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RES
RES
Resilient - Reviewed Interim Results for the Six Months Ended 30 June 2006
Resilient Property Income Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/016851/06)
Share code: RES & ISIN: ZAE000043642
REVIEWED INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2006
DIRECTORS" COMMENTARY
1 Introduction
The distribution of 56.78 cents per unit achieved for the six months to 30
June 2006 is a pleasing 18.44% increase over the distribution achieved in
the comparable prior year interim period.
Resilient"s strategy remains investment in dominant retail developments in
small cities and large towns tenanted predominately by national retailers
and anchored by large supermarkets. Resilient has a substantial pipeline of
developments and extensions to existing centres, which will be completed
during the course of the next three years.
2 Acquisitions
Diamond Pavilion, Kimberley
Resilient acquired the remaining 50% in the Diamond Pavilion Mall at a cost
of R118,3 million. The effective date for the acquisition was 12 April
2006, which is six months prior to the option date and accordingly a small
premium was paid to the seller for early delivery. As a result, a forward
yield of 12.9% was achieved on the entire investment. The centre is
trading well and Resilient is considering expanding the entertainment
offering with the addition of four cinemas.
3 Planned developments
Klerksdorp Village
Resilient and its 50% development partner have acquired 8,9 hectares of
unzoned land in the upmarket residential area of Klerksdorp close to the
Pick `n Pay Hypermarket. A further 6,6 hectares of adjacent unzoned land is
also being acquired. Resilient"s total land investment is R6 million. The
intention is to obtain retail zoning and develop a regional shopping centre
with a GLA of approximately 30 000 sqm. The zoning process is expected to
take a further two years.
Equestria Mall, Pretoria
Resilient acquired a 50% interest in this 10,3 hectare site in Equestria
for R20,6 million, in partnership with Keystone Investments. Keystone
Investments were the developers of Diamond Pavilion. Equestria is situated
in the affluent and rapidly expanding suburbs in the north east of
Pretoria. Tenant demand is strong and the intention is to develop the full
40 000 sqm of existing rights.
4 Feedback on existing developments
The Diamond Pavilion Mall in Kimberly opened on 12 April 2006.
Northam Shopping Centre, in which Resilient has a 55% interest, opened on
25 April 2006. An extension to Northam shopping centre of 620 sqm has been
undertaken to accommodate the Post Office and a fast food outlet.
Jabulani Mall in which Resilient has a 55% undivided share, is on schedule
for completion in November 2006. Edgars, Game, Shoprite and Woolworths
will anchor the mall. The developers have guaranteed a commencement yield
of 10%.
Construction of the Highveld Mall, due for completion in April 2007, is
progressing on schedule. Resilient acquired a 60% undivided share in the
mall with a 10% yield guaranteed by the developers. Edgars, Pick `n Pay
and Woolworths will anchor the development.
5 Extensions
A 5 500 sqm extension to Tzaneng Mall has commenced with completion planned
for April 2008. The extension will provide additional retail space for @
Home, Edgars, Foschini, Jet Stores, Miladys, Mr Price and Nedbank.
The 8 500 sqm extension and redevelopment of Mvusuludzo Mall in Thohoyandou
is progressing well to open on schedule in April 2007. The existing open
mall is being enclosed and extended to accommodate Ackermans, Edgars,
Exact, Foshini, Miladys, Sheet Street and Total Sports and provide
additional space for Jet Stores, Mr Price and Truworths.
6 Properties sold
Die Meent
Resilient"s 17.075% interest in this property was sold for R 5,9 million
against a book value of R 5,5 million. All conditions precedent have been
met and transfer is expected in September 2006.
Shoprite Secunda
Agreement has been reached to sell this property, which has a book value of
R41 million, for R47 million. The sale is still subject to suspensive
conditions.
7. Listed equities
Resilient sold 1 723 849 Acucap Properties units and 4 640 761 Capital
Property Fund units at average prices of R25,26 and R4,80 respectively.
Resilient"s entire holding of 23 249 644 units in Ambit Properties was sold
at an average price of R4,19 per linked unit. The holding in Diversified
Property Fund was increased by 6 895 329 units at an average price of R6,78
per unit.
