| Tue 29 May 2012, 8:55 | | VKE - Vukile - Audited Condensed Results for the year ended 31 March 2012 |
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VKE
VKE
VKE - Vukile - Audited Condensed Results for the year ended 31 March 2012
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
("Vukile" or "the group" or "the company")
AUDITED CONDENSED RESULTS
for the year ended 31 March 2012
- Annual distribution up 6.1%
- Successful acquisition of R1.5 billion property portfolio post year end,
increasing asset base by 25%
- Improved quality of office portfolio
- Re-rating of free-float index weighting from 50% to 100%
- Implementation of Domestic Medium Term Note Programme post year end
reduces cost of finance on R1.02 billion debt by 1%
- Successful broadening of unitholder base
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 2012 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.
The preparation of the financial results for the year ended 31 March 2012 was
supervised by Michael Potts, CA(SA), financial director.
2. FINANCIAL RESULTS
The group`s net profit available for distribution amounted to R439 million
for the year ended 31 March 2012 compared to the R408 million for the
previous year, an increase of 7.6%.
If adjusted for the higher weighted average linked units in issue during the
year, compared to the prior year, the 7.6% increase reduces to 6.3%.
In terms of a SENS announcement dated 16 March 2012 the board of directors
approved a final distribution of 70.5 cents per linked unit for the six
months to 31 March 2012. This early distribution was made prior to the issue
of linked units to finance the R1.5 billion portfolio acquisition, in order
to mitigate any potential dilution in distributions. The distribution for
the full year ended 31 March 2012 amounted to 124.81 cents per linked unit
(March 2011: 117.65 cents per linked unit), an increase of 6.1% and equated
to 99.8% of the profit available for distribution.
The 7.2 cents per linked unit increase in distributions year-on-year is made
up as follows:
Linked unit distributions
2012 2011
Cents Cents
per per
linked linked
unit unit
Contributions to increased rental income
Increase in rentals on new and renewed leases 12.6 10.3
Additional rentals from property acquisitions 9.3 12.8
Additional municipal service recoveries and other 5.6 3.7
27.5 26.8
Increase in property expenditure (11.5) (7.6)
Increase in net group property revenue 16.0 19.2
(Reduced)/additional income from asset management (6.1) 11.9
business
Less: Adjusted prior year asset management fees - (8.5)
for full year
Increased net finance costs (1.3) (6.6)
Reduced/(increased) administrative expenses, 0.8 (0.7)
taxation and retained income
Adjustment for changes in linked units in issue in (2.2) (2.3)
the prior year
Less: R10 million distribution foregone by Sanlam - (3.3)
Properties in prior years
Net increase in distribution 7.2 9.7
SUMMARY OF FINANCIAL PERFORMANCE
The property portfolio performed well in a difficult economic environment
during the year under review. On a like-for-like basis (a stable portfolio)
, net property revenue increased by 7.3% year on year. Sales of non-core
properties reduced the overall net property revenue by R10 million for the
year. A once-off lease payment of R27.8 million was received on the expiry
of a long-term structured lease from a tenant during the year and is included
in net property revenue.
The asset management business segment generated a net profit of R33.0 million
for the year against R51.7 million in the prior year. This segment`s profit
is reported gross of the consolidation adjustment reversing asset management
fees charged to the group`s portfolio of R10.5 million. Asset management and
other fees received of R33.8 million were in line with the previous year of
R33.6 million. However, sales commission of R18.9 million was R10.4 million
lower than the previous year.
Group corporate administrative expenditure of R25.9 million is similar to the
previous year.
Group finance costs, net of investment income, have increased by R4.7
million, from R147.4 million to R152.1 million. The increase in finance
costs is primarily due to interest arising on additional debt of R201.8
million, raised to finance the acquisition of the R541 million portfolio in
September 2010, now being incurred for a full year.
