Vukile Property Fund Ltd HY 2014 results

Vukile Property Fund Ltd HY 2014 results

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    Vukile Property Fund Ltd HY 2014 results
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    Vukile Property Fund Ltd HY 2014 results
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    • 1. UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS for the six months ended 30 September 2013 HIGHLIGHTS • irst F half increase of 5% in normalised distribution off a base of 52.2 cents per linked unit. • Successful completion of one of the most significant empowerment transactions in the listed property sector. • Successful re-launch of the revamped Randburg Square Shopping Centre. C • ontinued strong operational performance of the property portfolio. • Improved portfolio composition: o cquisition of 50% of East Rand Mall for A R1.1 billion. o Acquired R1.0 billion Sovereign Tenant Portfolio from Encha. o Realised R287 million on sales of higher risk properties. • Special distribution of 13.83 cents per linked unit. COMMENTS 1. NATURE OF OPERATIONS The group is a long-term investor in commercial properties with strong contractual cash flows for long-term sustainability and capital appreciation. he interim financial statements have been approved for issue by T the board of directors on 25 November 2013. The preparation of the financial results for the six months ended 30 September 2013 was supervised by Michael Potts, CA (SA), financial director. 3. SIGNIFICANT EVENT AND TRANSACTIONS During this reporting period, the following significant transactions were effected: T • he acquisition of the R1.04 billion Encha Sovereign Tenant Portfolio (“sovereign portfolio”) – as further set out in paragraph 8; T • he raising of debt facilities of R900 million to facilitate the acquisition of the sovereign portfolio and other properties – as further set out in paragraph 5; and The refinancing of R75 million commercial paper – as further set • out in paragraph 5. 4. SUMMARY OF FINANCIAL PERFORMANCE The directors of Vukile are pleased to report that the normalised distribution for the six months ended 30 September 2013 has increased by 5.0% to 54.81 cents per linked unit (normalised prior period: 52.20 cents per linked unit). The group’s net profit available for distribution amounted to R343.8 million for the six months to 30 September 2013 (R268.5 million – September 2012), which represents an increase of 28% over the comparable period. Summary of financial performance: 2. BASIS OF PREPARATION The unaudited condensed consolidated interim financial statements (“interim financial statements”) for the six months ended 30 September 2013, and comparative information, have been prepared in accordance with and containing the information required by IAS 34 (Interim Financial Reporting), International Financial Reporting Standards (“IFRS”), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Announcements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements and relevant sections of the South African Companies Act. Except for the new standards adopted as set out below, all accounting policies applied by the group in the preparation of these condensed consolidated interim financial statements are consistent with those applied by the group in its consolidated financial statements as at and for the year ended March 2013. The group has adopted the following new 31 standards: • Amendment to IFRS 7 – Disclosures – Offsetting Financial Assets and Financial Liabilities. • IFRS 10 – Consolidated Financial Statements. • IFRS 11 – Joint Arrangements. • IFRS 12 – Disclosure of Interests in Other Entities. • IFRS 13 – Fair Value Measurement. • Amendments to IAS 1 – Presentation of Items of Other Comprehensive Income. • Revised IAS 27 and 28 – Investments in Associates and Joint Ventures. There was no material impact on the interim financial statements identified based on management’s assessment of these standards. Net asset value per linked unit (cents) Normalised distribution per linked unit (cents) Special/non-recurring distribution (cents) Total distribution (cents) Loan to value ratio (%) September September 2013 2012 1 535 1 263 March 2013 1 369 54.81 52.20 120.44 13.83 68.64 32.8 4.83 57.03 29.2 11.15 131.59 33.5 A simplified income statement (which is not IFRS compliant) is set out below: GROUP September September 2013 2012 Paragraph R000 R000 reference Gross rental income and recoveries Property expenses Net profit from property operations Asset management business Asset management fees Sales commission Expenditure Corporate administrative expenses Finance costs net of investment income Loss on sale of furniture, fittings and computer equipment Tax Distributable income % variance 657 365 (250 453) 574 139 (228 099) 14.5 9.8 406 912 346 040 a 17.6 58 870 45 295 b 30.0 11 479 66 993 (19 602) 15 889 43 793 (14 387) (17 522) (14 510) c 20.8 (98 382) (92 260) d 6.6 (5) (6 070) 343 803 (16 031) 268 534 e -100 (62.1) 28.0 (27.8) 53.0 36.2 1
