| Fri 4 Nov 2011, 17:00 | | VIF - Vividend Income Fund Limited - Reviewed consolidated financial results for |
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VIF
VIF
VIF - Vividend Income Fund Limited - Reviewed consolidated financial results for
the year ended 31 August 2011
VIVIDEND INCOME FUND LIMITED
PREVIOUSLY KNOWN AS BUSINESS VENTURE INVESTMENTS NO 1381 (PROPRIETARY) LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA UNDER REGISTRATION NUMBER
2010/003232/06)
JSE CODE: VIF
ISIN: ZAE000150918 ("VIVIDEND" OR THE "COMPANY")
REVIEWED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2011
FULL-YEAR DISTRIBUTION PER UNIT - 33,25 CENTS
PORTFOLIO ACQUISITION YIELD - 11,10%
PROPERTY PORTFOLIO - R515 MILLION
NAV PER UNIT - 503 CENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
R`000 31 August 2011
Revenue 43 790
- Earned on a contractual basis 40 897
- Straight-lining of lease adjustment 2 893
Operating costs (15 186)
Net property income 28 604
- Earned on contractual basis 25 711
- Straight-lining of lease adjustment 2 893
Administrative expenses (6 384)
Net operating income 22 220
Fair value adjustments of investment properties 6 780
Investment income 13 622
Finance costs (2 837)
Profit before debenture interest 39 785
Debenture interest (34 782)
Profit before taxation 5 003
Taxation (1 760)
Total comprehensive income 3 243
Weighted linked units in issue (`000) 82 260 571
Linked units in issue (`000) 104 617 102
Basic and diluted earnings per share (cents) 3,94
Basic and diluted earnings per linked unit (cents) 46,23
Distribution per linked unit (cents) 33,25
- Interim 9,96
- Final 23,29
Consolidated Statement of Financial Position
R`000 31 August 2011
Assets
Non-current assets 518 275
Investment properties 515 382
Operating lease assets 2 893
Current assets 56 105
Trade and other receivables 8 857
Cash and cash equivalents 47 248
Total assets 574 380
Equity and liabilities
Share capital and reserves 3 244
Share capital 1
Distributable reserves 3 243
Non-current liabilities 535 848
Debentures 523 085
Interest-bearing borrowings 5 333
Non-interest-bearing borrowings 1 704
Deferred taxation 5 726
Current liabilities 35 288
Trade and other payables 10 924
Linked unitholders 24 364
Total equity and liabilities 574 380
Linked units in issue 104 617 102
Net asset value per linked unit (cents) 503
Net asset value per linked unit - before providing for
deferred tax (cents) 509
Loan to investment value ratio (%) 1,4%
Distributable Earnings
The following additional information is aimed at disclosing to the users the
basis on which the distributions are calculated.
R`000 31 August 2011
Revenue
- Earned on contractual basis 40 897
Operating costs (15 186)
Net property income 25 711
Administration expenses, excluding capital costs (1 714)
- Administration expenses 384)
- Listing costs included in administration expenses 4 670
Operating profit, excluding capital costs 23 997
Investment income 13 622
Distributable profit before finance costs 37 619
Finance costs (2 837)
Distributable income before taxation 34 782
Taxation, excluding deferred taxation -
Unitholders` distributable earnings 34 782
Linked units in issue 104 617 102
Distributable earnings per linked unit (cents) 33,25
Distribution per linked unit (cents) 33,25
Reconciliation - Earnings to Distributable Earnings
R`000 31 August 2011
Earnings attributable to equity holders 3 243
Fair value adjustments, net of deferred tax (5 831)
Capital costs incurred on listing 4 670
Headline earnings before debenture interest 2 082
Debenture interest 34 782
Headline earnings attributable to linked unitholders 36 864
Straight-lining of leases adjustment, net of deferred tax (2 082)
Distributable earnings attributable to linked unitholders 34 782
Headline earnings per share (cents) 2,53
Headline earnings per linked unit (cents) 44,81
Consolidated Statement of Changes in Equity
R`000 Share Distributable
capital reserve Total
Balance at 1 September 2010 * *
Private placement on listing 1 1
Total comprehensive income for the
period 3 243 3 243
Balance at 31 August 2011 1 3 243 3 244
* Less than R1 000
Consolidated Statement of Cash Flow
R`000 31 August 2011
Cash flow from operating activities
Net rental income from properties 19 327
Adjustment for:
- Working capital changes 3 235
Cash generated from operations 22 562
Investment income received 13 622
Finance costs paid (2 504)
Linked unitholder distributions paid (10 418)
Net cash inflow from operating activities 23 262
Cash flow from investing activities
Investing activities (458 052)
Net cash outflow used in investing activities (458 052)
Cash inflow from financing activities
Proceeds from private placement 523 086
Decrease in borrowings (42 259)
Net cash generated from financing activities 480 827
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period *
Increase in cash and cash equivalents during the period 46 037
Cash acquired from investing activities during the period 1 211
Cash and cash equivalents at end of period 47 248
* Less than R1 000
Segmental Information
Head
Analysis by usage Retail Commercial office Total
31 August 2011 R`000 R`000 R`000 R`000
Revenue
Rentals 14 317 13 930 28 247
Recoveries 5 286 7 364 12 650
Straight-lining of leases 1 669 1 224 2 893
adjustment
