| Mon 13 Oct 2014, 7:10 | | DELTA PROPERTY FUND LIMITED - Condensed consolidated interim results for the six months ended 31 august 2014 |
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DLT 201410130002A
Condensed consolidated interim results for the six months ended 31 august 2014
Delta Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/005129/06)
Share code: DLT ISIN: ZAE000172052
("Delta" or "the Fund" or "the Group")
(REIT status approved)
UNAUDITED
condensed
CONSOLIDATED INTERIM
RESULTS
for the six months ended 31 August 2014
Highlights
- 23.1% increase in distribution to 40.01 cents per linked unit
- R501 million US Dollar linked investment
- Increased property portfolio value to R7.2 billion
- A2 (ZA) short-term GCR credit rating
- Cost of capital of 8.07%, fixed 70%
Consolidated statement of comprehensive income
Unaudited Unaudited Audited
six months six months for year
ended ended ended
31 August 31 August 28 February
2014 2013 2014
R'000 R'000 R'000
Revenue
Contractual rental income 442 291 218 950 594 209
Straight line rental income accrual 37 902 23 902 59 814
480 193 242 852 654 023
Property operating expenses (116 701) (51 216) (151 520)
Net property rental and related income 363 492 191 636 502 503
Other income 464 17 12 300
Administration expenses (25 213) (15 813) (48 090)
Foreign exchange loss (1 450) ? ?
Net operating profit 337 293 175 840 466 713
Fair value adjustments (12 802) ? 261 256
Share of profit in associate 4 180 ? ?
Profit from operations 328 671 175 840 727 969
Finance costs (141 329) (52 586) (151 149)
Interest received 1 441 2 558 5 954
Cum distribution 13 702 16 004 35 270
Listing expenses ? (9 841) ?
Transaction costs (41 200) ? ?
Profit before debenture interest and taxation 161 285 131 975 618 044
Debenture interest (180 469) (116 738) (289 316)
(Loss) profit before taxation (19 184) 15 237 328 728
Taxation 9 517 (7 047) 56 007
(Loss) profit for the period (9 667) 8 190 384 735
Other comprehensive income ? ? ?
Total comprehensive (loss) profit for the period (9 667) 8 190 384 735
Reconciliation of earnings, headline earnings and distributable earnings
Total comprehensive (loss) profit for the year (9 667) 8 190 384 735
Debenture interest 180 469 116 738 289 316
Earnings 170 802 124 928 674 051
Change in fair value of investment property (net of deferred taxation) ? ? (308 748)
Change in fair value of property ? ? (264 523)
Deferred taxation ? ? (44 225)
Headline earnings attributable to linked unitholders 170 802 124 928 365 303
Change in fair value of financial instruments (net of deferred taxation) 11 570 ? ?
Change in fair value of financial instruments 16 069 ? ?
Deferred taxation (4 499) ? ?
Straight line rental income accrual (net of deferred taxation) (37 902) (17 209) (73 321)
Straight line rental income accrual (37 902) (23 902) (59 814)
Deferred taxation ? 6 693 (13 507)
Transaction costs 41 200 9 841 1 048
Deferred taxation ? other adjustments (3 384) 354 (4 046)
Fair value (gain) loss on investments (3 267) ? 3 267
Foreign exchange loss 1 450 ? ?
Retained distributable earnings ? (1 176) (2 935)
Distributable earnings attributable to linked unitholders 180 469 116 738 289 316
Less: Distribution declared 180 469 116 738 289 316
Interim 180 469 116 738 116 738
Final ? ? 172 578
Number of linked units in issue at interim 451 042 442 359 083 615 359 083 615
Number of linked units in issue at year end N/A N/A 429 510 825
Weighted average number of linked units in issue 442 207 400 307 268 720 344 639 642
Basic earnings per linked unit (cents) 38.62 40.66 195.58
Headline/diluted headline profit per linked unit (cents) 38.62 40.66 106.00
Distribution per linked unit (cents) ? interim 40.01 32.51 32.51
Distribution per linked unit (cents) ? year end ? ? 40.18
Distribution per linked unit (cents) ? full year 40.01 32.51 72.69
The Fund has no dilutionary instruments in issue.
