| Thu 5 Apr 2012, 12:00 | | VIF - Vividend Income Fund Limited - Condensed consolidated financial |
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VIF
VIF
VIF - Vividend Income Fund Limited - Condensed consolidated financial
statements for the six month period ended 29 February 2012
Vividend Income Fund Limited
(Incorporated in the Republic of South Africa under Registration number
2010/003232/06)
JSE code: VIF
ISIN: ZAE000150918
("Vividend" or "the company")
Condensed consolidated financial statements for the six month period ended 29
February 2012
Consolidated statement of comprehensive income
R`000 Notes Unaudited Unaudited Audited
6 months 6 months 12
29 February 28 February months
2012 2011 31
August
2011
Revenue 47 079 10 647 43 790
- Earned on a contractual basis 44 486 9 872 40 897
- Straight-lining of lease adjustment 2 593 775 2 893
Operating costs (18 395) (3 717) (15 186)
Net property income 28 684 6 930 28 604
- Earned on a contractual basis 26 091 6 155 25 711
- Straight-lining of lease adjustment 2 593 775 2 893
Administrative expenses (4 206) (5 844) (6 384)
Net operating income 24 478 1 086 22 220
Fair value gain on investment property 8 195 - 6 780
Investment income 1 419 7 697 13 622
Finance costs - (2 260) (2 837)
Profit before debenture interest 34 092 6 523 39 785
Debenture interest (25 631) (10 418) (34 782)
Profit/(loss) before taxation 8 461 (3 895) 5 003
Taxation (3 865) (217) (1 760)
Total comprehensive income 4 596 (4 112) 3 243
Weighted linked units in issue `000 105 092 59 533 82 261
Linked units in issue `000 1 191 075 104 617 104 617
Basic and diluted earnings/(loss) per 2 4,37 (6,91) 3,94
share (cents)
Basic and diluted earnings per linked 28,76 10,59 46,23
unit (cents)
Distribution per linked unit (cents) 24,50 9,96 33,25
- Interim 1 24,50 9,96 9,96
- Final - - 23,29
Distributable earnings
R`000 Notes Unaudited Unaudited Audited
6 months 6 months 12 months
29 February 28 February 31 August
2012 2011 2011
Revenue - earned on 44 486 9 872 40 897
contractual basis
Operating costs (18 395) (3 717) (15 186)
Net property income 26 091 6 155 25 711
Administration expenses, (1 879) (1 174) (1 714)
excluding capital costs
Administration expenses (4 206) (5 844) (6 384)
Capital costs 2 327 4 670 4 670
Operating profit, excluding 24 212 4 981 23 997
capital costs
Investment income 1 419 7 697 13 622
Distributable profit before 25 631 12 678 37 619
finance costs
Finance costs - (2 260) (2 837)
Distributable income before 25 631 10 418 34 782
taxation
Taxation charge, excluding - - -
deferred taxation
Unitholders` distributable 25 631 10 418 34 782
earnings
Linked units in issue `000 1 191 075 104 617 104 617
Distributable earnings per 24,50 9,96 33,25
linked unit (cents)
Distribution per linked unit 24,50 9,96 33,25
(cents)
Reconciliation - earnings to distributable earnings and headline earnings
R`000 Notes Unaudited Unaudited Audited
6 months 6 months 12 months
29 February 28 February 31 August
2012 2011 2011
Earnings/(losses) 4 596 (4 112) 3 243
attributable to equity
holders
Fair value adjustments, net (5 055) - (5 831)
of deferred tax
Headline loss before (459) (4 112) (2 588)
debenture interest
Debenture interest 25 631 10 418 34 782
Headline earnings 25 172 6 306 32 194
attributable to linked
unitholders
Capital costs 2 327 4 670 4 670
Straight lining of lease (1 868) (558) (2 082)
adjustment, net of deferred
tax
Distributable earnings 25 631 10 418 34 782
attributable to linked
unitholders
Headline loss per share 2 (0,44) (6,91) (3,15)
(cents)
Headline earnings per 3 23,95 10,59 39,14
linked unit (cents)
Consolidated statement of financial position
R`000 Unaudited Unaudited Audited
6 months 6 months 12 months
29 February 28 February 31 August
2012 2011 2011
Assets
Non-current assets 531 254 246 768 518 275
Investment properties 525 768 245 993 515 382
Operating lease assets 5 486 775 2 893
Current assets 465 364 394 319 56 105
Cash and cash equivalents 459 094 388 069 47 248
Trade and other receivables 6 270 6 250 8 857
Total assets 996 618 641 087 574 380
Equity and liabilities
Share capital and reserves 7 841 (4 111) 3 244
Share capital 2 1 1
Distributable reserves 7 839 (4 112) 3 243
