the Board resolution. The Board further confirms that immediately after providing the financial 
assistance, the Company continues to satisfy the solvency and liquidity test as contemplated in section 4 of 
the Companies Act and that the terms and conditions of the financial assistance are fair and reasonable to 
the Company.

Changes to directorate during the period
There have been no changes to the directorate during the period, however, Marelise de Lange was appointed as an
independent non-executive director to the Delta Board post the reporting date. Marelise is also a member of 
the Audit, Risk and Compliance Committee and the Investment Committee of Delta.

Prospects
The conclusion of South Africa's sixth democratic election is expected to provide much needed political stability 
and improved business confidence within the economy. We expect this transition to materialise within the next 
twelve months, whereby we envisage positive capital inflow and further stability to interest rates. 

The conclusion of the bulk lease renewal and longer-term refinancing of debt at market-related rates remain critical
priorities at this stage. The current short-term refinance of debt due to the low weighted average lease expiry 
has resulted in higher finance costs thereby diluting earnings. Capital expenditure and reducing vacancies remain 
a further strategic consideration, which is expected to benefit from a more aggressive disposal strategy of 
non-core assets. We have increased focus on marketing and broker discussions in an effort to conclude disposals, 
which is expected to also benefit the LTV.

While ongoing lease renewals provide much needed stability and certainty of income over a longer tenure, it does
translate into short-term sacrifice in the form of negative reversions. The Board anticipates earnings to decrease 
by between 8% and 10% for the 2020 financial year. The Group's independent auditors have neither reviewed nor reported 
on this forecast. 

Delta's Board and management remain committed to its sovereign strategy and intend to reduce its concentration 
risk within South Africa by responsibly exploring feasible and accretive opportunities in SADC. 

Declaration of final dividend ("the cash dividend") 
Shareholders are advised that dividend number 13 of 15.98900 cents per share for the year ended 28 February 2019 has
been declared. The source of the cash dividend is from distributable income. 

Salient dates of the cash dividend:
                                                                                           2019    
Declaration date of cash dividend                                                Friday, 31 May    
Last day to trade in order to be eligible for the cash dividend                Tuesday, 18 June    
Delta shares commence trading ex cash dividend                               Wednesday, 19 June    
Record date of cash dividend                                                    Friday, 21 June    
Cheques posted to certificated shareholders and accounts credited      
by CSDP or broker to dematerialised shareholders on                             Monday, 24 June    

Notes:
1. Delta shares may not be dematerialised or rematerialised between commencement of trade on Wednesday, 19 June 2019
   and the close of trade on Friday, 21 June 2019, both dates included.

Tax implications
In accordance with Delta's REIT status, shareholders are advised that the cash dividend meets the requirements of a
"qualifying distribution" for the purposes of section 25BB of the Income Tax Act, No 58 of 1962 ("Income Tax Act"). 
An announcement informing shareholders of the tax treatment of the distributions will be released separately 
on SENS.

Basis of preparation and accounting policies
The condensed consolidated financial statements have been prepared in accordance with the International Financial
Reporting Standards ("IFRS"), 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 JSE Listings Requirements and the requirements of the Companies Act of South Africa. The accounting policies applied 
in the preparation of these provisional results are in terms of IFRS and are consistent with those applied in the 
previous annual financial statements.

The condensed consolidated financial statements have been prepared under the supervision of the Chief Financial
Officer, Mr Shaneel Maharaj CA(SA)/HDipTax, and have been reviewed by BDO South Africa Incorporated, who expressed 
an unmodified review conclusion. 

A copy of the auditor's review report is available for inspection at the Company's registered office together with 
the financial statements identified in the auditor's report. The auditor's report does not necessarily cover all the
information contained in this announcement. Shareholders are therefore advised that in order to obtain a full 
understanding of the nature of the auditor's work they should obtain a copy of that report together with the 
accompanying financial information from the registered office of the Company.