Consolidated statement of financial position
Unaudited Unaudited Audited
six months six months for year
ended ended ended
31 August 31 August 28 February
2014 2013 2014
R'000 R'000 R'000
Assets
Non-current assets
Investment property 7 180 373 4 840 667 6 965 730
Fair value of property portfolio 7 030 190 4 767 706 6 853 449
Straight line rental income accrual 150 183 72 961 112 281
Property, plant and equipment 3 437 4 232 3 555
Investments ? ? 333 637
Investment in associate 505 442 ? ?
Deferred tax 12 455 ? 4 573
7 701 707 4 844 899 7 307 495
Current assets
Other financial assets 41 036 26 392 26 862
Trade and other receivables 96 864 60 045 121 837
Cash and cash equivalents 59 297 76 918 82 179
197 197 163 355 230 878
Total assets 7 898 904 5 008 254 7 538 373
Equity and liabilities
Unitholders interest
Share capital 2 894 681 2 261 901 2 755 936
Retained income 496 512 129 634 506 179
Total equity 3 391 193 2 391 535 3 262 115
Debentures 518 699 412 946 493 937
Deferred consideration ? ? 55 825
Total unitholders interest 3 909 892 2 804 481 3 811 877
Liabilities
Non-current liabilities
Interest bearing borrowings 3 060 121 1 787 415 2 981 312
Derivative instruments 16 070 64 255 ?
Deferred tax ? ? ?
3 076 191 1 851 670 2 981 312
Current liabilities
Interest bearing borrowings 641 476 197 978 216 430
Trade and other payables 89 868 36 959 83 256
Current tax payable 1 008 428 6 142
Unitholders for distribution 180 469 116 738 172 578
Other financial liabilities ? ? 266 656
Bank overdraft ? ? 122
912 821 352 103 745 184
Total liabilities 3 989 012 2 203 773 3 726 496
Total equity and liabilities 7 898 904 5 008 254 7 538 373
Consolidated statement of changes in equity
Retained Share
income capital Total
R'000 R'000 R'000
Balance at 28 February 2012 138 769 ? 138 769
Total comprehensive profit for the period 190 ? 190
Balance at 31 August 2012 138 959 ? 138 959
Issue of 164 935 365 linked units effective 02 November 2012 ? 952 501 952 501
Capital issue expenses ? (20 269) (20 269)
Total comprehensive loss for the period (17 515) ? (17 515)
Balance at 28 February 2013 121 444 932 232 1 053 676
Issue of 24 740 304 linked units effective 06 March 2013 ? 179 368 179 368
Issue of 38 739 178 linked units effective 15 March 2013 ? 280 859 280 859
Issue of 6 737 700 linked units effective 22 March 2013 ? 48 848 48 848
Issue of 119 047 599 linked units effective 06 May 2013 ? 863 095 863 095
Issue of 4 883 469 linked units effective 26 August 2013 ? 35 185 35 185
Capital issue expenses ? (16 845) (16 845)
Cum distribution ? distribution number 01* ? (44 837) (44 837)
Cum distribution ? distribution number 02* ? (16 004) (16 004)
Total comprehensive profit for the period 8 190 ? 8 190
Balance at 31 August 2013 129 634 2 261 901 2 391 535
Issue of 3 526 140 linked units effective 13 September 2013 ? 25 036 25 036
Issue of 931 359 linked units effective 13 September 2013 ? 6 613 6 613
Issue of 2 721 124 linked units effective 01 October 2013 ? 18 337 18 337
Issue of 25 853 907 linked units effective 09 December 2013 ? 197 782 197 782
Issue of 8 214 677 linked units effective 19 December 2013 ? 65 553 65 553
Issue of 4 238 127 linked units effective 23 December 2013 ? 31 426 31 426
Issue of 952 103 linked units effective 13 February 2014 ? 6 903 6 903
Issue of 3 919 367 linked units effective 13 February 2014 ? 28 415 28 415
Issue of 20 070 406 linked units effective 28 February 2014 ? 134 893 134 893
