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DIV
DIV
Diversified - Audited abridged consolidated financial report
Diversified Property Fund Limited
Registration number 2005/029685/06
(Incorporated in the Republic of South Africa)
("Diversified" or "the company")
JSE code: DIV & ISIN: ZAE000072369
ABRIDGED AUDITED RESULTS FOR THE 9 MONTHS ENDED 30 JUNE 2006
DIRECTORS" COMMENTARY
1 Introduction
Diversified was listed on the JSE on 6 October 2005 with a listings
forecast of 39,45 cents per unit. Actual distributions of 39,98 cents
per unit exceed the forecast for the nine months to 30 June 2006.
Diversified continues to focus on the acquisition of retail properties
and retail development opportunities. Steps have also been taken to
secure a pipeline of A grade industrial developments with the
acquisition of industrial land in Cape Town.
Diversified"s strategy is to acquire good quality stock by entering
into partnerships with leading property developers rather than
acquiring developers" non-core assets. Diversified will continue to
pursue rural retail development opportunities while social spending
supports this expanding retail market. All developments will be driven
by tenant demand.
2 Property acquisitions and developments
Checkers Queenstown
Diversified has acquired the 2 680 sqm Checkers Supermarket in the
centre of Queenstown for R10,4 million at a yield of 10%. This
property is adjacent to Bradlows Queenstown, which is also owned by
Diversified, and this combined site opens up the possibility of
developing additional retail space.
New Redruth Village, Alberton
This 11 400 sqm convenience centre is adjacent to the new South
African Revenue Service regional offices and is anchored by a Pick `n
Pay corporate store, Woolworths and Outdoor Warehouse. The centre is
scheduled to open on 26 October 2006. The development was acquired on
a guaranteed forward yield of 9.5% for a value of approximately R104
million.
Rivonia Village
Rivonia Village was acquired in April 2006 for R93,9 million on a
forward yield of 11%. The property has a GLA of 21 000 sqm comprising
14 500 sqm of retail and 6 500 sqm of offices. Tenants include
Woolworths, First National Bank and Clicks. Planning for the
redevelopment and expansion of the centre is in progress, supported by
strong demand from national retailers.
Montague Business Park
Diversified, in partnership with Acucap Properties and Improvon
Properties has acquired a 25% undivided share in a 61,5 hectare
industrial site in Cape Town at a cost of R65 million. The site is
well situated between Koeberg Road and the N7 motorway and between
Montague Gardens and Killarney Gardens in Milnerton. The effective
date of the transaction is transfer date, which is expected to be
during December 2006. The site is ideal for large-scale distribution
facilities as well as "big-box" retail along Koeberg road.
3 Disposals
81-83, 85 Main Road, Wynberg
This property, acquired for R11 million on listing, was sold for R14,5
million and transfer has been effected.
Fort Gale Estate Residential
Diversified has sold the residential portion of the Fort Gale Estate
in Mthatha for R22,0 million. The sale remains subject to the
registration of the subdivision by the Surveyor-General. The remaining
portion comprises an office park and includes land with good potential
for future office developments.
4 Planned extensions
The Spar Supermarket in the Mussina Shopping Centre is being extended
by 226 sqm and refurbished. A new ten-year Spar corporate lease has
been entered into.
Once town planning approval is confirmed, an extension of 2 000 sqm
will commence at Market Square, in Grahamstown. The additional space
has been let to Jet Stores, Hungry Lion, Sheet Street and ClearVision
optometrists. The extension will yield in excess of 13% and is
scheduled for completion in May 2007.
The Allied building (part of the Isando Business Park), which is
currently vacant, is being redeveloped and has been let to Maxiprest
Tyres on a seven year lease. The redevelopment will yield 11,3%.
5 Listed property securities
As part of the asset portfolio on listing, the company acquired 12 500
000 Capital Property Fund units at R4,00 per unit. Subsequent to
listing, the company acquired a further 1 659 333 Capital units at an
average price of R3,77 per unit. During the period under review 9 722
142 units were sold at an average price of R4,04 per unit, reducing
the investment to 4 437 191 Capital units (1,2% of Capital units in
issue).