The directors take full responsibility for the preparation of the provisional report and the financial information 
has been correctly extracted from the underlying financial statements. Delta has complied with IFRS and JSE Listings
Requirements by disclosing earnings and headline earnings per share. Distribution per share has been disclosed 
additionally.

By order of the Board
JB Magwaza            SH Nomvete
(Chairman)            (Chief Executive Officer)

31 May 2019


Condensed consolidated statement of financial position
as at 28 February 2019
                                                                     Group                          Company                      
R'000                                                         2019            2018            2019            2018    
Assets                                                                                                                
Non-current assets                                                                                                
Investment property                                      9 913 811      10 535 000       9 664 809      10 268 200    
Fair value of investment property                        9 755 209      10 342 418       9 506 715      10 076 207    
Straight-line rental income accrual                        158 602         192 582         158 094         191 993    
Property, plant and equipment                                1 714           2 557           1 714           2 557    
Investment in subsidiaries                                       -               -          62 273          62 273    
Investment in associate                                          -         381 868               -         381 868    
Investment in Grit                                         461 822               -         461 822               -    
Loans due from subsidiaries                                      -               -         439 038         423 268    
                                                        10 377 347      10 919 425      10 629 656      11 138 166    
Current assets                                                                                                        
Loans due from related parties                              43 511          55 243          43 511          55 243    
Loan receivable                                             20 906          48 465          20 906          48 465    
Current tax receivable                                           -             526               -               -    
Trade and other receivables                                357 973         338 845         334 393         302 985    
Cash and cash equivalents                                   25 339         100 177          26 870          96 864    
                                                           447 729         543 256         425 680         503 557    
Non-current assets held-for-sale                         1 436 520         972 600       1 206 520         744 600    
Total assets                                            12 261 596      12 435 281      12 261 856      12 386 323    
Equity                                                                                                                
Share capital                                            4 868 461       4 854 032       4 868 461       4 854 032    
Reserves                                                         -         144 230               -         139 425    
Retained income                                          1 772 984       2 160 330       1 746 477       2 117 907    
Total equity                                             6 641 445       7 158 592       6 614 938       7 111 364    
Liabilities                                                                                                           
Non-current liabilities                                                                                           
Derivative financial instruments                            22 478          31 475          22 478          31 475    
Interest-bearing borrowings                              1 448 218       2 688 755       1 448 218       2 688 755    
Loans due to subsidiaries                                        -               -           4 190           4 190    
                                                         1 470 696       2 720 230       1 474 886       2 724 420    
Current liabilities                                                                                                   
Interest-bearing borrowings                              3 810 253       2 263 935       3 810 253       2 263 935    
Trade and other payables                                   172 003         183 983         161 391         177 453    
Derivative financial instruments                            28 625          11 426          28 623          11 426    
Current tax payable                                         12 821               -          13 347               -    
Bank overdraft                                             125 753          97 115         158 418          97 725    
                                                         4 149 455       2 556 459       4 172 032       2 550 539    
Total liabilities                                        5 620 151       5 276 689       5 646 918       5 274 959    
Total equity and liabilities                            12 261 596      12 435 281      12 261 856      12 386 323    