Non-current liabilities 948 317 531 510 535 848
Debentures 931 444 523 085 523 085
Interest-bearing borrowings 5 578 - 5 333
Non-interest-bearing borrowings 1 704 - 1 704
Deferred taxation 9 591 8 425 5 726
Current liabilities 40 460 113 688 35 288
Interest-bearing borrowings - 101 410 -
Trade and other payables 14 829 1 860 10 924
Linked unitholders 25 631 10 418 24 364
Total equity and liabilities 996 618 641 087 574 380
Linked units in issue `000 191 075 104 617 104 617
Net asset value per linked unit 492 496 503
(cents)
Net asset value per linked unit 497 504 509
(cents) - before providing for
deferred tax
Loan to investment value ratio (%) 1,4% 41,1% 1,4%
Consolidated statement of changes in equity
R`000 Share capital Distributable Total
reserve
Balance as at 31 August 2010 * - *
Issue of shares 1 - 1
Total comprehensive income for the - (4 112) (4 112)
period
Balance as at 28 February 2011 1 (4 112) (4 111)
Issue of shares - - -
Total comprehensive income for the - 7 355 7 355
period
Balance as at 31 August 2011 1 3 243 3 244
Issue of shares 1 - 1
Total comprehensive income for the - 4 596 4 596
period
Balance as at 29 February 2012 2 7 839 7 841
Consolidated statement of cash flow
R`000 Unaudited Unaudited Audited
6 months 6 months 12 months
29 February 28 February 31 August
2012 2011 2011
Cash Flow from operating activities
Net income from operations 21 885 311 19 327
Adjustment for: - - -
- Working capital changes 6 982 (4 069) 3 235
Cash generated/(utilised) from 28 867 (3 758) 22 562
operations
Investment income received 1 419 7 697 13 622
Finance costs paid - (1 413) (2 504)
Linked unitholder distributions paid (24 364) - (10 418)
Net cash inflow from operating 5 922 2 526 23 262
activities
Cash flow from investing activities
Investing activities (2 436) (138 753) (458 052)
Net cash outflow used in investing (2 436) (138 753) (458 052)
activities
Cash flow from financing activities
Proceeds from the issue of linked 408 360 523 085 523 086
units
Decrease in borrowings - - (42 259)
Net cash generated from financing 408 360 523 085 480 827
activities
Net increase in cash and cash
equivalents
Cash and cash equivalents at 47 248 * *
beginning of period
Increase in cash and cash 411 846 386 858 46 037
equivalents during the period
Cash acquired from investing - 1 211 1 211
activities during the period
Cash and cash equivalents at end of 459 094 388 069 47 248
period
* Less than R1 000.
Segmental information
Analysis by usage February Retail R`000 Commercial Head office Total
2012 R`000 R`000 R`000
Revenue
Rentals 22 637 21 849 - 44 486
Straight-lining of leases 1 672 921 - 2 593
adjustment
Total revenue 24 309 22 770 - 47 079
Net operating income 15 165 13 519 (4 206) 24 478
Assets
Investment properties 279 860 245 354 554 525 768
Operating lease asset 3 340 2 146 - 5 486
Other assets 5 895 2 874 456 595 465 364
Total assets 289 095 250 374 457 149 996 618
Total liabilities (10 827) (10 496) (967 454) (988 777)
February 2011
Rentals 6 912 2 960 - 9 872
Straight lining of leases 610 165 - 775
adjustment
Total revenue 7 522 3 125 - 10 647
Net operating income 4 378 2 552 (5 844) 1 086
Assets
Investment properties 89 955 156 038 - 245 993
Operating lease asset 610 165 - 775
Other assets 3 919 - 390 400 394 319
Total assets 94 484 156 203 390 400 641 087
Total liabilities (9 866) (124) (635 208) (645 198)
Analysis by usage
February 2012 Retail Commercial Total
Number of properties 5 4 9
Vacant GLA 2 439 231 2 670
GLA occupied by A tenants 26 850 17 352 44 202
GLA occupied by B tenants 3 184 439 3 623
GLA occupied by C tenants 5 533 6 456 11 989
GLA available 38 006 24 478 62 484
Lease expiry profile to 31 Retail Commercial Total % of total
August (GLA)
Vacant 2 439 231 2 670 4
Month to month 1 588 900 2 488 4
2012 3 263 1 058 4 321 7
2013 4 377 13 458 17 835 29
2014 7 267 2 806 10 073 16
> 2014 19 072 6 025 25 097 40
Total 38 006 24 478 62 484 100
Gross rental per mSquared 80,88 99,35 88,12
Operating costs per (16,02) (13,40) (14,99)
mSquared
Basis of preparation
These interim consolidated financial statements have not been reviewed or
audited by the company`s independent external auditors.
