Wrap Text
Condensed reviewed consolidated interim financial statements for the six months ended 30 June 2012
Resilient Property Income Fund Limited
Incorporated in the Republic of South Africa
Reg no 2002/016851/06
Share code RES
ISIN ZAE000043642
(“Resilient” or “the group”)
Condensed reviewed consolidated interim financial statements for the six
months ended 30 June 2012
Directors’ commentary
Resilient declared a distribution of 120,74 cents per linked unit for the
interim period ended June 2012, a 10,4% increase over the 109,36 cents per
linked unit distributed in June 2011. This growth is the result of strong
performance by both the property portfolio and listed equities,
particularly Nepi and Fortress B. The highlights for the period were the
commencement of construction of Secunda Mall and Tubatse Crossing
(previously referred to as Burgersfort Mall).
1 PROPERTY DEVELOPMENTS
Secunda Mall
Construction of this regional mall commenced in June 2012 following a
delay in obtaining approval of a water licence. Completion is scheduled
for September 2013. Following the approval of additional rights and due to
strong tenant demand the size of the development was increased to a GLA of
54 000m2 compared with the 45 000m2 initially planned. The mall will be
anchored by Checkers Hypermarket, Edgars, Game, Pick ‘n Pay and Woolworths
and will include all major national clothing retailers.
Resilient has a 40% interest in the property and Sasol Pension Fund and a
local consortium own 40% and 20% respectively. The cost for Resilient’s
portion is estimated to be R256 million and is projected to yield 9%.
Soshanguve Crossing
Resilient has a 55% interest in this retail zoned property in Soshanguve,
north of Pretoria. The board has approved the development of a 37 000m2
mall subject to an initial yield of 8,75% being achieved and finalisation
of leases with three anchor tenants. Tenant demand is strong and
construction is anticipated to commence during the current financial year.
Sterkspruit Plaza
This shopping centre with a GLA of 10 730m2 is on schedule to open in
October 2012. The centre is anchored by Shoprite and is fully let.
Resilient owns 82% of the property with local partners owning the balance.
The first phase is projected to yield 8% as only a portion of the land has
been utilised. Depending on the tenants’ performance in the first phase, a
second phase will be considered in 2013 to accommodate additional brands.
Tubatse Crossing
The construction of this 42 000m2 GLA regional mall commenced in May 2012
with the first phase scheduled to open in May 2013. While tenant demand is
strong, the size of the mall is limited by the available electricity
supply. The mall will be anchored by Edgars, Game, Pick ‘n Pay and
Shoprite and will include all major national clothing retailers. The
development is projected to yield 8,75% at a cost of R580 million. The
litigation brought by a competing developer has not been heard, however,
senior counsel is of the opinion that the claims are without merit.
2 PROPERTY EXTENSIONS
Circus Triangle Mthatha
A 9 000m2 GLA extension to the mall to accommodate Edgars and the
expansion of Shoprite and most of the national clothing retailers
commenced in July 2012. As the extension involves building structured
parking, a yield of 8% is projected on the cost of R155 million. In
addition to increasing its dominance, the expansion will significantly
improve both the horizontal and vertical reticulation of the mall.
The Grove
A 13 500m2 extension to The Grove has been approved which will introduce
entertainment including 8 cinemas and an ice rink. The extension is
subject to a number of conditions including finalisation of leases.
Although it is expected to be yield dilutionary in the short term, the
medium and long term impact from the increase in footfall and resulting
higher trading densities will compensate for this.
Highveld Mall
A 21 250m2 GLA extension to Highveld Mall is on schedule to open in April
2013 at a projected yield of 9%. This extension will introduce Game, HiFi
Corporation and a number of leading fashion brands. Incredible Connection
will be relocated and expanded and the current @Home will be expanded to
an @HomeLivingSpace concept store. It will also increase the size of
Edgars and Truworths and includes a planned extension to the Woolworths
store. Following these extensions, the mall will have a GLA exceeding 70
000m2 and will become Resilient’s second largest retail centre after Mall
of the North. Resilient has a 60% interest in Highveld Mall.
