Wrap Text
Audited condensed consolidated results for the year ended 31 August 2012
DIPULA INCOME FUND
(Incorporated in the Republic of South Africa (Registration number 2005/013963/06)
JSE code for A-linked units: DIA ISIN for A-linked units: ZAE000158317
JSE code for B-linked units: DIB ISIN for B-linked units: ZAE000158325
("Dipula" or "the company", and together with its subsidiaries, "the Fund" or "the group")
Audited condensed consolidated results
for the year ended 31 August 2012
Highlights for the period
- Distributions in line with Prospectus forecast
A-linked units 79,370 cents
B-linked units 60,821 cents
- 5% increase in GLA to 461 158 m2
- Post reporting period acquisitions of R1,3 billion concluded
Condensed consolidated statement of comprehensive income
Audited Audited
Year ended Year ended
31 August 2012 31 August 2011
R'000 R'000
REVENUE
Property portfolio 299 583 110 171
Rental income 300 731 106 647
Straight-line rental income accrual (1 148) 3 524
Total revenue 299 583 110 171
Property expenses (58 080) (27 394)
Administration and corporate costs (11 757) (4 691)
Net operating profit 229 746 78 086
Changes in fair values of investment properties 85 072 3 350
Fair value gain on investment property 83 924 6 874
Adjustment resulting from straight-lining of rental revenue 1 148 (3 524)
Profit from operations 314 818 81 436
Net interest paid (65 209) (140 573)
Interest paid (67 305) (140 895)
Interest received 2 096 322
Profit/(Loss) before debenture interest and taxation 249 609 (59 137)
Debenture interest (147 947) (5 096)
Profit/(Loss) before taxation 101 662 (64 233)
Taxation (20 843) 9 771
Profit/(Loss) for the year after taxation 80 819 (54 462)
Other comprehensive income
Total comprehensive income/(loss) for the year
attributable to equity holders 80 819 (54 462)
Reconciliation of earnings/(loss), headline earnings/(loss)
and distributable earnings
Earnings/(Loss) for the year attributable to equity holders 80 819 (54 462)
Debenture interest 147 947 5 096
A-linked units 83 761 2 918
B-linked units 64 186 2 178
Earnings/(Loss) attributable to linked unitholders 228 766 (49 366)
Change in fair value of properties (net of deferred taxation) (60 318) (3 006)
Change in fair value of properties (85 072) (3 350)
Deferred taxation (including effect of rate change) 24 754 344
Headline earnings/(loss) attributable to linked
unitholders 168 448 (52 372)
Straight-line rental income accrual (net of deferred taxation) 827 (2 537)
Straight-line rental income accrual 1 148 (3 524)
Deferred taxation (321) 987
Lease cancellation income not distributed (19 003)
Deferred taxation asset raised on tax losses and doubtful
debt provisions (3 591) (11 102)
Debt breakage costs 71 107
Pre-acquisition profits of Asakhe Realty Investments acquired
in 2011 1 266
Distributable earnings attributable to linked unitholders 147 947 5 096
Total number of linked units 211 064 786 211 064 786
Number of A-linked units in issue 105 532 393 * 105 532 393 *
Number of B-linked units in issue 105 532 393 * 105 532 393 *
Weighted average number of A-linked units in issue 105 532 393 4 336 948
Weighted average number of B-linked units in issue 105 532 393 4 336 948
Basic earnings/(loss) per share (cents) 38,29 (627,88)
Headline earnings/(loss) per share (cents) 9,71 (662,54)
Basic earnings/(loss) per A-linked unit (cents) 117,66 (560,60)
Basic earnings/(loss) per B-linked unit (cents) 99,11 (577,66)
Headline earnings/(loss) per A-linked unit (cents) 89,08 (595,26)
Headline earnings/(loss) per B-linked unit (cents) 70,53 (612,32)
Distributable earnings per A-linked unit (cents) 79,370 2,77
Interim 39,685 N/A
Final 39,685 2,77
Distributable earnings per B-linked unit (cents) 60,821 2,06
Interim 27,741 N/A
Final 33,080 2,06
* Excluding treasury linked units.
The company does not have any dilutionary instruments in issue.
