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VIF - Vividend - Condensed Unaudited Consolidated Interim Financial Statements
for the six months ended 28 February 2011
Vividend Income Fund Limited
Previously known as Business Venture Investments No 1381 (Proprietary) Limited
(Incorporated in the Republic of South Africa under
Registration Number 2010/003232/06)
JSE code: VIF ISIN: ZAE000150918
("Vividend" or "the company")
Condensed Unaudited Consolidated Interim Financial Statements
for the six months ended 28 February 2011
* First interim distribution of 9.96 cents per linked unit
* Investment properties acquired during interim period - R319 million
Consolidated Statement of Comprehensive Income
Unaudited
Six months
28 February
Rands 2011
Revenue 10 647 599
- Earned on contractual basis 9 872 117
- Straight-line lease adjustment 775 482
Operating costs (3 717 285)
Net rental income from properties 6 930 314
- Earned on contractual basis 6 154 832
- Straight-line lease adjustment 775 482
Administrative expenses (5 844 206)
Operating profit 1 086 108
Investment income 7 697 195
- Interest received 7 372 953
- Commissions 324 242
Finance costs (2 260 013)
Profit before debenture interest 6 523 290
Debenture interest (10 418 090)
Profit/(loss) before taxation (3 894 800)
Taxation charge (217 135)
- Deferred taxation (217 135)
- Normal taxation -
Total comprehensive income for the period attributable
to equity holders (4 111 935)
Weighted linked units in issue (`000) 59 533 489
Linked units in issue (`000) 104 617 102
Basic and diluted loss per share (cents) (6.91)
Basic and diluted earnings per linked unit (cents) 10.59
Distribution per linked unit (cents) 9.96
Dividends -
Interest 9.96
Total
Consolidated Statement of Financial Position
Unaudited
28 February
Rands 2011
ASSETS
Non-current assets 246 768 051
Investment properties 245 992 569
Operating lease assets 775 482
Current assets 394 319 115
Cash and cash equivalents 388 068 930
Trade and other receivables 6 250 185
Total assets 641 087 166
EQUITY AND LIABILITIES
Share capital and reserves (4 110 889)
Share capital and premium 1 046
Distributable reserves (4 111 935)
Non-current liabilities 531 509 921
Debentures 523 084 464
Deferred taxation 8 425 457
Current liabilities 113 688 134
Interest-bearing borrowings 101 409 587
Trade and other payables 1 860 457
Linked unit holders 10 418 090
Total equity and liabilities 641 087 166
Linked units in issue 104 617 102
Net asset value per linked unit (cents) 496.1
Net asset value per linked unit (cents) - before providing
for deferred tax 504.1
Loan to investment value ratio (%) 41%
Consolidated Statement of Cash Flow
Unaudited
Six months
28 February
Rands 2011
CASH FLOW FROM OPERATING ACTIVITIES
Operating income from properties 310 626
Adjustment for:
- Working capital changes (4 068 678)
Cash generated from operations (3 758 052)
Investment income received 7 697 195
Finance costs paid (1 412 965)
Net cash inflow/(outflow) from operating activities 2 526 178
CASH FLOW FROM INVESTING ACTIVITIES
Investing activities (138 753 476)
Net cash outflow used in investing activities (138 753 476)
CASH INFLOW FROM FINANCING ACTIVITIES
Proceeds from private placement 523 085 475
Net cash generated from financing activities 523 085 475
NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the period 35
Increase in cash and cash equivalents during the period 386 858 177
Cash acquired from investing activities during the period 1 210 718
Cash and cash equivalents at the end of the period 388 068 930
Consolidated Statement of Changes in Equity
Distributable
Rands Share capital reserve Total
Balance at 1 September 2010 35 - 35
Private placement on listing 1 011 - 1 011
Total comprehensive income
for the period - (4 111 935) (4 111 935)
Balance at 28 February 2011 1 046 (4 111 935) (4 110 889)
Distributable Earnings
The following additional information is provided and is aimed at disclosing to
the users the basis on which the distributions are calculated.