The intangible asset of R362.8 million which arose on the acquisition of the
property asset management contract has been tested for impairment. Sales of
properties from the Sanlam portfolio, amounting to R3.1 billion from 1
January 2010 to 30 April 2012 (generating sales commission for Vukile of
R94.7 million), will result in lower asset management fees going forward,
which together with variable future sales from the Sanlam portfolio and an
increase in the discount rate has resulted in an impairment of R46 million in
intangible assets from R313 million in the prior year to R267 million at 31
March 2012.
Summary of group financial performance
March March %
2012 2011 chang
e
Headline earnings of linked units (Rm) 472 427 10.5
Net asset value per linked unit (cents) 1 109 1 003 10.6
Distribution per linked unit (cents) 124.81 117.6 6.1
5
Loan to value ratio (%) 27.6 31.5 12.4
SIMPLIFIED INCOME STATEMENT
March March % Note
2012 2011 change
Group Group
R000 R000
Calculation of distributable earnings
Net profit from property operations 588 348 535 772 9.8 1
excluding straight-line income adjustments
Net income from the asset management 33 025 51 662 (36.1)
business
Investment and other income 13 557 14 380 (5.7)
Administrative expenses (25 919) (25 509) (1.6)
Finance costs (165 (161 (2.4) 2
633) 803)
Taxation (excluding deferred tax on (4 277) (6 401) 33.2
revaluation adjustments)
Available for distribution 439 101 408 101 7.6
Note 1: Includes a R27.8 million once-off lease payment on an expiry of a
long-term structured lease. Asset management and other fees of R10.5 million
eliminated on consolidation are included as property expenditure above and
hence reduces net profit from property operations and increases fee income in
the asset management business segment.
Note 2: The increase in finance costs primarily relates to interest on the
R201 million loan raised in September 2010 now accounted for over a full
year.
Gross rental receivables ("Tenant arrears")
Tenant arrears reduced by R0.70 million from the prior year to R20.3 million
at 31 March 2012.
Impairment allowance
The allowance for the impairment of receivables increased marginally from
R9.9 million in 2011 to R10 million at 31 March 2012, which is considered
adequate at this stage. A summary of the movement in the impairment
allowance of trade receivables is set out below:
R000
Impairment allowance 1 April 2011 9 911
Allowance for receivable impairment for the year 1 555
Receivables written off as uncollectable (1
438)
Impairment allowance 31 March 2012 10 028
Bad debt write-off per the statement of comprehensive income 6 641
The net asset value of the group has increased over the reporting period by
10.6%, from 1 003 cents per linked unit to 1 109 cents per linked unit at 31
March 2012.
The change in net asset value per linked unit is based on 351 015 218 linked
units in issue at year end.
3. BORROWINGS
During August 2011, bank debt of R450 million in a subsidiary was
successfully refinanced at an all-in cost of finance of 8.66%, which is 1.74%
lower than the previous weighted average rate of 10.4%.
Following the extension of certain interest rate swaps and the above bank
refinancing, the group`s overall cost of debt has reduced from 9.77% per
annum at 31 March 2011 to 9.36% per annum, inclusive of margins and costs, at
31 March 2012.
A bank facility of R450 million in Vukile expires on 31 May 2012. At this
stage, an indicative facility letter has been received at favourable interest
rates and loan agreements will be finalised shortly. 100% of the group`s
total interest bearing debt was fixed or hedged at year-end.
In terms of a new finance strategy approved by the board in November 2011 the
R1.02 billion CMBS programme has been refinanced through a new R5 billion
DMTN programme. Secured corporate bonds of R1.02 billion were issued on 8
May 2012 under this programme. The average weighted cost of the R1.02
billion corporate bonds issued equates to 8.8%, including the extension of
existing interest rate swaps and new hedges over a 3 year to 5 year period.
This represents a reduction of 1.0% over the previous weighted average all-in
finance costs of the CMBS programme. The secured corporate bond debt of
R1.02 billion is fully hedged.