Capital issue expenses ? (11 014) (11 014)
Cum distribution ? distribution number 03* ? (9 909) (9 909)
Total comprehensive profit for the period 376 545 ? 376 545
Balance at 28 February 2014 506 179 2 755 936 3 262 115
Issue of 14 622 058 linked units effective 24 April 2014 ? 101 185 101 185
Issue of 6 909 560 linked units effective 30 June 2014 ? 47 879 47 879
Capital issue expenses ? (2 687) (2 687)
Cum distribution ? distribution number 03 and 04* ? (7 632) (7 632)
Total comprehensive loss for the period (9 667) ? (9 667)
Balance at 31 August 2014 496 512 2 894 681 3 391 193
* Details of distributions 01 ? 04 as announced on SENS
Consolidated statement of cash flows
Unaudited Unaudited Audited
six months six months for year
ended ended ended
31 August 31 August 28 February
2014 2013 2014
R'000 R'000 R'000
Cash generated from operations 301 858 123 830 377 871
Interest received 1 441 2 558 5 954
Finance costs (141 329) (52 586) (151 149)
Taxation (paid) received (3 500) ? 370
Net cash from operating activities 158 470 73 802 233 046
Acquisition of investment property (126 825) (2 680 209) (4 477 778)
Refurbishment and renovations capitalised (49 916) (17 444) (41 790)
Purchase of property, plant and equipment (641) (4 410) (4 410)
Payments of other financial assets (25 454) (475) (945)
Proceeds from disposal of listed securities 348 809 ? ?
Acquisition of listed securities (501 262) ? (348 889)
Accrued distribution on acquisition of listed securities ? ? 14 141
Net cash from investing activities (355 289) (2 702 538) (4 859 671)
Proceeds from issue of linked units 118 000 1 630 625 2 226 574
Capital issue expenses (2 687) (16 845) (27 859)
Prior period cum distribution paid ? (44 837) ?
Debenture interest paid (178 453) (39 068) (200 642)
Proceeds from interest bearing borrowings 503 855 1 118 951 2 331 300
Repayment of other financial liabilities (266 656) ? 266 656
Deferred consideration raised ? ? 55 825
Net cash from financing activities 174 059 2 648 826 4 651 854
Net movement in cash and cash equivalents (22 760) 20 090 25 229
Cash at the beginning of the year 82 057 56 828 56 828
Total cash at end of the period 59 297 76 918 82 057
Abridged consolidated segmental analysis
Unaudited
Admin and
For the six months ended Office Office corporate
31 August 2014 (R'000) Retail government other Industrial costs Total
Contractual rental income 11 716 286 698 128 089 15 788 ? 442 291
Straight line rental income accrual 627 28 475 5 812 2 988 ? 37 902
Property operating expenses (4 564) (65 491) (43 438) (3 208) ? (116 701)
Net property rental and related income 7 779 249 682 90 463 15 568 ? 363 492
Fair value adjustments ? ? ? ? (12 802) (12 802)
Investment property ? ? ? ? ? ?
Investments ? ? ? ? 3 267 3 267
Derivative instruments ? ? ? ? (16 069) (16 069)
Investment property 178 833 4 830 315 1 932 373 238 852 ? 7 180 373
Fair value of property portfolio 177 288 4 705 707 1 916 078 231 117 ? 7 030 190
Straight line rental income accrual 1 545 124 608 16 295 7 735 ? 150 183
Unaudited
For the six months ended Office Office
31 August 2013 (R'000) Retail government other Industrial Total
Contractual rental income 5 489 149 062 58 335 6 064 218 950
Straight line rental income accrual 344 19 266 3 196 1 096 23 902
Property operating expenses (1 061) (29 927) (19 220) (1 008) (51 216)
Net property rental and related income 4 772 138 401 42 311 6 152 191 636
Fair value adjustments ? ? ? ? ?