Condensed consolidated statement of changes in equity
Fair value Accumulated Total
Stated capital reserve loss equity
R'000 R'000 R'000 R'000
Balance at 1 September 2010 111 589 (11 168) 100 421
Issue of linked units 468 940 468 940
Share issue expenses (18 094) (18 094)
Treasury shares (22 994) (22 994)
Total comprehensive loss for the
year (54 462) (54 462)
Transfer of capital items to fair value
reserve 5 306 (5 306)
Balance at 1 September 2011 427 852 116 895 (70 936) 473 811
Total comprehensive income for the
year 80 819 80 819
Transfer of capital items to fair value
reserve 58 667 (58 667)
Balance at 31 August 2012 427 852 175 562 (48 784) 554 630
Condensed consolidated statement of cash flows
Audited Audited
Year ended Year ended
31 August 2012 31 August 2011
R'000 R'000
Cash inflows/(outflows) from operating activities 91 275 (62 319)
Cash generated from operations 232 637 78 254
Net finance costs (65 109) (140 573)
Distribution paid (76 253)
Cash outflows from investing activities (142 144) (517 840)
Cash inflows from financing activities 187 762 603 978
Net movement in cash and cash equivalents 136 893 23 819
Cash and cash equivalents at the beginning of the year 25 260 1 441
Cash and cash equivalents at the end of the year 162 153 25 260
Segmental information
For the year ended 31 August 2012
Extracts from the statement of Retail Industrial Offices Total
comprehensive income R'000 R'000 R'000 R'000
Rental income 148 530 42 286 109 915 300 731
Property expenses (28 105) (9 933) (20 042) (58 080)
Net property income 120 425 32 353 89 873 242 651
Straight-line rental income accrual (1 148)
Administration and corporate costs (11 757)
Net operating profit 229 746
Extracts from the statement of
financial position
Investment property at year-end 1 397 443 391 919 604 124 2 393 486
Non-current assets held for sale
(excluding deferred taxation) 17 075 9 770 25 500 52 345
For the year ended 31 August 2011
Extracts from the statement of Retail Industrial Offices Total
comprehensive income R'000 R'000 R'000 R'000
Rental income 57 481 8 678 40 488 106 647
Property expenses (12 643) (4 455) (10 296) (27 394)
Net property income 44 838 4 223 30 192 79 253
Straight-line rental income accrual 3 524
Administration and corporate costs (4 691)
Net operating profit 78 086
Extracts from the statement of
financial position
Investment property at year-end 1 124 730 332 300 650 069 2 107 099
Non-current assets held for sale
(excluding deferred taxation) 1 400 20 000 21 400
Condensed consolidated statement of financial position
Audited Audited
31 August 2012 31 August 2011
R'000 R'000
ASSETS
Non-current assets 2 441 968 2 155 581
Investment property 2 393 486 2 107 099
Goodwill 48 482 48 482
Current assets 188 665 46 338
Trade and other receivables 25 310 21 078
Loan to related party 1 202
Cash and cash equivalents 162 153 25 260
Non-current assets held for sale
Investment property held for sale 54 987 21 400
Total assets 2 685 620 2 223 319
EQUITY AND LIABILITIES
Equity 554 630 473 811
Stated capital 427 852 427 852
Reserves 126 778 45 959
Non-current liabilities 1 848 872 1 677 216
Debentures 900 629 900 629
Interest-bearing liabilities 906 562 759 500
Deferred taxation 41 681 17 087
Current liabilities 282 118 71 182
Trade and other payables 46 120 66 086
Linked unitholders for distribution 76 790 5 096
Interest-bearing liabilities 159 208
Non-current liabilities held for sale
Investment property held for sale Deferred taxation 1 110
Total equity and liabilities 2 685 620 2 223 319
Net asset value per A-linked unit
(excluding deferred taxation) (cents) 707,98 659,81
Net asset value per B- linked unit
(excluding deferred taxation) (cents) 707,98 659,81
Net asset value per A-linked unit (cents) 689,48 651,19
Net asset value per B- linked unit (cents) 689,48 651,19
Notes
1. Basis of preparation
The audited condensed consolidated financial results have been prepared in accordance with the requirements
of International Financial Reporting Standards, the AC 500 series of interpretations, IAS 34: Interim Financial
Reporting, the JSE Listings Requirements and the requirements of the South African Companies Act, 2008. These
results have been prepared by the Financial Director, Brigitte de Bruyn CA(SA).