I’langa Mall
Rights to extend the mall to a GLA of 67 000m2 have been approved. An
extension to increase the entertainment offering and to accommodate
additional clothing brands is currently under evaluation.
Rivonia Village
A 3 500m2 GLA extension to the centre has been approved to accommodate
Checkers at a yield of 7% and a projected cost of R53 million. The
relatively low yield is the result of introducing a second anchor,
improving vertical reticulation and additional structured parking. The
extension will place the centre in an even stronger position to compete in
its market.
Village Mall Kathu
The centre will be extended by 7 300m2 of GLA to introduce Game as a
further anchor. As there will be no additional electricity available in
Kathu for some years, the air conditioning for the big box tenants will be
replaced by an ice storage system at a significant cost to Resilient. This
will defer a portion of electricity utilisation to off-peak hours and
enables the extension to proceed. The cost of the new system and the
introduction of an anchor will result in a yield of 7% being achieved.
3 RESILIENT AFRICA
The board has committed R600 million to this initiative with Standard Bank
and Shoprite Checkers as partners. Considerable progress has been made in
establishing the necessary legal structures in Mauritius and Nigeria to
enable the partnership to commence operations. Resilient Africa has
entered into memoranda of understanding with two local land owners with
the objective of commencing construction of the first retail centre early
in 2013.
4 INVESTMENTS
Jun 2012 Dec 2011
Number Carrying Number Carrying
of units/ value of units/ value
Investment shares (R’000) shares (R’000)
Capital 205 257 010 2 029 992 208 000 000 1 830 400
Fortress B 63 000 000 390 600 63 000 000 318 150
Nepi 19 100 000 765 146 19 100 000 620 750
Proptrax SAPY 877 286 38 951 – –
Proptrax TEN 573 122 7 394 – –
3 232 083 2 769 300
5 VACANCIES
Vacancies improved from 1,9% at December 2011 to 1,8% in June 2012. The
largest component of the vacancy is the first floor retail space at
Central Park Bloemfontein which will be redeveloped to accommodate an
additional anchor tenant.
6 BORROWINGS
A five year secured facility of R665 million was accepted from Standard
Bank to replace the expiring Standard Bank facility.
Resilient has repaid its R250 million overnight facility from Omsfin.
Resilient’s unsecured R2 billion DMTN programme has been utilised as
follows:
Pricing over
Amount 3-month Jibar
3-month issuance expiring 14 August 2012 R275 million +0,26%
3-month issuance expiring 21 September
2012 R250 million +0,24%
1-year issuance expiring 17 October 2012 R150 million +0,86%
3-year issuance expiring 3 June 2014 R225 million +1,45%
3-year issuance expiring 18 October 2014 R350 million +1,55%
The intention is to increase the utilisation of unsecured finance to 50%
of Resilient’s borrowings.
7 PROSPECTS
The board is confident that growth in distributions of approximately 10%
will be achieved for the 2012 financial year. The growth is based on the
assumptions that a stable macro-economic environment will prevail, no
major corporate failures will occur and that tenants will be able to
absorb the recovery of rising utility costs. Budgeted rental income was
based on contractual escalations and market related renewals. This
forecast has not been audited or reviewed by Resilient’s auditors.