    • 2. a. NET PROFIT FROM PROPERTY OPERATIONS • The property portfolio has performed in line with expectations for the six months ended 30 September 2013, in a difficult economic environment. • The group’s net profit from property operations, exclusive of straight-line rental accruals, has increased by 17.6% over the comparable period, from R346.0 million to R406.9 million. This percentage increase is made up as follows: % • n a like-for-like (stable portfolio) basis O 8.1 • New property acquisitions contributed 16.7 • Less: Sales of non-core properties (7.2) (1) 17.6 The sale of non-core properties has had the effect of reducing gross income by R25 million over the comparable period, partially offset by income generated from the re-investment of the proceeds thereof. (1) F urther details of the property portfolio performance are set out in paragraph 9. Impairment allowance for tenant receivables The allowance for the impairment of receivables decreased from R13.7 million at 31 March 2013 to R12.0 million at September 2013 which is considered adequate at 30 this stage. The impairment allowance is expected to approximate 1% of gross rental income for the year ending March 2014, which is in line with previous impairment 31 allowances. A summary of the movement in the impairment allowance of trade receivables is set out below. R000 Impairment allowance 1 April 2013 Allowance for receivable impairment for the year 13 653 93 Receivables written off as uncollectable 11 951 e. TAXATION The first half tax accrual is 62% lower than the comparable period due to distributions comprising varying percentages of profit available for distribution for the two periods. At year end it is anticipated that 100% of profits available for distribution will be distributed, thereby minimising the actual normal tax payable by the company. The bulk of the normal tax payable arises in the Namibian subsidiaries. 5. BORROWINGS During September 2013, R75 million of 6 month commercial paper was successfully refinanced with the issue of new 12 month commercial paper at a margin of 60 bps above 3 month JIBAR. R400 million facility was concluded with Standard Bank to partly A finance the R1.04 billion acquisition of the Encha portfolio. The facility comprises the following: Rm (1 795) Impairment allowance 30 September 2013 Bad debt write-off per the statement of comprehensive income 4 183 b. ASSET MANAGEMENT BUSINESS sset management fee income is 28% lower than the A comparable period following the disposal of the R2.2 billion East Rand Mall in April 2013, which has led to a lower base of c.R6.9 billion on which to calculate on-going recurring asset management fees. Sales commission has increased by 53% over the comparable period following the sale of East Rand Mall. Asset management expenditure has increased by 36% over the comparable period primarily as a result of an increase in a short-term incentive accrual of R3.2 million. This bonus will only become payable if certain performance targets are achieved at the year-end. The amortisation of the long-term share incentive scheme has increased by R0.9 million over the prior year due to additional allocations in July 2013 in respect of the Conditional Unit Plan Scheme. Asset management fees now comprise c.2% of the total revenue. c. CORPORATE ADMINISTRATIVE EXPENDITURE Corporate administration expenses have increased by 21% over the comparable period mainly as a result of an increase of R3.1 million in a short-term incentive bonus provision. As set out above the short-term incentive bonus will only become payable if certain performance targets are achieved at yearend. d. FINANCE COSTS NET OF INVESTMENT INCOME Net finance costs have increased by R6.1 million over the comparable period. Additional interest on R550 million debt 2 raised to partly finance the acquisition of East Rand Mall for R1.1 billion together with interest on the Encha acquisition contributed an additional interest charge of R26 million, offset by lower finance costs following the repayment of R76 million of revolving loans and also offset by additional interest income earned: • on the R400 million issue of equity in May 2013; • n the R66 million equity raised from the distribution o reinvestment plan in June 2013; • from property sales which realised R287 million; and • antecedent divestiture income accrued of R13.7 million. • 3 year term debt • 3 year revolving loan • 5 year term debt • 5 year revolving loan 160 40 160 40 The 3 year and 5 year term loans of R160 million each have been hedged at swap rates of 6.48% and 7.10% respectively. The all-in weighted average cost of the Standard Bank facility, including swap costs, margins and amortised debt raising fees, equates to 8.0%. R500 million development facility has been concluded with A Nedbank as follows: • Term loan R250 million at JIBAR plus 163 bps; • Revolving loan R250 million at prime overdraft rates less 180 bps. The facility expires on 31 December 2014. This facility was raised in order to finance the development of Lethlabile Mall and Linbro Park and to part finance the acquisition of Edendale Mall. 92.8% of debt at 30 September 2013 has been hedged by way of fixed loans or interest rate swaps. The current all-in cost of finance, including margins and amortised debt raising fees, is 8.1%. The LTV ratio at 30 September 2013 equates to 32.8%. Swaps, constituting R401 million or 39% of swaps maturing by mid-year 2015, have been extended to mature in October 2018, at an additional swap cost of 35 bps.
