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VKE
VKE
VKE - Vukile Property Fund Limited - Audited condensed results and distribution
announcement for the year ended 31 March 2011
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")
AUDITED CONDENSED RESULTS and distribution announcement for the year ended 31
March 2011
* Annual distribution increased by 9%
* Successful acquisition of R541 million property portfolio
* Vacancies contained at 5.1% of gross rentals (2010: 4.1%)
* Successful re-financing of R462 million securitisation debt
* Improvement in recurring cost to property revenue ratios
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2011
2011 2010
Group Group
R000 R000
Assets
Non-current assets 5 487 419 5 272 170
Investment properties 4 984 840 4 725 437
- Investment properties 5 083 993 4 811 152
- Straight-line rental income
adjustment (99 153) (85 715)
Other non-current assets 502 579 546 733
- Intangible asset 312 832 362 767
- Straight-line rental income asset 99 153 85 715
- Development expenditure 2 723 1 391
- Furniture, fittings and computer
equipment 1 774 1 510
- Available-for-sale financial asset 10 208 13 601
- Financial asset at amortised cost 4 782 5 450
- Goodwill 71 107 76 299
Current assets 409 218 261 066
Trade and other receivables 71 409 46 741
Cash and cash equivalents 337 809 214 325
Investment properties held for sale 281 422 92 333
Total assets 6 178 059 5 625 569
Equity and reserves 1 404 550 1 381 502
Non-current liabilities 3 909 613 3 463 718
Linked debentures and premium 2 116 916 1 890 753
Other interest bearing borrowings 1 226 282 1 012 203
Derivative financial instruments 21 867 28 136
Deferred taxation liabilities 544 548 532 626
Current liabilities 863 896 780 349
Trade and other payables 173 277 136 275
Short-term borrowings 449 600 460 727
Current taxation liabilities 5 416 2 373
Linked unitholders for distribution 235 603 180 974
Total equity and liabilities 6 178 059 5 625 569
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31
MARCH 2011
2011 2010
Group Group
R000 R000
Property revenue 836 124 742 072
Straight-line rental income accrual 14 368 7 041
Gross property revenue 850 492 749 113
Property expenses (293 603) (267 061)
Net profit from property operations 556 889 482 052
Profit from asset management business 44 913 3 067
Corporate administrative expenses (25 509) (23 781)
Investment and other income 14 380 21 188
Operating profit before finance costs 590 673 482 526
Finance costs (161 803) (145 340)
Profit before debenture interest 428 870 337 186
Debenture interest (403 948) (319 231)
Profit before capital items 24 922 17 955
(Loss)/profit on sale of investment
properties (14 798) 1 387
Amortisation of debenture premium 2 519 1 361
Goodwill written off on sale of
properties (5 192) -
Impairment of intangible asset (49 935) -
(Loss)/profit before fair value
adjustments (42 484) 20 703
Fair value adjustments 78 494 293 975
Gross change in fair value of
investment properties 92 862 301 016
Straight-line rental income
adjustment (14 368) (7 041)
Profit before taxation 36 010 314 678
Taxation (25 488) (79 081)
Profit for the year 10 522 235 597
Other comprehensive income
Cash flow hedges 6 602 (11 436)
- current period losses (16 616) (22 390)
- reclassification to profit or loss 23 218 10 954
Available-for-sale financial
assets - current period losses (3 556) (6 486)
Other comprehensive income (loss)
for the year 3 046 (17 922)
Total comprehensive income for the year 13 568 217 675
Earnings per linked unit (cents) 120.86 182.37
Diluted earnings per linked unit (cents) 120.86 182.37
RECONCILIATION OF GROUP NET PROFIT TO HEADLINE EARNINGS AND TO PROFIT AVAILABLE
FOR DISTRIBUTION
2011 2010
Cents Cents
2011 per 2010 per
Group linked Group linked
R000 unit R000 unit
Attributable profit after
taxation 10 522 3.07 235 597 77.44
Adjusted for:
Debenture interest 403 948 117.79 319 231 104.93
Earnings per linked unit 414 470 120.86 554 828 182.37
Change in fair value of
investment properties (78 494) (22.89) (293 975) (96.62)
Total tax effects of
adjustments 23 126 6.74 70 139 23.05
Change in goodwill
on sale of subsidiary 5 192 1.51 - -
Loss/(profit)/on sale
of re-valued properties 14 798 4.31 (1 387) (0.46)