8 Summary of financial performance
30 Jun 2006 31 Dec 2005 30 Jun 2005 31 Dec 2004
Distribution 56.78 cents 52.15 cents 47.94 cents 44.08 cents
Distribution payment 11 Sep 2006 13 Mar 2006 5 Sep 2005 7 Mar 2005
Total units in issue 143 814 195 133 003 384 124 603 384 123 018 384
Property operations
(a)
Net asset value R12.46 R11.12 R7.70 R7.36
(b,c,d,e)
Gearing ratio (c,d) 12.5% 16.0% 37.6% 35.3%
Units in issue (f) 143 744 195 132 963 384 124 553 384 123 008 384
Consolidated
Net asset value (b) R11.85 R11.12 R7.70 R7.36
Units in issue (f,g) 132 933 384 132 963 384 124 553 384 123 008 384
Notes to the summary of financial performance
a) The group would, from time to time and in compliance with changing
financial reporting requirements, consolidate entities that do not form
part of the group"s operations, that do not operate under the group"s
operating policies and who"s businesses, risk profiles and debt levels are
not comparable to that of the group. Disclosure under `Property operations"
excludes the consolidation of these entities.
b) Investment properties are fair valued annually by external valuers. The
net asset value reported in interim financial reports therefore excludes
any revaluation gains or losses for the period from the prior annual
financial report, to the date of the interim financial report.
c) Stakeholders are referred to the meeting of unitholders on 23 June 2006,
in which the company obtained a mandate for the implementation of a
strategy that will allow for the investment of BEE Groups in Resilient. For
this purpose, a company Eagle"s Eye Investments (Pty) Ltd was formed. An
adjustment is made here to exclude the impact of consolidating Eagle"s Eye
Investments (Pty) Ltd and 10 810 811 Resilient units held by that entity.
d) Resilient promoted the formation of The Siyakha Education Trust, a trust
dedicated to black education in South Africa. An adjustment is made here to
exclude the impact of consolidating The Siyakha Education Trust.
e) The investment in Diversified Property Fund is classified as an
associate and is accounted for at the value immediately preceding the date
on which it became an associate. An adjustment is made here to account for
this investment of 24 334 499 Diversified units at the closing bid price of
R7.15 per unit, as opposed to the book value of R6.33 per unit, after
provision for deferred tax at 29% on revaluations.
f) Excludes units classified as treasury units as a result of the
consolidation of The Resilient Unit Purchase Trust.
g) Excludes units classified as treasury units as a result of the
consolidation of Eagle"s Eye Investments (Pty) Ltd.
9 Interest rate profile
Amount % of
Expiry R"million Interest rate borrowings
June 2007 75.0 8.69% 27.5%
March 2008 50.0 9.44% 18.3%
April 2008 50.0 8.79% 18.3%
September 2008 50.0 10.77% 18.3%
July 2009 50.0 9.25% 18.3%
August 2009 50.0 9.70% 18.3%
November 2010 65.0 10.70% 23.8%
Hedged gearing 390.0 9.60% 142.8%
Variable rate (117.1) 9.20% (42.8%)
gearing (*)
Total gearing 272.9 9.77% 100.0%
(*) Based on the prime lending rate of
11.50%
10 Distribution
The board has approved and notice is hereby given of an interim
distribution (distribution no. 7) of 56.78 cents per linked unit for the 6
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 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.
11 Prospects
Resilient will enjoy six months of income from the highly profitable
Diamond Pavilion in the second half of the year, compared to the
approximately two and a half months of income for this interim period.
Resilient will also benefit from two months of income from Jabulani Mall in
the second half of the year. The board remains confident that the growth in
distribution for the 2006 financial year will exceed 15%.