    • 3. 6. INANCING OF THE ACQUISITION OF THE ENCHA F PORTFOLIO The repayment profile complies with the company’s strategy of The acquisition of the Encha portfolio has been financed as follows: year. R000 Purchase price Equity issued to Encha shareholders on 4 October 2013 (22.839 million Vukile units @ R15.5873 per linked unit) 1 044 764 356 000 ensuring that no more than 25% of debt should expire in any one 8. DEVELOPMENTS, ACQUISITIONS AND SALES ENCHA SOVEREIGN TENANT PORTFOLIO ACQUISITION As part of Vukile’s transformation strategy, the company concluded a unique and commercially driven transaction with Encha Standard Bank facilities utilised 160 000 Properties to acquire four predominantly national government- 3 year revolving loan 40 000 tenanted properties for R1.04 billion, at a yield of 9.5%. The 5 year term loan 24 550 Pretoria Momentum building is under option and will increase the 5 year revolving loan 40 000 total acquisition price to c.R1.4 billion if exercised. 3 year term loan RMB facilities utilised 3 year term loan 150 000 3 year revolving loan 118 214 532 764 Surplus cash resources arising on property sales 125 000 Total Shortfall (1) 1 013 764 31 000 (1) This amount will be settled by way of an equity issue and/or cash once Encha has finalised the adjustment accounts. HAMMARSDALE JUNCTION The Hammarsdale Junction shopping centre measuring 19 400m² and anchored by Pick n Pay, Super Spar and Mr Price, opened in June 2013. The centre is located within the Mpumalanga Township in KwaZulu-Natal. The national tenant component is approximately 81%. The average monthly foot count since opening has been 450 000. Permanent job opportunities for The weighted average all-in cost of finance for the above debt raised of R532.8 million is 7.71%. approximately 450 people were created. Tenants have indicated The weighted average cost of capital (“WACC”) for this transaction equates to 7.54% against a yield of 9.5% and is, therefore, significantly earnings accretive. The final anticipated capital expenditure is R198 million at an initial Stratford Property Ventures has commenced with the development The group’s debt repayment profile is set out below: of a 15 000m² mini factory/warehousing complex at Linbro Park, Financial year ending 31 March Current/ future Nature of Repayment debt 2014 2015 2016 2017 2018 2019 debt date Rm Rm Rm Rm Rm Rm Rm 1 020 580 200 240 DMTN Bonds May 2015 2017 14 August 2014 399 Vukile - bank March 2014 March 2015 debt (1) 440 RMB/SCM loans for R1.5 billion acquisition 490 April 2015 April 2018 399 300 as a desirable business address, which enjoys excellent accessibility to the N3 and Sandton CBD via Marlboro Road while offering the added benefit of being located approximately three 163 from 350m² to 1 870m². The anticipated capital expenditure is 164 R123.5 million, at an initial yield of 10.0% which is underpinned by a one year rental guarantee. The completion date for this 175 75 Nedbank facility Linbro Park, Lethabile, Edendale (2) 500 250 200 development is July 2014. 250 November 2014 100 LETHLABILE MALL, NORTH WEST PROVINCE The Lethlabile Mall is being developed at a capital outlay of R194.2 million and a yield of 9.2%. The centre with a GLA of Standard Bank for Encha (3) September 2016 September 2018 400 RMB (ERM mortgaged) facility for Encha/other(4) April 2014 April 2018 450 200 200 17 600m², is situated in Lethlabile about 30 kilometres north of Brits in the North West Province. Shoprite is the food anchor and other national tenants include Pep Stores, Ackermans, Mr 150 150 150 Price, Jet Stores, Dunns, Capitec and Nedbank. The national component will comprise approximately 85% of the GLA of Repayment profile 4 249 Percentage 100 725 1 014 943 504 350 17.1 23.9 22.2 16.8 11.8 713 17 600m². The project is currently progressing well and on course 8.2 (859) 3 390 R16 million of the access facility of R150 million is currently utilised. R60.1 million of R500 million Nedbank facility has been utilised to date. (3) R264.5 million of R 400 million Standard Bank facility has been utilised to date. (4) R300 million of R450 million facility has been utilised to date. (1) (2) will be incorporated into Linbro Business Park, firmly established will comprise 22 units with a wide variety of unit sizes ranging 163 550 Current debt one of Johannesburg’s prime industrial areas. The