Wrap Text
Unaudited condensed consoliated interim financial results for the six months ended 31 December 2012
Vunani Property Investment Fund Limited
(Registration number: 2005/019302/06)
ISIN: ZAE000157459
JSE code: VPF
(“VPIF” or “the Company” or “the Fund”)
Listed on the JSE Limited (“JSE”)
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE SIX
MONTHS ENDED 31 DECEMBER 2012
FINANCIAL HIGHLIGHTS
Distributions increased 24.4% to 38.0 cents per linked unit;
Revenue increased 53.7% to 106.9 million;
Net property income increased 74.6% to R75.0 million;
Portfolio increased 6.6% to R1.5 billion from 30 June 2012 to December
2012;
Linked unit price increased 16.4% to 960 cents from 30 June 2012 to 31
December 2012;
Tangible net asset value increased from 809.67 to 811.92 cents per linked
unit from 30 June 2012 to 31 December 2012; and
Compound growth of 21.0% from 30 June 2012 to 31 December 2012
NON-FINANCIAL HIGHLIGHTS
2012 Energy Efficiency Forum award winner for 14 Loop Street, Cape Town;
80% Blue chip tenants
5.8% Vacancy at 31 December 2012
95% Tenant retention
COMMENTARY
Introduction
VPIF is a property loan stock company which offers investors an opportunity
to participate in an office dominated JSE listed property fund. The
portfolio currently comprises 28 strategically located, high quality
buildings, located in South Africa with a total Gross Lettable Area (“GLA”)
of 145 202m2 valued at R1.5 billion.
The directors are pleased to announce excellent interim results. Despite
the market conditions being the toughest in the Fund’s seven year history,
VPIF was able to maintain its high rating in all of its key performance
indicators. In addition, the distribution growth of 24.4% indicates the
value to unit holders of an experienced, focussed management team. The
Fund’s strategy has remained largely unchanged from inception in 2006 and
it will continue to extract value from its chosen market of A+, A and some
B grade offices, whilst avoiding trophy assets until such time as such
investments are value enhancing. Refurbishment of existing stock continues
to enhance earnings as do new acquisitions. The next 12 months will see the
Fund aggressively pursuing further acquisitions which could result in the
raising of additional capital, but not at the expense of yield and quality.
The global and domestic markets remain uncertain and largely stagnant. Such
instability makes capital preservation and low risk distributions
attractive to investors. VPIF is well placed to fulfil this objective and
has a solid platform from which to offer above market growth and earnings.
Summary of financial performance Unaudited Audited Unaudited
6 months year to 6 months
31 Dec 2012 30 Jun 2012 31 Dec 2011
Net asset value per linked unit
(cents) 742.44 742.93 679.84
Tangible net asset value per
linked unit (cents) 811.92 809.67 719.84
Distribution per linked unit
(cents) 38.00 64.51 30.54
Linked unit price (cents) 960.00 825.00 720.00
Loan to value 35.0% 31.4% 18.3%
At 31 December 2012 the property portfolio reported a vacancy level of
5.8%.
Vacant Vacant
Total 31 Dec 30 Jun
GLA 2012 2012
(m2) % %
Office 131 804 5.6% 5.7%
Retail 8 147 0.2% 0.1%
Industrial 5 251 - -
Total 145 202 5.8% 5.8%
The abovementioned vacancy includes a vacancy that was acquired at
Foretrust, which was not paid for. The weighted average lease escalation is
7.4% for the portfolio.
Reconciliation of change in Total GLA at Net increase Total GLA at
GLA of the Fund: 30 Jun 2012 in GLA 31 Dec 2012
(m2) (m2) (m2)
Office 127 180 4 624 131 804
Retail 8 147 - 8 147
Industrial - 5 251 5 251
Total 135 327 9 875 145 202
Acquisitions/business combinations
During the period the Fund made the following acquisitions:
Weighted
Acquisition average
Transfer cost GLA Acquisition annual
date R’000 (m2) yield escalation
7 Aug
Brickfield property1 2012 20 004 5 251 10.0% 7.0%
Business Centre 6 Nov
property2 2012 64 579 4 886 9.6% 7.5%
1. The property is situated at 5-9 Brickfield Road, Salt River and
occupied by J Ryan Printers. The lease is a 10 year triple net lease
expiring in August 2022.
2. The property is situated at 377 Rivonia Boulevard, Sandton. The
building is entirely let to the Business Centre, which has entered
into a triple net lease expiring in November 2022.