Investment property 102 397 3 310 382 1 202 304 225 584 4 840 667
Fair value of property portfolio 101 946 3 244 281 1 196 991 224 488 4 767 706
Straight line rental income accrual 451 66 101 5 313 1 096 72 961
Audited
Admin and
For the year ended Office Office corporate
28 February 2014 (R'000) Retail government other Industrial costs Total
Contractual rental income 14 574 396 662 162 640 20 333 ? 594 209
Straight line rental income accrual 811 46 135 8 120 4 748 ? 59 814
Property operating expenses (3 157) (90 817) (54 384) (3 162) ? (151 520)
Net property rental and related income 12 228 351 980 116 376 21 919 ? 502 503
Fair value adjustments 5 536 153 391 99 541 6 055 (3 267) 261 256
Investment property 5 536 153 391 99 541 6 055 ? 264 523
Investments ? ? ? ? (3 267) (3 267)
Investment property 175 690 4 595 321 1 959 370 235 349 ? 6 965 730
Fair value of property portfolio 174 772 4 499 187 1 948 888 230 602 ? 6 853 449
Straight line rental income accrual 918 96 134 10 482 4 747 ? 112 281
Commentary on results
Capital structure
Delta is in the process of converting its existing linked unit capital structure into an all share capital structure. Delta's application
to convert to a REIT was approved by the JSE on 05 August 2013 and by Delta's shareholders on 02 October 2014. As a result
the 31 August 2014 results have been prepared on the existing linked unit capital structure where debentures are in issue. The
de-linking, cancellation of the debentures and full implementation of the REIT structure is anticipated to be completed by Delta's
financial year end. Future distributions will be classified as dividends for accounting purposes.
Profile
Delta is a JSE main board listed specialist Property Fund. Its primary focus is on long-term investment in quality, rental generating
properties situated in strategic nodes attractive to national government and other empowerment sensitive tenants. The Fund is
black managed and a level 2 B-BBEE contributor, qualifying for long-term government leases in terms of the Department of Public
Work's incubator programme. A springboard for Delta's success has been its ability to identify, acquire and convert strategic
assets to A and B-grade status to tenant specification, enabling the Fund to become a landlord of choice in its chosen nodes. Delta
believes that the defensive attributes of the sovereign underpin to its portfolio will provide a beachhead for its targeted double digit
growth in the medium term, especially in the expected domestic low-growth economic environment. The portfolio at 31 August
2014 comprised of 78 strategically located and high grade properties, valued at R7.2 billion. Delta also holds a R501.3 million
investment in Delta International Property Holdings Limited ("Delta International").
Financial results
Delta has declared a distribution of 40.01 cents per linked unit for the six months ended 31 August 2014, an increase of 23.1%
on the distribution for the six months ended 31 August 2013. All rental income received by the Group, less property operating
expenses, administration costs and interest on debt, is distributed bi-annually. The Group does not distribute capital profits and
fair value gains.
Distributable income includes R13.7 million of cum distribution (previously referred to as antecedent interest) of which R1.8 million
relates to new linked units issued during the year and R11.9 million relates to distributable income effectively realised through the
disposal of the shares held in Ascension Properties Limited ("Ascension").
The increase in administration expenses from R15.8 million for the six months ended 31 August 2013 to R25.2 million at 31 August
2014 is in line with the increase in the size of the portfolio.
Transaction costs of R41.3 million relate to the cancellation of the property management contract, with effect from 01 June 2014,
with Motseng Property Services Proprietary Limited ("MPS"). The amount was partially settled by offsetting a loan of R11.3 million
owed by Motseng Investment Holdings Proprietary Limited ("MIH") to Delta with the balance of R30 million was settled in cash.
Management of the properties previously managed by MPS, is now undertaken by MPI Property Asset Management Proprietary
Limited ("MPI"), Delta's appointed asset manager, on a cost recovery basis.
