To view the PDF file, sign up for a MySharenet subscription.

VPF - VPIF - Abridged consolidated financial statements for the six months ended

Release Date: 03/10/2011 07:06
Code(s): VPF
Wrap Text

VPF - VPIF - Abridged consolidated financial statements for the six months ended 30 June 2011 Vunani Property Investment Fund Limited (Registration number: 2005/019302/06) (formerly Vunani Property Investment Fund Proprietary Limited) ISIN: ZAE000157459 JSE code: VPF ("VPIF") ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS (Prepared by M de Lange, CFO) FOR THE SIX MONTHS ENDED 30 JUNE 2011 Audited Audited Group statement of financial Group Group position 30 June 31 December 2011 2010 Assets R R Non-current assets 791 476 583 784 380 510 Investment property 782 436 543 776 522 427 Plant and equipment 5 938 457 4 535 304 Other non-current assets 3 101 583 3 322 779 Current assets 10 139 094 12 668 467 Trade and other receivables 6 164 605 7 782 634 Cash and cash equivalents 3 974 489 4 885 833 Total assets 801 615 677 797 048 977 Equity and liabilities Equity 285 929 456 292 849 397 Ordinary share capital 142 560 142 560 Retained earnings 8 282 016 24 020 Non-distributable reserve 277 504 880 292 682 817 Debentures 142 417 440 142 417 440 Linked unit holders` interest 428 346 896 435 266 837 Liabilities Other non-current liabilities 344 378 961 331 064 788 Other financial liabilities 298 504 858 283 210 071 Deferred tax 45 874 103 47 854 717 Current liabilities 28 889 820 30 717 352 Current portion of other 7 355 143 7 355 143 financial liabilities Trade and other payables 21 534 677 23 362 209 Total liabilities 373 268 781 361 782 140 Total equity and liabilities 801 615 677 797 048 977 Units in issue 57 024 000 14 256 000 Net asset value per unit 751.2 3 053.2 (cents) Net tangible asset less deferred tax 831.6 3 388.9 value per unit (cents) GROUP STATEMENT OF COMPREHENSIVE INCOME for the six months ended 30 Audited Audited June 2011 Group Group 6 months to 12 months to 30 June 31 December
2011 2010 R R Revenue - investment property 55 868 513 103 753 654 income Straightline effect of leases 328 443 892 514 Other income 441 71 766 Property expenses (24 283 942) (39 088 429) Operating income 31 913 455 65 629 505 Finance income 232 341 486 817 Finance cost amortisation (1 986 594) - Finance costs (15 203 865) (34 158 204) Net operating income 14 955 337 31 958 118 Fair value adjustments (7 505 304) 109 780 687 Profit before denture interest 7 450 033 141 738 805 and taxation Trust distributions - net (6 493 975) (9 943 353) rental income Debenture interest (9 856 613) (20 428 821) Net (loss)/ income before (8 900 555) 111 366 631 taxation Income tax expense 1 980 614 (15 822 370) Total comprehensive (6 919 941) 95 544 261 (loss)/income for the period Total comprehensive (loss)/income for the period attributable to: Equity holders of the group (6 919 941) 95 544 261 Basic and diluted earnings per 16.54 220.81 unit (cents) Basic and diluted (12.14) 167.55 (loss)/earnings per share (cents) GROUP STATEMENT OF CHANGES IN EQUITY for the six months ended 30 June 2011 Ordinary Non- (Accumulated Total share capital distributable loss)/ reserve retained earnings
R R R R Balance at 31 142 560 197 637 828 (475 252) 197 305 136 December 2009
Total - - 95 544 261 95 544 261 comprehensive income for the year Transfer to non- - 95 044 989 (95 044 989) - distributable reserve Balance at 31 142 560 292 682 817 24 020 292 849 397 December 2010 Total - - (6 919 941) (6 919 941) comprehensive loss for the period Transfer from non- - (15 177 937) 15 177 937 - distributable reserve Balance at 30 142 560 277 504 880 8 282 016 285 929 456 June 2011 GROUP STATEMENT OF CASH FLOWS for the six months ended 30 June Audited Audited 2011 Group Group 6 months to 12 months to 30 June 31 December
