| Mon 27 Nov 2006, 12:15 | | Vukile - Unaudited Interim Results & Distribution |
|
VKE
VKE
Vukile - Unaudited Interim Results & Distribution, six months ended 30
September 2006
VUKILE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2002/027194/06)
Share code: VKE & ISIN: ZAE000056370
UNAUDITED INTERIM RESULTS AND DISTRIBUTION ANNOUNCEMENT for the six months
ended 30 September 2006
* Total return to unitholders for 12 months - 34.4%
* Distribution up 10%
* NAV per linked unit increases by 12.7%
COMMENTS
1 BASIS OF PREPARATION
The unaudited abridged interim financial statements for the six months ended
30 September 2006, and comparative information, have been prepared in terms
of International Financial Reporting Standards (IFRS). The statements also
comply with IAS34 (Interim Financial Reporting) and relevant sections of
the South African Companies Act 1973, as amended. The accounting policies
applied are consistent with those applied in the most recent audited
financial statements.
Deferred taxation on the fair value adjustment of investment property was
previously provided at capital gains taxation rates. In terms of IAS 12,
Vukile has now applied a combination of income taxation and capital gains
taxation rates based on the nature of the property. The effect of the
above changes was disclosed in Vukile"s annual financial statements at 31
March 2006. These changes were not previously incorporated in the interim
results for the six-months ended 30 September 2005 and hence this period"s
results are now restated.
2 FINANCIAL RESULTS
The group"s net profit available for distribution amounted to R98.9 million
(36.30 cents per linked unit) for the six months ended 30 September 2006
compared to the R87.2 million (32.50 cents per linked unit) for the six
months ended 30 September 2005, an increase of 13.4%. MICC contributed
R26.7 million to net profit before tax, debenture interest and fair value
adjustment and after adjusting for minority interests (R25.8 million - 30
September 2005). Vukile"s net rental income, excluding straight-line
rental accruals, has increased by R11 million or 9.4% over the comparable
period. As a result of property sales following Vukile"s acquisition of an
additional 24% in MICC, MICC"s net rental income, excluding straight-line
rental accruals, had reduced by R10.8 million or 17%. This reduction was
more than offset by:
* an additional 24% of MICC"s income now attributable to Vukile. The net
profit attributable to minorities has reduced by R9.5 million over the
comparable period, and
* by a reduction in finance costs, net of interest received, of R4 million
over the comparable period.
SUMMARY OF FINANCIAL PERFORMANCE
Sept 06 Sept 05 March 06
Net asset value attributable to
equity holders of parent
per linked unit 710 cents 630 cents 670 cents
Distribution per linked unit 35.75 cents 32.50 cents 36.0 cents
Loan to value ratio 35.5% 39.7% 41.0%
The net asset value per linked unit increased by 12.7% from R6.30 per linked
unit as at 30 September 2005 to R7.10 per linked unit as at
30 September 2006.
The board has approved an interim distribution of 35.75 cents per linked unit
for the six months ended 30 September 2006, an increase of 10% over the
comparable period.
3 BORROWINGS
The group"s long-term debt is hedged using interest rate swap agreements for
periods expiring between four and six years and via two-year swaptions to
hedge short term debt. Increases in interest rates will, therefore, have
little impact on the group"s cost of debt.
MICC"s debt has been restructured and comprises a new five-year loan of R251.2
million from Nedbank at a rate which has been fixed at 10.66% (previously
11.51%) through an interest rate swap agreement, as well as a new five-year
loan of R188.8 million from Absa (replacing Standard Bank) at a rate which
has been fixed at 10.38% (previously 11.22%) through an interest rate swap
agreement. In addition, an access facility of R62.7 million at 1.5% below
prime has been negotiated with Absa. The net effect of this restructuring
is an annual saving in debt costs of approximately R4.0 million.
4 PROPERTY PORTFOLIO
The combined property portfolio currently comprises 79 properties with a gross
lettable area of 956 147m2.
For the combined portfolio, the sectoral spread by revenue comprises 32.7%
commercial, 51.6% retail and 15.7% industrial.
During the period under review 110 923m2 (85.5%) of expired leases of 129
734m2 were renewed.