The company`s borrowing capacity is unlimited, in terms of its memorandum of
incorporation. The board policy is to limit the group`s loan-to-value ratio
("LTV") to 45%. The group`s LTV ratio at 31 March 2012 was 27.6% compared to
the bank and securitisation covenants of 50% and 65% respectively. The
group has unutilised bank facilities of R207 million.
4. GROUP PROPERTY PORTFOLIO PORTFOLIO OVERVIEW
The group property portfolio at 31 March 2012 consisted of 72 properties with
a total market value of R6 113 million and gross lettable area of 922
221mSquared.
The portfolio is well-represented in most of the South African provinces and
Namibia. 85% of the gross income is derived from Gauteng, KwaZulu-Natal,
Western Cape and Namibia.
In terms of the group`s strategy to operate as a diversified fund, overweight
in retail, the group is of the opinion that the current sectoral and
geographical profile broadly conforms to the requirements of a well-balanced
mixed portfolio. There is, therefore, no specific strategy to increase or
decrease these profiles. On the sectoral profile, in terms of gross income,
the exposure to retail increased while the exposure to offices declined
mostly due to increased vacancies in the office sector.
PROPERTY PORTFOLIO PERFORMANCE
New leases and renewals of 202 129mSquared with a contract value of R579.5
million were concluded during the year. 74% of leases that expired during
the year ended 31 March 2012 were renewed or are in the process of being
renewed (2011: 82%). The reduction in renewals is mostly due to government
leases that were still in the process of being renewed at year end as well as
a number of lease renewals that were held back, pending the large
refurbishment at Randburg Square.
The group lease expiry profile reflects that 37% of leases are due for
renewal in 2013.
Of the 37% leases due for renewal in 2013, +/- 38 500m2 are under negotiation
already and these tenants have indicated that they will renew. This will
reduce the expiries to 33%, which equates to the normal average lease period
of 3 years across the portfolio.
At 31 March 2012, the portfolio`s vacancy (measured as a percentage of gross
rental) was 6.8% (5.9% excluding "development" vacancies) compared to 5.1% at
31 March 2011. The development vacancies are at Randburg Square where phase
1 of the revamp of the centre, at an estimated cost of R80 million, is almost
complete and phase 2 is in the final planning stages. This revamp entails a
re-mix of tenants and the introduction of new tenants which will
fundamentally change the nature of the centre going forward. Vacancies have
not been filled pending this major revamp.
Vukile is engaged in various additional initiatives in an effort to reduce
the vacancies in the portfolio including broker focus groups, the
implementation of a vacancy website, leasing incentives on selected
properties, incentives to property management companies and leasing brokers.
Vacancies have reduced by a net 4 500mSquared since 30 September 2011.
Recurring property expenses have increased year on year mostly due to
excessive increases in electricity and rates and taxes. Although a large
proportion of the increases are recovered from tenants, the group has
implemented the following measures to try and alleviate these costs, as it
could ultimately impact on the tenant`s ability to pay rentals:
- Reducing energy consumption by replacing older technology with newer,
more energy efficient technology.
- Embarking on various new initiatives to reduce energy consumption at our
properties including the installation of check meters at our properties,
appointing energy consultants to perform energy audits and to recommend
actions to reduce consumption and installing energy efficient equipment
in all new developments and upgrades.
- Appointing a specialist to value all the group`s properties where the
municipal valuations appear to be higher than market and to lodge the
appropriate objections and appeals. An appropriate percentage of such
savings are refunded to the tenants.
The group continuously evaluates methods of containing costs in the
portfolio. As a result of the measures referred to earlier, the recurring
costs to property revenue ratios (excluding electricity and rates and taxes)
have decreased from 20.5% in March 2007 to 18.4% in March 2012 and hence have
been well contained.
The average contracted escalation on the total portfolio at 8.2% is extremely
positive, with the industrial sector having the highest escalations.
Against the backdrop of a difficult trading environment, positive reversions
on lease renewals were achieved during the year across all three sectors.
The escalation on expiry rentals was the lowest in the office sector mostly
due to the high vacancies currently experienced in this sector where
landlords offer attractive incentives to new tenants in an effort to reduce
vacancies at their buildings.