Property portfolio
As at 31 August 2014, the portfolio, valued at R7.2 billion, consisted of 78 properties with a total GLA of 631 898m(2).
The weighted average rental per m2 per sector for the full portfolio at year end was as follows:
Weighted
average rental
Sector per m(2)*
Office government R108.67
Office other R85.94
Retail R85.78
Industrial R32.07
*Weighted average rental as at 31 August 2014
The segmental and geographic breakdown of property holdings as at 31 August 2014 was as follows:
SEE PRESS FOR DETAILS.
Acquisitions
During the six months ended 31 August 2014, Delta completed the transfer of the Servamus building valued at R120.6 million.
Disposal of investments
On 25 February 2014 the Boards of Delta, Rebosis Property Fund Limited ("Rebosis") and Ascension, announced on SENS that
they were exploring a tripartite merger. On 24 June 2014 Delta and Rebosis jointly announced that the merger was not going
ahead. Although the rationale for the merger was never in question, the timing of the merger was inopportune. This resulted in
Delta disposing of its entire holding of Ascension A-linked units and Ascension B-linked on 22 July 2014 to Rebosis, for a cash
consideration of R348.8 million.
Equity investments
During the period under review Delta acquired 23.4 million shares in Delta International for an aggregate purchase consideration
of R501.3 million. Delta International offers investors direct access to high growth opportunities in African real estate (excluding
South Africa). The acquisition of Delta International was partially funded by a US Dollar based debt facility from the Bank of China at
an interest rate of LIBOR plus 350 bps per annum. The balance of the investment was funded through excess available on existing
debt facilities.
The investment in Delta International has been classified as an associate due to the significant influence exercised by Delta. The
investment has been equity accounted and the share of profit for the period it was held is detailed below.
28 February
Number of 2014
units R'000
Delta International 23 415 200 501 262
Share of profit in associate 4 180
Investment in associate 505 442
Commitments
31 August
2014
R'000
Capital improvements in respect of investment property
? Opening balance ? 01 March 2014 182 685
? Refurbishments and renovations capitalised in the period (49 916)
? New approvals 211 661
344 430
These commitments will be financed by a combination of available cash resources and new debt financing facilities.
Lease expiry profile
GLA Rental
Details % %
Vacant 4.7 0.0
28-Feb-15 6.3 6.7
29-Feb-16 12.3 13.1
28-Feb-17 22.5 26.5
28-Feb-18 19.3 18.1
28-Feb-19 10.7 13.2
> 28-Feb-19 24.2 22.4
Total 100.0 100.0
During the year leases in respect of 41 521 m2 (6.5% of portfolio) were renewed. The weighted average escalation rate across the
portfolio was 8.0% at 31 August 2014.
Vacancies
Vacancies in the Delta portfolio at 31 August 2014 were 4.7% which is an improvement on the 5.3% reported at 31 August 2013.
Borrowings
Delta's borrowings of R3.7 billion equate to a gearing ratio of 48.2% compared with 41.0% at 31 August 2013. Gearing is calculated
as total interest bearing liabilities (excluding debentures) as a percentage of total income producing assets.
31 August 31 August 28 February
2014 2013 2014
R'000 R'000 R'000
Investment property 7 180 373 4 840 667 6 965 730
Investment in listed securities ? ? 333 637
Investment in associate 505 442 ? ?
7 685 815 4 840 667 7 299 367
Total borrowings 3 701 597 1 985 393 3 464 398
Gearing 48.2% 41.0% 47.5%
The increase in gearing has facilitated the growth of Delta's income producing assets from R4.8 billion at 31 August 2013 to
R7.7 billion at 31 August 2014.
To manage the risk of increasing interest rates on the current gearing levels, management has fixed 70% of the outstanding debt
for a weighted average period of 3.0 years. Management will continue to pursue attractive funding rates through both debt capital
markets and vanilla debt.
The weighted average interest rate of all borrowings was 8.07% per annum at 31 August 2014, with unutilised banking facilities of
R392.4 million.