Impairment of
intangible asset 49 935 14.56 - -
Amortisation of
debenture premium (2 519) (0.73) (1 361) (0.45)
Headline earnings of l
inked units 426 508 124.36 328 244 107.89
Straight-line rental
accrual net of deferred
taxation (18 407) (5.36) (4 979) (1.64)
Adjustment for reduced
distribution in respect
of new issue of shares - - - 3.29
Profit available
for distribution 408 101 119.00 323 265 109.54
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2011
Re-valua-
Share tion of
capital Non- available-
and distri- for-sale-
share butable financial
R000 premium reserves assets
Group
Balance at 31 March 2009 20 297 1 137 743 (9 788)
Issue of share capital 7 299 - -
Dividend distribution - -
27 596 1 137 743 (9 788)
Profit for the year - - -
Change in fair value of
investment properties - 301 016 -
Deferred taxation on change
in fair value of investment
properties and straight-line
rental accrual - (72 201) -
Share-based remuneration - 12 078 -
Transfer to non-distributable
reserve - 1 387 -
Other comprehensive income
Revaluation of available-for-
sale financial asset - - (6 486)
Revaluation of cash flow
hedges - - -
Balance at 31 March 2010 27 596 1 380 023 (16 274)
Issue of share capital 4 667 - -
Dividend distribution - - -
32 263 1 380 023 (16 274)
Profit for the year - - -
Change in fair value of
investment properties - 92 862 -
Deferred taxation on change
in fair value of investment
properties and straight-line
rental accrual - (11 958) -
Share-based remuneration - 6 177 -
Transfer from non-distributable
reserve - (77 054) -
Other comprehensive income
Revaluation of available-for-
sale financial asset - - (3 556)
Revaluation of cash flow
hedges - - -
Balance at 31 March 2011 32 263 1 390 050 (19 830)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31
MARCH 2011 (continued)
Cash flow Retained
R000 hedges earnings Total
Group
Balance at 31 March 2009 (16 854) 13 703 1 145 101
Issue of share capital - - 7 299
Dividend distribution - (651) (651)
(16 854) 13 052 1 151 749
Profit for the year - 235 597 235 597
Change in fair value of
investment properties - (301 016) -
Deferred taxation on change
in fair value of investment
properties and straight-line
rental accrual - 72 201 -
Share-based remuneration - - 12 078
Transfer to non-distributable
reserve - (1 387) -
Other comprehensive income
Revaluation of available-for-
sale financial asset - - (6 486)
Revaluation of cash flow
hedges (11 436) - (11 436)
Balance at 31 March 2010 (28 290) 18 447 1 381 502
Issue of share capital - - 4 667
Dividend distribution - (824) (824)
(28 290) 17 623 1 385 345
Profit for the year - 10 522 10 522
Change in fair value of
investment properties - (92 862) -
Deferred taxation on change
in fair value of investment
properties and straight-line
rental accrual - 11 958 -
Share-based remuneration - - 6 177
Transfer from non-
distributable reserve - 77 054 -
Other comprehensive income
Revaluation of available-for-
sale financial asset - - (3 556)
Revaluation of cash flow
hedges 6 062 - 6 062
Balance at 31 March 2011 (22 228) 24 295 1 404 550
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 MARCH 2011
2011 2010
Group Group
R000 R000
Cash flow from operating activities 570 910 452 245
Cash flow from investing activities (371 782) (410 110)
Cash flow from financing activities (75 644) 111 383
Net increase in cash and cash equivalents 123 484 153 518
Cash and cash equivalents at the
beginning of the year 214 325 60 807
Cash and cash equivalents at the
end of the year 337 809 214 325
COMMENTS
1 Basis of preparation
The condensed financial results included in this announcement have been prepared
in accordance with the measurement and recognition criteria of International
Financial Reporting Standards ("IFRS") and have been prepared in accordance with
the presentation and disclosure requirements of IAS 34, Interim Financial
Reporting, the AC 500 standards as issued by the Accounting Practices Board, or
its successor, the Companies Act and the JSE Limited Listings Requirements.
The accounting policies used in the preparation of the condensed financial
results for the year ended 31 March 2011 are consistent with those applied in
the previous financial year.