INVESTMENT ACTIVITY
Active management and quality of the portfolio
In terms of the strategy of improving the quality in the portfolio, Vukile
has decided to reduce its exposure to lower B grade CBD offices, mainly
occupied by government, and to replace these with higher quality offices in
popular office nodes. This strategy has been largely achieved with most of
the CBD offices currently in the process of being sold. In addition, the
R1.5 billion acquisition from Sanlam, which consists mainly of good quality
offices in decentralised office nodes, grows the value of our office
portfolio on a R/mSquared basis. In terms of retail investments, the fund`s
strategy to invest in high-density-lower-income rural and township areas has
delivered excellent results and we believe it will continue to do so.
5. ACQUISITIONS, DEVELOPMENTS, UPGRADES AND DISPOSALS
As part of our strategy to improve the quality of the existing portfolio, the
following projects as set out below have been completed, or are in progress:
5.1 Revamps and upgrades
PROPERTIES COMPLETED
Approved capex (Rm)
Property Projec Addit Comple- Note
t ional Upgr Extensio Maintena Tota Yie- tion
detail area ade n nce l ld date
(m2) %
27.00 2.00
7.50 36.5
0
Mala Plaza Extens 1 112 - 18.10 2.00 9.3 Jun
, ion 20.1 2011
Malamulele and 0
upgrad
e
Grosvenor Upgrad - 7.50 - - Nov 1
Crossing, e 7.50 2011
Bryanston
Hillfox New 1 337 8.90 10. Oct
Value premi- 8.90 0 2011
Centre ses
for
Cash-
build
PROJECTS APPROVED AND IN PROGRESS
Approved capex (Rm)
Property Project Total Comple- Not
detail Add Upgrade Exte Maintena Yie- tion e
iti nsio nce ld date
ona n %
l
are
a
(m2
)
107.60 20.1 17.20 144.90
0
Randburg Upgrade 63.60 - 17.20 80.80 Jun 1
Square and 2012
mainten
ance:
phase 1
Bellville Upgrade 33.50 - - 33.50 Apr 2
Louis for 2013
Leipoldt Medi
Hospital Clinic
Hillfox Upgrade 6.50 - - 6.50 Apr 1
Value : phase 2012
Centre 1
Hillfox Upgrade 4.00 - - 4.00 May 1
Value : phase 2012
Centre 2
Oshakati Redevel 2 - 20.1 - 20.10 11. Jul
Centre opment 312 0 1 2012
of ex-
Standar
d Bank
site
Note 1: Post the upgrade/revamps higher rentals on renewals and reduced
vacancies can be expected.
Note 2: This capex was agreed as part of a new 15 year lease.
5.2 Approved developments
The development of a 19 000mSquared shopping centre, located approximately
halfway between Durban and Pietermaritzburg, has been approved at a capital
outlay of R193 million and an initial yield of 9,5%. There are limited
retail facilities in the township and the centre will be anchored by Pick n
Pay, SPAR and Mr Price.
The group is actively looking at a pipeline of similar retail developments
which will increase the weighting of retail in the portfolio.
5.3 Property sales
Property Purchase Sales Yield Actual
price price % and
R000 expected
dates of
transfer
Benoni Kleinfontein Offices: Erf 4 709 1 700 17.3 June
2011
Oshakati Beares Furniture 4 502 5 800 10.8 Septembe
r 2011
Pretoria Hatfield Botbyl Subaru 23 637 13 750 19.4 November
2011
AAD Goodwood 7 845 15 250 10.1 January
2012
Johannesburg John Griffen 5 298 16 500 12.0 May 2012
Pretoria VWL 67 346 103 000 12.5 1
Glencairn Building Eloff Street 23 520
82 425 7.8 1
Johannesburg Truworths Building 43 680
Nelspruit Prorom 16 108 38 000 12.5 1
Katimo Mulilo Pep Stores 6 149 18 000 11.7 1
Rundu Ellerines 4 330 2 800 14.7 1
Total 218 349 282 000
Note 1: Sales agreements concluded and awaiting fulfilment of various
conditions precedent.