By order of the board
Des de Beer Jacques van Wyk
Managing Director Financial Director
Johannesburg
16 August 2006
Consolidated balance sheets
Reviewed Audited Reviewed
30 Jun 2006 31 Dec 2005 30 Jun 2005
R"000 R"000 R"000
Assets
Investment properties 1 373 954 1 042 589 1 017 609
Investment properties under
development 48 056 84 306 10 807
Investment in listed associated 201 026 - 270 941
company
Investments in listed property 528 195 765 570 261 724
securities
Investments in other assets 80 305 86 133 69 407
Total non-current assets 2 231 536 1 978 598 1 630 488
Investment properties available 52 498 - -
for sale
Trade and other receivables 50 514 18 642 7 040
Cash and cash equivalents 89 3 680 85 657
Total current assets 103 101 22 322 92 697
Total assets 2 334 637 2 000 920 1 723 185
Equity
Share capital 1 330 1 330 1 246
Share premium 164 557 164 775 104 702
Non-distributable reserves 771 318 674 912 256 041
Retained earnings - 10 3
Total equity attributable to 937 205 841 027 361 992
equity holders
Liabilities
Linked debenture liabilities 638 080 638 224 597 856
Interest-bearing borrowings 397 690 195 029 586 264
Deferred tax liabilities 216 320 196 910 84 376
Total non-current liabilities 1 252 090 1 030 163 1 268 496
Trade and other payables 26 958 31 980 23 063
Linked debenture interest 81 658 69 361 59 735
payable
Income tax payable 36 726 28 389 9 899
Total current liabilities 145 342 129 730 92 697
Total liabilities 1 397 432 1 159 893 1 361 193
Total equity and liabilities 2 334 637 2 000 920 1 723 185
Consolidated income statements
Reviewed Audited Reviewed
6 months 12 months 6 months
ended ended ended
30 Jun 2006 31 Dec 2005 30 Jun 2005
R"000 R"000 R"000
Gross rental income 80 269 174 261 89 445
Amortised lease escalations 7 570 (270) 4 437
Property operating expenses (23 552) (51 870) (29 371)
Net rental and related income 64 287 122 121 64 511
Distribution income from listed
associated company 5 515 26 232 17 904
Distribution income from listed 26 728 28 629 9 625
property securities
Total distribution income from 32 243 54 861 27 529
equity investments
Profit on disposal of - 55 404 -
investment properties
Profit on disposal of listed 33 629 62 216 11 928
property securities
Profit on disposal of 33 629 117 620 11 928
investments
Valuation gains on investment 112 773 286 497 -
properties
Valuation adjustment resulting (7 570) 270 (4 437)
from amortised lease
escalations
Valuation (loss) / gain on (48 007) 212 103 38 584
listed property securities
Valuation gains on investments 57 196 498 870 34 147
Fair value adjustment on 9 429 (10 896) -
interest rate swaps
Administrative expenses (9 993) (11 467) (4 616)
Other income 6 230 3 815 -
Other expenses (374) (248) (219)
Net operating income before net 192 647 774 676 133 280
financing costs
Financing income
Financing income from the 4 529 7 440 3 455
incentive trust
Interest on linked units - 2 310 333
issued cum distribution
Financing costs
Interest on borrowings (14 099) (50 231) (26 876)
Interest to linked debenture
holders
- interim (81 658) (59 735) (59 735)
- final - (69 361) -
Net financing costs (91 228) (169 577) (82 823)
Post-acquisition reserves from 22 743 1 285 1 285
listed associated company
Profit before income tax 124 162 606 384 51 742
Income tax (27 716) (149 526) (11 337)
Profit for the period 96 446 456 858 40 405
attributable to equity holders
Earnings per share (cents) 72,51 361,29 32,61
Earnings per linked unit (cents) 133,91 463,38 80,82
Reconciliation of headline earnings per linked unit
Reviewed Audited Reviewed
30 Jun 2006 31 Dec 2005 30 Jun 2005
cents cents cents
Earnings per share 72,51 361,29 32,61
Interest to linked debenture
holders 61,40 102,09 48,21
Earnings per linked unit 133,91 463,38 80,82
Adjusted for:
- valuation gains on
investment properties (84,79) (226,57) (41,76)
- valuation loss / (gains)
on listed property
securities 19,00 (168,75) -
- profit on disposal of
investment properties - (43,81) -
- (profit)/loss on disposal
of equity investments (25,28) (49,20) -
- taxation effect 19,21 120,54 9,15
(71,86) (367,79) (32,61)
Headline earnings per linked
unit 62,05 95,59 48,21
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 133 003 384 (31 Dec
2005: 126 451 329; 30 Jun 2005:123 902 832) linked units in issue.