development kilometres from the Gautrain Marlboro Station. The development 140 DMTN Bonds March 2014 March 2018 East Rand Mall Unutilised facilities yield of 9.5%, underpinned by a one year gross income guarantee. MINI FACTORY/WAREHOUSING COMPLEX LINBRO PARK 7. DEBT REPAYMENT PROFILE MICC - bank debt that trading to date has been in line with expectations. A total of R859 million of the above facilities are currently unutilised. for the anticipated completion date of April 2014. JOINT VENTURE WITH THE MCCORMICK GROUP 50% interest in Edendale Mall The acquisition of a 50% interest in Edendale Mall, Pietermaritzburg, a 31 700m² retail centre, has been further delayed pending the resolution of the structure in which Vukile will hold its title. Once resolved, the mall will be a good fit for the portfolio. The mall is 3
    • 4. enclosed, has good visibility, accessibility, adequate parking and taxi facilities. Further, the mall has a strong tenant mix comprising national, franchise and regional brands. The node is further strengthened by the close proximity of the Edendale Provincial Hospital, SA police station, medical clinics and local schools. It is estimated that there are approximately 90 000 households or VACANCY PROFILE % of gross rental 16 14.2 14 12.5 12 10 about 450 000 people in the catchment area. The anticipated capital expenditure is R186 million at an initial yield of 9%. The 6 purchase price is underpinned by a one year income guarantee. 4 The remaining 50% will be held by the McCormick Group. 8.6 8 2 7.2 7.1 6.7 5.9 4.9 3.9 3.6 0.0 0 Retail Offices 30% interest in Maake Plaza (15 200m²) and Modjadji Plaza Industrial 31 March 2013 Sovereign Hospital 0.0 Motor related Total 30 September 2013 (9 800m²) Offers for the acquisition of a 30% interest in both these centres at a purchase price of R61.5 million at a blended anticipated initial yield of 12% have been accepted. The centres are located in the rural areas surrounding Tzaneen in the Limpopo Province. The The increased vacancies at offices are mainly due to higher vacancies at Pretoria Midtown Building, Midrand Ulwazi Building and Jhb Parktown Oakhurst. The motor related vacancy is at Cape Town Bellville Barons which accounts for 1 358m². remaining 70% is held by the McCormick Group. Both centres are anchored by Shoprite and the national tenant composition is 88%. DISPOSALS line with the strategy of improving the quality of the portfolio, In the following higher risk properties were disposed of in the six months ended 30 September 2013: Property Durban Embassy Midrand Allandale Land (Halfway House Ext 65) Sales price R000 Yield % 238 000 9.9 21 850 Bloemfontein Bree Street Warehouse 13 900 Randburg Triangle 13 500 Date of sale 2013 23 May The renewal escalations on expiry rentals are still positive compared to expiry rentals: • Retail 6.3% • Offices 0.8% • Industrial 0.8% LEASE RENEWALS Escalation on expiry rentals (%) 8 6.3 6 - 16 August 6.7 13 August 10.5 10 May 4 2.9 287 250 2 These disposals create an earnings drag during the short-term but contribute to an improved risk profile and the quality of the 0.8 The combined property portfolio currently comprises 81 properties with a gross lettable area of 1 150 729m². The sectoral spread by market value comprises 52% retail, 23% offices, 10% industrial, 10% sovereign, 3% hospital and 2% motor related. Offices Industrial 0 Retail portfolio for the longer term. 9. PROPERTY PORTFOLIO 0.8 Average New leases concluded on retail space have exceeded budgeted rentals by 9.7%, whilst new leases concluded on offices and industrial are down 6.3% and 8.9% respectively on budgeted rentals. NEW LEASES CONCLUDED Rental concluded/budget (market related rentals) (%) 150 During the six month period under review, new leases and renewals with a total area of 150 579m² and a contract value of R538.3 million were concluded. 109.7 100 93.7 91.1 96.4 78% of leases to be renewed during the period ended September 2013 were renewed or are in the process of being 30 50 renewed. The vacancy profile graph (measured as a percentage of gross rentals) alongside indicates that the overall vacancy percentage has decreased from 7.1% at 31 March 2013 to 6.7% at 30 September 2013. 4 0 Retail Offices Industrial Average The contracted rental escalation profile reflects a positive average escalation across all sectors of 8.1%.