2011 2010 R R Cash flows from operating activities Cash generated by operations 26 666 021 62 274 570 Finance income 232 341 486 817 Finance costs (15 203 865) (34 158 204) Debenture interest (9 856 613) (20 428 821) Net cash inflow from operating 1 837 884 8 174 362 activities Cash flows from investing activities Additions to plant and equipment (2 411 825) (2 781 688) Additions to investment property (5 792 150) (1 670 217) Additions to other non current (554 619) (2 265 974) assets Net cash outflow from investing (8 758 594) (6 717 879) activities Cash flows from financing activities Advance of other financial 6 009 366 726 507 liabilities Net cash inflow from financing 6 009 366 726 507 activities Net (decrease)/increase in cash and (911 344) 2 182 990 cash equivalents Cash and cash equivalents at the 4 885 833 2 702 843 beginning of the period Cash and cash equivalents at the end 3 974 489 4 885 833 of the period
Reconciliation of headline and diluted headline earnings per unit - Total comprehensive (6 919 941) 95 544 261 (loss)/income attributable to equity holders: Adjust for: - Trust distributions - net 6 493 975 9 943 353 rental income - Debenture interest 9 856 613 20 428 821 Revaluation of investment property - Gross revaluation 206 477 (109 780 687) - Deferred tax (28 907) 15 369 296 Headline earnings per unit 9 608 218 31 505 044 shareholder Reconciliation of earnings and diluted earnings per unit: - Total comprehensive (6 919 941) 95 544 261 (loss)/income attributable to equity holders: Adjust for: - Trust distributions - net 6 493 975 9 943 353 rental income - Debenture interest 9 856 613 20 428 821 Earnings per unit shareholder 9 430 647 125 916 435 Headline and diluted headline 16.54 220.81 earnings per unit (cents) BASIS OF PRESENTATION These audited consolidated financial statements have been prepared in accordance with the Listing Requirements of the JSE Limited, the recognition and measurement requirements of International Financial Reporting Standards (IFRS), presentation and disclosure requirements of IAS34, the AC 500 series issued by the Accounting Practices Board and the requirements of the Companies Act of South Africa, 2008 (as amended) and Companies Regulations, 2011. The accounting policies as set out in the audited financial statements for the six months ended 30 June 2011 are in terms of IFRS and have been consistently applied when compared to the previous accounting period. These consolidated financial statements incorporate the financial statements of the company and its subsidiaries that in substance are controlled by the Group. Results of subsidiaries are included from the effective date of acquisition up to the effective date of disposal. All significant transactions and balances between Group enterprises are eliminated on consolidation. EVENTS AFTER THE REPORTING DATE Subsequent to year end, VPIF acquired an additional property, Athol Ridge Office Park as well as the entire share capitals of Cedar Park Properties 31 Proprietary Limited ("Cedar Park") and Pacific Eagle Investments 204 Proprietary Limited ("Pacific Eagle") from Vunani Properties Proprietary Limited. VPIF listed on the Main Board of the Johannesburg Stock Exchange Limited on 11 August 2011. VPIF raised R448 338 271 through the issue of 63,594,081 new units. As per the Pre Listing Statement published on 18 July 2011, the proceeds were utilised to settle outstanding debt, pay for listing costs, and the purchase considerations for the acquisitions mentioned above. The remaining debt after settlement equates to a loan to value of approximately 8.86%. The loan to value is defined as the outstanding debt to the value of the investment property. The details of the acquired properties are as follows: Property Name: Athol Ridge Cedar Park Pacific Eagle Registered legal Erven 132, 133, Unit 18 of Erf 1570, description: 134, the Greenstone Hill 1571, 1572, remaining extent Office Park, Ext 1573 and 1574
of erf 135, 22, Erf 1836 and Portion 1 of erf 1837 135, Portion 3 of erf 184 and
Portion 4 of erf 184, Athol Extension 12 and erf 6, Simba
Township, Registration Division IR