Grant Thornton, the group`s independent auditor, has audited the consolidated
annual financial statements of Vukile Property Fund Limited from which the
condensed consolidated financial results have been derived and have expressed an
unqualified audit opinion on the consolidated annual financial statements. The
audit report is available for inspection at Vukile Property Fund Limited`s
registered office.
2 Financial results
The group`s net profit available for distribution amounted to R408.1 million for
the year ended 31 March 2011 compared to the R323.3 million for the previous
year, an increase of 26.2%. If acquisitions and disposals are excluded, on a
"like for like" basis, group net property revenue increased by 9.5% from 2010 to
2011.
The asset management business segment has performed well during the year. Asset
management fees of R33.6 million were earned which was R3.1 million higher than
the income forecast in the circular to shareholders dated 26 November 2009.
Likewise, sales commission of R29.3 million was R5.3 million higher than
forecast in the circular due to higher than expected disposals in the Sanlam
portfolio. Costs were well contained at R20 million.
Group corporate administrative expenditure of R25.5 million reflected an
increase of R1.7 million over the previous year, an increase of 7.3%.
Group finance costs, net of investment income, have increased by R23.2 million,
from R124.2 million to R147.4 million. The increase in finance costs is due to
the additional debt of R201.8 million, raised to finance the acquisition of the
R541 million portfolio in September 2010.
The intangible asset of R362.8 million which arose on the acquisition of the
property asset management business has been tested for impairment. A change in
the forecast income profile due to higher than anticipated sales of the Sanlam
portfolio in the initial periods, together with an increase in the discount
rate, has resulted in the discounted forecast cash flows being estimated at
R49.93 million lower than the original carrying value. An impairment charge of
R49.93 million has been raised.
Summary of group financial performance
March March %
2011 2010 change
Headline earnings of linked units (R`m) 427 328 30.2
Available for distribution (cents
per linked unit) 119.0 109.54 8.6
Net asset value per linked unit
(cents) 1 003 986* 1.7
Distribution per linked unit (cents) 117.65 107.90 9.0
Loan to value ratio 31.5% 30.2% 4.3
* Adjusted to account for additional units issued in September 2010 to 932
cents per linked unit.
Simplified income statement
March March
2011 2010
Group Group
R000 R000 Note
Calculation of distributable earnings
Net profit from property operations
excluding straight-line income
adjustments 542 521 475 011
Net income from the asset management
business 44 913 3 067 1
Investment and other income 14 380 21 188 2
Administrative expenses (25 509) (23 781)
Finance costs (161 803) (145 340) 3
Taxation (excluding deferred tax on
revaluation adjustments) (6 401) (6 880)
Available for distribution 408 101 323 265
Note 1: The asset management business only operated for 3 months in the
previous year with insignificant sales commission generated in that period.
Note 2: The decrease in investment and other income is due to a once-off
dividend of R8.8 million received from Vukile Investment Property Securitisation
(Pty) Ltd ("VIPS") in the prior year.
Note 3: The additional finance costs are as a result of bank debt of R201.8
million utilised in the acquisition of the R541 million portfolio in September
2010.
Gross Rental Receivables ("Tenant arrears")
Tenant arrears reduced by R0.75 million from the prior year to R21 million at 31
March 2011. The allowance for impairment of receivables reduced from R10.25
million in 2010 to R9.9 million at 31 March 2011.
Receivables written off during the year as uncollectable through operating costs
amounted to R8.0 million.
The net asset value of the group has increased over the reporting period by
7.6%, from 932 cents per linked unit (adjusted for increase in units in issue)
to 1 003 cents per linked unit at 31 March 2011.
The change in net asset value per linked unit, based on 351 015 218 linked units
in issue at year end, is set out in the NAV bridge (refer to the results
announcement and slide presentation on the website www.vukileprops.co.za).
3 Borrowings
During November 2010, the securitisation debt of R462 million was successfully
refinanced through a note issue via the securitisation vehicle at an all-in cost
of finance of 9.76%, which is 0.44% lower than the previous rate of 10.20%. The
issue was 2.7 times oversubscribed.
Following the extension of certain interest rate swaps and the above
securitisation refinancing, the group`s overall cost of debt has reduced from
10.4% per annum at 31 March 2010 to 9.77% per annum, inclusive of margins and
costs, at 31 March 2011.