    • 5. CONTRACTED RENTAL ESCALATION PROFILE (%) 10 8.6 8 7.9 8.9 8.1 8.1 7.5 7.0 6 4 2 0 Retail Offices Industrial Sovereign Hospital Motor related Total 10. VALUATIONS The directors have valued the group’s property portfolio at R10.3 billion utilising the discounted cash flow methodology for the group, and the purchase price for the sovereign portfolio. In terms of the company’s accounting policies, approximately 50% of all properties are valued every six months on a rotational basis by qualified independent external valuers. The external valuation by Jones Lang LaSalle (Pty) Ltd, Broll Valuation and Advisory Services and Old Mutual Investment Group South Africa (Pty) Ltd of 56.0% of the total portfolio is in line with the directors’ valuation. VALUATION ASSUMPTIONS The range of the reversionary capitalisation rates applied to the portfolio are between 7.2% and 13.9% with the weighted average being approximately 9.6%. The discount rates applied range between 13.1% and 17.6% with the weighted average being approximately 14.1%. determining future cash flows for valuation purposes, In vacancies are forecast for each property based on estimated demand. 11. PERATING SEGMENT REPORTING O The revenues and profits generated by the group’s operating segments and segment assets are summarised in the table on page 6. During the six month period to 30 September 2013, there has been a change from prior periods in the measurement methods used to determine operating segments and reported segment profits in that hospitals and auto dealerships are reported as separate segments in line with the JSE Listing Requirements. 12. EVENTS AFTER PERIOD END The JSE Limited approved the listing of 22.84 million Vukile linked units to part fund the acquisition of the Encha portfolio. The proceeds received from the issue of these linked units of R356 million have been utilised to reduce vendor loans existing at 30 September 2013. of the audit and risk committee and as chairman of the social, ethics and human resources committee and Mr Hlongwane as a member of the property and investment committee and the social, ethics and human resources committee. Both Mr Cook and Mr Hlongwane were valued board members and the board wishes them well in their future endeavours. Mr Hatla Ntene, a quantity surveyor with extensive experience was appointed as an independent non-executive director with effect from 25 October 2013 and has been appointed to the property and investment committee. Dr Sedise Moseneke has been appointed as an executive director following the Encha portfolio acquisition with effect from 1 August 2013. 14. DISTRIBUTION ANNOUNCEMENT Linked unitholders are referred to the SENS announcements published on 8 November 2013 and 15 November 2013 respectively in which the company announced the declaration of a special distribution in respect of the East Rand Mall commission income and the normal distribution for the interim period ended 30 September 2013 amounting to 13.83 cents per unit and 54.81 cents per unit respectively. 15. PROSPECTS have made significant progress in changing our portfolio We to a better quality, lower risk portfolio. This has been achieved through value enhancing acquisitions and the disposal of riskier, yet higher yielding, assets. The improved quality of the portfolio is evidenced by the asset composition where some 65% of the portfolio is represented by our retail (52%), sovereign portfolio (10%) and hospital (3%) assets which collectively provide a real stability to the portfolio. The retail portfolio continues to perform well and we are seeing tenant demand across the portfolio. The sovereign portfolio has a lease expiry profile exceeding five years and contractual escalations of 8.9%. The remainder of the portfolio comprises office (23%), motor related (2%) and industrial (10%) assets. We expect the office sector to remain the most challenging but have been encouraged by the positive momentum in the industrial sector in the first half of the financial year. With trading conditions expected to remain difficult in the second half of the financial year, we are however still on track to meet our distribution guidelines for F2014 of growth in normalised distribution (off a base of 120.44 cpu) of between 4% and 6%. We expect a healthy growth in distributions for F2015 given the positive effects of the repositioning of the portfolio and the full year impact of the acquisitions undertaken during the F2014 year. T his forecast has not been reviewed or reported on by the company’s auditors. On behalf of the board AD Botha Chairman LG Rapp Chief Executive 13. CHANGES IN DIRECTORATE During the period under review Mr Peter Cook and Mr Mlungisi Hlongwane retired from the board. Mr Cook served as a member Melrose Estate 25 November 2013 5