Region: Gauteng Gauteng Western Cape Sector: Commercial Commercial Commercial Vacancy: Nil Nil Nil Gross lettable 8 577 1 807 2 223 area (GLA): Property Buildings/Offices Buildings/ Buildings/ description and Offices Offices use: AUDIT REPORT The Group`s auditors KPMG Inc. have issued an unmodified audit opinion on the complete set of audited financial statements for the six months ended 30 June 2011. Their audit report is available for inspection at the registered office of the company. STATEMENT ON GOING CONCERN The directors have made an assessment of the group`s ability to continue as a going concern and have no reason to believe the business will not be a going concern in the year ahead. CHANGE IN YEAR END During the year, the company changed its year end from 31 December to 30 June. These financial statements are for the six months ended 30 June 2011. INTRODUCTION During the review period, Vunani Properties Investment Fund Limited (VPIF) continued to deliver on its strategy of strengthening its financial position and improving our distributions through tight management of its assets and continual refurbishment of the buildings. The company`s ultimate aim since formation was to list the fund and much of the first six months of 2011 was devoted to this activity. This goal was achieved with resounding success post the reporting date on 11 August 2011. OPERATING ENVIRONMENT The 2011 business year commenced as the euphoria of the FIFA Soccer World Cup started to wear off. Domestic consumer indebtedness was at record levels touching 80% equivalent of personal disposable income resulting in sustained sluggish domestic demand, while uncompetitive exchange rates and depressed European demand hampered exports. The South African economy managed to recover somewhat and eventually rendered GDP growth of 2,8%. However, the global economic downturn has exerted pressure on rentals and vacancies across the office sector. In addition, tenants were affected by steep increases in overhead costs (electricity charges and municipal rates) which consequently resulted in a weaker office rental demand as business owners chose to consolidate. Hands-on management resulted in high tenant retention and low vacancy rate across the portfolio. The year ahead is seen as challenging with the recovery in the office sector being slower than expected. VPIF`s strategic decision to focus on its chosen niche of A and B+ grade office properties, combined with its experience in refurbishments, positions it well to take advantage of the expected office sector recovery in the medium term. FINANCIAL POSITION During the six months under review, VPIF continued to deliver an attractive distribution of R16 350 588 with underlying lease escalations in excess of 8.5%. The compounded total return since inception remained solid at 34.3% per annum with capital growth at 15.7% and distribution growth of 18.6%. The property portfolio was independently valued and the book value increased by 1% from R776 522 427 to R782 436 543 with the completion of some of the refurbishment projects. Net rental and related revenue for the review period increased by 7.69%, whilst property related expenses increased by 15%. Other operating expenses increased by 8.6% after removing listing costs. This resulted in an operating profit for the year of R14,955 377. The net cost to income ratio (net of recoveries) is 23.9%. The Fund`s debt remained relatively low at a 39.1% loan to value. During the period management broke the fixed debt at 11.88% and re-fixed it at 9.95% for 5 years. It is the strategy of the Fund not to take interest rate risk. SEGMENTAL REPORTING The group has six reportable segments based on the geographic split of the country which are the group`s strategic business segments. For each strategic business segments, the group`s CEO reviews internal management reports on at least a monthly basis. All segments are located in South Africa. There are no single major customers. The following summary describes the operations in each of the group`s reportable segments: 6 month ended 30 Head Office Gauteng Kwa-Zulu Sub Total June 2011 Natal R R R R
Revenue - - 47 550 209 1 561 713 49 111 922 Investment property income Straightline 328 443 - - 328 443 effect of leases Other income - 441 - 441 Property (4 032 814) (17 266 766) (354 144) (21 653 724) expenses Operating income (3 704 371) 30 283 884 1 207 569 27 787 082 Net operating (20 767 412) 30 383 486 1 207 653 10 823 727 income Fair value (7 505 304) - - (7 505 304) adjustments Reportable segment (loss)/profit before debenture interest and tax (28 272 716) 30 383 486 1 207 653 3 318 423 Reportable 4 006 817 685 388 396 24 606 801 714 002 014 segment assets Reportable (357 716 671) (14 414 186) (123 215) (372 254 segment 072) liabilities 6 month ended 30 Northern Western Eastern Total June 2011 Province Cape Cape R R R R