The sale of the above high yielding high risk properties will have a negative
impact on distributions. However, this is the trade-off for a significant
improvement in the quality of the portfolio. The proceeds from property
sales will be utilised to acquire properties that conform to Vukile`s
investment requirements and/or to fund expansions and revamps, thereby
further enhancing the quality of the portfolio.
6. VALUATION OF PORTFOLIO
The accounting policies of the group require that directors value the entire
portfolio every year 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 R6.11 billion as
at 31 March 2012. This is R761 million higher than the valuation as at 31
March 2011.
The external valuations by Broll Valuation and Advisory Services (Pty) Ltd,
Jones Lang LaSalle (Pty) Ltd and Old Mutual Investment Group South Africa
(Pty) Ltd at 31 March 2012 of 45.9% of the total portfolio are in line with
the directors` valuations of the same properties.
7. OPERATING SEGMENTS
Asset
manage Total
Indust Offices Retail Total ment Group
rial R000 R000 R000 busine R000
R000 ss
R000
Group income for
the year ended 31
March 2012
Revenue 130 255 126 547 933 53 317 986 586
222 921 269
Straight-line 6 539 13 156 26 298 45 993 - 45 993
rental income
accrual
136 268 282 574 979 53 317 1 032
761 219 262 579
Expenses (45 (88 875) (199 (334 (30 (365
632) 914) 421) 792) 213)
Net profit from 91 129 179 407 374 305 644 841 22 525 667 366
property and other
operations
Group statement of
financial position
at 31 March 2012
Assets
Investment 1 016 1 585 937 3 189 5 791 5 791
properties 662 276 875 875
Add: Lease - 14 14 283
commissions 283
5 806 5 806
158 158
Goodwill 3 917 931 60 696 65 544 65 544
Intangible asset - - - - 267 267 096
096
Investment 16 500 200 437 104 258 321 195 321 195
properties held for
sale
1 037 1 787 305 3 354 6 192 267 6 459
079 230 897 096 993
Add: Excluded items
Deferred capital 4 411
expenditure
Furniture, fittings 1 985
and computer
equipment
Available-for-sale 28 468
financial asset
Financial asset at 2 967
amortised cost
Trade and other 50 934
receivables
Cash and cash 215 947
equivalents
Total assets 6 764
705
Liabilities
Linked debentures 357 617 527 1 138 2 113 2 113
and premium 152 534 213 213
Interest bearing 283 490 767 904 1 679 1 679
borrowings 838 825 430 430
640 1 108 294 2 043 3 792 3 792
990 359 643 643
Add: Excluded items
Equity 1 781
188
Derivative 25 644
financial
instruments
Deferred taxation 727 785
liabilities
Trade and other 188 692
payables
Current taxation 1 267
liabilities
Linked unitholders 247 486
for distribution
Total equity and 6 764
liabilities 705
Indust Offices Retail Total Asset Total
rial R000 R000 R000 management Group
R000 business R000
R000
Group income for
the year ended 31
March 2011
Revenue 132 244 812 458 642 836 124 65 146 901 270
670
Straight-line 2 280 4 207 7 881 14 368 - 14 368
rental income
accrual
134 249 019 466 850 66 146 915 638
950 523 492
Expenses (48 (77 (167 (293 (20 233) (313
790) 772) 041) 603) 836)
Net profit from 86 160 171 299 556 889 44 913 601 802
operations 247 482
Group statement of
financial position
at 31 March 2011
Assets
Investment 898 1 407 2 764 5 070 5 070
properties 608 496 166 270 270
Add: lease 13 723 13 723
commissions
5 083 5 083
993 993
Goodwill 5 091 3 977 62 039 71 107 71 107
Intangible Asset 312 832 312
832
Investment - 179 102 403 281 281 422
properties held for 019 422
sale
903 1 590 2 928 5 312 832 5 749
699 492 608 436 522 354
Add: Excluded items
Deferred capital 2 723
expenditure
Furniture, fittings 1 774
and computer
equipment
Available-for-sale 10 208
financial asset
Financial asset at 4 782
amortised cost
Trade and other 71 409
receivables
Cash and cash 337
equivalents 809
Total assets 6 178
059
Liabilities
Linked debentures 355 627 563 1 133 2 116 2 116
and premium 454 899 916 916
Interest bearing 281 496 897 667 1 675 1 675
