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VKE
VKE
VKE - Vukile - Unaudited Interim Results And Distribution Announcement For The
Six Months Ended 30 September 2007
Vukile Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/027194/06)
JSE Share code: VKE & ISIN: ZAE000056370
NSX Share code: VKN
("Vukile" or "the group")
UNAUDITED INTERIM RESULTS AND DISTRIBUTION ANNOUNCEMENT
for the six months ended 30 September 2007
- Net profit available for distribution up 25.8%
- Interim distribution increased by 12.6%
- Value of portfolio exceeds R4 billion
- Vacancies down to 2.5%
- Total return to unitholders for 12 months 53.3%
COMMENTS
1 BASIS OF PREPARATION
The unaudited abridged interim financial statements for the six months
ended 30 September 2007, and comparative information, have been prepared in
terms of IAS 34 (Interim Financial Reporting) and relevant sections of the
South African Companies Act 1973, as amended. The accounting policies
applied are in accordance with International Financial Reporting Standards
(IFRS) and are consistent with those applied in the most recent audited
financial statements.
2 FINANCIAL RESULTS
The directors of Vukile are pleased to report that the group`s net profit
available for distribution has increased by 25.8% to R124.4 million for the
six months ended 30 September 2007 from R98.9 million for the comparable
period. The group`s net rental income, exclusive of straight-line rental
accruals and based on a stable portfolio (excluding acquisitions and
sales), has increased by 9.2% over the comparable period.
SUMMARY OF FINANCIAL PERFORMANCE
Sept 07 Sept 06 March 07
Net asset value 892 710 803
attributable to equity
holders of parent per
linked unit (cents)
Distribution per
Distribution per 40.25 35.75 76.75
linked unit (cents)
Loan to value ratio 28.4 35.5 29.9
(%)
The net asset value per linked unit increased by 25.6% to R8.92 per linked
unit as at 30 September 2007 from R7.10 per linked unit as at 30 September
2006. This represents a discount of 25.7% to Vukile`s unit price of R12 per
linked unit at 30 September 2007.
The board has approved an interim distribution of 40.25 cents per linked
unit for the six months ended 30 September 2007, an increase of 12.6% over
the comparable period.
3 BORROWINGS
The group`s long-term debt is hedged using interest rate swap agreements
for periods expiring between three and five years.
Changes to the group`s debt profile subsequent to 31 March 2007 are
summarised as follows:
* R50 million swaption held by Vukile converted to a R33 million
interest rate swap at a fixed rate of 10.74% (inclusive of 1.4%
margin) expiring on 22 November 2010. Debt of R33 million was raised
to finance the acquisition of West Street Houghton.
* A R62.7 million swaption was converted into a R54.8 million interest
rate swap at a fixed rate of 10.62% (inclusive of 1.4% margin)
expiring in July 2011. Debt of R54.8 million was raised to partly fund
the acquisition of BPI House referred to in paragraph 5 below.
Due to the fact that 96% of the group`s debt is hedged or fixed until 2010,
55% until 2011 and 22% until 2012, increases in interest rates will have
little impact on the group`s cost of debt.
4 PROPERTY PORTFOLIO
The combined property portfolio currently comprises 73 properties with a
gross lettable area of 918 331m2.
The sectoral spread by gross rentals comprises 30% commercial, 57% retail
and 13% industrial.
During the period under review, new leases and renewals with a total area
of 69 486m2 and a total contract value of R217 million were concluded.
The vacancy profile (% of gross rentals) has reduced from 2.9% on 31 March
2007 to 2.5% on 30 September 2007, a decrease of 14%.
The group`s lease expiry profile (% of GLA) indicates that approximately
one third of the portfolio will expire in the next 12 months, providing
opportunities to take advantage of rising rentals, particularly in the
office and industrial sectors.
Valuations
The directors have valued the group`s property portfolio at R4.35 billion
as at 30 September 2007. This is R489 million (12.6%) higher than the
valuation at 31 March 2007 (8.9% on a stable portfolio).
The external valuations by JHI Real Estate Limited and Old Mutual Property
Group (Pty) Ltd of 47% of the total portfolio are R82.7 million (3.9%)
higher than the directors` valuation of the same properties at 30 September
2007.
5 ACQUISITIONS AND DEVELOPMENTS
Apart from the potential acquisition of a 50% undivided share in a retail
development in Kings Road, Pinetown, which has not materialised, all the
acquisitions and disposals referred to in the company`s annual report for
the year ended 31 March 2007, issued in May 2007, have been successfully
concluded or are on track and within budget.