Condensed consolidated statement of profit or loss and other comprehensive income
for the year ended 28 February 2019
                                                                     Group                          Company
R'000                                                         2019            2018            2019            2018    
Revenue                                                                                                               
Rental income                                            1 581 669       1 562 033       1 522 713       1 505 471    
Straight-line rental income accrual                        (34 304)          2 020         (32 970)          1 134    
                                                         1 547 365       1 564 053       1 489 743       1 506 605    
Property operating expenses                               (509 579)       (414 168)       (496 835)       (406 068)   
Net property rental and related income                   1 037 786       1 149 885         992 908       1 100 537    
Other income                                                 6 356          20 287           6 356          20 278    
Foreign currency translation reserve                                                                    
recognised on derecognition of associate                     4 805               -               -               -    
Dividend income                                             21 769               -          36 660          50 812    
(Loss)/gain on foreign exchange movements                  (28 103)         16 881         (28 103)         16 881    
Administration expenses                                    (79 727)        (53 329)        (76 361)        (52 838)   
Net operating profit                                       962 886       1 133 724         931 460       1 135 670    
Fair value adjustments                                    (168 152)        104 759        (151 437)         99 975    
Profit from operations                                     794 734       1 238 483         780 023       1 235 645    
Finance costs                                             (537 281)       (482 179)       (537 354)       (482 624)   
Interest income                                             26 032          19 696          56 732          50 497    
Share of profit in associate                                     -          43 970               -               -    
Impairment of investment in associate                            -         (21 900)              -         (47 719)   
Profit before taxation                                     283 485         798 070         299 401         755 799    
Taxation                                                   (27 692)              -         (27 692)              -    
Profit for the year                                        255 793         798 070         271 709         755 799    
Other comprehensive income:                                                                                           
Items that may be reclassified                                                                          
subsequently to profit or loss                                                                          
Share of foreign currency translation                                                                   
reserve of associate                                             -           4 451               -               -    
Total comprehensive income for the year                    255 793         802 521         271 709         755 799    
Profit for the year attributable to:                                                                                  
Owners of the parent                                       255 793         798 070         271 709         755 799    
Total comprehensive income attributable to:                                                                           
Owners of the parent                                       255 793         802 521         271 709         755 799    
Basic and diluted earnings per share (cents)                 39.80          112.26               -               -    


Condensed consolidated statement of cash flows
for the year ended 28 February 2019
                                                                     Group                          Company
R'000                                                         2019            2018            2019            2018    
Cash generated from operations                             905 500       1 132 324         846 033       1 100 863    
Interest received                                           24 544          12 158          55 244          42 504    
Dividend received                                           38 849          18 587          53 741          33 733    
Finance costs                                             (486 027)       (475 899)       (486 027)       (475 899)   
Taxation (paid)/refund                                     (14 345)            627         (14 345)              -    
Net cash from operating activities                         468 521         687 797         454 646         701 201    
Acquisition of property, plant and equipment                  (164)           (498)           (164)           (498)   
Capital expenditure on investment property                                                            
and assets held-for-sale                                  (114 975)       (185 436)       (112 540)       (182 905)   
Proceeds on disposal of assets held-for-sale                15 750         205 200          15 750         205 200    
Gross movement in loans with related parties                17 216          26 223          17 216          26 223    
Decrease/(increase) in loan receivable                      33 034         (48 465)         33 034         (48 465)   
Loans advanced to subsidiaries                                                   -         (15 771)        (18 115)   
Net cash from investing activities                         (49 139)         (2 976)        (62 475)        (18 560)   
Distribution reinvestment                                   14 429           8 784          14 429           8 784    
Dividends paid                                            (643 139)       (694 329)       (643 139)       (694 329)   
Deferred consideration settled in cash                    (140 000)              -        (140 000)              -    
Increase in interest-bearing borrowings                    424 967         220 358         424 967         220 358    
Repayment of interest-bearing borrowings                  (179 115)       (360 385)       (179 115)       (360 385)   
Repayment of other financial liabilities                         -          (9 025)              -          (9 025)   
Net cash from financing activities                        (522 858)       (834 597)       (522 858)       (834 597)   
Net movement in cash and cash equivalents                 (103 476)       (149 776)       (130 687)       (151 956)   
Cash at the beginning of the year                            3 062         152 838            (861)        151 095    
Total cash at the end of the year                         (100 414)          3 062        (131 548)           (861)   