The accounting policies adopted in the preparation of these results are consistent with those applied in the
preparation of the financial statements for the year ended 31 August 2011.
The directors are not aware of any matters of circumstances arising subsequent to 31 August 2012 that require
any additional disclosure or adjustment to the financial statements.
PKF (Jhb) Inc. have issued their unmodified audit opinion on the group financial statements for the year ended
31 August 2012, which is available for inspection at the company's registered office.
2. Summary of financial performance
Audited Audited
31 August 2012 31 August 2011
R'000 R'000
Distributable earnings per A-linked unit (cents) 79,370 2,77
Interim 39,685 N/A
Final 39,685 2,77
Distributable earnings per B-linked unit (cents) 60,821 2,06
Interim 27,741 N/A
Final 33,080 2,06
A-linked units in issue* 105 532 393 105 532 393
B-linked units in issue* 105 532 393 105 532 393
Net asset value per combined linked unit (cents)** 1 378,96 1 302,38
Net asset value per A-linked unit (cents) 689,48 651,19
Net asset value per B-linked unit (cents) 689,48 651,19
Gearing ratio (%)*** 38,1 34,2
* Excluding treasury linked units.
** Net asset value includes total equity and debentures.
*** The gearing ratio is calculated by dividing interest-bearing liabilities, excluding short-term portion of bank
funding and excluding debenture liabilities, by total assets.
3. Debt facilities
Margin Rate below
over JIBAR prime
Fixed for floating for floating
Amount rate facility facility
Expiry Type R'million % % %
2013 Floating 42,0 1,25
2015 Fixed 506,7 8,63
2016 Fixed 100,0 9,26
2016 Floating 137,3 2,38
2016 Floating 99,4 0,95
2017 Fixed 125,0 8,95
2017 Floating 400,0 2,16
1 410,4
The average all-in rate for borrowings at 31 August 2012 is 8,39%.
4. Lease expiry profile (Unaudited)
Based on Based on rental
GLA revenue
Lease expiry % %
Vacant 10,4
Unlettable space 3,8
Monthly and expired 6,8 7,2
August 2013 25,4 28,4
August 2014 14,4 14,5
August 2015 12,8 14,1
August 2016 10,0 10,1
August 2017 and beyond 16,4 25,7
100,0 100,0
5. Payment of final distributions
The board has approved and notice is hereby given of final cash interest distributions (distribution number 3) of
39,685 cents per A-linked unit and 33,080 cents per B-linked unit for the six months ended 31 August 2012.
These interest distributions are not subject to dividend withholding tax.
The payment of the distributions will be in accordance with the abbreviated timetable set out below:
2012
Last date to trade cum distribution Friday, 30 November
Linked units trade ex distribution Monday, 3 December
Record date Friday, 7 December
Payment date Monday, 10 December
Linked unit certificates may not be dematerialised or rematerialised between Monday, 3 December 2012 and
Friday, 7 December 2012, both days inclusive.
COMMENTARY
1. Profile and property portfolio
Dipula is a property loan stock company which listed in the Real Estate sector of the JSE on 17 August
2011.
Investors in Dipula can invest in either A-linked units or B-linked units or both. A-linked units entitle the
investor to a preferential 5% growth in distributions until 2017, and thereafter distributions will grow at the
lower of 5% or CPI. B-linked unitholders receive all the residual income not distributed to the A-linked
unitholders thus benefiting from the gearing effect of any growth in excess of 5%.
The Fund owns a sectorally and geographically diversified portfolio with a retail bias. The portfolio consists
of 49,4% retail, 36,5% office and 14,1% industrial properties by gross rental revenue. Approximately
70,6% of the portfolio is concentrated in Gauteng with properties in the eight other provinces. As at
31 August 2012, the portfolio which comprised 176 properties was valued at R2,4 billion.
The Fund is externally managed by the 100% BEE owned and controlled Dipula Asset Management Trust.
Management owns a significant stake in the Fund, thus aligning the interests of management and other
Dipula unitholders.