Eva Park offices have been revamped at a cost of R4 million. This
contributed to an increase in gross rentals from R57/m2 to approximately
R70/m2 and a reduction in vacancies from 1 000m2 at 31 March 2007 to
approximately 500m2 (4.7%) at 30 September 2007. A refurbishment of
Daveyton Mall, at a cost of approximately R10 million, has been completed.
This included a major refurbishment of the interior and an upgrade of the
ablution facilities. A fire at this centre caused damage to two stores
estimated at R4 million. As the company is insured for loss of profits,
this will not have any impact on earnings. Moratiwa Shopping Centre,
developed at a cost of R61.6 million, opened on 2 November 2007 and is
trading extremely well.
The group acquired BPI House in Windhoek for approximately R113 million
with effect from 1 July 2007. BPI House is an A-grade office and retail
complex in the heart of the Windhoek CBD. It has a total gross lettable
area of 12 826m2 and a blue-chip tenant line-up which includes the
government of Namibia, Pick `n Pay, Truworths, Dunns, Engen, Mobile Telecom
Company and Ernst & Young. The anticipated net yield is 9.1% in the first
year.
The cost of acquisitions and developments for the six month period amounted
to R213 million.
6 CAUTIONARY ANNOUNCEMENT
Linked unitholders are referred to the cautionary announcements dated 7
September and 19 October 2007, in terms of which unitholders were notified
that Vukile had entered into negotiations that could result in significant
acquisitions. An announcement in this regard will be made in due course.
7 DUAL LISTING
On 11 July 2007, Vukile listed in the Real Estate sector of the Namibian
Stock Exchange (NSX). The dual listing will enable the company to broaden
its shareholder base, while at the same time providing Namibian
institutions with a new investment vehicle.
8 SEGMENTAL ANALYSIS
Industrial Commercial Retail Corporate Total
R000 R000 R000 R000 R000
Group income
for the six
months ended
30 Sept 2007
Rental income 43 808 91 787 159 545 - 295 140
Straight-line 959 1 836 4 123 - 6 918
rental income
Property (18 696) (28 187) (56 008) - (102 891)
expenses
Net profit 26 071 65 436 107 660 - 199 167
from property
operations
Group balance
sheet at 30
Sept 2007
Non-current
Assets
Investment 668 543 1 303 663 2 304 591 - 4 276 797
properties
Other 18 622 37 606 56 276 98 510 211 014
noncurrent
assets
Non-current - - 14 448 - 14 448
assets held
for sale
Current
assets
Trade and 4 544 9 721 18 522 5 746 38 533
other
receivables
Cash and cash 613 125 8 205 38 186 47 129
equivalents
Non-current 421 232 815 439 1 488 602 - 2 725 273
liabilities
Current
liabilities
Trade and 11 968 14 870 40 898 69 421 137 157
other
payables
Linked - - - 118 959 118 959
unitholders
Segment assets and liabilities
Segment assets include all operating assets used by a segment and consist
principally of investment properties, receivables and cash. Assets not
directly attributable to a particular segment are allocated to the
corporate segment. Segment liabilities include all operating liabilities of
a segment and consist principally of outstanding accounts. Segment assets
and liabilities do not include deferred taxes.
9 PROSPECTS
The board remains confident that the outlook given in the annual report,
namely that we have budgeted for growth in distribution broadly in line
with what has been delivered in the previous year, is still applicable.
10 PAYMENT OF DEBENTURE INTEREST AND DIVIDEND
Notice is hereby given of a distribution amounting to 40.25 cents per
linked unit, for the six-month period to 30 September 2007. The
distribution comprises interest on debentures of 40.17 cents per linked
unit and a dividend of 0.08 cents per linked unit.
Last date to trade cum distribution Thursday, 13 Dec 2007
Linked units trade ex distribution Friday, 14 Dec 2007
Record date for unitholders to
participate in the distribution Friday, 21 Dec 2007
Payment of distribution to unitholders Monday, 24 Dec 2007
Linked unit certificates may not be dematerialised or re-materialised
between Friday 14 December 2007 and Friday 21 December 2007, both days
inclusive.