By order of the board
Des de Beer Nick Hanekom
Managing director Financial director
Johannesburg
7 August 2012
Consolidated statement of financial position
Reviewed Audited Reviewed
Jun 2012 Dec 2011 Jun 2011
R'000 R'000 R'000
ASSETS
Non-current assets 13 599 602 13 063 400 10 730 091
Investment property 8 748 909 8 759 377 6 888 688
Straight-lining of rental revenue
adjustment 145 058 122 359 107 145
Investment property under development 506 295 346 376 287 213
Investments 3 232 083 2 769 300 2 541 558
Intangible asset 26 422 26 422 26 422
Resilient Unit Purchase Trust loans 388 866 420 320 316 669
Loans to employees to acquire
Capital units 268 067 279 249 297 126
Loans to BEE partners 169 789 221 632 192 729
Loans to development partners 114 113 118 365 72 541
Current assets 57 914 47 068 126 525
Loans to development partners 21 009 6 885 63 603
Trade and other receivables 29 767 36 357 51 785
Cash and cash equivalents 7 138 3 826 11 137
Total assets 13 657 516 13 110 468 10 856 616
EQUITY AND LIABILITIES
Total equity attributable to
equity holders 6 831 787 6 573 956 5 460 207
Share capital 2 697 2 697 2 496
Share premium 2 490 931 2 490 931 1 964 168
Non-distributable reserves 4 338 159 4 080 328 3 493 543
Retained earnings – – –
Total liabilities 6 825 729 6 536 512 5 396 409
Non-current liabilities 4 715 585 4 680 213 3 987 141
Linked debentures 1 294 681 1 294 681 1 198 243
Interest-bearing borrowings 2 600 483 2 690 016 2 256 337
BEE instrument 238 688 150 350 112 306
Deferred tax 581 733 545 166 420 255
Current liabilities 2 110 144 1 856 299 1 409 268
Trade and other payables 296 815 220 905 165 073
Linked debenture interest payable 325 666 327 312 272 999
Income tax payable 2 001 876 818
Interest-bearing borrowings 1 485 662 1 307 206 970 378
Total equity and liabilities 13 657 516 13 110 468 10 856 616
Consolidated statement of comprehensive income
Reviewed Reviewed
for the Audited for the
six for the six
months year months
ended ended ended
Jun 2012 Dec 2011 Jun 2011
R’000 R’000 R’000
Net rental and related revenue 384 051 603 423 271 208
Recoveries and contractual rental
revenue 546 935 843 738 375 495
Straight-lining of rental revenue
adjustment 22 699 32 761 17 547
Rental revenue 569 634 876 499 393 042
Property operating expenses (185 583) (273 076) (121 834)
Distributable income from investments 96 861 181 283 80 328
Fair value gain on investment
property and investments 431 265 933 326 132 276
Fair value gain on investment
property – 568 696 –
Adjustment resulting from straight-
lining of rental revenue (22 699) (32 761) (17 547)
Fair value gain on investments 453 964 397 391 149 823
Fair value (loss)/gain on BEE
instrument (88 338) (31 450) 6 594
Management fees received from PFM 36 881 63 609 28 145
Administrative expenses (44 227) (71 353) (30 813)
Distributable income from associates – 13 959 13 959
Profit before net finance costs 816 493 1 692 797 501 697
Net finance costs (519 785) (788 702) (309 399)
Finance income 40 345 99 793 64 992
Interest from loans 40 345 70 935 29 116
Fair value adjustment on interest
rate derivatives – 8 064 34 830
Interest on linked units issued cum
distribution – 20 794 1 046
Finance costs (560 130) (888 495) (374 391)
Interest on borrowings (177 548) (289 089) (126 499)
Capitalised interest 15 586 43 396 25 107
Fair value adjustment on interest
rate derivatives (72 502) (42 491) –
Interest to linked debenture
holders
– interim (325 666) (272 999) (272 999)
– final – (327 312) –
Profit before income tax expense 296 708 904 095 192 298
Income tax expense (38 877) (133 955) (8 943)
Profit for the period attributable
to equity holders 257 831 770 140 183 355
Total comprehensive income for the
period 257 831 770 140 183 355
Basic earnings per share (cents) 95,59 296,57 73,45
Basic earnings per linked unit
(cents) 216,33 527,75 182,81
Diluted earnings per share (cents) 91,91 284,72 70,40
