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LIBERTY TWO DEGREES LIMITED - Summarised group interim results for the six months ended 30 June 2019

Release Date: 29/07/2019 07:52
Code(s): L2D     PDF:  
 
Wrap Text
Summarised group interim results for the six months ended 30 June 2019

Liberty Two Degrees Limited 
(Registration number: 2018/388906/06) 
JSE share code: L2D 
ISIN: ZAE000260576 (L2D or the Company)

Short-form summarised group interim results 
for the six months ended 30 June 2019

Highlights
Half-year distribution of 29.31 cents per share
Trading density growth of 2.9 %
Vacancy rates
Portfolio 4.6% (down 1.4%)
Retail 2.4% (down 1.9%)
LTV = 16% with 68% of interest rate exposure hedged
Ongoing implementation of strategic building blocks
Eastgate rates objection successfully resolved

Financial results

                                    Unaudited              
                       Unaudited     Restated    Change      Audited
R'000                30 Jun 2019  30 Jun 2018         %  31 Dec 2018
Net property income      338 772      272 788     24.19      589 122
Profit before fair
value adjustments        258 738      268 431     (3.61)     566 055
Profit before tax        244 211      203 864     19.79      646 817
Headline earnings        258 681      261 385     (1.03)     543 806
Headline earnings
per share (cents)          28.48        28.77     (1.03)       59.86
Distribution per
share (cents)              29.31        29.31         0        60.00
Net asset value per
share (rand)                9.59         9.81     (2.27)        9.45

At 30 June 2019, Liberty Two Degrees' (L2D) portfolio was valued at
R10.2 billion following the acquisition of a further R1.2 billion of 
the co-owned Liberty Property Portfolio (LPP) with effect from 
1 November 2018. L2D reported net property income of R338.8 million 
for the six months ended 30 June 2019, an increase of 24.19% on the
prior period (30 June 2018 Restated: R272.8 million) after taking 
into account the additional assets acquired.

Profit before tax amounted to R244.2 million (30 June 2018 Restated: 
R203.9 million) after interest and fair value adjustments. The net 
asset value per share has decreased by 2.27% primarily as a result 
of the capital reorganisation accounting treatment related to the 
acquisition of the previous management company. Headline earnings 
include the reversal of fair value adjustments.

The predominantly retail portfolio continues to show positive net 
property income growth for the period. The net property income 
growth (normalised for ownership) was 6.1% which is supported by 
trading density growth of 2.9% for the period presented.

L2D elected to become an investor in Edcon as part of Edcon's 
restructuring. The investment is carried at fair value. For the 
period a fair value adjustment of R7.7 million had been provided 
for. The investment is carried at R17.5 million as at 30 June 2019.

Declaration of a cash distribution
The Board has approved and notice is hereby given of a distribution 
of 29.31 cents per share for the six months ended 30 June 2019 (the
distribution).

The distribution is payable to L2D shareholders in accordance 
with the timetable set out below:

2019
Last date to trade cum dividend:              Tuesday, 20 August 
Units trade ex dividend:                       Wednesday, 21 August 
Record date:                                  Friday, 23 August 
Payment date:                                 Monday, 26 August

Share certificates may not be dematerialised or rematerialised 
between Wednesday, 21 August 2019 and Friday, 23 August 2019, 
both days inclusive.

Payment of the distribution will be made to shareholders on Monday, 
26 August 2019. In respect of dematerialised shares, the distribution 
will be transferred to the Central Securities Depository Participant 
(CSDP) accounts/broker accounts on Monday, 26 August 2019. Certificated 
shareholders' dividend payments will be posted on or about Monday, 
26 August 2019.

Shares in issue at the date of declaration of this distribution:
908 443 335

L2D's income tax reference number: 9087144235

In accordance with L2D's status as a REIT, shareholders are advised 
that the distribution 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 distribution on the shares 
will be deemed to be a dividend, for South African tax purposes, in 
terms of section 25BB of the Income Tax Act.

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

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

Distributions received by non-resident shareholders will not be taxable 
as income and instead will be treated as an ordinary dividend which is
exempt from income tax in terms of the general dividend exemption in 
section 10(1)(k)(i) of the Income Tax Act.

Assuming dividend withholding tax will be withheld at a rate of 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 shareholder, the net dividend amount due to non-resident shareholders 
is 23.448 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. a declaration that the distribution is subject to a reduced rate as a 
   result of the application of a DTA; and
b. a written undertaking to inform their CSDP, broker or the company, as
   the case may be, should the circumstances affecting the reduced rate 
   change or the beneficial owner cease to be the beneficial owner, both in 
   the form prescribed by the Commissioner for the South African Revenue 
   Service. Non-resident shareholders are advised to contact their CSDP, 
   broker or the company, as the case may be, to arrange for the above-
   mentioned documents to be submitted prior to payment of the distribution 
   if such documents have not already been submitted, if applicable.

Prospects
The South African economy remains under pressure with low growth forecast 
for the remainder of 2019. The quality and robust nature of the L2D property 
portfolio is evident in the company's solid operational performance despite 
the negative impact of low macroeconomic growth on the consumer. L2D's specialist 
retail skills and the steadfast execution of its strategic building blocks 
should continue to ensure that its predominantly retail portfolio will 
perform well. L2D remains on track to deliver on the full year distribution 
forecasted.

The forecast statements contained herein have not been reviewed or reported 
on by L2D's external auditors.

Changes in Board and Board sub-committees
David Munro, Group Chief Executive of Liberty Holdings, was appointed as a 
non-executive director to the Board from 29 July 2019. Zaida Adams has been 
appointed as chair of the Audit and Risk committee from 29 July 2019.

On behalf of the Board
Angus Band            Amelia Beattie          Jose Snyders
Chairman              Chief Executive         Financial Director

29 July 2019

Sponsor: The Standard Bank of South Africa Limited

The full long-form announcement is available at: https://senspdf.jse.co.za/documents/2019/jse/isse/l2de/hy19_l2d.pdf

The contents of this short-form announcement are the responsibility of
the board of directors of L2D. This short-form announcement is only a 
summary of the information in the full announcement and does not contain 
full or complete details. Any investment decisions made by investors and/or 
shareholders should be based on consideration of the full announcement as 
a whole. Shareholders are encouraged to review the full announcement which 
is available on SENS and on L2D's website. The full announcement is also 
available for inspection at the registered office of L2D or at the office 
of our sponsor, The Standard Bank of South Africa Limited, 30 Baker Street, 
Rosebank, 2196. Copies of the full announcement are available to investors 
at no charge, during normal business hours from Monday, 29 July 2019 to 
Friday, 2 August 2019.
Date: 29/07/2019 07:52:00
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