borrowings 399 816 882 882
636 1 124 2 031 3 3 792
853 379 566 792 798 798
Add: Excluded items
Equity 1 404
550
Derivative 21 867
financial
instruments
Deferred taxation 544
liabilities 548
Trade and other 173 277
payables
Current taxation 5 416
liabilities
Linked unitholders 235 603
for distribution
Total equity and 6 178
liabilities 059
8. CHANGE IN ACCOUNTING ESTIMATE - DEFERRED TAX
Vukile has accounted for its deferred tax assets and liabilities relating to
a recently announced change in the Capital Gains Tax rate at the increased
rate of 18.67% (March 2011: 14%) which has resulted in the deferred tax
liability increasing by R21.1 million.
9. CAPITAL COMMITMENTS
The group authorised and contracted refurbishment and expansion programmes in
the previous financial year of which an outstanding balance of R98.2 million
still has to be incurred.
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
R123.7 million and to develop an industrial unit at Allandale at a cost of
R13 million.
The above refurbishment programme, capital expenditure and developments will
be funded out of surplus cash, bank facilities and proceeds from property
sales.
10. RELATED PARTY TRANSACTIONS
The following are related party transactions:
Related Type of transaction 2012 2012 2011 2011
party Amount Amounts Amount Amounts
paid/ owed paid/ owed to
(received) to/(by) (received related
R000 related ) R000 parties
parties R000
R000
Sanlam Life Lease rentals 430 - 1 268 -
Insurance
Limited (1)
Asset management (17 571) - (63 270) (13
fees and sales 770)
commission received
Sanlam Handling fees on - - 1 603 419
Properties sold properties and
Proprietary asset management
Limited (1) fees
Consulting fees (1 431) -
Sanlam Assumption of - - 430 -
Capital company`s
Markets conditional
Limited financial
("SCM") (1) obligations to
senior management
JHI Property management - - 19 469 1 487
Properties and other fees
Proprietary
Limited (2)
Kuper Legh Property management 1 735 - 5 373 327
Property and other fees
Group (3)
(1) The Sanlam Group ceased to be a related party from August 2011. The
Sanlam Group currently holds less than 6% of the company`s linked units in
issue. The amounts received and paid have been disclosed for a four month
period to 31 July 2011.
(2) Sanlam Limited sold its minority shareholding in JHI in the previous
financial year. JHI is no longer regarded as a related party.
(3) The property management agreement with Kuper Legh Property Group expired
on 31 August 2011 and hence this company, through its major shareholder, is
no longer a related party.
11. PROSPECTS
With the global economic environment remaining fragile, the South African
economy continues to take tentative steps towards recovery. With the
property sector lagging the broader economic cycle by around 12 to 18 months,
we expect trading conditions to remain difficult for the forthcoming year.
However, based on experience over the past few months, it appears as though
the sector seems to have bottomed out and it is encouraging that the increase
in vacancies across the board seems to have been arrested.
The Vukile retail portfolio continues to trade well and we are still seeing
increased tenant demand across our portfolio. Given the increased disposable
incomes and shifting spending patterns in the lower LSM segments of the
market, we would expect this trend to continue in the year ahead. It is
against this backdrop that we are actively exploring a number of new
developments of shopping centres catering to the lower income markets in both
urban and rural environments.
The acquisition of a portfolio of 20 properties from Sanlam has been
concluded and they have now been fully absorbed into our portfolio. We
believe that the portfolio will provide scope for growth in the future
through having both upgrade potential and reducing the vacancies in the
acquired assets.