Total revenue 21 272 22 518 - 43 790
Net operating income 13 694 14 910 (6 384) 22 220
Assets
Investment properties 271 664 243 718 - 515 382
Operating lease asset 1 669 1 224 - 2 893
Other assets 7 955 (366) 48 516 56 105
Total assets 281 288 244 576 48 516 574 380
Total liabilities 4 265 4 471 562 400 571 136
Analysis by usage Retail Commercial Total
Number of properties 5 4 9
Vacant GLA 2 050 1 054 3 104
GLA occupied by A tenants 27 345 18 528 45 873
GLA occupied by B tenants 2 879 - 2 879
GLA occupied by C tenants 5 600 5 036 10 636
GLA available 37 874 24 618 62 492
Lease expiry profile to
31 August (GLA) Retail Commercial Total % of total
Vacant 2 050 1 054 3 104 5%
MTM 2 492 6 2 498 4%
2012 3 607 2 257 5 864 9%
2013 4 201 13 568 17 769 28%
2014 6 358 1 533 7 891 13%
> 2014 19 166 6 200 25 366 41%
Total 37 874 24 618 62 492 100%
Gross rental per m2 80,55 95,17 86,31
Operating costs per m2 6,62 10,77 8,25
Basis of preparation
The reviewed consolidated financial results have been prepared in accordance
with the measurement and recognition requirements of IFRS, the AC500 standards,
the principles of IAS 34: Interim Financial Reporting, the JSE Listings
Requirements and the requirements of the South African Companies Act. This
report was compiled under the supervision of Robert Amoils CA(SA), the financial
director.
Charles Orbach & Company has issued an unqualified opinion on the reviewed
consolidated financial results for the year ended 31 August 2011. A copy of
their review report is available for inspection at the company`s registered
office.
Comparative information
Vividend was incorporated on 17 February 2010 and acquired its first property
and associated letting enterprise with effect from 1 September 2010. The company
was dormant for the financial period ending 31 August 2010. For this reason no
comparative information has been provided.
Subsequent events
Linked unitholders are referred to the SENS published on 10 October 2011 in
which the Company announced that it will acquire, subject to the successful
fulfilment of the conditions precedent, the Vusani Portfolio from Vusani
Property Investments (Proprietary) Limited for a purchase consideration of R790
million. The acquisition is expected to be concluded, subject to fulfilment of
the conditions precedent, by 28 February 2012, and the portfolio is expected to
be transferred into the name of the company by 1 April 2012.
In addition, linked unitholders are referred to the SENS published on 3 November
2011 in which the company announced that it will acquire, subject to the
successful fulfilment of the conditions precedent, the Union Street Property
from Plascon Property Holdings (Proprietary) Limited for a purchase
consideration of R51,3 million. The effective date of the Union Street
acquisition is the date of transfer of the Union Street Property into the name
of the company, which is expected on or about 1 April 2012.
DIRECTORS` COMMENTARY
Listing and linked unit structure
Vividend listed 104 617 102 linked units on the Main Board of the JSE Limited on
18 November 2010 at R5 per linked unit.
Linked unitholders are entitled, through the debenture portion of their linked
units, to the after-tax profits of the company, excluding capital profits and
losses and after adjusting for all non-cash items. The interest entitlement is
calculated and accrues to linked unitholders on the last days of February and
August of each year and is payable within 90 days of accrual date, or such
shorter period as prescribed in the JSE Listings Requirements.
Distributable earnings
Vividend achieved a total distribution per linked unit of 33,25 cents for the
financial year ended 31 August 2011. The distributions for the six-month periods
ended 28 February 2011 and 31 August 2011 were 9,96 cents and 23,29 cents
respectively. Relative to the full-year forecast contained in the company`s
prospectus, as published on SENS on 1 November 2010, which forecast a
distribution yield for the year ended 31 August 2011 of 8,11%, the company
achieved a distribution yield of 8,46% for the year ended 31 August 2011.
Portfolio refurbishment and repositioning
The company continues to actively manage the risks and opportunities associated
with its portfolio earnings by proactively enhancing the quality of the
underlying properties. As a result, Vividend has committed R13 million to the
refurbishment and repositioning of certain properties within its portfolio,
namely the Rynfield Shopping Centre and the Montclair Mall. The refurbishment of
the Rynfield Shopping Centre was completed on 30 October 2011 and resulted in
the tenanting of all vacancies acquired when the centre was purchased on 30 June
2011. The refurbishment of the Montclair Mall is scheduled for commencement in
February 2012 and is expected to provide additional duration and quality to the
lease profile prevalent to the centre. The company will continue to explore all
refurbishment and repositioning opportunities within its portfolio on an
proactive basis so as to enhance the quality, sustainability and growth of its
earnings.
Commentary on results
Vividend`s property portfolio performed in line with expectations with no
reversions, vacancies or defaults being experienced outside of the applicable
seller warranties and/or guarantees.