During the period under review, Delta issued R340 million in commercial paper under its unsecured domestic medium term note
programme.
Debt facilities at 31 August 2014:
Available Balance of
facilities facilities* Fixed:
Financier R'000 R'000 Floating WACC
Nedbank 2 081 625 1 917 153 87% : 13% 8.26%
Standard Bank 954 999 720 958 0% : 100% 7.99%
Bank of China 126 332 127 782 0% : 100% 3.70%
Sanlam 39 400 39 400 0% : 100% 8.00%
DMTN programme 872 000 872 000 0% : 100% 7.13%
Total 4 074 356 3 677 293 60% : 40% 7.77%
*Excludes accrued interest and swaps. Includes facilities that have been through Fixed Rate Addendum Agreements
DMTN programme
Book runner Instrument R'000 Expiry WACC
Rand Merchant Bank DLTC07 210 000 04-Feb-15 6.50%
Standard Bank DLT01U 50 000 28-Nov-14 6.88%
Standard Bank DLTC04 200 000 28-Nov-14 6.82%
Standard Bank DLTC06 50 000 13-Jan-15 6.92%
Nedbank DLTB02 362 000 09-Dec-16 7.72%
Total 872 000 7.13%*
*WACC calculation excludes the swap entered into for DLTB02, which is included under swap contracts
Summary of swap contracts
Nominal
amount
Financier Inception R'000 Expiry WACC
Nedbank(#) 09-Jun-14 362 000 09-Dec-16 8.58%
Standard Bank 09-Apr-14 160 000 09-Apr-17 8.92%
Standard Bank 09-Apr-14 350 000 09-Apr-19 9.65%
Total 872 000 9.07%
#Relates to the Secured Note DLTB02
Overall fixed: Floating and total WACC 70% : 30% 8.07%
As at August 2014, R24.3 million in interest had been accrued on the above facilities.
To ensure effective cash management, surplus cash is invested against revolving debt facilities at a rate in excess of 7.5%.
Events after the reporting period
Subsequent to 31 August 2014, Delta acquired the Old Mutual Centre and The Marine buildings. On 06 October 2014, Delta
completed the issue of R125 million unsecured bonds. The cash raised will be used to settle the current bridging facility.
Prospects
The Board's decision to not pursue the tripartite merger earlier this year has been vindicated as it has enabled Delta to act on
other opportunities. Some of these have already been realised, such as the stake in Delta International. Other opportunities
are continuously explored and in various stages of completion. The stake in Delta International provides unique US dollar based
exposure to retail and office sector growth in emerging market economies on the African continent, outside of South Africa, offering
diversification and a Rand hedge.
Delta International is the JSE's first property company to directly invest in real estate outside of South Africa and currently offers a
unique exposure to Morocco and Mozambique. Delta will continue to operate as a primarily sovereign and parastatal underpinned
fund, supplemented by a level of diversification through Delta International and other future initiatives.
The Asset Management team continues to bed down the existing portfolio and extract maximum efficiencies from the assets. The
assimilation of the newly internalised property management team has been concluded and is performing in line with expectations.
Delta will continue to leverage its excellent empowerment credentials and deal-making abilities to further add to its core portfolio of
defensive assets, as well as to secure lease renewals and maintain low vacancies.
The South African property market continues to face challenging conditions, with low economic growth and rising costs. Despite
these factors, Delta remains confident that focusing on fundamentals such as maintaining a defensive core portfolio, a long lease
expiry profile and by actively managing re-financing and interest rate risks, it is well positioned to achieve double digit distribution
growth going forward.
This prospects statement has not been reviewed or reported on by Delta's independent external auditors.