Dipula invests in individual assets generally between R20,0 million and R200,0 million across all sectors
throughout South Africa. The strategy is to prudently grow the portfolio to R10,0 billion over the next four
to six years, with specific focus on sustainable income growth. Management will continue to ensure first
rate asset and property management which includes maximising revenue, cost containment, maintaining
the assets as well as conservatively managing interest rates and funding risks.
These final results are for the 12 months ended 31 August 2012. The August 2011 period is not directly
comparable as it only related to 15 days post the merger of Dipula Property Fund and Mergence Africa
Property Fund and the R700,0 million acquisitions made on listing on 17 August 2011.
2. Distributable income
As a result of the aforementioned merger and the acquisition of the Asakhe and Redefine portfolios
totalling R700 million only occurring late in August 2011, no comparison can be made to the prior year
earnings. A more meaningful comparison to the forecast presented in the Prospectus dated 28 July 2011
has therefore been presented. The forecast, including the assumptions on which it is based and the
financial information from which it is prepared, is the responsibility of the directors of Dipula. The forecast
was reported on by the independent reporting accountants.
Actual earnings are in line with those presented in the forecast, with the B-linked units benefiting from
the marginally better than forecast distributions of 2,5% for the total year. Lease cancellation income
of R19,0 million has not been distributed as this relates to earnings for 2013 (R9,5 million) and 2014
(R9,5 million). The aforementioned amounts do not include any interest that will be earned. The directors
are of the view that the income should be distributed in the periods to which the income relates.
Prospectus
Actual forecast
year ended year ended
Comparison of actual distribution to 31 August 2012 31 August 2012 Variance
Prospectus forecast R'000 R'000 %
Property portfolio rental income 300 731 283 514 6,1
Property expenses (58 080) (64 398) 9,8
Net property income 242 651 219 116 10,7
Asset management fee (7 240) (6 975) (3,8)
Administration and corporate costs (4 517) (3 402) (32,8)
Net interest paid (65 209) (62 360) (4,6)
Profit before fair value adjustment on
investment property, debenture interest
and taxation 165 685 146 378 13,2
Debenture interest (147 947) (146 378) 1,1
Distribution per A-linked unit (cents) 79,370 79,370
Distribution per B-linked unit (cents) 60,821 59,340 2,5
Total distributions for the year ended 31 August 2012 for A-linked unitholders amounted to 79,370 cents
per A-linked unit and for B-linked unitholders amounted to 60,821 cents per B-linked unit. A-linked
unitholders will receive 39,685 cents per A-linked unit as per their entitlement for the six months ended
31 August 2012, whilst B-linked unitholders will receive the balance of the distributable income for the
same period. This translates to distributions for the six months ended 31 August 2012 of 33,080 cents
per B-linked unit.
3. Financial results
Dipula has achieved its forecast distributions despite the challenging economic climate. Net property
income, excluding the acquisitions of the McCormick properties and the Metcash lease cancellation
income, is in line with the Prospectus forecast.
4. Changes in fair value
The group's property portfolio was valued in terms of its valuation policy on 31 August 2012. Properties with
values greater than R8,0 million were independently valued and properties with values below R8,0 million
were valued by the directors. The net increase in the value of the property portfolio was R85,0 million.
5. Deferred taxation
Dipula has accounted for capital gains tax at the increased rate of 18,6% which affects disposals after
1 September 2012. The change in rate resulted in deferred taxation increasing by R9,1 million.
6. Vacancies
Vacancies have increased from 7,9% at listing to 10,4% at 31 August 2012.
7. Asset management
As previously reported, Dipula's strategy is to grow the portfolio whilst disposing of smaller non-core
properties.