Condensed consolidated statement of changes in equity
for the year ended 28 February 2019
                                                       Foreign
                                                      currency                                                            
                                                   translation                                                         
                                           Share       reserve        Deferred       Total    Retained       Total     
R'000                                    capital      ("FCTR")   consideration    reserves      income      equity    
Group                                                                                                                 
Balance at 1 March 2017                4 845 248           354         139 425     139 779   2 056 589   7 041 616    
Total comprehensive                                                                                     
income for the year                            -         4 451               -       4 451     798 070     802 521    
Profit for the year                            -             -               -           -     798 070     798 070    
Other comprehensive income                     -         4 451               -       4 451           -       4 451    
Deferred consideration raised              8 784             -               -           -           -       8 784    
Distributions paid                             -             -               -           -    (694 329)   (694 329)   
Balance at 1 March 2018                4 854 032         4 805         139 425     144 230   2 160 330   7 158 592    
Total comprehensive                                                                                     
income for the year                            -             -               -           -     255 793     255 793    
Profit for the year                            -             -               -           -     255 793     255 793    
Other comprehensive income                     -                             -           -           -           -    
Deferred consideration                                                                                  
settled in cash                                -             -        (139 425)   (139 425)          -    (139 425)   
FCTR recognised                                                                                         
in profit or loss                              -        (4 805)              -      (4 805)          -      (4 805)   
Distribution reinvestment                 14 590             -               -           -           -      14 590    
Share issue expenses                        (161)            -               -           -           -        (161)   
Distributions paid                             -             -               -           -    (643 139)   (643 139)   
Balance at 28 February 2019            4 868 461             -               -           -   1 772 984   6 641 445    

                                                       Foreign    
                                                      currency                                                        
                                                   translation                                                        
                                           Share       reserve        Deferred       Total    Retained       Total    
R'000                                    capital      ("FCTR")   consideration    reserves      income      equity    
Company
Balance at 1 March 2017                4 845 248             -         139 425     139 425   2 056 438   7 041 111    
Total comprehensive                                                                                     
income for the year                            -             -               -           -     755 799     755 799    
Profit for the year                            -             -               -           -     755 799     755 799    
Other comprehensive income                     -             -               -           -           -           -    
Deferred consideration raised              8 784             -               -           -           -       8 784    
Distributions paid                             -             -               -           -    (694 329)   (694 329)   
Balance at 1 March 2018                4 854 032             -         139 425     139 425   2 117 907   7 111 364    
Total comprehensive                                                                                     
income for the year                            -             -               -           -     271 709     271 709    
Profit for the year                            -             -               -           -     271 709     271 709    
Other comprehensive income                     -             -               -           -           -           -    
Deferred consideration                                                                                  
settled in cash                                -             -        (139 425)   (139 425)          -    (139 425)   
Distribution reinvestment                 14 590             -               -           -           -      14 590    
Share issue expenses                        (161)            -               -           -           -        (161)   
Distributions paid                             -             -               -           -    (643 139)   (643 139)   
Balance at 28 February 2019            4 868 461             -               -           -   1 746 477   6 614 938    