Unaudited
Six months
28 February
Rands 2011
Revenue
- Earned on contractual basis 9 872 117
Operating costs (3 717 285)
Net rental income from properties 6 154 832
Administration expenses, excluding capital costs (1 173 924)
Administration expenses (5 844 206)
Listing costs included in administration expenses 4 670 282
Operating profit, excluding capital costs 4 980 908
Investment income
- Interest received 7 372 953
- Commission received 324 242
Distributable profit before finance costs 12 678 103
Finance costs (2 260 013)
Distributable income before taxation 10 418 090
Taxation charge, excluding deferred taxation -
Unit holders` distributable earnings 10 418 090
Linked units in issue 104 617 102
Distributable earnings per linked unit (cents) 9.96
Distribution per linked unit (cents) 9.96
Reconciliation - Earnings to Distributable Earnings and Headline Earnings
Unaudited
Six months
28 February
Rands 2011
Earnings/(losses) attributable to equity holders (4 111 935)
Capital costs incurred on listing 4 670 282
Headline earnings before debenture interest 558 347
Debenture interest 10 418 090
Headline earnings attributable to linked unit holders 10 976 437
Straight-line lease adjustment net of deferred tax (558 347)
Distributable earnings attributable to linked unit holders 10 418 090
Headline earnings per linked unit (cents) 18.44
Segmental Information
Analysis by property Retail Commercial Total
February 2011 Rands Rands Rands
Revenue
Rentals and recoveries 6 911 640 2 960 477 9 872 117
Straight-line lease adjustment 610 722 164 760 775 482
Total revenue 7 522 362 3 125 237 10 647 599
Operating profit 4 378 600 2 551 715 6 930 314
Assets
Investment properties 89 954 298 156 038 271 245 992 569
Vacant GLA 104 86 190
GLA occupied by A Tenants 6 629 14 610 21 239
GLA occupied by B Tenants 2 623 - 2 623
GLA occupied by C Tenants 736 5 169 5 905
GLA available 10 092 19 865 29 957
Gross rental per GLA 82 90 88
Operational costs per GLA 11 11 9
Lease expiry profile (GLA)
Vacant 1.0% 0.4% 0.6%
31 August 2011 6.1% 6.7% 6.5%
31 August 2012 22.2% 45.8% 37.9%
31 August 2013 0.0% 35.6% 23.6%
> 31 August 2013 70.7% 11.5% 31.4%
Total 100.0% 100.0% 100.0%
Lease expiry profile
(contractual gross income)
Vacant 0.0% 0.0% 0.0%
31 August 2011 6.2% 8.3% 6.9%
31 August 2012 22.5% 57.0% 35.1%
31 August 2013 0.0% 20.4% 7.5%
> 31 August 2013 71.3% 14.3% 50.5%
Total 100.0% 100.0% 100.0%
Notes to the financial statements
The condensed consolidated interim financial statements have been prepared in
accordance with the measurement and recognition requirements of IFRS, IAS 34:
Interim Financial Reporting, as well as the AC 500 standards as issued by the
Accounting Practices Board, the JSE Listings Requirements and the requirements
of the South African Companies Act 1973, as amended.
These condensed consolidated interim financial statements have not been
reviewed or audited by our auditors, Charles Orbach and Company.
Comparative information - Vividend was incorporated on 17 February 2010 and
acquired its first property and associated letting enterprise with effect from
1 September 2010. The company was therefore dormant for the financial period
ending 31 August 2010. For this reason no comparative information has been
provided.
Subsequent events - Linked unitholders are advised that the Rynfield Shopping
Centre Acquisition, as disclosed on SENS on 23 February 2011, is still under
due diligence as a result of an extension to the due diligence period from
11 March 2011 to 11 April 2011. Linked unitholders are also advised that the
Church Street (Pietermaritzburg) Property and the Beaufort West Shopping
Centre Property, as disclosed on SENS on 31 March 2011, are still subject to
the applicable conditions precedent.
Contingency - Linked unitholders are reminded of the 1 000 000 linked units
that will be issued to Auscult Investments (Proprietary) Limited, as part of
the purchase consideration of the Owl Street (Millpark) property, on renewal
of a material lease within the lease profile of the Owl Street (Millpark)
property by 31 December 2012.
COMMENTARY
Listing and linked unit structure
Vividend listed 104 617 102 linked units on the Main Board of the JSE Limited
on 18 November 2010 at R5 per linked unit.
Linked unitholders are entitled, through the debenture portion of their linked
units, to the after-tax profits of the company, excluding capital profits and
losses and after reversing all non-cash items. The interest entitlement is
calculated and accrues to linked unitholders on the last days of February and
August of each year and is payable within 90 days of accrual date, or such
shorter period as prescribed in the JSE Listings Requirements.
Distributable earnings
Vividend achieved a total distribution per linked unit of 9.96 cents for the
six-month period ended 28 February 2011. Given that the listing was only
completed on 18 November 2010 (three and a half months prior to the end of the
interim period) and that Vividend is still in the process of taking transfer
of properties acquired and utilising the cash raised in the private placement,
the board is satisfied with this initial distribution.
Commentary on results
Vividend`s property portfolio performed in line with expectations with no
reversions, vacancies or defaults being experienced in the six-month period
ended 28 February 2011.
Delays in the transfer of both the Owl Street (Millpark) and Roggebaai
properties did have a negative impact on net rentals generated by the
portfolio, however this impact was off-set by higher than anticipated interest
income earned on money market investments.
Listing costs were substantially higher than anticipated due to additional
placement fees payable on the allocation of certain linked units.