7.1 Acquisitions
The following retail properties were acquired in the current year:
GLA Purchase price Effective
Property name m2 R'000 Yield from Transfer date
Nquthu Plaza 14 972 136 701 9.5% May 2012 June 2012
Bochum and Transfer expected
Blouberg Plaza 12 529 117 208 9.5% May 2012 November 2012
7.2 Disposals
The following property was disposed of and transferred during the financial year:
GLA Book value Sale price
Property name m2 R'000 R'000 Transfer date
Kleynhans Corner 1 019 2 750 3 500 August 2012
7.3 Investment properties held for sale
The following properties are held for sale at year-end:
Book value at
GLA 31 August 2012 Sale price
Property name Sector m2 R'000 R'000
360 Pretoria Avenue Office 4 185 19 300 19 300
Saficon Driehoek Industrial 1 894 5 400 5 400
Perm Kempton Office 3 527 5 200 5 200
Sandvale Industrial 874 4 370 4 370
Victoria and Knox Streets Retail 3 618 2 600 2 600
Princess Jones Retail 1 141 2 250 2 250
Princess Geenrich Retail 1 400 2 100 2 100
Bears Amanzimtoti Retail 1 384 1 900 1 900
Standard Bank Amanzimtoti Retail 783 1 600 1 600
Saficon Germiston Retail 1 927 1 550 1 550
1 Palm Street Phalaborwa Retail 935 1 400 1 400
Attie Fourie Place Retail 915 1 000 1 000
Perm Springs Office 2 011 1 000 1 000
Odendaalsrus Centre Retail 1 055 675 675
Metro Koringpunt Retail 1 200 600 600
Virgin Active portion of land Retail 8 100 1 400 1 400
52 345 52 345
8. Funding
Dipula has an all-in blended rate of funding of 8,39% at 31 August 2012 and has fixed interest debt of
R506,0 million for three years, R100,0 million for four years and R125,0 million for five years respectively.
A floating facility of R236,7 million expires in approximately three years and an additional facility of
R400,0 million has been negotiated for five years which is not as yet fixed. Management intends to fix
this facility when the funds are drawn down to settle the purchase considerations of already announced
acquisitions. A bridging facility of R42,0 million expires in 2013 and this will be settled out of the proceeds
of the capital raising announced on SENS on 25 October 2012. To ensure effective cash management,
surplus cash is deposited into the floating debt facility.
9. Commitments
Per the following SENS announcements, the group has signed various acquisition agreements:
- the SENS announcement dated 29 May 2012 detailed the acquisition of the Plaza Shopping Centre,
Randfontein Station Shopping Centre and Bushbuckridge Shopping Centre totalling R329,9 million;
- the SENS announcement dated 28 August 2012 detailed the acquisition of the SAPS VIP building, the
SAPS IJS building and the Absa Home loans building totalling R431,0 million;
- the SENS announcement dated 7 September 2012 detailed the acquisition of the Smada Properties for
R116,0 million and Tower Mall for R152,7 million; and
- the SENS announcement dated 12 November 2012 detailed the acquisitions of Tembisa Mega Mart for
R170,0 million, the first phase Orange Farm shopping centre for R42,0 million and the Melki Portfolio
for R57,0 million.
The commitments will be funded using a combination of bank funding in the form of a R400,0 million
facility negotiated with Nedbank and proceeds from the capital raising embarked upon in November 2012,
as announced on SENS on 25 October 2012.
10. Prospects
There has been sustained pressure on local and global economies and South Africas economy is expected
to grow at just above 2%. Inflation has been edging upward but the Reserve Bank is not expected to
increase interest rates as it needs to maintain a "balancing act" between economic growth and inflation
control. The cost of Municipal rates and electricity are likely to remain a challenge for both landlords
and tenants as Government passes on the burden of underfunded municipalities and attempts to fund
the Eskom expansion programme. Despite these challenging conditions, through income-enhancing
acquisitions, efficient management of costs and by reducing vacancies, Dipula expects to deliver growth
in distributions to unitholders. In addition, management is assessing various acquisitions of portfolio
improving assets. Distribution growth is anticipated to be between 7% and 9% for the 2013 financial
period. This forecast has not been reviewed or reported on by the group's independent external auditors.
By order of the Board
Johannesburg
14 November 2012
Directors
ZJL Matlala (Chairperson)*, IS Petersen (CEO), BH Azizollahoff*#, B de Bruyn (FD)
NS Gumede, E Links*, Y Waja* * Independent non-executive, # British
Registered office
Block B Dunkeld Park, 6 North Road, Dunkeld West
PO Box 875, Parklands, 2121
Sponsor
Java Capital
Transfer secretaries
Link Market Services South Africa
(Proprietary) Limited
Company secretary
Probity Business Services
(Proprietary) Limited
Website: www.dipula.co.za
Date: 14/11/2012 12:00:00 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.
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