We remain comfortable with the underlying performance of the core property
portfolio and after taking into account the non-recurring lease termination
fee received and the variability of the sales commission in respect of the
Sanlam portfolio, we are of the view that Vukile should be able to deliver
reasonable growth in distributions for the year ahead.
The forecast information in this paragraph 11 has not been audited or
reviewed by Vukile`s auditors.
On behalf of the board
AD Botha LG Rapp Roodepoort
Chairman Chief executive 29 May 2012
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION at 31 March 2012
2012 2011
Group Group
R000 R000
Assets
Non-current assets 6 176 629 5 487 419
Investment properties 5 674 979 4 984 840
Investment properties 5 806 158 5 083 993
Straight-line rental income adjustment (131 179) (99 153)
Other non-current assets 501 650 502 579
Intangible asset 267 096 312 832
Straight-line rental income asset 131 179 99 153
Deferred capital expenditure 4 411 2 723
Furniture, fittings and computer equipment 1 985 1 774
Available-for-sale financial asset 28 468 10 208
Financial asset at amortised cost 2 967 4 782
Goodwill 65 544 71 107
Current assets 266 881 409 218
Trade and other receivables 50 934 71 409
Cash and cash equivalents 215 947 337 809
Investment properties held for sale 321 195 281 422
Total assets 6 764 705 6 178 059
Equity and liabilities
Equity and reserves 1 781 188 1 404 550
Non-current liabilities 3 315 432 3 909 613
Linked debentures and premium 2 113 213 2 116 916
Other interest bearing borrowings 448 790 1 226 282
Derivative financial instruments 25 644 21 867
Deferred taxation liabilities 727 785 544 548
Current liabilities 1 668 085 863 896
Trade and other payables 188 692 173 277
Short-term borrowings 1 230 640 449 600
Current taxation liabilities 1 267 5 416
Linked unitholders for distribution 247 486 235 603
Total equity and liabilities 6 764 705 6 178 059
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended
31 March 2012
2012 2011
Group Group
R000 R000
Property revenue 933 269 836 124
Straight-line rental income accrual 45 993 14 368
Gross property revenue 979 262 850 492
Property expenses (334 421) (293 603)
Net profit from property operations 644 841 556 889
Profit from asset management business 22 525 44 913
Corporate administrative expenses (25 919) (25 509)
Investment and other income 13 557 14 380
Operating profit before finance costs 655 004 590 673
Finance costs (165 633) (161 803)
Profit before debenture interest 489 371 428 870
Debenture interest (437 224) (403 948)
Profit before capital items 52 147 24 922
Profit/(loss) on sale of investment properties 3 084 (14 798)
Profit on sale of subsidiary 1 428 -
Amortisation of debenture premium 3 703 2 519
Impairment of goodwill (4 801) -
Goodwill written-off on sale of properties (762) (5 192)
Impairment of intangible asset (45 736) (49 935)
Profit/(loss) before fair value adjustments 9 063 (42 484)
Fair value adjustments 549 253 78 494
Gross change in fair value of investment 595 246 92 862
properties
Straight-line rental income adjustment (45 993) (14 368)
Profit before taxation 558 316 36 010
Taxation (189 754) (25 488)
Profit for the year 368 562 10 522
Other comprehensive income
Cash flow hedges (4 412) 6 602
Available-for-sale financial assets 3 453 (3 556)
Other comprehensive (loss)/income for the year (959) 3 046
Total comprehensive income for the year 367 603 13 568
Earnings per linked unit (cents) 229.56 120.86
Diluted earnings per linked unit (cents) 229.56 120.86
Number of linked units in issue 351 015 351 015
218 218
Reconciliation of group net profit to headline earnings and to profit
available for distribution