Net assets acquired Brickfield Business Total
R’000 property Centre
property
Investment property 20 004 64 579 84 583
Cost of investment 20 004 64 579 84 583
Settlement of cost of investment:
Cash paid 20 004 64 579 84 583
Post balance sheet events
Subsequent to 31 December 2012, the Fund took transfer of 8 parking bays at
Vunani Chambers at a cost of R980 000 in order to enhance the offering at
the building and to address the shortage of parking space.
Fair value adjustments
The entire portfolio, with the exception of the abovementioned properties
were independently valued at 30 June 2012 and the board of directors does
not believe that a revaluation of the properties are warranted as there
were no factors that would materially affect the valuation of the portfolio
for the period ending 31 December 2012.
The fair value adjustment reflected in the statement of comprehensive
income relates to the change in fair value of the interest rate swaps.
Arrears
Tight management of receivables resulted in total arrears decreasing to
R3.7m (30 June 2012 R5.6m).
Borrowings
At 31 December 2012 the Fund had a loan to value of 35.0% (30 June 2012:
31.4%). The Fund remains capitalised to take advantage of yield enhancing
acquisitions. The fund has an average cost of debt of 8.7% with 67% of the
outstanding debt hedged through the use of interest rate swaps.
Unaudited Audited Unaudited
6 months year to 6 months
31 Dec 30 Jun 31 Dec
R’000 2012 2012 2011
Standard Bank Limited loan – carried at
cost 532 325 447 825 192 888
Fair value of interest rate swaps 21 260 14 881 -
Carried at fair value through profit or
loss 553 585 462 706 192 888
Less amount to be settled within 12 months
and included in current liabilities (324 196) (324 196) -
Redraw portion of facility - (15 400) -
Non-current portion of other financial
liabilities 229 389 123 110 192 888
Amount to be settled within 12 months and
included in current liabilities 324 196 324 196 -
Less redraw portion of facility (36 000) (17 900) -
Current portion of other financial
liabilities 288 196 306 296 -
Standard Bank of South Africa has indicated that it will extend the
facility for a further 5 years upon expiry on 31 May 2013.
Basis of accounting
The condensed financial results for the six months to 31 December 2012 have
been prepared in accordance with the recognition and measurement criteria
of International Financial Reporting Standards (“IFRS”), the presentation
and disclosure requirements of IAS 34: Interim Financial Reporting, the
SAICA Financial Reporting Guides as Issued by the Accounting Practices
Committee, the Companies Act 71, of 2008 and the JSE Listings Requirements.
The accounting policies applied in the preparation of the results for the
period ended 31 December 2012 are in terms of IFRS and consistent with
those adopted in the financial statements for the year ended 30 June 2012.
These interim condensed financial results have been prepared by Marelise de
Lange, B.Com(Hon)(Acc).
These condensed consolidated interim results incorporate the financial
results of the Company and its subsidiaries. Results of subsidiaries are
included from the effective date of acquisition. Investment property
comprises land and buildings held to generate rental income and capital
growth over the long term and are carried at fair value. Should any
properties no longer meet the company’s investment criteria and be sold,
any profits or losses will be of a capital nature and will be taxed at
rates applicable to capital gains.
Share and debenture capital
The authorised share capital is 2 000 000 000 ordinary shares of R0.0025
each and the issued share capital is 120 618 080 ordinary shares of R0.0025
each. Each ordinary share is linked to one unsecured variable rate
debenture of R2.4975. The ordinary shares and debentures trade as linked
units on the JSE. In terms of the debenture trust deed, the interest
payable on the debenture is calculated in accordance with the distributable
income formula and 100% is distributed annually.
No linked units were issued during the period.
Prospects
Despite the difficult economic climate, the portfolio has performed well
over the past six months and the board expects similar performance to ensue
in the second half of the year. We will continue to focus on our strategy
of growing the fund with yield enhancing assets without compromising on
quality. This prospects statement has not been reviewed or reported on by
the Fund’s independent external auditors.
Cash distribution
Notice is hereby given of debenture interest payment number 3 of 38.00
cents per linked unit for the six months ended 31 December 2012.
Salient dates relating to the cash distribution are as follow:
Declaration date Monday, 25 February 2013
Last date to trade in order to participate in Thursday, 14 March 2013
the cash distribution
Linked units to trade ex-distribution Friday, 15 March 2013
Record date Friday, 22 March 2013
Payment date Monday, 25 March 2013
Linked units may not be dematerialised or rematerialised between Friday, 15
March 2013 and Friday, 22 March 2013, both dates inclusive.