Acquisitions
The following properties were acquired and transferred during the six-month
period ended 28 February 2011:
Book value at Initial Effective date
Property name 28 Feb 2011 yield of purchase
Clearwater Crossing R89 954 298 10.96% 1 September 2010
Owl Street (Millpark) R100 766 934 12.54% 1 January 2011
Gradner Street (Roggebaai) R55 271 337 11.20% 17 February 2011
The following properties were acquired but not transferred during the six-
month period ended 28 February 2011:
Anticipated
Purchase Initial effective date
Property name consideration yield of purchase
Tyrwhitt Street
(Rosebank) R33 144 686 10.5% 1 May 2011
Beyers Naude
(Blackheath) R39 898 697 10.5% 1 May 2011
Borrowings
No external borrowing or gearing, outside of an interest-bearing vendor
liability owing to the sellers of Owl Street (Millpark), was utilised during
the period. The Owl Street (Millpark) vendor liability was settled, with the
applicable interest, on transfer of the Owl Street (Millpark) property, which
occurred on 17 March 2011.
Revaluation
At each financial year-end at least one-third of the property portfolio will
be valued on a rotational basis by an external valuer, while at the interim
stage directors` valuations will be performed by applying market-related
yields. The directors` valuation at 28 February 2011 did not result in a fair
value adjustment to the property portfolio for the six-month period ending
28 February 2011.
Prospects
Vividend continues to investigate a consistent and encouraging stream of
opportunities that fall within its primary scope of targeting value and value
enhancing opportunities within the retail, commercial and industrial property
sectors of South Africa. The company continues to secure and demand the
necessary income security from sellers to protect contractual income streams
from the negative impacts of vacancies, reversions and/or tenant support in
the first year(s) of ownership.
Distributable earnings for the full year remain dependent on 1) a stable
macroeconomic outlook; 2) efficient transfer timelines within the CIPRO and
Deeds offices; 3) no major corporate failures; 4) ability of tenants to absorb
escalations in rentals, utility costs and rates and taxes; and 5) ability of
management to source suitable properties.
Should the CIPRO and Deeds Office delays experienced on the transfer of
properties acquired during the period continue to prevail, linked unit holders
are advised that full year distributable earnings will be negatively impacted.
The board are using their best efforts to expedite the process and will advise
linked unit holders of the financial impact of these delays, if applicable,
when a reasonable level of certainty exists.
Declaration of interest payment
Notice is hereby given that interest of 9.96 cents per linked unit has been
declared, in accordance with the debenture trust deed, for the period
1 September 2010 to 28 February 2011, payable to linked unit holders recorded
in the register of the company on Friday, 6 May 2011. The last day to trade
"cum" distribution will be Thursday, 28 April 2011 and trading will commence
"ex" distribution on Friday, 29 April 2011.
In respect of dematerialised linked unit holders, the distribution will be
transferred to the Central Securities Depository Participant`s
accounts/broker`s accounts on Monday, 9 May 2011. Certificated linked
unitholder distribution payments will be posted on or about 9 May 2011.
No dematerialisation or rematerialisation of linked units may take place
between Friday, 29 April 2011 and Friday, 6 May 2011 both days inclusive.
By order of the board
KK Combi (Chairman) A Jacobson (CEO)
8 April 2011
Cape Town
Directors
KK Combi#* (Chairman), A Jacobson (Chief Executive Officer), Robert Amoils
(Financial Director), Bruce Rubenstein*, Mark Sandak-Lewin*, Alan Witt*,
M Jacobson*, G Lanfranchi*, G Rabinowitz*
* Non-executive # Independent
Registered office
Unit 6 Rozenhof Office Court, 20 Kloof Street, Gardens, Cape Town, 8001
Postnet Suite 137, Private Bag X1, Vlaeberg, 8018
Telephone: 021 422 5245
Facsimile: 021 422 5047
Transfer secretaries
Link Market Services South Africa (Proprietary) Limited
Registration number: 2000/018923/21
11 Diagonal Street, Johannesburg, 2001
PO Box 4844, Johannesburg, 2000
Asset manager
Vividend Management Group (Proprietary) Limited
(Incorporated in the Republic of South Africa)
Registration number: 2010/002609/07
Unit 6 Rozenhof Office Court
20 Kloof Street, Gardens, Cape Town, 8001
Telephone: 021 422 5245
Facsimile: 021 422 5047
E-mail address: arij@vividend.co.za
Sponsor
PSG Capital (Proprietary) Limited
(Incorporated in the Republic of South Africa)
Registration number: 2006/015817/07
1st Floor Ou Kollege Building, 35 Kerk Street, Stellenbosch, 7599
PO Box 7403, Stellenbosch, 7599
Date: 08/04/2011 11:42:43 Supplied by www.sharenet.co.za
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