Diluted earnings per linked unit
(cents) 207,99 506,65 175,22
Reconciliation of profit for the period to headline earnings and
distributable income
Reviewed Reviewed
for the Audited for the
six for the six
months year months
ended ended ended
Jun 2012 Dec 2011 Jun 2011
R’000 R’000 R’000
Basic earnings (shares) – profit for
the period attributable to equity
holders 257 831 770 140 183 355
– interest to linked debenture
holders 325 666 600 311 272 999
Basic earnings (linked units) 583 497 1 370 451 456 354
Adjusted for: 22 699 (451 076) 29 440
– fair value loss/(gain) on
investment property 22 699 (535 935) 17 547
– income tax effect – 84 859 11 893
Headline earnings (linked units) 606 196 919 375 485 794
Adjustment resulting from straight-
lining of rental revenue (22 699) (32 761) (17 547)
Fair value gain on investments (453 964) (397 391) (149 823)
Fair value loss/(gain) on BEE
instrument 88 338 31 450 (6 594)
Fair value adjustment on interest
rate derivatives 72 502 34 427 (34 830)
Interest paid by BEE SPV 9 469 21 057 10 772
Income received by BEE SPV (13 053) (24 942) (11 823)
Income tax effect 38 877 49 096 (2 950)
Distributable income 325 666 600 311 272 999
Less: distribution declared (325 666) (600 311) (272 999)
Income not distributed – – –
Headline earnings per share (cents) 104,01 122,87 85,24
Headline earnings per linked unit
(cents) 224,75 354,04 194,60
Diluted headline earnings per share
(cents) 100,00 117,96 81,70
Diluted headline earnings per linked
unit (cents) 216,08 339,89 186,52
Basic earnings per share, basic earnings per linked unit, headline
earnings per share and headline earnings per linked unit are based on the
weighted average of 269 725 259 (Dec 2011: 259 679 640; Jun 2011: 249 634
021) shares/linked units in issue during the period.
Diluted earnings per share, diluted earnings per linked unit, diluted
headline earnings per share and diluted headline earnings per linked unit
are based on the weighted average of 280 536 070 (Dec 2011: 270 490 451;
Jun 2011: 260 444 832) shares/linked units in issue during the period.
Abridged consolidated statement of cash flows
Reviewed Reviewed
for the Audited for the
six for the six
months year months
ended ended ended
Jun 2012 Dec 2011 Jun 2011
R’000 R’000 R’000
Cash (outflow)/inflow from operating
activities (3 094) 68 208 26 023
Cash outflow from investing
activities (82 517) (1 680 926) (751 521)
Cash inflow from financing activities 88 923 1 612 112 732 203
Increase/(decrease) in cash and
cash equivalents 3 312 (606) 6 705
Cash and cash equivalents at
beginning of period 3 826 4 432 4 432
Cash and cash equivalents at end
of period 7 138 3 826 11 137
Cash and cash equivalents consist of:
Current accounts 7 138 3 826 11 137
Consolidated statement of changes in equity
Non-
Share Share distributable Retained
capital premium reserves earnings Total
Reviewed R’000 R'000 R'000 R'000 R'000
Balance at
31 December 2010 2 471 1 904 106 3 310 188 – 5 216 765
Issue of units 25 60 062 60 087
Total
Comprehensive
income for the
period 183 355 183 355
Transfer to non-
distributable
reserves 183 355 (183 355) –
Balance at
30 June 2011 2 496 1 964 168 3 493 543 – 5 460 207
Issue of units 201 526 763 526 964
Total
Comprehensive
income for the
period 586 785 586 785
Transfer to non-
distributable
reserves 586 785 (586 785) –
Balance at
31 December 2011 2 697 2 490 931 4 080 328 – 6 573 956
Total
Comprehensive
income for the
period 257 831 257 831
Transfer to non-
distributable
reserves 257 831 (257 831) –
Balance at
30 June 2012 2 697 2 490 931 4 338 159 – 6 831 787
Non-distributable reserves comprise those profits and losses that are not
distributable to unitholders and are made up of revaluation adjustments on
investment property, investment property held for sale and investments,
the share of post-acquisition reserves of associates, straight-lining
adjustments and other non-distributable balances.