These condensed consolidated financial statements have been prepared in
accordance with the measurement and recognition requirements of International
Financial Reporting Standards (IFRS), the presentation and disclosure
requirements of IAS 34: Interim Financial Reporting, the AC 500 standards as
issued by the Accounting Standards Board, the Companies Act of South Africa,
as amended, and the JSE Limited Listings Requirements.
The company`s accounting policies as set out in the audited financial
statements for the year ended 31 August 2011 have been consistently applied.
The interim consolidated financial statements for the six month period ended
29 February 2012 have been prepared under the supervision of Robert Amoils
CA(SA).
Notes to the consolidated financial statements
1) Specific issue
On 29 February 2012, in terms of a specific issue of linked units, as detailed
in the circular dated 27 January 2012 (the specific issue), 86 458 334 linked
units were issued to specific issue participants at an issue price of 480
cents per linked unit. These linked units, while in issue at 29 February 2012,
do not qualify for the interest entitlement, as calculated in terms of the
Debenture Trust Deed, for the six month period ended 29 February 2012. The
distribution per linked unit for the six month period ended 29 February 2012
is therefore calculated by using the number of linked units in issue prior to
the specific issue, being 104 617 102, and not the number of linked units in
issue after the specific issue, being 191 075 436.
2) Basic, diluted and headline earnings per share
The directors are of the view that the disclosure of earnings per share, while
obligatory in terms of IAS 33, Earnings per Share, and the JSE Limited
Listings Requirements, is not meaningful to investors as the shares are traded
as part of a linked unit and practically all the revenue earnings are
distributed in the form of debenture interest.
In addition, headline earnings include fair value adjustments for financial
liabilities and accounting adjustments required to account for lease income on
a straight-line basis, as well as other non-cash accounting adjustments that
do not affect distributable earnings. The calculation of distributable
earnings and the distribution per linked units as set out above is more
meaningful.
3) Headline earnings per linked unit
In terms of Circular 3/2009, issued by SAICA, the fair value adjustments on
investment property are added back in the calculation of headline earnings per
linked unit. The Circular does not make provision for the fair value
adjustment on other non-current financial liabilities to be added back.
Directors` commentary
Introduction
Vividend is a property loan stock company listed on the JSE Limited under
Financial - Real Estate Holdings, with a market capitalisation at 29 February
2012 of R955 million and a quality portfolio of nine directly owned properties
valued at R531 million.
The company`s primary objective is to identify value and value enhancing
opportunities within target sectors of the South African property market by
using defined investment strategies that have a goal of creating a diverse and
stable portfolio of assets capable of generating secure, consistent and
continually escalating free cash flows. 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 Listing Requirements. The company does not distribute capital
profits.
Financial results
The distribution for the six month period ended 29 February 2012 increased
146% relative to the comparable period in 2011 and 5,2% relative to the
immediately preceding six month period ended 31 August 2011.
Net property income applicable to the Standing Portfolio, being the properties
owned for the full reporting period and for the full comparable period, which
is only calculable relative to the six month period ended 31 August 2011,
increased 2.1% due to additional repairs and maintenance expenditure effected
by the Company to promote income sustainability within the targeted lease
profiles.
Vacant GLA, being GLA available for let, at 29 February 2012 improved from
3,104mSquared to 2,670mSquared, being 4.2% of the portfolio GLA at 29 February
2012. Of the vacant GLA at 29 February 2012, 876mSquared (33%) is subject to
Seller Guarantees and is therefore revenue generating.
Due to the increase in the Capital Gains Tax (CGT) Rate applicable to the fair
value adjustment on investment property, from 14% to 18,6%, the effective tax
rate applicable to the six month period ended 29 February 2012 increased to
46%. There is no immediate cash-flow impact on the Company as a result of the
increase as the taxation charge all relates to deferred tax.