The group"s lease expiry profile as at 30 September 2006 is approximately the
same as it was at 30 September 2005.
At 30 September 2006, the combined portfolio"s vacancy (measured as a
percentage of gross rentals), was 4.1% compared to 4.6% at 30 September
2005. The vacancy at Randburg Square office tower will, once all the newly
concluded leases commence on 1 December 2006, be less than 10% compared to
more than 60% at 31 March 2006.
5 ACQUISITIONS AND DISPOSALS
All the acquisitions and disposals referred to in the company"s annual
financial statements for the year ended 31 March 2006, issued on 29 May
2006, have been successfully concluded.
The following properties have also been identified as non-core and have been
sold.
Valuation
Original Net at
purchase sales 31 Mar Expected
price price 2006 date of
Property R000 R000 R000 transfer
Vukile
JHB Market Street Bradlows 10 902 7 909 10 128 Nov 06
JHB Wynberg 57 Andries Str 2 853 6 203 2 851 Nov 06
Orkney Shopping Centre 11 742 13 759 15 657 Nov 06
Totals 25 497 27 871 28 636
MICC
Johannesburg Denver Relyant 5 599 7 177 8 761 Nov 06
Pinetown Halifax Road 20 333 22 290 22 315 Nov 06
Pietermaritzburg Heritage House 12 827 11 565 10 089 Nov 06
Randburg Hillview 17 408 18 390 18 260 Nov 06
Bethlehem Maluti Square 10 100 6 203 9 268 Nov 06
Totals 66 267 65 625 68 693
6 DEVELOPMENTS
The two major expansion and upgrade projects, Phoenix Plaza and Dobsonville
Centre, are both on track for completion in November this year as
scheduled. The additional space at both complexes has already been fully
let and, despite various new developments in Soweto, there is a waiting
list from tenants wanting to take up space in the Dobsonville Centre. In
addition, the new joint venture value retail complex at King"s Road
Pinetown (owned jointly with SA Retail) is also on track for completion in
November this year.
7 VALUATION OF PORTFOLIO
The directors have valued the Vukile property portfolio at R2.57 billion as at
30 September 2006. This is R68.7 million (2.74%) higher than the
directors" valuation as at 31 March 2006. If sales and acquisitions are
excluded, the value of the portfolio increased by R78.7 million (3.3%)
compared to the value as at 31 March 2006. Approximately 50% of the Vukile
portfolio has been valued by Old Mutual Properties at R1.195 billion. The
directors" valuation for the same properties amounts to R130 million
(10.9%) less than Old Mutual"s valuation.
The MICC portfolio has been valued by the directors of MICC at R919 million as
at 30 September 2006, which valuation has been approved by the board of
directors of Vukile. This represents an increase of 1.4% over the
directors" valuation of the comparable properties at 31 March 2006.
8 SEGMENTAL ANALYSIS
Indus- Com- Cor-
trial mercial Retail porate Total
R000 R000 R000 R000 R000
Group income
For the six
months ended
30 Sept 2006
Rental income 43 393 90 251 142 706 - 276 350
Straight-line
rental income 486 1 067 1 330 - 2 883
Property
expenses (16 383) (28 887) (50 948) - (96 218)
Net profit
from property
operations 27 496 62 431 93 088 - 183 015
Group balance
sheet at
30 Sept 2006
Non-current assets
Investment
properties 501 179 1 002 571 1 726 441 - 3 230 191
Other non-
current assets 8 099 16 745 25 743 83 223 133 810
Non-current assets
held for sale 66 299 119 260 89 456 - 275 015
Current assets 12 525 13 883 65 615 2 757 94 780
Current
liabilities 48 595 67 896 139 034 97 394 352 919
Segment assets and liabilities
Segment assets include all operating assets used by a segment and consist
principally of investment properties, receivables and cash. Assets not
directly attributable to a particular segment are allocated to the
corporate segment. Segment liabilities include all operating liabilities
of a segment and consist principally of outstanding accounts. Segment
assets and liabilities do not include deferred taxes.