Reconciliation of earnings, headline earnings and distributable earnings
                                                                                                     Group
R'000                                                                                         2019            2018    
Earnings, headline earnings and distributable earnings                                                                
Profit before taxation                                                                     283 485         798 070    
Investment property                                                                        237 599        (148 562)   
Fair value adjustment to investment property                                               237 599        (146 611)   
Fair value adjustment to associate's investment property                                         -          (1 951)   
Headline earnings                                                                          521 084         649 508    
Derivative financial instruments (net of deferred taxation)                                 10 507             290    
Fair value adjustment to derivative financial instrument                                    10 547             290    
Deferred taxation                                                                                -               -    
Investment in joint venture (net of deferred taxation)                                           -          41 562    
Fair value adjustment to investment in joint venture                                             -          41 562    
Deferred taxation                                                                                -               -    
Investment in Grit (net of deferred taxation)                                              (79 954)         41 562    
Fair value adjustment to investment in Grit                                                (79 954)         41 562    
Deferred taxation                                                                                -               -    
Straight-line rental income accrual (net of deferred taxation)                              34 304          (2 020)   
Straight-line rental income accrual                                                         34 304          (2 020)   
Deferred taxation                                                                                -               -    
Foreign currency translation reserve recognised on derecognition of associate               (4 805)              -    
Dividend income from Grit                                                                   17 418          35 666    
Loss/(gain) on foreign exchange differences                                                 28 103         (16 881)   
Share of profit in associate                                                                     -         (43 970)   
Change in fair value of associate's investment properties                                        -           1 951    
Impairment of investment in associate                                                            -          21 900    
Antecedent distribution                                                                        569             257    
Prior year retained earnings distributed                                                         -           3 378    
Distributable earnings attributable to owners of the parent                                527 226         691 641    
Less: Distribution declared                                                                395 419         691 641    
Interim                                                                                    281 222         329 724    
Final (declared after 28 February 2019)                                                    114 197         361 917    
Distributable earnings retained                                                            131 807               -    
Shares in issue at the beginning of the year                                           711 844 486     710 632 182    
Distribution reinvestment                                                                2 385 232       1 212 304    
Number of shares in issue                                                              714 229 718     711 844 486    
Weighted average number of shares in issue at the beginning of the year                710 927 785     710 632 182    
Distribution reinvestment                                                                1 366 459         295 603    
Weighted average number of shares in issue                                             712 294 244     710 927 785    
Actual number of shares in issue                                                                                      
Number of shares in issue at interim                                                   713 793 466     710 632 182    
Number of shares in issue at year-end                                                  714 229 718     711 844 486    
Basic and diluted earnings and headline earnings per share (cents)                                                    
Basic and diluted earnings per share                                                         39.80          112.26    
Basic and diluted headline earnings per share                                                73.16           91.36    
Distribution per share (cents)                                                                                        
Interim                                                                                      39.40           46.40    
Final (declared after 28 February 2019)                                                      15.99           50.84    
Distribution per share declared for the full year                                            55.39           97.24    
The Group has no dilutionary instruments in issue.                                                                    


Condensed consolidated segmental analysis
                                      Administration                                                                  
                                       and corporate                    Office      Office                             
R'000                                          costs   Industrial   government       other     Retail        Total    
Group 2019                                                                                                            
Contractual rental income                          -       27 968    1 161 461     354 027     38 213    1 581 669    
Straight-line rental income accrual                -         (211)     (36 635)        (33)     2 575      (34 304)   
Property operating expenses                        -       (8 434)    (310 288)   (175 287)   (15 570)    (509 579)   
Net property rental and 
related income                                     -       19 323      814 538     178 707     25 218    1 037 786    
Other income                                   5 053           28          847         253        175        6 356    
FCTR recognised in profit or loss              4 805            -            -           -          -        4 805    
Dividend income                               21 769            -            -           -          -       21 769    
(Loss)/gain on foreign                
exchange movements                           (28 103)           -            -           -          -      (28 103)   
Administration expenses               
(excluding depreciation)                     (67 576)         (63)      (8 614)     (1 591)      (915)     (78 759)   
Depreciation                                    (968)           -            -           -          -         (968)   
Net operating profit/(loss)                  (65 020)      19 288      806 771     177 369     24 478      962 886    
Fair value adjustment to              
investment properties                        (10 599)      11 665     (167 745)    (57 762)   (13 158)    (237 599)   
Fair value adjustment to              
investment in Grit                            79 954            -            -           -          -       79 954    
Fair value adjustment to derivative                                                                    
financial instruments                        (10 507)           -            -           -          -      (10 507)   
Profit/(loss) from operations                 (6 171)      30 953      639 026     119 607     11 320      794 735    
Finance costs                               (542 356)          (1)       3 782       1 328        (34)    (537 281)   
Interest income                               12 510            2       10 950       2 490         80       26 032    
Profit/(loss) before taxation               (536 017)      30 954      653 758     123 425     11 366      283 486    
Taxation                                     (27 692)           -            -           -          -      (27 692)   
Profit for the year                         (563 709)      30 954      653 758     123 425     11 366      255 794    
Reportable segment assets             
and liabilities                                                                                                  -    
Assets                                                                                                           -    
Fair value of investment property                  -            -    6 863 695   2 586 017    305 497    9 755 209    
Straight-line rental income accrual                -           (0)     121 616      22 983     14 003      158 602    
Non-current assets held-for-sale                   -      198 400    1 078 120     160 000          -    1 436 520    
Other assets                                 596 827        3 335      235 372      46 109     29 621      911 264    
                                             596 827      201 735    8 298 803   2 815 109    349 121   12 261 595    
Liabilities                                                                                                      -    
Total liabilities                           (320 268)      85 247    3 985 492   1 705 114    164 566    5 620 151    