On behalf of the board
PD Naidoo RF Kane
Chairman Chief executive officer
Sandton
25 February 2013
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months year to
31 Dec 31 Dec 30 Jun
R’000 2012 2011 2012
Investment property income 106 949 69 593 165 860
Straight-line rental adjustment 5 954 575 5 994
Revenue 112 903 70 168 171 854
Property expenses (37 896) (27 212) (57 874)
Net property income 75 007 42 956 113 980
Other income 52 96 926
Other operating expenses (1 070) (13 923) (15 274)
Asset management fees (3 806) (2 135) (5 359)
Operating profit 70 183 26 994 94 273
Finance income 676 1 054 2 005
Finance cost amortisation - (44 694) (45 694)
Finance costs (17 814) (8 372) (25 085)
Fair value adjustments (4 491) 7 299 106 835
Profit/(loss) before debenture interest
and tax 48 554 (17 719) 132 334
Distributions (45 835) (36 843) (77 813)
Trust distributions – net rental income - (2 324) (2 324)
Debenture interest (45 835) (34 519) (75 489)
Profit/(loss) before amortisation of
debenture premium 2 719 (54 562) 54 521
Amortisation of debenture premium 953 - 1 679
Profit/(loss) before income tax 3 672 (54 562) 56 200
Income tax expense (3 312) (2 111) (35 098)
Current tax - - (25)
Deferred tax (3 312) (2 111) (35 073)
Profit/(loss) for the period 360 (56 673) 21 102
Total comprehensive income for the period
attributable to equity holders 360 (56 673) 21 102
RECONCILIATION OF ATTRIBUTABLE INCOME TO
EARNINGS, HEADLINE EARNINGS AND
DISTRIBUTABLE INCOME
Total comprehensive income for the period
attributable to equity holders 360 (56 673) 21 102
Distributions 45 835 36 843 77 813
Trust distributions – net rental income - (2 324) (2 324)
Debenture interest 45 835 34 519 75 489
Amortisation of debenture premium (953) - (1 679)
Earnings/(loss) attributable to linked
unit holders 45 242 (19 830) 97 236
Earnings/(loss) attributable to linked
unit holders 45 242 (19 830) 97 236
Impairment of goodwill - - 1 190
Gross revaluation of investment property - - (115 607)
Deferred tax on revaluation - - 21 503
Headline earnings/(loss) attributable to
linked unit holders 45 242 (19 830) 4 322
Earnings/(loss) attributable to linked
unit holders 45 242 (19 830) 97 236
Straight-line rental adjustment (5 954) (575) (5 994)
Gain on bargain purchase - - (830)
Listing costs - 13 469 13 469
Finance cost amortisation - 44 694 45 694
Fair value adjustments 4 491 (7 299) (106 835)
Deferred tax 3 312 2 111 35 073
Distributable income 47 091 32 570 77 813
NUMBER OF LINKED UNITS ‘000
Linked units in issue 120 618 120 618 120 618
Weighted average number of linked units in
issue 120 618 106 102 113 475
CENTS
Available for distribution per linked unit 39.04 27.00 64.51
Earnings/(loss) per liked unit 37.51 (18.69) 85.69
Headline earnings/(loss) per linked unit 37.51 (18.69) 3.81
STATEMENT OF FINANCIAL POSITION
Unaudited Audited Unaudited
6 months year to 6 months
31 Dec 30 Jun 31 Dec
R’000 2012 2012 2011
ASSETS
Non-current assets 1 534 207 1 441 059 1 063 096
Investment property 1 520 909 1 426 394 1 051 984
Property, plant and equipment 5 799 6 936 7 278
Other non-current assets 7 499 7 729 3 834
Current assets 44 511 33 972 55 449
Trade and other receivables 13 514 13 893 6 855
Income tax receivable 47 37 -
Cash and cash equivalents 30 950 20 042 48 594
Total assets 1 578 718 1 475 031 1 118 545
EQUITY AND LIABILITIES
Equity 307 550 307 190 229 413
Ordinary share capital 301 301 301
(Accumulated loss)/retained earnings (53 616) (56 500) (54 154)
Non-distributable reserve 360 865 363 389 283 266
Debentures 587 965 588 918 590 597
Linked unit holders’ interest 895 515 896 108 820 010
Other liabilities
Other non-current liabilities 313 196 203 606 241 140
Other financial liabilities 229 389 123 110 192 888
Deferred tax 83 807 80 496 48 252
Current liabilities 370 007 375 317 57 395
Current portion of other financial
liabilities 288 196 306 296 -
Trade and other payables 35 977 28 048 57 299
Linked unit holders for distribution 45 834 40 973
Current tax payable - - 96
Total liabilities 683 203 578 923 298 535