    • 6. OPERATING SEGMENTS ANALYSIS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 GROUP September 2013 Group income for the six months ended 30 September 2013 Property revenue Property expenses Straight-line rental income accrual Profit from property and other operations Group statement of financial position at 30 September 2013 Assets Investment properties Add: Lease commissions Goodwill Intangible asset Investment properties held for sale Add: Excluded items Development capital expenditure Furniture, fittings and other equipment Available-for-sale financial asset Financial asset at amortised cost Loans to directors Trade and other receivables Cash and cash equivalents Total assets Liabilities Linked debentures and premium Interest bearing borrowings Asset Total management property business R000 R000 Industrial R000 Offices R000 Sovereign offices R000 60 284 (21 891) 38 393 1 708 40 101 139 493 (59 193) 80 300 3 573 83 873 23 833 (7 779) 16 054 714 16 768 413 583 (158 987) 254 596 11 326 265 922 6 983 (1 030) 5 953 265 6 218 13 189 (1 573) 11 616 517 12 133 657 365 (250 453) 406 912 18 103 425 015 1 045 919 2 065 193 1 044 761 4 979 683 127 920 325 852 9 589 328 22 181 9 611 509 63 602 34 750 162 670 752 830 325 852 10 427 941 3 889 1 049 808 Retail R000 Motor related R000 Hospital R000 59 713 334 267 2 399 460 1 044 761 383 813 5 423 209 78 472 (19 602) 58 870 58 870 Straight-line rental income accrual Profit from property and other operations Group statement of financial position at 30 September 2012 Assets Investment properties Add: Lease commissions Goodwill Intangible asset Investment properties held for sale Add: Excluded items Development capital expenditure Furniture, fittings and other equipment Available-for-sale financial asset Financial asset at amortised cost Trade and other receivables Cash and cash equivalents Total assets Liabilities Linked debentures and premium Interest bearing borrowings Add: Excluded items Equity Derivative financial instruments Deferred taxation liabilities Trade and other payables Current taxation liabilities Linked unitholders for distribution Total equity and liabilities 6 735 837 (270 055) 465 782 18 103 483 885 9 589 328 22 181 9 611 509 63 602 95 731 95 731 752 830 95 731 10 523 672 261 687 5 487 35 403 197 15 350 91 357 421 963 11 355 116 374 791 341 543 716 334 859 815 783 540 1 643 355 374 377 341 165 715 542 1 921 939 1 751 442 3 673 381 58 291 53 120 111 411 116 765 106 406 223 171 3 705 978 3 377 216 7 083 194 3 705 978 3 377 216 7 083 194 Add: Excluded items Equity Derivative financial instruments Deferred taxation liabilities Trade and other payables Current taxation liabilities Loans to vendors Linked unitholders for distribution Total equity and liabilities September 2012 Group income for the six months ended 30 September 2012 Property revenue Property expenses Total R000 3 288 321 14 635 5 999 247 597 4 982 382 052 328 336 11 355 116 69 047 (24 365) 44 682 (913) 43 769 207 671 (78 894) 128 777 (2 747) 126 030 297 421 (124 840) 172 581 (3 934) 168 647 574 139 (228 099) 346 040 (7 594) 338 446 1 047 599 2 623 649 3 600 297 1 047 599 3 917 2 623 649 931 3 600 297 60 696 7 271 545 16 715 7 288 260 65 544 74 700 1 126 216 289 205 2 913 785 62 948 3 723 941 426 853 7 780 657 59 682 (14 387) 45 295 45 295 237 053 237 053 633 821 (242 486) 391 335 (7 594) 383 741 7 271 545 16 715 7 288 260 65 544 237 053 426 853 8 017 710 545 1 862 44 645 2 060 59 958 315 910 8 442 690 430 476 326 264 756 740 1 117 271 846 796 1 964 067 1 405 097 1 064 944 2 470 041 2 952 844 2 238 004 5 190 848 2 952 844 2 238 004 5 190 848 2 231 477 81 978 473 376 217 170 13 706 234 135 8 442 690