9 MICC
The company issued a SENS announcement on 4 May 2006, advising that a linked
unitholder owning 9 825 MICC linked units (representing 0.01% of MICC"s
total issued capital), filed an application with the High Court on Friday
28 April 2006 opposing Vukile"s invoking of section 440K. Vukile intends
opposing such application. A date for the hearing of the application has
not yet been determined. Accordingly, the listing of MICC"s linked units
on the JSE and the Namibian Stock Exchange was not terminated on Friday, 5
May 2006, but will continue to be suspended until further notice. Vukile
currently owns 98.9% of MICC"s issued linked units.
10 NOTICE OF GENERAL MEETING TO VUKILE UNITHOLDERS
A circular will be posted to Vukile unitholders and debenture holders, within
the next two weeks, giving notice of a general meeting to be held early in
2007 to consider the following:
* An issue of approximately R200 million of new linked units for cash, on
terms that are to be specifically approved by unitholders in respect of
this particular issue ("a specific issue for cash"); and
* A special resolution to amend certain aspects of the Debenture Trust Deed
to extend the contractual distribution from 90% to 99% of net income and to
bring the definition of net income in line with the new IFRS accounting
policies.
11 PROSPECTS
Trading conditions remain strong and we do not expect the higher interest rate
environment to have an adverse effect on portfolio income in the
foreseeable future. There is still upward pressure on rentals (especially
commercial and industrial) and, although we do not expect to reduce the
vacancies in the portfolio substantially from the current (very low)
levels, we also do not expect vacancies to increase in the foreseeable
future. The benefits of a reduction in MICC"s debt by R200 million,
together with the reduced interest rates on MICC long-term debt for a full
six-month period to 31 March 2007, will also assist in boosting
distributable income.
We therefore expect the distribution for the full year to 31 March 2007 to
reflect the good trading conditions and to show growth broadly in line with
the growth at the interim stage.
12 PAYMENT OF DEBENTURE INTEREST AND DIVIDEND
Notice is hereby given of a distribution amounting to 35.75 cents per linked
unit, for the six-month period to 30 September 2006. The distribution
comprises interest on debentures of 35.68 cents per linked unit and a
dividend of 0.07 cents per linked unit.
Last date to trade cum distribution Fri, 15 Dec 2006
Linked units trade ex distribution Mon, 18 Dec 2006
Record date for unitholders to
participate in the distribution Fri, 22 Dec 2006
Payment of distribution to unitholders Wed, 27 Dec 2006
Linked unit certificates may not be dematerialised or re-materialised between
Monday 18 December 2006 and Friday 22 December 2006, both days inclusive.
On behalf of the Board
AD Botha G van Zyl
Chairman Chief executive
Roodepoort 27 November 2006
ABRIDGED GROUP INCOME STATEMENT
Unaudited
Unaudited Restated Audited
Six months Six months Year
ended ended ended
30 Sept 30 Sept 31 Mar
2006 2005 2006
R000 R000 R000
Property revenue 276 350 275 196 567 688
Straight-line rental income
accrual 2 883 13 797 19 144
Gross property revenue 279 233 288 993 586 832
Property expenses (96 218) (95 599) (201 174)
Net profit from property
operations 183 015 193 394 385 658
Administrative expenses (6 207) (5 595) (21 598)
Investment and other income 5 184 1 313 4 355
Operating profit before
finance costs 181 992 189 112 368 415
Finance costs (73 901) (73 981) (144 978)
Net profit before debenture
interest 108 091 115 131 223 437
Debenture interest (97 500) (94 518) (200 632)
Net profit before fair value
adjustments 10 591 20 613 22 805
Loss on sale of re-valued
properties (1 280) - -
Realised capital profit on
property sales 46 539 - -
Less: Prior revaluations
of sold properties (47 819) - -