Bank loans to a subsidiary of R450 million matures in July 2011. Four banks
have been approached to refinance these loans. At this stage, indicative
facility letters have been received from certain of the above banks at
favourable interest rates. We intend to finalise the refinancing of the loans
at all-in hedged rates which are lower than the current fixed and hedged rates.
98% of the group`s total interest bearing debt was hedged at year-end.
The company`s borrowing capacity is, in terms of its articles of association,
not limited. The board policy is to limit gearing to 45%. The group`s gearing
ratio at the end of the financial year was 31.5% compared to the bank and
securitisation covenants of 50% and 65% respectively. The group has unutilised
bank facilities of R279 million.
4 Distributions
The board of directors has approved a final distribution of 67.1 cents per
linked unit for the six months to 31 March 2011, an increase of 10.2% over the
comparable six month period. The distribution for the full year ended 31 March
2011 is 117.65 cents per linked unit, an increase of 9.0% over the previous
year`s distribution of 107.90 cents per linked unit.
The 9.7 cents per linked unit increase in distributions year-on-year is made up
as follows:
2011 2010
Cents Cents
per per
linked linked
unit unit
Contributions to increased rental income
- Increase in rentals on new and
renewed leases 10.3 15.7
- Additional rentals from property
acquisitions 12.8 -
- Additional municipal service
recoveries and other 3.7 8.1
26.8 23.8
Increase in property expenditure (7.6) (11.2)
Increase in net group property revenue 19.2 12.6
Additional income from asset management
business 11.9 1.0
Less: Adjusted prior year asset
management fees for full year (8.5) -
Increased net finance costs (6.6) (0.5)
Increased administrative expenses,
taxation and retained income (0.7) (2.7)
Adjustment for issue of additional
linked units (2.3) (3.7)
Less: R10 million distribution foregone
by Sanlam Properties in prior year (3.3) 3.3
Net increase in distribution 9.7 10.0
5 Group property portfolio
The property portfolio currently comprises 74 properties with a gross lettable
area of 919 688mSquared.
At 31 March 2011, the portfolio`s vacancy (measured as a percentage of gross
rentals) was 5.1% compared to 4.1% at 31 March 2010 (5.3% at 30 September 2010).
The largest vacancy in the portfolio is at Randburg Square, which reflected a
vacancy at year end of 5 103mSquared. This is due to a proposed major revamp of
the centre at an estimated cost of R64 million. This revamp, which will
commence shortly, entails a re-mix of tenants and the introduction of new
tenants. Vacancies have not been filled pending this major revamp.
New leases and renewals of 204 795mSquared, with a contract value of R945.5
million, were concluded during the year. This includes a new 15 year lease with
Medi-Clinic at Louis Leipoldt hospital with a contract value of R486 million.
82% of leases that expired during the year ended 31 March 2011 were renewed or
are in the process of being renewed (2010: 90%). The group is implementing a
process to improve the lease renewal percentage.
The expiry profile graph (refer to the results announcement and slide
presentation on the website www.vukileprops.co.za) reflects that 38% of leases
will expire during the year ending 31 March 2012.
The forecast contracted rental escalation graph (refer to the results
announcement and slide presentation on the website www.vukileprops.co.za)
reflects firm contracted escalations for the year ending 31 March 2012 of
approximately 10%.
There has been little change in the sectoral or geographical profiles since the
previous year. (refer to the results announcement and slide presentation on the
website www.vukileprops.co.za).
The group continuously evaluates methods of containing costs in the portfolio.
As a result of the measures referred to above, the recurring costs to property
revenue (excluding electricity and rates and taxes) have decreased from 16.48%
to 15.26% year on year.
6 Acquisitions, developments and disposals
6.1 Acquisitions
6.1.1 Acquisitions completed:
The following properties were acquired on 3 September 2010.