                                      Administration                                                              
                                       and corporate                    Office      Office                        
R'000                                          costs   Industrial   government       other     Retail        Total 
Group 2018                                 
Contractual rental income                          -       26 303    1 138 261     358 925     38 544    1 562 033    
Straight-line rental income accrual                -       (1 228)      (4 463)      3 620      4 091        2 020    
Property operating expenses                        -       (6 677)    (254 560)   (139 131)   (13 800)    (414 168)   
Net property rental and related income             -       18 398      879 238     223 414     28 835    1 149 885    
Other income                                   1 360          127       14 488       4 201        111       20 287    
Gain on foreign exchange differences          16 881            -            -           -          -       16 881    
Administration expenses                                                                               
(excluding depreciation)                     (52 113)           -            -           -          -      (52 113)   
Depreciation                                  (1 216)           -            -           -          -       (1 216)   
Net operating profit/(loss)                  (35 088)      18 525      893 726     227 615     28 946    1 133 724    
Fair value adjustment to                                                                              
investment properties                       (117 915)     (30 379)     346 503     (87 379)    35 781      146 611    
Fair value adjustment to investment                                                                   
in joint venture disposed                    (41 562)           -            -           -          -      (41 562)   
Fair value adjustment to derivative                                                                   
financial instruments                           (290)           -            -           -          -         (290)   
Profit/(loss) from operations               (194 855)     (11 854)   1 240 229     140 236     64 727    1 238 483    
Finance costs                               (482 179)           -            -           -          -     (482 179)   
Interest income                               19 696            -            -           -          -       19 696    
Share of profit in associate                  43 970            -            -           -          -       43 970    
Impairment of investment in associate        (21 900)           -            -           -          -      (21 900)   
Profit/(loss) before taxation               (635 268)     (11 854)   1 240 229     140 236     64 727      798 070    
Taxation                                           -            -            -           -          -            -    
Profit for the year                         (635 268)     (11 854)   1 240 229     140 236     64 727      798 070    
Reportable segment assets and liabilities                                                                             
Assets                                                                                                                
Fair value of investment property                  -            -    7 431 687   2 592 159    318 572   10 342 418    
Straight-line rental income accrual                -            -      158 613      22 541     11 428      192 582    
Non- current assets held-for-sale                  -      186 800      593 400     192 400          -      972 600    
Other assets                                 598 926        3 856      174 895     119 752     30 252      927 681    
                                             598 926      190 656    8 358 595   2 926 852    360 252   12 435 281    
Liabilities                                                                                                           
Total liabilities                         (1 659 486)     105 236    4 696 358   1 947 170    187 411    5 276 689    
The segmental report has been populated based on a per building classification which is in accordance with the 
majority tenant.

Corporate information
Directors
JB Magwaza^ (Chairman), SH Nomvete* (CEO), S Maharaj* (CFO), ON Tshabalala* (COO), 
N Khan~, DN Motau^, ID Macleod^, MJN Njeke^#, NN Afolayan^, MCR Rampheri^, M de Lange^
*Executive, ^Independent non-executive, ~Non-executive, #Lead independent director

Registered office
Silver Stream Office Park, 10 Muswell Road South, Bryanston 
(Postnet Suite 210, Private Bag X21, Bryanston, 2021)

Transfer secretaries
Computershare Investor Services Proprietary Limited 

Sponsor
Nedbank Corporate and Investment Banking

www.deltafund.co.za
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