Notes
1 PREPARATION, ACCOUNTING POLICIES AND REVIEW OPINION
The condensed reviewed consolidated interim financial statements have been
prepared in accordance with the measurement and recognition requirements
of IFRS, the AC500 standards as issued by the Accounting Practices Board,
the information contained in IAS 34: Interim Financial Reporting, the JSE
Listings Requirements and the requirements of the South African Companies
Act.
This report was compiled under the supervision of Nick Hanekom CA(SA), the
financial director.
The accounting policies adopted are consistent with those applied in the
prior periods.
The directors are not aware of any matters or circumstances arising
subsequent to 30 June 2012 that require any additional disclosure or
adjustment to the interim financial statements.
Deloitte & Touche has reviewed the financial information set out in this
report. The review was conducted in accordance with ISRE 2410: Review of
Interim Financial Information performed by the Independent Auditor of the
Entity. Their unmodified review report is available for inspection at
Resilient’s registered address.
2 SUMMARY OF FINANCIAL PERFORMANCE
Jun 2012 Dec 2011 Jun 2011 Dec 2010
Distribution per
linked unit (cents) 120,74 121,35 109,36 111,23
Units in issue 280 536 070 280 536 070 260 444 832 257 894 832
Property operations
Net asset value* R30,55 R29,32 R26,80 R26,11
Gearing ratio** 28,3% 28,8% 27,7% 23,6%
Units in issue 280 536 070 280 536 070 260 444 832 257 894 832
Consolidated
Net asset value* R30,13 R29,17 R26,67 R25,91
Gearing ratio** 29,9% 30,5% 29,7% 25,8%
Units in issue 269 725 259 269 725 259 249 634 021 247 084 021
*Net asset value includes total equity attributable to equity holders and
linked debentures.
**The gearing ratio is calculated by dividing the total interest-bearing
borrowings by the total assets.
2.1 To comply with financial reporting requirements the group will account
for entities that do not form part of its operations, do not operate under
its operating policies and whose businesses, risk profiles and debt levels
are not comparable with its own. Disclosure under “Property operations”
excludes Eagle’s Eye Investments Proprietary Limited (“BEE SPV”).
2.2 On 27 June 2006 10 810 811 linked units were issued to BEE SPV and
Resilient is standing surety for the funding obligations of BEE SPV in
acquiring these units. In terms of IFRS the issue did not take place and
the essence of the transaction was that the BEE shareholders received a
right/option to acquire linked units in Resilient at a future date at a
predetermined price. As a consequence the issue of linked units has been
eliminated in the preparation of these financial statements. The
right/option the BEE shareholders have acquired has a value of
R238 688 000 (Dec 2011: R150 350 000; Jun 2011: R112 306 000). The value
of this right/option will be considered on an ongoing basis and changes in
its fair value are accounted for through profit and loss.
The following table indicates the effect of the BEE transaction on the
group financial statements (the column “Property operations” indicates
Resilient’s results had the BEE transaction been accounted for as an issue
for value):
Property
Consolidated BEE SPV Operations
Jun 2012 R’000 R’000 R’000
Statement of comprehensive income
Fair value loss on BEE instrument (88 338) 88 338 –
Finance costs
– Interest on borrowings (177 548) 9 469 (168 079)
– Interest to linked debenture
holders (325 666) (13 053) (338 719)
Statement of financial position
Current assets
– Trade and other receivables 29 767 (1 568) 28 199
Share capital 2 697 108 2 805
Share premium 2 490 931 142 270 2 633 201
Non-distributable reserves 4 338 159 248 350 4 586 509
Non-current liabilities
– Linked debentures 1 294 681 51 892 1 346 573
– Interest-bearing borrowings
(non-current and current) 4 086 145 (218 308) 3 867 837
BEE instrument 238 688 (238 688) –
Current liabilities
– Trade and other payables 296 815 (245) 296 570
– Linked debenture interest payable 325 666 13 053 338 719
2.3 The intangible asset relates to the management contract of PFM, the
management company of Capital, and is carried at cost.