    • 7. UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AT 30 SEPTEMBER 2013 GROUP FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 Unaudited Unaudited 30 September 30 September 2013 2012 R000 R000 Audited 31 March 2013 R000 GROUP Property revenue 657 365 574 139 1 166 940 18 103 (7 594) 4 829 675 468 566 545 1 171 769 (250 453) (228 099) (452 811) Non-current assets 10 088 966 7 639 969 7 770 306 Gross property revenue Investment properties 9 454 898 7 153 484 7 241 245 Property expenses Net profit from property operations 425 015 338 446 718 958 Net income from asset management business 58 870 45 295 45 952 Corporate administrative expenses (17 522) (14 510) (29 192) Investment and other income 26 587 8 096 25 615 492 950 377 327 761 333 (124 969) (100 356) (194 285) 367 981 276 971 567 048 (327 601) (233 639) (554 368) Profit before capital items 40 380 43 332 12 680 Profit on sale of investment properties 26 560 5 405 903 (5) - - Profit on sale of subsidiary - 555 1 160 Amortisation of debenture premium 4 308 4 677 6 804 - - (821) (57 234) (30 043) (114 131) 9 611 509 7 288 260 7 389 656 Straight-line rental income adjustment (156 611) (134 776) (148 411) Other non-current assets 634 068 486 485 529 061 95 731 237 053 152 965 156 611 134 776 148 411 Finance costs Profit before debenture interest Intangible asset Straight-line rental income asset Development capital expenditure Furniture fittings, computer equipment and other Available-for-sale financial asset Financial asset at amortised cost 261 687 545 138 385 5 487 1 862 5 129 35 403 44 645 19 417 197 2 060 1 152 Loans to directors 15 350 - - Goodwill 63 602 65 544 63 602 513 320 375 868 1 351 664 Current assets Trade and other receivables 91 357 59 958 84 360 Cash and cash equivalents 421 963 315 910 1 267 304 Investment properties held for sale 752 830 426 853 323 202 Total assets 11 355 116 8 442 690 Operating profit before finance costs Debenture interest Loss on sale of furniture and fittings Goodwill written-off on sale of subsidiary/properties by a subsidiary Impairment of intangible asset Impairment of goodwill - - (1 121) Profit/(loss) before fair value adjustments 14 009 23 926 (94 526) Fair value adjustments 592 299 219 377 255 329 9 445 172 Gross change in fair value of investment properties 610 402 211 783 260 158 (18 103) 7 594 (4 829) 606 308 243 303 160 803 (6 070) (57 323) 412 834 600 238 185 980 573 637 44 695 (56 334) (33 686) 4 465 6 862 (18 367) EQUITY AND RESERVES 3 288 321 2 231 477 2 626 187 Straight-line rental income adjustment Non-current liabilities 6 305 604 5 596 202 5 755 367 Profit before taxation Linked debentures and premium 3 705 978 2 952 844 3 275 222 Other interest bearing borrowings 2 578 992 2 088 004 2 414 522 14 635 81 978 59 330 5 999 473 376 6 293 Derivative financial instruments Deferred taxation liabilities Taxation 1 761 191 615 011 1 063 618 Trade and other payables 247 597 217 170 228 117 Short-term borrowings 798 224 150 000 512 936 4 982 13 706 1 343 Current liabilities Current taxation liabilities Loans to vendors Linked unitholders for distribution Total equity and liabilities Audited 31 March 2013 R000 Straight-line rental income accrual ASSETS Investment properties Unaudited Unaudited 30 September 30 September 2013 2012 R000 R000 382 052 328 336 11 355 116 234 135 8 442 690 321 222 9 445 172 Profit for the period Other comprehensive income Items that will be reclassified subsequently to profit or loss Cash flow hedges Available-for-sale financial assets-current period income/(loss) Other comprehensive income/(loss) for the period 49 160 (49 472) (52 053) Total comprehensive income for the period 649 398 136 508 521 584 Earnings per linked unit (cents) 205.25 103.20 273.53 Diluted earnings per linked unit (cents) 205.25 103.20 273.53 455 513 047 410 515 218 431 040 218 Number of linked units in issue 7
    • 8. RECONCILIATION OF GROUP NET PROFIT TO HEADLINE EARNINGS AND TO PROFIT AVAILABLE FOR DISTRIBUTION UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 30 September 2013 30 September 2012 Group R000 Attributable profit after taxation Cents per linked unit 600 238 132.78 31 March 2013 Group R000 Cents per linked unit Group R000 Cents per linked unit 185 980 45.74 573 637 139.10 Total tax effects of adjustments Write-off in goodwill on sale of subsidiary/ properties sold by a subsidiary Impairment of goodwill Profit on sale of subsidiary Profit on sale of investment properties Loss on sale of furniture and fittings Impairment of intangible asset 233 639 72.47 57.46 554 368 134.43 419 619 103.20 1 128 005 273.53 (131.02) (219 377) (53.95) (255 329) (61.91) 42 897 10.55 (418 606) (101.51) 205.25 - - - - - - 821 0.20 - - - - 1 121 0.27 - - (555) (0.14) (1 160) (0.28) (26 560) (5.88) (5 