A distribution of 56.78 cents per linked unit (based on 143 814 195
units in issue) will be paid to unitholders on 11 September 2006.
Statements of changes in equity
for the 6 months ended 30 June 2006
Non-
Issued Share distri- Retained
butable
capital premium reserves earnings Total
R"000 R"000 R"000 R"000 R"000
Balance at 1 1 330 164 775 674 912 10 841 027
January 2006
Issue of
units
- Issue of 108 142 270 142 378
10 810 811
units on 27
June 2006
Less: Units (218) (218)
held by The
Resilient
Unit Purchase
Trust
Less: Units (108) (142 270) (142 378)
held by BEE
partners
Profit on (50) (50)
units held by
The Resilient
Unit Purchase
Trust
Profit for 96 446 96 446
the period
Transfer to 96 456 (96 456) -
reserves
Balance at 30 1 330 164 557 771 318 - 937 205
June 2006
for the 6 months ended 30 June 2005
Non-
Issued Share distri- Retained
butable
capital premium reserves earnings Total
R"000 R"000 R"000 R"000 R"000
Balance at 1 1 230 96 091 217 943 - 315 264
January 2005
Issue of
units
- Issue of 16 8 845 8 861
1 585 000
units on 22
March 2005
Less: Units (234) (234)
held by The
Resilient
Unit Purchase
Trust
Profit on 10 10
units held by
The Resilient
Unit Purchase
Trust
Fair value (2 314) (2 314)
adjustment to
cash flow
hedges
Profit for 40 405 40 405
the period
Transfer to (40 402) 40 402 -
reserves
Balance at 30 1 246 104 702 256 041 3 361 992
June 2005
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 consolidated statements of cash flows
Reviewed Audited Reviewed
6 months ended 12 months 6 months ended
ended
30 Jun 2006 31 Dec 2005 30 Jun 2005
R"000 R"000 R"000
Cash flows from operating (22 119) (3 582) 6 900
activities
Cash flows from investing (153 663) 127 967 (92 319)
activities
Cash flows from financing 172 191 (196 424) 95 357
activities
Movement in cash and cash (3 591) (72 039) 9 938
equivalents
Cash and cash equivalents 3 680 75 719 75 719
at beginning of period
Cash and cash equivalents 89 3 680 85 657
at end of period
Notes to the interim results for the 6 months ended 30 June 2006
1) Preparation and review opinion
This interim financial 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 reviewed the financial
information set out in this interim financial report. The unqualified
review opinion is available for inspection at the group"s business address:
4th Floor, Rivonia Village, Rivonia Boulevard, Rivonia 2191.
2) Property revaluation adjustments
2.1) Investment properties
Investment properties are fair valued annually by external valuers. The net
asset value reported in interim financial reports therefore excludes any
revaluation gains or losses for the period from the prior annual financial
report, to the date of the interim financial report.
2.2) Developments and extensions completed
The value of construction works at existing properties and that relating to
new developments, are initially recognised at cost and only fair valued,
based on external valuations, once construction works are completed. During
the period under review construction works at the Diamond Pavilion Mall and
Northam Shopping Centre were completed and revaluation gains of R 106.8
million were recorded in profit for the period.
2.3) Properties available for sale
Investment properties are reclassified as available for sale when the group
has a binding agreement of sale and all material conditions precedent to
the sale have been met. Available for sale properties are carried at the
realisable fair value as based on the sale agreement. The Shoprite Secunda
and Die Meent properties were reclassified as available for sale during the
period and resulted in R 6.0 million in revaluation profit for the period.
3) Administrative information
Directors: AS Nkonyeni (Chairman), JJG da Costa, D de Beer*, MP Greyling,
JJ Kriek*, DJ Lewis*, PP Msweli, MJN Njeke, BL Stuhler#, PA Theodosiou, R
Turner, BD van Wyk, JJ van Wyk*, JN Zidel*
# Non-independent non-executive
* Executive director
Company secretary: NW Hanekom
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 05:42:11 PM Produced by the JSE SENS Department