ABRIDGED GROUP INCOME STATEMENT
Unaudited Unaudited Audited
30 Sept 30 Sept 31 March
2007 2006 2007
R000 R000 R000
Property revenue 295 140 276 350 553 480
Straight-line rental 6 918 2 883 22 100
income accrual
Gross property revenue 302 058 279 233 575 580
Property expenses (102 891) (96 218) (195 751)
Net profit from property 199 167 183 015 379 829
operations
Administrative expenses (10 516) (6 207) (12 032)
Investment and other 5 268 5 184 12 122
income
Operating profit before 193 919 181 992 379 919
finance costs
Finance costs (60 105) (73 901) (139 022)
Net profit before 133 814 108 091 240 897
debenture interest
Debenture interest (118 717) (97 500) (213 088)
Net profit before capital 15 097 10 591 27 809
items
Capital items
Loss on sale of re-valued - (1 280) (5 878)
properties
Realised capital profit - 46 539 46 196
Less: Prior revaluations - (47 819) (52 074)
of sold properties
Amortisation of debenture 410 - 416
premium
Fair value adjustments 319 421 80 227 436 068
Gross change in fair value 326 339 83 110 458 168
of investment properties
Straight-line rental (6 918) (2 883) (22 100)
income adjustment
Net profit before taxation 334 928 89 538 458 415
Taxation (97 744) (29 882) (137 273)
Net profit after taxation 237 184 59 656 321 142
Attributable to:
Linked unitholders of the 237 184 59 588 320 639
company
Minorities - 68 503
RECONCILIATION: HEADLINE
EARNINGS AND DISTRIBUTABLE
EARNINGS
Attributable profit after 237 184 59 588 320 639
taxation
Adjusted for:
Net change in fair value (319 421) (80 227) (436 068)
of investment properties
Total tax effects of 93 293 22 913 127 161
adjustments
Total minority interest of - (186) 96
adjustments
Loss on sale of re-valued - 1 280 5 878
properties
Amortisation of debenture (410) - (416)
premium
Debenture interest 118 717 97 500 213 088
Headline earnings of 129 363 100 868 230 378
linked units
Straight-line rental
accrual net of minority
interest and
deferred taxation (4 936) (1 966) (15 577)
Available for distribution 124 427 98 902 214 801
Distribution to
unitholders
Interest 118 717 97 195 212 406
Dividend 242 199 433
118 959 97 394 212 839
Pre-issue debenture
interest offset against
debenture
and share premium - - 5 731
Total distribution 118 959 97 394 218 570
Total number of linked 295 551 272 429 295 551
units in issue (000)
Weighted average number of 295 551 272 429 276 927
linked units in issue
(000)
Earnings per linked unit 120.42 57.55 192.49
(cents)
Headline earnings per 43.77 37.03 83.19
linked unit (cents)
Available for distribution 42.10 36.30 77.57
per linked unit (cents)
ABRIDGED GROUP BALANCE SHEET
Unaudited Unaudited Audited
30 Sept 30 Sept 31 March
2007 2006 2007
R000 R000 R000
ASSETS
Non current assets 4 485 148 3 317 257 3 937 807
Investment properties 4 276 797 3 183 3 810 296
447
Investment properties - at 4 349 752 3 230 3 876 332
valuation 191
Straight-line rental (72 955) (46 744) (66 036)
income adjustment
Other non-current assets 208 351 133 810 127 511
Straight-line rental 57 904 46 744 51 206
income asset
Investment properties 51 937 - -
under development
Furniture fittings & 173 224 205
computer equipment
Goodwill 76 299 83 223 76 100
Interest rate swap asset 22 038 3 619 -
Current assets 88 325 94 780 223 382
Straight-line rental 15 051 - 14 830
income asset
Trade and other 26 145 26 079 21 541
receivables
Cash and cash equivalents 47 129 68 701 187 011
Non-current assets held 14 448 275 015 -
for sale
Investment properties 14 151 270 627 -
- Investment properties 14 448 275 015 -
at fair value
- Straight-line rental (297) (4 388) -
income adjustment
Straight-line rental 297 4 388 -
income asset
Total assets 4 587 921 3 687 4 161 189
052
EQUITY AND LIABILITIES
Equity and reserves 1 101 336 592 902 836 137
Share capital 2 956 2 724 2 956
Share premium 17 341 13 354 17 341
Reserves 1 081 039 566 362 815 840
Minority interest - 10 462 -
Non-current liabilities 3 230 469 2 741 3 079 211
231
Linked debentures and 1 535 560 1 351 1 535 971
premium 448
Other interest bearing 1 189 713 1 088 1 127 403
borrowings 530
Interest rate swap - - 7 720
liabilities