6 Borrowings
The interest rate profile of the group is shown below:
Amount Interest rate % of
Expiry R" million % borrowings
October 2006 50.0 8.73% 20.7%
October 2008 50.0 9.28% 20.7%
October 2010 50.0 9.56% 20.7%
Hedged 150.0 9.19% 62.1%
borrowings
Prime linked 91.1 9.80% 37.9%
borrowings (*)
Total borrowings 241.1 9.42% 100.0%
(*) Based on the current prime lending rate of 11.5%
7 Summary of financial performance
30 Jun 2006 31 Dec 2005 Prospectus
Units in issue 121 460 507 96 761 507 88 559 007
Net asset value 638 cents 499 cents 494 cents
Distribution per linked unit 27,07 cents 12,91 cents 39,45 cents
Gearing ratio 23,9% 34,9%
Distribution payment date 11 Sep 2006 13 Mar 2006
8 Distribution
The board has approved and notice is hereby given of a final
distribution (distribution no. 2) of 27,07 cents per linked unit for
the six months to 30 June 2006.
Last day to trade cum distribution Friday 1 September 2006
Trading ex distribution from Monday 4 September 2006
Record date to participate in the
distribution Friday 8 September 2006
Distribution paid on Monday 11 September 2006
In respect of dematerialised linked unitholders, the distribution will
be transferred to the Central Securities Depository Participant
accounts/broker accounts on Monday, 11 September 2006. Certificated
linked unitholders" distribution payments will be posted on or about
Monday, 11 September 2006. Linked unit certificates may not be
dematerialised or rematerialised between Monday, 4 September 2006 and
Friday, 8 September 2006, both days inclusive.
9 Prospects
The owner-occupier market for smaller industrial units is
exceptionally strong at present. Diversified intends taking advantage
of this by selling the industrial mini units by way of sectional
title.
The bulk of Diversified"s properties are situated in areas of high
growth. In addition intensive management, refurbishment and extensions
planned for a number of properties will further enhance growth.
Diversified is well positioned for growth in the 2007 financial year
and the board is confident that growth in distributions will exceed
market averages.
By order of the board
David Lewis Jacques van Wyk
Managing Director Financial Director
Johannesburg
16 August 2006
Consolidated balance sheets
Audited Unaudited
30 Jun 31 Dec
2006 2005
R"000 R"000
Assets
Investment properties 901 095 649 473
Investment properties under 47 634 -
development
Investments in listed property 25 553 22 978
securities
Loans to the purchase trust 65 211 49 352
Total non-current assets 1 039 493 721 803
Investment properties available for 35 948 -
sale
Trade and other receivables 11 316 900
Cash and cash equivalents 78 5 207
Total current assets 47 342 6 107
Total assets 1 086 835 727 910
Equity
Share capital 1 215 968
Share premium 54 276 21 221
Non-distributable reserves 135 863 (3 364)
Retained earnings - -
Total equity attributable to equity 191 354 18 825
holders
Liabilities
Linked debenture liabilities 582 938 464 455
Interest-bearing borrowings 207 299 227 848
Deferred tax liabilities 59 371 3 511
Total non-current liabilities 849 608 695 814
Trade and other payables 13 325 753
Linked debenture interest payable 32 885 12 492
Income tax payable (337) 26
Total current liabilities 45 873 13 271
Total liabilities 895 481 709 085
Total equity and liabilities 1 086 835 727 910
Consolidated income statements
Audited Unaudited
9 months 3 months
ended ended
30 Jun 31 Dec
2006 2005
R"000 R"000
Gross rental income 78 803 25 239
Amortised lease escalations 5 954 1 992
Property operating expenses (23 227) (7 943)
Net rental and related income 61 530 19 288
Distribution income from listed
property securities 1 712 719
Total distribution income from listed
property securities 1 712 719
Profit on disposal of listed property 679 180
securities
Profit on disposal of investments 679 180
Valuation gains on investment 191 229 -
properties
Valuation adjustment resulting from
amortised lease escalations (5 954) (1 992)
Valuation (loss)/gain on listed (49) 1 432
property securities
Valuation gains on investments 185 226 (560)
Fair value adjustment on interest rate 2 513 (1 988)
swaps
Administrative expenses (1 524) (120)
Other income 208
Other expenses (1 918) (2 951)
Asset management fee paid to the
Resilient group (3 462) -
Listing costs (1 365) (1 365)
Net operating income before net
financing costs 243 599 13 203
Financing income
Financing income from the incentive 3 621 1 043
trust
Interest on linked units issued cum 3 236 426
distribution
Financing costs
Interest on borrowings (14 025) (5 847)
Interest to linked debenture holders
- interim (12 492) (12 492)
- final (32 879) -
Net financing costs (52 539) (16 870)
Profit/(loss) before income tax 191 060 (3 667)
Income tax (55 195) 303
Profit/(loss) for the period 135 865 (3 364)
attributable to equity holders
Earnings per share (cents) 129,46 (3,58)
Earnings per linked unit (cents) 172,69 9,70
Reconciliation of headline earnings per linked unit
Audited Unaudited
9 months 3 months
ended ended
30 Jun 2006 31 Dec 2005
cents cents
Earnings per share 129,46 (3,58)
Interest to linked debenture holders 43,23 13,28
Earnings per linked unit 172,69 9,70
Adjusted for:
- valuation gains on investment (182,21)
properties
valuation loss/(gain) on listed
property 0,05 (1,52)
securities
- profit on disposal of equity (0,65) (0,19)
investments
- impairment of goodwill 1,83 2,04
- taxation effect 52,92 0,47
(128,06) 0,80
Headline earnings per linked unit 44,63 10,50
Diluted earnings per share is the same as earnings per share as
there are no dilutory instruments in issue.