Total Purchase
rentable price*
Property Region area (mSquared) R000
Amanzimtoti Jeffels Road
(Warehouse) KwaZulu-Natal 22 645 62 007
Kimberley Kimpark Northern Cape 10 494 47 915
Nelspruit Sanlam Centre Mpumalanga 13 934 39 963
Pinetown Westmead
Kyalami Park KwaZulu-Natal 16 914 59 390
Pretoria Hatfield Sanlam
Building Gauteng 5 358 41 875
Pretoria Sanwood Park Gauteng 6 388 55 464
Rustenburg Edgars Building Northwest 9 784 83 750
Sandton St Andrews Complex Gauteng 10 169 76 805
Sandton Sunninghill Place Gauteng 8 774 73 986
541 155
* Includes transaction costs
This portfolio acquisition was financed as follows:
R`m
Issue of linked units 235.7
Bank finance 201.8
Surplus cash 103.7
541.2
6.1.2 Future acquisitions:
Giyani Plaza
The company announced on SENS on 11 April 2011 that Giyani Plaza is to be
acquired from Sanlam Life Insurance at a total outlay of R71.9 million,
including estimated transaction costs. This 9 443mSquared centre is located in
Giyani approximately 90 km east of Makhado (Louis Trichardt) in Limpopo
Province, which is the administrative capital of the Mopani District
Municipality.
The major tenant is Pick n Pay (1 804mSquared). The centre has 80% national
tenants. An initial yield of 10.2% is forecast.
The cost of acquisitions, developments and tenant installations for the year
ended 31 March 2011 amounted to R622.9 million, including the R541 million
portfolio acquisition.
6.2 Disposals
The following properties were sold as part of the group`s ongoing winnowing
strategy:
Properties sold
Sales price
Property R000
Randburg Hillcrest Centre 16 750
Pongola City Shopping Centre 31 100
Pretoria 227 Andries Street 43 121
JHB Atlas Road Complex 28 700
Benoni Kleinfontein Offices: Erven 36 to 39 5 120
Benoni Kleinfontein Offices: Erf 24 1 400
Benoni Kleinfontein Offices: Erven 43 to 45 5 250
Amanzimtoti Jeffels Road (Warehouse) 63 400
Nelspruit Game 25 000
Cape Town Ndabeni Business Park 25 000
Total 244 841
The proceeds from property sales will be utilised to acquire properties that
conform to our investment requirements and/or to fund expansions and revamps,
thereby further enhancing the quality of the portfolio.
7 Valuation of portfolio
The accounting policies of the group require that directors value the entire
portfolio every six months to fair market value. Approximately one half of the
portfolio is valued every six months, on a rotational basis, by registered
independent third party valuers.
The directors have valued the group`s property portfolio at R5.35 billion as at
31 March 2011. This is R463 million or 9.4% higher than the valuation as at 31
March 2010.
The external valuations by C B Richard Ellis (Pty) Ltd and Colliers Property &
Facilities Management (Pty) Ltd at 31 March 2011 of 56.5% of the total portfolio
were R181 million or 6% higher than the directors` valuations of the same
properties.
The 6% difference is within acceptable industry norms.
8 Operating segments
R000 Industrial Offices Retail
Group income for the
year ended 31 March 2011
Revenue 132 670 244 812 458 642
Straight line rental
income accrual 2 280 4 207 7 881
134 950 249 019 466 523
Expenses (48 790) (77 772) (167 041)
Net profit from operations 86 160 171 247 299 482
Group statement of financial
position at 31 March 2011
Assets
Investment properties 898 608 1 407 496 2 764 166
Add: lease commissions
Goodwill 5 091 3 977 62 039
Intangible Asset
Investment properties held
for sale - 179 019 102 403
903 699 1 590 492 2 928 608
Add: excluded items
Development expenditure
Furniture, fittings and
computer 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 355 454 627 563 1 133 899
Interest bearing borrowings 281 399 496 816 897 667
636 853 1 124 379 2 031 566
Add: excluded items
Equity
Derivative financial instrument
Deferred taxation
Trade and other payables
Current taxation liabilities
Linked unitholders for distribution
Total equity and liabilities
8 Operating segments (continued)
Asset
Management Total
R000 Total business group
Group income for the year
ended 31 March 2011