Deferred taxation 505 196 301 253 408 117
Current liabilities 256 116 352 919 245 841
Trade and other payables 90 524 93 950 93 883
Short-term bank finance 46 402 151 850 26 529
Vendor loans - 1 811 -
Taxation payable 231 7 914 4 253
Linked unitholders for 118 959 97 394 121 176
distribution
Total equity and 4 587 921 3 687 4 161 189
liabilities 052
ABRIDGED GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
30 Sept 30 Sept 31 March
2007 2006 2007
R000 R000 R000
CASH FLOW FROM OPERATING (8 400) 4 309 19 276
ACTIVITIES
Cash generated from 172 301 173 276 349 089
operations
Finance costs (60 105) (73 901) (139
022)
Investment and other 5 268 5 184 12 122
income
Distributions paid (121 176) (98 075) (195
469)
Taxation paid (4 688) (2 175) (7 444)
CASH FLOW FROM INVESTING (213 665) 244 302 236 081
ACTIVITIES
CASH FLOW FROM FINANCING 82 183 (259 (148
ACTIVITIES 587) 023)
Net (decrease)/increase in (139 882) (10 976) 107 334
cash and cash equivalents
Cash and cash equivalents 187 011 79 677 79 677
at the beginning of the
period
Cash and cash equivalents 47 129 68 701 187 011
at the end of the period
STATEMENT OF CHANGES IN EQUITY
Share Non-dis- Retained Total
capital tributable income Minority
and share reserves interest
premium
R000 R000 R000 R000 R000
Group
Balance at 31 16 078 450 798 5 390 10 473 482 739
March 2006
Revaluation of - 50 785 - - 50 785
interest rate
swaps
Net profit for - - 59 588 68 59 656
the period
Change in fair - 83 110 (83 - -
value of 110)
investment
properties
Deferred
taxation on
change in fair
value of - (22 950) 22 950 - -
investment
properties
Allocation of - (80) 80 - -
change in fair
value of
investment
properties in
respect of
minorities
Deferred - (920) 920 - -
taxation on
straight-line
rental accrual
Loss on sale of - (1 280) 1 280 - -
properties
transferred
Minorities` - - - (79) (79)
share of post
acquisition
distribution
Dividend - - (199) - (199)
distribution
Balance at 30 16 078 559 463 6 899 10 462 592 902
September 2006
Linked units 4 219 - - - 4 219
issued in
acquiring
property
Increased - - - (10 (10
holding in 976) 976)
business
combination
acquired
previously
Revaluation of - (11 339) - - (11
interest rate 339)
swaps
Net profit for - - 261 051 435 261 486
the period
Change in fair - 375 058 (375 - -
value of 058)
investment
properties
Deferred - (104 416) 104 416 - -
taxation on
change in fair
value of
investment
properties
Allocation of - (455) 455 - -
change in fair
value of
investment
properties in
respect of
minorities
Deferred - (5 641) 5 641 - -
taxation on
straight-line
rental accrual
Minorities` - - - 79 79
share of post
acquisition
distribution
Transfer from - (4 598) 4 598 - -
non-
distributable
reserves
Dividend - - (234) - (234)
distribution
Balance at 31 20 297 808 072 7 768 - 836 137
March 2007
Revaluation of - 28 257 - - 28 257
interest rate
swaps
Net profit for - - 237 184 - 237 184
the period
Change in fair - 326 339 (326 - -
value of 339)
investment
properties
Deferred - (94 523) 94 523 - -
taxation on
change in fair
value of
investment
properties
Deferred - (753) 753 - -
taxation on
straight-line
rental accrual
Dividend - - (242) - (242)
distribution
Balance at 30 20 297 1 067 392 13 647 - 1 101
September 2007 336
On behalf of the board
A D Botha G van Zyl
Chairman Chief executive
Roodepoort
26 November 2007
JSE Sponsor: Barnard Jacobs Mellet Corporate Finance (Proprietary) Limited
NSX Sponsor: IJG Securities(Proprietary) Limited
Executive directors: G van Zyl (CEO), MJ Potts (Financial director)
Non-executive directors: AD Botha (Chairman), S Bernic, HSC Bester, PJ Cook, PS
Moyanga, JM Hlongwane, M Serebro and UJ van der Walt
Registered office: 2nd floor Meersig Building,
Constantia Boulevard, Constantia Kloof, 1709
Company Secretary: EL Yates
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited,
Marshalltown, Johannesburg
Investor and media relations: Contact Helen McKane on vukile@dpapr.com, or Tel:
011 728-4701
Website: www.vukileprops.co.za
Date: 26/11/2007 12:15:00 Produced by the JSE SENS Department.
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