Total equity and liabilities 1 578 718 1 475 031 1 118 545
Linked units in issue (‘000) 120 618 120 618 120 618
Net asset value per linked unit (cents) 742.44 742.93 679.84
Tangible net asset value less deferred tax
per linked unit (cents) 811.92 809.67 719.84
CONDENSED STATEMENT OF CASHFLOW
Unaudited Unaudited Audited
6 months 6 months year to
31 Dec 31 Dec 30 Jun
R’000 2012 2011 2012
Cash generated from operations 33 702 26 132 89 544
Finance income received 676 1 054 2 005
Finance costs paid (17 814) (8 372) (25 085)
Tax paid (10) 96 (62)
Distributions paid to unit holders (40 974) (4 273) (36 840)
Net cash inflow from operating activities (24 420) 14 637 29 562
Net cash outflow from investing activities (87 446) (218 169) 494 925)
Net cash inflow from financing activities 122 774 248 152 481 431
Net cash increase in cash and cash
equivalents 10 908 44 620 16 068
Cash and cash equivalents at the beginning
of the period 20 042 3 974 3 974
Cash and cash equivalents at the end of
the period 30 950 48 594 20 042
STATEMENT OF CHANGES IN EQUITY
(Accumulated
Ordinary Non- loss)/
share distributable retained
R’000 capital reserve earnings Total
Balance at 31 December 2011 301 283 266 (54 154) 229 413
Total comprehensive income
for the period:
Profit for the period 77 777 77 777
Transfer to non-
distributable reserve 80 123 (80 123) -
Balance at 30 June 2012 301 363 389 (56 500) 307 190
Total comprehensive income
for the period:
Profit for the period 360 360
Transfer to non-
distributable reserve (2 524) 2 524 -
Balance at 31 December 2012 301 360 865 (53 616) 307 550
CONDENSED SEGMENTAL ANALYSIS
for the six Gauteng KwaZulu Northern Western Eastern North Total
months to 31 -Natal Province Cape Cape West
December
2012
R’000
Statement of
comprehensiv
e income
extracts
Investment 66 661 1 695 543 28 513 5 938 3 599 106 949
property
income
(excluding
straight-
line rental
adjustment)
Property (26 833) (410) (106) (8 439) (1 359) (749) (37 896)
expenses
Segmental 39 828 1 285 437 20 074 4 579 2 850 69 053
results
Statement of
financial
position
extracts
Investment 864 436 29 552 9 496 376 309 89 601 57 000 1 426 394
opening
balance (30
June 2012)
Additions 67 256 - - 21 292 13 - 88 561
acquisitions
Straight- 640 79 26 4 344 491 374 5 954
line rental
adjustment
Fair value 932 332 29 631 9 522 401 945 90 105 57 374 1 520 909
of
investment
property
for the six Gauteng KwaZulu Northern Western Eastern North Total
months to 31 -Natal Province Cape Cape West
December
2011
R’000
Statement of
comprehensiv
e income
extracts
Investment 59 092 1 565 497 6 903 1 536 - 69 593
property
income
(excluding
straight-
line rental
adjustment)
Property (22 324) (482) (82) (3 878) (446) - (27 212)
expenses
Segmental 36 768 1 083 415 3 025 1 090 - 42 381
results
Statement of
financial
position
extracts
Investment 672 256 24 542 7 694 55 945 22 000 - 782 437
property
opening
balance (30
June 2011)
Additions 190 234 4 978 1 859 316 222 67 386 56 576 637 255
and
acquisitions
Straight- 1 946 32 (57) 4 142 215 424 6 702
line rental
adjustment
Fair value 864 436 29 552 9 496 376 309 89 601 57 000 1 051 984
of
investment
property
Board of directors:
Executive directors
RF Kane (Chief Executive Officer)
M de Lange (Chief Financial Officer)
PW Mackenzie
Independent non-executive directors
PD Naidoo (Chairman)
JR Macey
RR Emslie
Non-executive directors
CE Chimombe-Munyoro
EG Dube
Company secretary:
Probity Business Services Proprietary Limited (N Toerien)
11 Cradock Avenue,
Rosebank
Telephone number; (011) 327 7146
Sponsor:
Grindrod Bank Limited
1st Floor, Building 3 Commerce Square
39 Rivonia Road,
Sandton
Transfer secretary:
Computershare Investor Services Proprietary Limited
70 Marshall Street,
Johannesburg
Physical/Registered address:
Vunani House, Athol Ridge Office Park
151 Katherine Street
Sandown, Sandton
Postal address:
PO Box 652419
Benmore,
2010
Telephone number: +27 11 263 9500
Facsimile number: +27 11 388 6849
Date: 25/02/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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