Earnings per share, earnings per linked unit and headline
earnings per linked unit are based on the weighted average of
104 949 441 (31 December 2005: 94 097 110) linked units in
issue.
A distribution of 27,07 cents per linked unit (based on 121 460
507 units in issue) will be paid to unitholders on 11 September
2006.
Statements of changes in equity
Non-
Issued Share distri- Retained
butable
capital premium reserves earnings Total
R"000 R"000 R"000 R"000 R"000
Balance at 6 - - - - -
October 2005
Issue of units
- Issue of 886 16 571 17 457
88 559 007
units on 6
October 2005
- Issue of 7 74 3 998 4 072
407 500 units
on 4 November
2005
- Issue of 8 429 437
795 000 units
on 15 November
2005
Share premium 223 223
discount
Profit for the (3 364) (3 364)
period
Transfer to (3 364) 3 364 -
reserves
Balance at 31 968 21 221 (3 364) - 18 825
December 2005
Issue of units
- Issue of 224 25 777 26 001
22 380 000
units on 22
March 2006
- Issue of 2 23 2 922 2 945
319 000 units
on 7 April
2006
Share premium 4 359 4 359
discount
Less: Units (3) (3)
held by The
Diversified
Unit Purchase
Trust
Profit on (3) (3)
units held by
The
Diversified
Unit Purchase
Trust
Profit for the 139 229 139 229
period
Transfer to 139 226 (139 226) -
reserves
Balance at 30 1 215 54 276 135 862 - 191 353
June 2006
Non-distributable reserves comprise those profits and losses
that are not distributable to unitholders and are made up of
mainly revaluation adjustments on investment assets, profits or
losses on the disposal of investment assets and profits and
losses resulting from activities other than the group"s
investment in properties and listed property securities.
Abridged statements of cash flows
Audited Unaudited
9 months 3 months
ended ended
30 Jun 2006 31 Dec 2005
R"000 R"000
Cash flows from operating 44 207 12 949
activities
Cash flows from investing (822 199) (658 937)
activities
Cash flows from financing 778 070 651 195
activities
Increase in cash and cash 78 5 207
equivalents
Cash and cash equivalents at - -
beginning of period
Cash and cash equivalents at end 78 5 207
of period
Notes to the abridged audited results for the 9 months ended 30 June
2006
1 Preparation and audit opinion
This abridged report has been prepared in accordance with
International Financial Reporting Standards (IFRS) and the
requirements of the Companies Act (Act 61 of 1973). KPMG Inc. has
audited the financial information set out in this abridged
report. The unqualified audit opinion is available for inspection
at the group"s business address: 4th Floor, Rivonia Village,
Rivonia Boulevard, Rivonia 2191.
2 Statutory information
Directors: Mike Tshishonga# (Chairman of the board); Hayden
Bamford; Des de Beer; David Lewis; Holden
Marshall#; Gugu Mazibuko#; Marius Muller; David
Savage#; Manosagaran Subramanien# (Chairman of the
Investment Committee); Nomatembo Tambo#; Andrew
Teixeira; Jacques van Wyk; Djurk Venter# (Chairman
of the Audit Committee)
# Independent non-executive
Company secretary: AA Bornman
Business Address: 4th Floor, Rivonia Village, Rivonia Boulevard,
Rivonia, 2191
Transfer office: Link Market Services (Pty) Ltd, 11 Diagonal Street
Johannesburg 2001
Date: 16/08/2006 05:15:49 PM Produced by the JSE SENS Department
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