3 FACILITIES AND INTEREST RATE DERIVATIVES
Average
Amount margin over
Facility expiry R’million Jibar
2012 835 0,61%
2013 785 1,64%
2014 575 1,51%
2015 – –
2016 1 221 1,63%
2017 715 1,87%
2018 53 1,21%
2019 327 1,63%
4 511 1,46%
Amount Average % of
Interest rate swaps expiry R’million swap rate borrowings
2013 400 7,22% 10,34%
2014 650 7,42% 16,80%
2015 600 7,71% 15,51%
2016 600 7,42% 15,51%
2017 600 7,80% 15,51%
2018 600 7,44% 15,51%
2019 500 6,91% 12,93%
Hedged borrowings 3 950 7,44% 102,11%
Variable rate borrowings (82) (2,11%)
Total borrowings* 3 868 8,87%** 100,00%
*Total borrowings comprise the level of external interest-bearing
borrowings, excluding those of BEE SPV.
**Represents the all-in average rate for Resilient on 30 June 2012.
4 LEASE EXPIRY PROFILE
Based on
Based on contractual
rentable rental
Lease expiry area revenue
Vacant 1,8%
Dec 2012 10,7% 11,5%
Dec 2013 14,2% 16,8%
Dec 2014 16,4% 19,8%
Dec 2015 11,7% 13,8%
Dec 2016 17,3% 18,0%
>Dec 2016 27,9% 20,1%
Total 100,0% 100,0%
5 SEGMENTAL ANALYSIS
Jun 2012 Dec 2011 Jun 2011
Rental revenue R’000 R’000 R’000
Retail 569 634 876 499 393 042
Jun 2012 Dec 2011 Jun 2011
Profit before net finance costs R’000 R’000 R’000
Retail 361 352 1 139 358 253 661
Corporate 455 141 553 439 248 036
Total 816 493 1 692 797 501 697
6 PAYMENT OF INTERIM DISTRIBUTION
The board has approved and notice is hereby given of a cash interim
interest distribution (distribution no 19) of 120,74 cents per linked unit
for the six months ended 30 June 2012. This interest distribution is not
subject to dividend withholding tax.
The last date to trade linked units cum distribution will be Friday, 24
August 2012 and trading will commence ex distribution on Monday, 27 August
2012. The record date to participate in the distribution will be Friday,
31 August 2012.
Linked unit certificates may not be dematerialised or rematerialised
between Monday, 27 August 2012 and Friday, 31 August 2012, both days
inclusive.
Payment of the distribution will be made to linked unitholders on Monday,
3 September 2012. In respect of dematerialised linked unitholders, the
distribution will be transferred to the Central Securities Depository
Participant accounts/broker accounts on Monday, 3 September 2012.
Certificated linked unitholders’ distribution payments will be posted on
or about Monday, 3 September 2012.
Directors
JJ Njeke (chairman); Des de Beer*; Thembi Chagonda; Jorge da Costa;
Andries de Lange*; Marthin Greyling; Nick Hanekom*; Bryan Hopkins;
Johann Kriek*; David Lewis*; Phumelele Msweli; Umsha Reddy; Barry van Wyk
(*executive director)
Company secretary
Rajeshree Sookdeyu
Business address
4th Floor, Rivonia Village, Rivonia Boulevard, Rivonia 2191
Transfer office
Link Market Services South Africa Proprietary Limited
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein 2001
Sponsor
Java Capital
Date: 07/08/2012 03:02:00 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.
Sharenet Sites 
