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DELTA PROPERTY FUND LIMITED - Audited condensed consolidated results for the year ended 28 February 2022
2022/05/24 11:45:00Download PDF Stock report
Audited condensed consolidated results for the year ended 28 February 2022
Delta Property Fund
(Incorporated in the Republic of South Africa)
(Registration number 2002/005129/06)
JSE Share code: DLT
ISIN: ZAE000194049
(Approved as a REIT by the JSE)
('Delta' or 'the Company' or 'the Group')
SHORT-FORM ANNOUNCEMENT
AUDITED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2022
HIGHLIGHTS
- SA REIT FFO (previously distributable earnings) per share 36.91cps (2021: 31.33cps)
- Headline earnings per share 39.74cps (2021: 8.78cps)
- CAPEX spent R112.8m (2021: R37.6m)
- Rental collections 112.7% (2021: 87.03%)
- B-BBEE Level 1 (2021: Level 2)
COMMENTARY
INTRODUCTION
Delta is emerging as a turnaround story, despite an external environment that continued to be unforgiving. While the
economy remained under pressure resulting in record high vacancies, Delta's sovereign underpinned portfolio showed
resilience.
Part of our focus has been to reintroduce disciplines in the business. We have enhanced internal controls, made changes
to the reporting lines, and bolstered our staff complement and competencies, predominantly through the hiring of new
and senior talent. Our employee engagement survey showed applaudable outcomes.
The resilience of a sovereign focused portfolio, was evident as we improved our collection rate from 87.03% in 2021 to
112.7% over the period plus successfully reducing net arrears by 17.3% (including write-offs).
A significant win in the past year has been the renewal of 70 548m2 gross lettable area (GLA) and the conclusion of new
leases with a combined GLA of 17 586m2. Further, expired month-to-month leases dating as far back as 2017, with a GLA
of 126 233m2 were negotiated in the period and concluded post year-end. Our efforts on legacy tenant installation and
capex continued in the second half of the financial year, playing a key role in ensuring the renewal of leases. We are
pleased that our focus and effort in rebuilding trust with our tenants and our capex programme yielded positive
results. These efforts will be underpinned by the ongoing delivery against capital expenditure commitments, which has
resulted in several key tenants reviewing their decisions to vacate and who are currently engaging on varied lease
tenures with Delta.
The Board has approved a refined strategy, focused on portfolio optimisation, which continues to be centred around
disposals in the short- to medium-term and portfolio refinement in the medium- to long-term. In keeping with this
strategy, the Domus building measuring 5 454m2 was disposed of for R25 million, in the year under review, with the
conclusion (awaiting transfer) of the sale of Delta House measuring 11 439m2 for an agreed purchase price of
R74 million boosting the tally to close to R100 million. Additional disposals are being negotiated for seven
buildings measuring 64 501m2 post the reporting period.
While we are pleased with our progress and strategy execution in the reporting period, vacancies, which have increased,
are a focal point. In response to this, more resources (human capital and financial) are being mobilised to complement
the new leasing strategies supported by a more robust broker strategy and enhanced incentives.
FINANCIAL REPORTING
Financial results
Audited Audited
year ended year ended
28 February 28 February
2022 2021 % change
SA REIT Funds from operations ('FFO per share') 36.91 31.33 17.8
Rental income (including recoveries) 1 388 704 1 445 893 (4.0)
Net property income (excluding straight-line rental adjustment) 817 359 889 237 (8.1)
Net finance costs 388 395 413 612 (6.1)
Fair value adjustments (412 624) (636 895) 35.2
Investment property (including non-current assets held for sale) 7 888 200 8 227 800 (4.1)
Basic and diluted loss per share (20.30) (63.63) 68.1
Headline earnings per share 39.74 8.78 352.6
Loan-to-value 57.0% 56.5% 0.5bps
SA REIT FFO per share increased by 17.8% from 31.33 cents per share to 36.91 cents per share and further supported by
cash flow from operations of R254.7 million compared to R235.7 million in the prior year.
Rental income (including recoveries) as well as net property income decreased by 4.0% and 8.1% respectively mainly as a
result of negative rental reversions on the lease renewal of the Polokwane portfolio.
Investment property (including non-current assets held for sale) reduced by 4.1% from R8.2 billion to R7.9 billion.
This is due to the slow recovery of the economy, which is evident in the increased vacancy factors used in valuing the
portfolio. The investment in Grit, which continues to be non-core, decreased substantially as a result of their share
price reducing by 31.4% from USD 70 cents per share at 28 February 2021 to USD48 cents per share at year-end. This was
clawed back with an increased exchange rate of R15.55/USD1 at year-end from R14.54/USD1 in the prior year.
Interest-bearing borrowings decreased by R210.5 million attributable to amortisations and the disposal of Domus in
May 2021. The loan-to-value increased from 56.5% to 57.0% following the downward valuation being offset by the
amortisations.
DIVIDEND
The SA REIT FFO (previously distributable earnings) per share amounts to 36.91 cents per share (2021: 31.33 cents).
With the decision to continue to allocate cash resources to fund capex and tenant installation obligations, the Board
resolved not to declare a dividend at this stage (2021: Nil). This decision will continue to be reviewed at each
reporting period.
PROSPECTS
Notwithstanding macro-economic headwinds and legacy challenges within the portfolio, the Group expects some of its
initiatives to provide some greenshoots in the short to medium term. Focus will remain on significantly reducing
vacancies in the portfolio, continuing to pursue retention of tenants and delivering on debt reduction and portfolio
optimisation.
The auditors have issued an unqualified audit opinion on the audited financial results, an emphasis of matter in
respect of a material uncertainty related to going concern was raised. The auditors' opinion has not been modified in
respect of this matter. The auditors' audit opinion, containing key audit matters, together with the annual financial
statements is available for inspection at Delta's registered office and on the following weblink
https://www.deltafund.co.za/financials.
Any investment decisions made by investors and/or shareholders should be based on consideration of the full
announcement as a whole and shareholders are encouraged to review the full announcement, which is available on the JSE
website at https://senspdf.jse.co.za/documents/2022/jse/isse/DLT/fy2022.pdf and can be found on the Group's website
https://www.deltafund.co.za/financials/.
The contents of this short-form announcement are the responsibility of the Board of directors of Delta. This short-form
announcement is a condensed version of the full announcement in respect of the audited annual Group results for the
year ended 28 February 2022 and does not contain full or complete details of the financial results.
The full announcement is available for inspection at the registered office, during business hours, at no charge and any
requests to the Company Secretary for copies will be dealt with by referring the requester to the appropriate link on
the Company's public website under the Investor Relations tab. The information contained in this short-form
announcement has been extracted from the audited annual Group results and has not been reviewed or reported on by
Delta's auditor.
By order of the Board
P Langeni S Mbanjwa
(Chairman) (CEO)
24 May 2022
Directors: P Langeni~ (Chairman), S Mbanjwa (CEO), B Masinga* (Executive), M de Lange* (CFO), N Khan~, DN Motau^,
MJN Njeke#, P Stock^, MCR Rampheri^ *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, a division of Nedbank Limited
http://www.deltafund.co.za
Date: 24-05-2022 11:45:00
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