Revenue - 470 092 4 859 183 1 427 316 55 868 513 Investment property income Straightline - - - 328 443 effect of leases Other income - - - 441 Property (84 957) (2 236 450) (308 810) (24 283 941) expenses Operating income 385 135 2 622 733 1 118 506 31 913 456 Net operating 385 249 2 624 467 1 121 896 14 955 339 income Fair value - - - (7 505 304) adjustments Reportable segment (loss)/profit before debenture interest and tax 385 249 2 624 467 1 121 896 7 450 035
Reportable 7 718 227 57 357 593 22 537 842 801 615 676 segment assets Reportable (42 140) (419 405) (553 164) (373 268 segment 781) liabilities 12 months ended Head Office Gauteng Kwa-Zulu Sub Total 31 December 2010 Natal R R R R Revenue - - 87 986 033 2 659 015 90 645 048 Investment property income Straightline 892 514 - - 892 514 effect of leases Other income - 71 766 - 71 766 Property (4 316 000) (29 262 667) (664 800) (34 243 467) expenses Operating income (3 423 486) 58 795 132 1 994 215 57 365 861 Net operating (37 235 817) 58 936 128 1 994 212 23 694 523 income Fair value 109 780 687 - - 109 780 687 adjustments Reportable segment (loss)/profit before debenture interest and tax 72 544 870 58 936 128 1 994 212 133 475 210 Reportable 5 013 206 681 550 742 24 185 334 710 749 282 segment assets Reportable (344 271 278) (16 737 017) (101 641) (361 109 segment 936) liabilities 12 months ended Northern Western Eastern Total 31 December 2010 Province Cape Cape R R R R Revenue - 900 986 9 578 372 2 629 247 103 753 653 Investment property income Straightline - - - 892 514 effect of leases Other income - - - 71 766 Property (138 305) (4 050 932) (655 724) (39 088 428) expenses Operating income 762 681 5 527 440 1 973 523 65 629 505 Net operating 762 759 5 526 338 1 974 499 31 958 119 income Fair value - - - 109 780 687 adjustments Reportable segment (loss)/profit before debenture interest and tax 762 759 5 526 338 1 974 499 141 738 806 Reportable 7 520 637 56 140 516 22 638 542 797 048 977 segment assets Reportable (42 042) (356 044) (274 118) (361 782 segment 140) liabilities MANAGEMENT VPIF is fortunate to have retained the same leadership team since its formation five years ago. Their collective experience and commitment has undoubtedly proved beneficial to the establishment and growth of VPIF and we are confident that they will prove their worth once again after the listing of VPIF on the JSE. PROSPECTS The board believes that the office market is currently near its lowest ebb, thereby creating embedded value for incoming investors. Office property rentals are expected to rise disproportionately in the medium term as the current oversupply is absorbed and the lack of new developments impacts on rentals. VPIF will continue to utilise its BEE rating to retain Government tenants and selectively acquire new Government tenanted buildings, based on sound investment fundamentals. The high proportion of single tenant and National Government or listed tenants is expected to underpin strong cash flows. APPRECIATION We would like to thank our fellow directors and board members for their strategic direction and tireless dedication in taking VPIF to market. Equally important is the support we received from our tenants and business partners. Statements contained throughout this announcement regarding the prospects of the group have not been reviewed or reported on by the group`s external auditors. NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given to unit holders that the annual general meeting of unit holders of the Company will be held in the boardroom, Vunani House, 151 Katherine Street, Sandton at 10:00 on Thursday 3 November 2011. Sandton 30 September 2011 Sponsor Grindrod Bank Limited Date: 03/10/2011 07:06:02 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

Share This Story