Revenue 836 124 65 146 901 270
Straight line rental
income accrual 14 368 - 14 368
850 492 66 146 915 638
Expenses (293 603) (20 233) (313 836)
Net profit from operations 556 889 44 913 601 802
Group statement of
financial position at
31 March 2011
Assets
Investment properties 5 070 270 5 070 270
Add: lease commissions 13 723 13 723
5 083 993 5 083 993
Goodwill 71 107 71 107
Intangible Asset 312 832 312 832
Investment properties
held for sale 281 422 281 422
5 436 522 312 832 5 749 354
Add: excluded items
Development expenditure 2 723
Furniture, fittings
and computer equipment 1 774
Available-for-sale
financial asset 10 208
Financial asset
at amortised cost 4 782
Trade and other receivables 71 409
Cash and cash equivalents 337 809
Total assets 6 178 059
Liabilities
Linked debentures and
premium 2 116 916 2 116 916
Interest bearing
borrowings 1 675 882 1 675 882
3 792 798 - 3 792 798
Add: excluded items
Equity 1 404 550
Derivative financial
instrument 21 867
Deferred Taxation 544 548
Trade and other payables 173 277
Current taxation liabilities 5 416
Linked unitholders for
distribution 235 603
Total equity and liabilities 6 178 059
8 Operating segments (continued)
R000 Industrial Offices Retail
Group income for the year
ended 31 March 2010
Revenue 114 642 208 207 419 223
Straight line rental income
accrual 1 088 1 976 3 977
115 730 210 183 423 200
Expenses (40 141) (74 022) (152 898)
Net profit from operations 75 589 136 161 270 302
Group statement of financial
position at 31 March 2010
Assets
Investment properties 862 833 1 396 783 2 536 987
Add: lease commissions
Goodwill 5 114 4 979 66 206
Intangible asset
Investment properties held
for sale 30 441 - 61 892
898 388 1 401 762 2 665 085
Add: excluded items
Development expenditure
Furniture, fittings and
computer 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 280 359 438 388 815 673
Interest bearing borrowings 269 123 420 820 782 987
549 482 859 208 1 598 660
Add: excluded items
Equity
Derivative financial instrument
Deferred taxation
Trade and other payables
Current taxation liabilities
Linked unitholders for
distribution
Total equity and liabilities
8 Operating segments (continued)
Asset
management Total
R000 Total business group
Group income for the year
ended 31 March 2010
Revenue 742 072 10 208 752 280
Straight line rental income
accrual 7 041 - 7 041
749 113 10 208 759 321
Expenses (267 061) (7 141 (274 202)
Net profit from operations 482 052 3 067 485 119
Group statement of financial
position at 31 March 2010
Assets
Investment properties 4 796 603 4 796 603
Add: lease commissions 14 549 14 549
4 811 152 4 811 152
Goodwill 76 299 76 299
Intangible Asset 362 767 362 767
Investment properties
held for sale 92 333 92 333
4 979 784 362 767 5 342 551
Add: excluded items
Development expenditure 1 391
Furniture, fittings
and computer equipment 1 510
Available-for-sale
financial asset 13 601
Financial asset at
amortised cost 5 450
Trade and other receivables 46 741
Cash and cash equivalents 214 325
Total assets 5 625 569
Liabilities
Linked debentures
and premium 1 534 420 356 333 1 890 753
Interest bearing
borrowings 1 472 930 1 472 930
3 007 350 356 333 3 363 683
Add: excluded items
Equity 1 381 502
Derivative financial
instrument 28 136
Deferred taxation 532 626
Trade and other payables 136 275
Current taxation liabilities 2 373
Linked unitholders for
distribution 180 974
Total equity and liabilities 5 625 569
9 Capital commitments
The group is authorised and has contracted to refurbishment and expansion
programmes at a combined cost of R59.5 million.
The group is authorised, but has not yet contracted, to upgrade shopping
centres, replace air-conditioning units, refurbish lifts, tenant installations
and other minor capital expenditure at an estimated cost of R179.9 million.
A further R71.9 million is authorised and contracted for the acquisition of
Giyani Plaza.
The above refurbishment programme, capital expenditure and acquisition of Giyani
Plaza will be funded out of surplus cash and bank facilities.