Fair value adjustment 80 227 161 765 449 311
Gross change in fair value of
investment properties 83 110 175 562 468 455
Straight-line rental income
adjustment (2 883) (13 797) (19 144)
Net profit before taxation 89 538 182 378 472 116
Taxation (29 882) (50 447) (127 659)
Net profit after taxation 59 656 131 931 344 457
Attributable to:
* Linked unitholders of the
company 59 588 122 347 317 631
* Minorities 68 9 584 26 826
59 656 131 931 344 457
RECONCILIATION: HEADLINE EARNINGS AND
DISTRIBUTABLE EARNINGS
Attributable profit after taxation 59 588 122 347 317 631
Adjusted for:
Gross change in fair value of
investment properties (83 110) (175 562) (468 455)
Deferred taxation on gross
change in fair value adjustment
of investment properties 23 869 44 596 125 754
Minority interest in
revaluation surplus net of
deferred taxation 80 8 793 25 984
Straight-line rental accrual
net of minority interest and
deferred taxation 1 966 11 766 13 370
Loss on sale of re-valued
properties 1 280 - -
Debenture interest net of
minority interest 97 195 86 982 184 859
Headline earnings of linked units 100 868 98 922 199 143
Adjusted for:
Straight-line rental accrual
net of minority interest and
deferred taxation (1 966) (11 766) (13 370)
Pre-acquisition distribution
receivable from MICC - - 7 844
Less: Cost of investment in
MICC - - (7 844)
Available for distribution 98 902 87 156 185 773
Distribution to unitholders 97 394 87 162 185 236
Interest 97 195 86 984 184 859
Dividend 199 178 377
Total number of linked units in
issue (000) 272 429 268 189 272 429
Weighted average number of
linked units in issue (000) 272 429 268 189 268 619
Headline earnings (cents per
linked unit) 37.03 36.89 74.14
Available for distribution
(cents per linked unit) 36.30 32.50 69.16
ABRIDGED GROUP BALANCE SHEET
Unaudited
Unaudited Restated Audited
30 Sept 30 Sept 31 Mar
2006 2005 2006
R000 R000 R000
ASSETS
Non-current assets 3 317 257 3 380 241 3 177 967
Investment properties 3 183 447 3 281 105 3 053 773
Investment properties -
at valuation 3 230 191 3 321 250 3 094 470
Straight-line rental income
adjustment (46 744) (40 145) (40 697)
Other non-current assets 133 810 99 136 124 194
Straight-line rental income
adjustment 46 744 40 145 40 697
Furniture, fittings and
computer equipment 224 402 274
Goodwill 83 223 58 589 83 223
Interest rate swap asset 3 619 - -
Current assets 94 780 45 931 99 357
Trade and other receivables 26 079 21 836 19 680
Cash and cash equivalents 68 701 24 095 79 677
Non current assets held for sale 275 015 - 574 256
Investment properties 270 627 - 566 704
* Investment properties
at fair value 275 015 - 574 256
* Straight-line rental
income adjustment (4 388) - (7 552)
Straight-line rental income asset 4 388 - 7 552
Total assets 3 687 052 3 426 172 3 851 580
EQUITY AND LIABILITIES
Equity and reserves 592 902 340 151 482 739
Share capital 2 724 2 682 2 724
Share premium 13 354 13 009 13 354
Reserves 566 362 285 841 456 188
Minority interest 10 462 38 619 10 473
Non-current liabilities 2 741 231 2 938 339 2 995 529
Linked debentures and premium 1 351 448 1 389 486 1 351 708
Other interest bearing
borrowings 1 088 530 1 319 910 1 315 974
Interest rate swap liability - 22 426 47 166
Deferred taxation 301 253 206 517 280 681
Current liabilities 352 919 147 682 373 312
Trade and other payables 93 950 60 520 86 686
Short-term bank finance 151 850 - 183 993
Vendor loans 1 811 - 2 030
Taxation payable 7 914 - 2 528
Linked unitholders for
distribution 97 394 87 162 98 075
Total equity and liabilities 3 687 052 3 426 172 3 851 580
ABRIDGED GROUP CASH FLOW STATEMENT
Unaudited
Unaudited Restated Audited
Six months Six months Year
ended ended ended
30 Sept 30 Sept 31 Mar
2006 2005 2006
R000 R000 R000
CASH FLOWS FROM OPERATING
ACTIVITIES 4 309 (6 018) 26 300
Cash generated from operations 173 276 152 086 347 929
Finance costs (73 901) (73 981) (144 978)