Delays in the transfer of certain properties acquired during the year had a
negative impact on net rentals generated by the portfolio, however this impact
was offset by higher than anticipated interest income earned on money market
investments.
Listing costs were substantially higher than anticipated due to additional
placement fees payable on the allocation of certain linked units. As listing
costs are of a capital nature, linked unitholder distributions were not
affected.
Acquisitions
The following properties were acquired and transferred during the year ended 31
August 2011:
Book value Purchase
Property Name (R/C)* GLA (m2) (R`000) yield
Clearwater Crossing (R) 10 092 82 404 10,96%
Owl Street (Milpark) (C) 14 893 113 332 11,95%
Gradner Street (Roggebaai) (C) 4 972 56 737 11,20%
Beyers Naude (Blackheath) (C) 3 081 39 960 10,50%
Tyrwhitt Avenue (Rosebank) (C) 1 672 33 689 10,50%
Church Street (Pietermaritzburg) (R) 5 125 39 064 10,54%
Beaufort West Shopping Centre (R) 6 911 39 072 11,34%
Montclair Mall (R) 11 758 79 575 10,78%
Rynfield Shopping Centre (R) 3 988 31 549 11,20%
Total 62 492 515 382 11,10%
*R = Retail, C = Commercial
Borrowings
Borrowings outstanding at 31 August 2011 were purchase liabilities owing to the
seller of the Owl Street (Milpark) property (R5,3 million) and the seller of the
Beaufort West Shopping Centre (R1,7 million). Both purchase liabilities are
classified as long-term borrowings and both are dependent on the happening of
future events that are beneficial to the value of the property portfolio. The
weighted average interest cost of borrowings incurred during the year ended 31
August 2011 was 6,5%.
Revaluation
At each financial year-end at least one third of the property portfolio is
valued on a rotational basis by an external valuer. The valuation of the
portfolio at 31 August 2011, encompassing both the external valuer`s valuations
and the directors` valuations, resulted in a positive fair value adjustment of
R6,78 million, which gives rise to a net asset value of 503 cents per linked
unit, or 509 cents per linked unit excluding the impacts of deferred taxation.
Prospects
Vividend continues to investigate a consistent stream of opportunities that fall
within its primary scope of targeting value and value-enhancing opportunities
within the retail, commercial and industrial property sectors of South Africa.
Although Vividend is operating in a challenging economic environment,
considerable progress has been made by the company in creating a high-quality,
stable and well-diversified portfolio that is well positioned to take advantage
of leveraged acquisition opportunities that may present themselves. Reasonable
distribution growth is expected from the existing portfolio, primarily as a
result of contractual rental escalations. However, it is not possible to comment
on the distribution growth attributable to additions to the portfolio, via
acquisition, with a reasonable degree of certainty due to uncertainties relating
to the timing of such acquisitions. As a result, the board is confident that
Vividend will deliver growth in unitholder distributions for the year ended 31
August 2012. However, it is unable to quantify the extent of this growth at this
time. Unitholders will be informed accordingly when a reasonable degree of
certainty exists for the company to quantify the extent of this growth. To the
extent that the prospects set out in this announcement are deemed to be a
general profit forecast, same has not been reviewed or reported on by the
company`s auditors.
Declaration of interest payment No. 2
Notice is hereby given that interest of 23,29 cents per linked unit has been
declared, in accordance with the debenture trust deed, for the period 1 March
2011 to 31 August 2011, payable to linked unitholders recorded in the register
of the company on Friday, 25 November 2011. The last day to trade cum
distribution will be Friday, 18 November 2011, and trading will commence ex
distribution on Monday, 21 November 2011.
In respect of dematerialised linked unitholders, the distribution will be
transferred to the Central Security Depository Participant accounts/broker
accounts on Monday, 28 November 2011. Certificated linked unitholder
distribution payments will be posted on or about Monday, 28 November 2011.
No dematerialisation or rematerialisation of linked units may take place between
Monday, 21 November 2011, and Friday, 25 November 2011, both days inclusive.
By order of the board
KK Combi
Chairman
A Jacobson
Chief Executive Officer
4 November 2011
Directors
KK Combi (Chairman)#*, A Jacobson (Chief Executive Officer),
R Amoils (Financial Director), M Sandak-Lewin, B Rubenstein*,
A Witt*, M Jacobson*, G Lanfranchi*,
G Rabinowitz*, S Slom#, B Bank#
* Non-executive # Independent
Registered office
Unit 6 Rozenhof Office Court
20 Kloof Street, Gardens, Cape Town 8001
Postnet Suite 137, Private Bag X1, Vlaeberg 8018
Telephone: 021 422 5245
Facsimile: 021 422 5047
Transfer secretaries
Link Market Services South Africa (Proprietary) Limited
Registration number: 2000/018923/21
Rennie House, 13th Floor, 19 Ameshoff Street, Braamfontein, 2001
PO Box 4844, Johannesburg 2000
Asset manager
Vividend Management Group (Proprietary) Limited
Sponsor
PSG Capital (Proprietary) Limited
Date: 04/11/2011 17:00:41 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