405) (1.33) (903) (0.22) 5 - - - 188 0.05 57 234 12.66 30 043 7.39 114 131 Total R000 (0.94) (4 677) (1.14) (6 804) (1.65) 80.07 262 545 64.58 561 464 136.16 - - - (188) (0.05) (4.01) 5 989 1.47 (4 829) (1.17) 76.06 268 534 66.05 556 447 134.94 32 263 2 013 225 28 982 2 074 470 32 263 1 719 943 28 982 1 781 188 - 293 282 - 293 282 17 231 - - 17 231 - - (477) (477) 2 013 225 28 505 2 091 224 Profit for the period Change in fair value of investment properties Deferred taxation on change in fair value of investment properties and straight-line rental accrual - - 185 980 185 980 - 211 783 (211 783) - - (35 254) 35 254 - Share-based remuneration Transfer from nondistributable reserve Other comprehensive income Revaluation of available-forsale financial asset Revaluation of cash flow hedges Balance at 30 September 2012 - 3 745 - 3 745 - (30 121) 30 121 - - 6 862 - 6 862 - (56 334) - (56 334) 49 494 2 113 906 68 077 2 231 477 6 622 - - 6 622 - - (654) (654) 56 116 2 113 906 67 423 2 237 445 - - 387 657 387 657 - 48 375 (48 375) - - 35 254 (35 254) - - 426 790 (426 790) - - 3 666 - 3 666 Dividend distribution 27.68 Amortisation of debenture premium (4 308) Headline earnings attributable to linked unitholders 361 911 Loss on sale of furniture and fittings (5) Straight-line rental accrual net of deferred taxation (18 103) Profit available for distribution Retained earnings R000 49 494 Adjusted for: Debenture interest 327 601 Earnings attributable to linked unitholders 927 839 Change in fair value of investment properties (592 299) GROUP Restated balance at 31 March 2012 Balance at 31 March 2012 as previously reported Change of rate in deferred taxation including straight line rental accrual Issue of share capital and premium Share Noncapital and share distributable reserves premium R000 R000 Issue of shares Dividend distribution Profit for the period Change in fair value of investment properties Deferred taxation on change in fair value of investment properties and straight-line rental accrual Deferred taxation rate change Share-based remuneration Transfer from nondistributable reserve - (92 073) 92 073 - UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW Other comprehensive loss Revaluation of available-forsale financial asset Revaluation of cash flow hedges - (25 229) - (25 229) - 22 648 - 22 648 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 Balance at 31 March 2013 56 116 2 533 337 36 734 2 626 187 8 880 Unaudited Unaudited 30 September 30 September 2012 2013 R000 R000 Audited 31 March 2013 R000 467 376 398 546 738 201 Cash flow from investing activities (2 123 975) (1 368 322) (1 446 725) Cash flow from financing activities 811 258 1 069 739 1 759 881 Cash flow from operating activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period (845 341) 99 963 1 051 357 1 267 304 215 947 215 947 421 963 315 910 1 267 304 Issue of shares Profit for the period Change in fair value of investment properties Share-based remuneration Transfer from nondistributable reserve Other comprehensive loss Revaluation of available-forsale financial asset Revaluation of cash flow hedges Balance at 30 September 2013 8 880 - - - - (669) (669) 64 996 Dividend distribution 2 533 337 36 065 2 634 398 - - 600 238 600 238 - 610 402 (610 402) - - 4 525 - 4 525 - (30 674) 30 674 - - 4 465 - 4 465 - 44 695 - 44 695 64 996 3 166 750 56 575 3 288 321 VUKILE PROPERTY FUND LIMITED (“Vukile” or “the company” or “the group”) (Incorporated in the Republic of South Africa) • (Registration number 2002/027194/06) ISIN: ZAE000056370 • JSE share code: VKE • NSX share code: VKN Granted REIT status with the JSE JSE sponsor: Java Capital Trustees and Sponsors (Pty) Ltd, 2 Arnold Road, Rosebank, 2196 • NSX sponsor: IJG Group, Windhoek, Namibia Executive directors: LG Rapp (CEO), MJ Potts (Financial director), HC Lopion (Executive director : asset management), GS Moseneke Non-executive directors: AD Botha (Chairman), PS Moyanga, SF Booysen, H Ntene, NG Payne, SEN Sebotsa, HM Serebro Registered office: Ground floor, One-on-Ninth, cnr Glenhove Road and Ninth Street, Melrose Estate, 2196 Company Secretary: J Neethling Transfer secretaries: Link Market Services South Africa (Pty) Ltd, Braamfontein, Johannesburg Investor and media relations: Contact Helen McKane on vukile@dpapr.com, or Tel: 011 728-4701 8 www.vukile.co.za dPA5762 343 803
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