2012 2012 2011 2011
Group Cents Group Cents
R000 per R000 per
linked linked
unit unit
Attributable profit after taxation 368 562 105.00 10 522 3.07
Adjusted for:
Debenture interest 437 224 124.56 403 948 117.79
Earnings 805 786 229.56 414 470 120.86
Change in fair value of investment (549 (156.48 (78 (22.89
properties 253) ) 494) )
Total tax effects of adjustments 172 405 49.12 23 126 6.74
Profit on sale of subsidiary (1 428) (0.41) - -
Write-off of goodwill on sale of 762 0.22 5 192 1.51
subsidiary
(Profit)/loss on sale of investment (3 084) (0.88) 14 798 4.31
properties
Impairment of goodwill 4 801 1.37 - -
Impairment of intangible asset 45 736 13.03 49 935 14.56
Amortisation of debenture premium (3 703) (1.05) (2 519) (0.73)
Headline earnings 472 022 134.48 426 508 124.36
Straight-line rental accrual net of (32 922) (9.38) (18 (5.36)
deferred taxation 407)
Profit available for distribution 439 100 125.10 408 101 119.00
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31
March 2012
R000 Share Non- Revalua Cash- Retaine Total
capital distribu tion of flow d
and table availab hedges earning
Share reserves le-for- s
premium sale
financi
al
assets
Group
Balance at 31 March 27 596 1 380 (16 (28 18 447 1 381 502
2010 023 274) 290)
Issue of share 4 667 - - - - 4 667
capital
Dividend - - - - (824) (824)
distribution
32 263 1 380 (16 (28 17 623 1 385 345
023 274) 290)
Profit for the year - - - - 10 522 10 522
Change in fair - 92 862 - - (92 -
value of investment 862)
properties
Deferred taxation - (11 958) - - 11 958 -
on change in fair
value of investment
properties and
straight-line
rental accrual
Share-based - 6 177 - - - 6 177
remuneration
Transfer from non- - (77 054) - - 77 054 -
distributable
reserve
Other comprehensive
income
Revaluation of - - (3 556) - - (3 556)
available-for-sale
financial asset
Revaluation of cash - - - 6 062 - 6 062
flow hedges
Balance at 31 March 32 263 1 390 (19 (22 24 295 1 404 550
2011 050 830) 228)
Dividend - - - - (892) (892)
distribution
32 263 1 390 (19 (22 23 403 1 403 658
050 830) 228)
Profit for the year - - - - 368 562 368 562
Change in fair - 595 246 - - (595 -
value of investment 246)
properties
Deferred taxation - (186 - - 186 100 -
on change in fair 100)
value of investment
properties and
straight-line
rental accrual
Share-based - 9 927 - - - 9 927
remuneration
Transfer from non- - (46 163) - - 46 163 -
distributable
reserve
Other comprehensive - - - - - -
income
Revaluation of - - 3 453 - - 3 453
available-for-sale
financial asset
Revaluation of cash - - - (4 412) - (4 412)
flow hedges
Balance at 31 March 32 263 1 762 (16 (26 28 982 1 781 188
2012 960 377) 640)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 March
2012
2012 2011Grou
Group pR000
R000
Cash flow from operating activities 638 685 570 910
Cash flow from investing activities (167 (371
450) 782)
Cash flow from financing activities (593 (75 644)
097)
Net (decrease)/increase in cash and cash equivalents (121 123 484
862)
Cash and cash equivalents at the beginning of the year 337 809 214 325
Cash and cash equivalents at the end of the year 215 947 337 809
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
JSE sponsor: Java Capital, 2 Arnold Road, Rosebank, 2196
NSX sponsor: IJG Securities (Pty) Ltd, Windhoek, Namibia.
Executive directors: LG Rapp (CEO), MJ Potts (Financial director), HC Lopion
(Executive director: asset management).
Non-executive directors: AD Botha (Chairman), HSC Bester, PJ Cook, JM
Hlongwane, PS Moyanga, HM Serebro, NG Payne, SF Booysen
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.
Date: 29/05/2012 08:55:00 Produced by the JSE SENS Department.
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