Distribution
Linked unitholders are advised that distribution no. 04 of 40.01164 cents per linked unit for the six months ended 31 August 2014
will be paid to linked unitholders in accordance with the abbreviated timetable set out below:
Last day to trade cum distribution Friday, 31 October 2014
Linked units trade ex distribution Monday, 03 November 2014
Record date Friday, 07 November 2014
Payment date Monday, 10 November 2014
Linked unitholders may not dematerialise or rematerialise their linked units between Monday, 03 November 2014 and Friday,
07 November 2014, both days included.
As Delta has REIT status, linked unitholders 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 of Delta linked units 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 tax residents
Distributions received by or accrued to South African tax residents must be included in the gross income of such linked unitholders
and are not exempt from income tax in terms of the exclusion to the general dividend exemption contained in section 10(1)(k)(i)
(aa) of the Income Tax Act, because they are dividends distributed by a REIT. These distributions are however exempt from dividend
withholding tax (Dividend Tax) in the hands of South African tax resident linked unitholders provided that the South African tax
resident linked unitholders have provided the following forms to the Central Securities Depository Participant (CSDP) or broker, as
the case may be, in respect of uncertificated linked units, or the transfer secretaries, in respect of certificated linked units:
- a declaration that the distribution is exempt from dividends tax; and
- a written undertaking to inform the CSDP, broker or transfer secretaries, 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.
Delta linked unitholders are advised to contact their CSDP or broker, as the case may be, to arrange for the abovementioned
documents to be submitted prior to the payment of the distribution.
Tax implications for non-resident linked unitholders
Distributions received by non-resident linked unitholders 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 section 10(1)(k)(i) of the Income Tax Act. It
should be noted that up to 31 December 2013 distributions received by non-residents from a REIT were not subject to Dividend Tax.
With effect from 01 January 2014, any distribution received by a non-resident from a REIT will be subject to Dividend Tax at 15%,
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 linked unitholder. Assuming Dividend Tax will be withheld at a rate of 15%, the net
amount due to non-resident linked unitholders is 34.00989 cents per share. A reduced dividend withholding rate in terms of the
applicable DTA may only be relied on if the non-resident linked unitholder has provided the following forms to their CSDP or broker,
as the case may be, in respect of uncertificated linked units, or the transfer secretaries, in respect of certificated linked units:
- a declaration that the dividend is subject to a reduced rate as a result of the application of the DTA; and
- a written undertaking to inform the CSDP, broker or the transfer secretaries, 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 of the South African Revenue Services.
If applicable, non-resident linked unitholders are advised to contact the CSDP, broker or the transfer secretaries, 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.
Linked unitholders are encouraged to consult with their professional advisors should they be in any doubt as to the appropriate
action to take.
The number of linked units in issue at the date of this declaration is 451 042 442 and the Company's tax reference number is
9464252148.
Basis of preparation and accounting policies
The unaudited condensed consolidated interim results of Delta have been prepared in accordance with the framework concepts
and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and contain the information required by IAS 34: Interim Financial Reporting, the JSE Listings
Requirements and the requirements of the Companies Act of South Africa. This report has been compiled under the supervision of
Bronwyn Corbett CA (SA), the Chief Financial Officer of Delta.
The accounting policies adopted in the preparation of these results are consistent with those applied in the preparation of the
financial statements for the year ended 28 February 2014. The results have not been reviewed or audited by Delta's auditors, BDO
South Africa Incorporated.
Delta has complied with IFRS and JSE Listings Requirements by disclosing earnings and headline earnings per share. Headline
earnings includes fair value adjustments for financial instruments and the straight line rental income accrual which does not affect
distributable earnings.
By order of the Board
JB Magwaza (Chairman) SH Nomvete (Chief Executive Officer)
10 October 2014
Directors: JB Magwaza? (Chairman), SH Nomvete* (CEO), BA Corbett* (CFO), JJG Da Costa^
N Khan^#, IN Mkhari?, PD Simpson^
*Executive ?Non-Executive ^Independent Non-Executive #Lead Independent Director
Registered office: Silver Stream Office Park, 10 Muswell Road South, Bryanston
(PostNet Suite 210, Private Bag X21, Bryanston 2021)
Transfer secretaries: Computershare Investor Services Proprietary Limited
Sponsor: Nedbank Capital
www.deltafund.co.za
Date: 13/10/2014 07:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