10 Related party transactions
The following are related party transactions:
Amounts
Amount owed Amount Amounts
paid/ to/(by) paid/ owed to
(re- related (re- related
Type of ceived) parties ceived) parties
Related trans- 2011 2011 2010 2010
party action R000 R000 R000 R000
Sanlam Life
Insurance
Limited Lease
Rentals 1 268 - 466 -
Asset
management
fees and
sales commission
received (63 270) (13 770) (10 074) (5 953)
Sanlam
Properties
(Pty)
Ltd Handling fees
on sold
properties
and asset
management
fees 1 603 419 8 933 472
Consulting
fees (1 431) - (280) -
Sanlam
Capital
Markets
Limited
("SCM") Assumption
of company`s
conditional
financial
obligations
to senior
management 430* - 8 998 -
Gensec
Property
Services
Limited
Trading
as JHI Property
management
and other
fees 19 469 1 487 19 538 3 331
Kuper Legh
Property
Group Property
management
and other
fees 5 373 327 7 021 371
* Included in this amount is R0.4 million which has been re-imbursed by Sanlam
Properties (Pty) Ltd ("SP") in respect of the long term incentive scheme
liabilities assumed by the Vukile Group on the take-over of one SP employee on 1
January 2011.
SP, Sanlam Life and SCM are subsidiaries of Sanlam Limited which held directly,
and indirectly through Lazarus Capital (Pty) Ltd, a total of 131 727 393 (37.5%)
of the issued linked units of Vukile Property Fund Limited at 31 March 2011.
Sanlam Limited sold a minority shareholding in JHI during the year. Kuper Legh
Property Group is controlled by an individual who is also a significant
unitholder in Vukile.
All the above amounts due were paid or received by May 2011.
11 Prospects
Although the negative factors that have constrained a global economic recovery
after the sub-prime crisis seem to be dissipating, there are still some major
risks that continue to cast a shadow over a full blown economic recovery. These
include the disaster in Japan as well as the problems experienced by some of the
European countries related to the austerity measures imposed by the European
Union. These factors will continue to dampen global economic recovery for the
foreseeable future.
Although South Africa is not isolated from the rest of the world, there are, in
spite of the global negative sentiment, some indications that the local economy
has turned the corner and that we should experience continued, but slow growth
in the economy. This is evidenced by the fact that manufacturing activity has
increased and inventory levels in the economy are also increasing.
The property sector "lags" the broader economic cycle by between 12 and 18
months. This means that trading conditions in the property sector will remain
difficult, but we should see a stabilisation of current vacancy levels, arrear
rentals and bad debts. It is anticipated that conditions will slowly start to
improve over the next 6 to 12 months, but it will in all probability be a
gradual process.
Vukile is well positioned to take advantage of any opportunities and to continue
to deliver reasonable distribution growth.
The information contained in this paragraph has not been reviewed or reported on
by the group`s auditors.
12 Payment of debenture interest and dividend
Notice is hereby given of a distribution amounting to 67.12 cents per linked
unit for the six months ended 31 March 2011. The distribution comprises
interest on debentures of 66.98 cents per linked unit and a dividend of 0.14
cents per linked unit.
Last date to trade cum distribution Thursday, 9 June 2011
Linked units trade ex distribution Friday, 10 June 2011
Record date for unitholders
to participate in the distribution Friday, 17 June 2011
Payment of distribution to unitholders Monday, 20 June 2011
Linked unit certificates may not be dematerialised or re-materialised between
Friday 10 June 2011 and Friday 17 June 2011, both days inclusive.
On behalf of the board
AD Botha G van Zyl
Chairman Chief executive
Roodepoort
23 May 2011
Vukile Property Fund Limited
Incorporated in the Republic of South Africa
Registration number 2002/027194/06
ISIN: ZAE000056370
JSE Share code: VKE
NSX Share code: VKN
JSE sponsor: One Capital, 17 Fricker Road, Illovo, 2196
NSX sponsor: IJG Securities (Pty) Ltd, Windhoek, Namibia
Executive directors: G van Zyl (CEO), MJ Potts (Financial Director), HC Lopion
(Director Asset Management)
Non-executive directors: AD Botha (Chairman), HSC Bester, PJ Cook, JM
Hlongwane, PS Moyanga, MH Serebro, UJ van der Walt
Registered office: 1st floor Meersig Building, Constantia Boulevard, Constantia
Kloof, 1709
Company Secretary: J Neethling
Transfer secretaries: Link Market Services South Africa (Pty) Ltd, Johannesburg
Investor and media relations: Contact Helen McKane on vukile@dpapr.com, or Tel:
011 728-4701. www.vukileprops.co.za.
Date: 23/05/2011 12:15:01 Produced by the JSE SENS Department.
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