Share and debenture capital
In terms of the circular dated 27 January 2012, the company issued 86 458 334
linked units to specific issue participants on 29 February 2012 at R4,80 per
linked unit. In terms of the specific issue, these linked units do not qualify
for the interest entitlement, as calculated in terms of the Debenture Trust
Deed, for the six month period ended 29 February 2012.
After the specific issue the authorised share capital of the company was 5 000
000 000 shares of R0,00001 and the issued share capital was 191 075 436. Each
ordinary share is linked to a variable rate debenture of R4,99999.
The issue price applicable to the specific issue, being R4,80 per linked unit,
resulted in a decline in the net asset value (NAV) per linked unit to 492
cents at 29 February 2012 from 503 cents at 31 August 2011. The decline in NAV
from the specific issue was partially offset by the upward revaluation of the
property portfolio at 29 February 2012.
Fair value adjustments
The revaluation of the property portfolio at 29 February 2012 resulted in an
upward revision of R8,2 million to R531 million (R6,6 million attributable to
retail properties and R1,6 million attributable to commercial properties). The
upward revision was mainly due to an increase in the future contractual rental
applicable to the properties.
Borrowings
No external borrowing or gearing, outside of vendor-liabilities owing to the
sellers of Owl Street (Milpark) (R5,6 million) and Beaufort West Shopping
Centre (R1,7 million), were used during the period. Both vendor liabilities
are classified as long-term liabilities and both are dependent on the
happening of future events that are beneficial to the value of the property
portfolio.
A debt funding facility of R500 million was secured by the Company prior to 29
February 2012 at an interest cost of JIBAR plus 215 bps. The funding facility
will be introduced into the portfolio at a loan to value of 30% and will
facilitate the acquisition of the Vusani Portfolio from Vusani Property
Investments (Pty) Ltd for R790 million and future expansion of the property
portfolio, either through refurbishment or acquisition. The funding facility
will be drawn down, in part, on transfer of the Vusani Portfolio into the name
of Vividend. In terms of the interest rate strategy of the company, at least
70% of the funding facility will be fixed for the duration of the facility
term.
Portfolio refurbishment and repositioning
The company continues actively managing the risks and opportunities associated
with its portfolio income by proactively enhancing the quality of the
underlying properties through a targeted refurbishment and repositioning
programme. A planned refurbishment of the Montclair Mall, which includes the
introduction of additional tenantable GLA, is scheduled for completion in the
2012 calendar year and is expected to provide additional duration and quality
to the lease profile of the centre.
Prospects
Vividend continues investigating 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.
Given the progress associated with the transfer of the Vusani Portfolio into
the name of Vividend and the current indicative costs associated with the
funding facility secured by the company, the board is confident that Vividend
will achieve its forecasted unitholder distribution of 50,50 cents for the
financial year ended 31 August 2012, as included in the circular dated 27
January 2012 and reported on by the independent reporting accountant.
Declaration of interest payment no. 3
Notice is hereby given that interest of 24,50 cents per linked unit has been
declared, in accordance with the debenture trust deed, for the period 1
September 2011 to 29 February 2012, payable to linked unit holders recorded in
the register of the company on Friday, 4 May 2012. The last day to trade `cum`
distribution will be Wednesday, 25 April 2012, and trading will commence `ex`
distribution on Thursday, 26 April 2012.
In respect of dematerialised linked unit holders, the interest will be
transferred to the Central Security Depository Participant accounts/brokers
accounts on Monday, 7 May 2012. Certificated linked unitholder distribution
payments will be posted on or about Monday, 7 May 2012.
No dematerialisation or rematerialisation of linked units may take place
between Thursday, 26 April 2012, and Friday, 4 May 2012, both days inclusive.
By order of the board
KK Combi A Jacobson
Chairman Chief executive officer
5 April 2012
Directors
KK Combi (Chairman)#*, A Jacobson (Chief Executive Officer), R Amoils
(Financial Director), A Witt, M Sandak-Lewin*, B Rubenstein*, M Jacobson*, S
Slom#, G Rabinowitz*, 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
Transfer secretaries
Link Market Services South Africa (Proprietary) Limited
Asset manager
Vividend Management Group (Proprietary) Limited
Sponsor
PSG Capital (Proprietary) Limited
Date: 05/04/2012 12:00:02 Produced by the JSE SENS Department.
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