Investment and other income 5 184 1 313 4 228
Distributions paid (98 075) (84 480) (179 411)
Taxation paid (2 175) (956) (1 468)
CASH FLOWS FROM INVESTING
ACTIVITIES 244 302 (13 043) (204 419)
CASH FLOWS FROM FINANCING
ACTIVITIES (259 587) 19 095 233 735
Net (decrease)/increase in
cash and cash equivalents (10 976) 34 55 616
Cash and cash equivalents at
the beginning of the period 79 677 24 061 24 061
Cash and cash equivalents at
the end of the period 68 701 24 095 79 677
STATEMENT OF CHANGES IN EQUITY
Share Non-
Capital dis-
and tribut- Re-
share able tained Minority
premium reserves income Interest Total
R000 R000 R000 R000 R000
Group
Balance at 31 March
2005 15 691 160 685 4 853 26 392 207 621
Increased holding in
business combination
acquired previously - - (2) (1 032) (1 034)
Revaluation of interest
rate swaps - (1 864) - - (1 864)
Net profit for the
period - - 122 347 9 584 131 931
Change in fair value of
investment properties - 161 765 (161 765) - -
Deferred taxation on
change in fair value of
investment properties - (44 596) 44 596 - -
Allocation of change in
fair value of investment
properties in respect of
minorities - (8 793) 8 793 - -
Straight-line rental
adjustment net of
deferred taxation - 10 166 (10 166) - -
Minorities" share of post
acquisition distribution - - - 3 675 3 675
Transferred to capital
reserve - 5 072 (5 072) - -
Dividend distribution - - (178) - (178)
Balance at 30 September
2005 15 691 282 435 3 406 38 619 340 151
Restated balance at
30 September 2005 15 691 282 435 3 406 38 619 340 151
Balance at 30 September
2005 as previously
reported 15 691 346 046 3 406 57 722 422 865
Change in accounting
policy - deferred
taxation on revaluation
of investment
properties - (63 611) - (19 103) (82 714)
Linked units issued in
acquiring property 387 - - - 387
Increased holding in
business combination
acquired previously - - 2 (46 079) (46 077)
Revaluation of interest
rate swaps - (24 740) - - (24 740)
Net profit for the period - - 195 284 17 242 212 526
Change in fair value of
investment properties - 287 546 (287 546) - -
Deferred taxation on
change in fair value of
investment properties - (75 539) 75 539 - -
Allocation of change in
fair value of investment
properties in respect of
minorities - (17 191) 17 191 - -
Straight-line rental
adjustment net of
deferred taxation - 3 359 (3 359) - -
Minorities" share of post
acquisition distribution - - - 691 691
Transfer from capital
reserve - (5 072) 5 072 - -
Dividend distribution - - (199) - (199)
Balance at 31 March
2006 16 078 450 798 5 390 10 473 482 739
Revaluation of interest
rate swaps - 50 785 - - 50 785
Net profit for the period - - 59 588 68 59 656
Change in fair value of
investment properties - 80 227 (80 227) - -
Deferred taxation on
change in fair value of
investment properties - (22 950) 22 950 - -
Allocation of change in
fair value of investment
properties in respect of
minorities - (80) 80 - -
Straight-line rental
adjustment net of
deferred taxation - 1 963 (1 963) - -
Loss on sale of properties
transferred - (1 280) 1 280 - -
Minorities" share of post
acquisition distribution - - - (79) (79)
Dividend distribution - - (199) - (199)
Balance at 30 September
2006 16 078 559 463 6 899 10 462 592 902
VUKILE PROPERTY FUND LIMITED
Registered office: 2nd floor Meersig Building, Constantia Boulevard,
Constantia Kloof, 1709
Executive directors: G van Zyl (CEO), MJ Potts (Financial director) Non-
executive directors: AD Botha (Chairman), S Bernic, HSC Bester, PJ Cook,
PS Moyanga, JM Hlongwane and M Serebro
Company Secretary: EL Yates
Sponsor: Bridge Capital Advisors (Pty) Limited, Woodmead, Johannesburg
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited,
ground floor, 70 Marshall Street, Johannesburg
Investor and media relations: Contact Helen McKane on vukile@dpapr.com, or
Tel: 011 728-4701
Website: www.vukileprops.co.za
Date: 27/11/2006 12:15:18 PM Produced by the JSE SENS Department
