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Audited provisional consolidated financial results for the year ended 31 August 2013
DIPULA INCOME FUND
(Incorporated in the Republic of South Africa) (Registration number 2005/013963/06)
JSE share code for A-linked units: DIA ISIN for A-linked units: ZAE000158317
JSE share code for B-linked units: DIB ISIN for B-linked units: ZAE000158325
(Approved as a REIT by the JSE)
("Dipula" or "the company", and together with its subsidiaries, "the group")
AUDITED PROVISIONAL CONSOLIDATED FINANCIAL RESULTS for the year ended 31 August 2013
HIGHLIGHTS
- 7% increase in full year combined A- and B- linked distributions
to 149.977 cents
- 5% increase in full year A-linked distribution to 83.338 cents
- 9.6% increase in full year B-linked distribution to 66.639 cents
- 45.5% increase in distributable earnings to R215.2 million
- Acquisitions totalling R1.1 billion concluded
- Portfolio value increased to R3.75 billion
- Successful R650 million private placement completed
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
Year ended Year ended
31 August 2013 31 August 2012
R'000 R'000
REVENUE
Property portfolio 374 720 299 583
Rental income 338 301 300 731
Straight-line rental income accrual 36 419 (1 148)
Total revenue 374 720 299 583
Other income 13 276
Property expenses (70 136) (58 080)
Administration and corporate costs (14 244) (11 757)
Net operating profit 303 616 229 746
Fair values changes on investment properties 126 537 85 072
Profit from operations 430 153 314 818
Net interest (61 822) (65 209)
Interest paid (80 863) (67 305)
Interest received 19 041 2 096
Amortisation of debenture premium 7 146
Profit before debenture interest and taxation 375 477 249 609
Debenture interest (215 216) (147 947)
A-linked units (119 590) (83 761)
B-linked units (95 626) (64 186)
Profit before taxation 160 261 101 662
Taxation 39 011 (20 843)
Profit for the year after taxation 199 272 80 819
Other comprehensive income
Total comprehensive income for the year attributable
to equity holders 199 272 80 819
Audited Audited
Year ended Year ended
31 August 2013 31 August 2012
R'000 R'000
Reconciliation of earnings, headline earnings and distributable
earnings
Profit for the year attributable to equity holders 199 272 80 819
Debenture interest 215 216 147 947
Earnings 414 488 228 766
Change in fair value of properties (net of deferred taxation) (178 872) (60 318)
Change in fair value of properties (126 537) (85 072)
Deferred taxation (including effect of rate change) (52 335) 24 754
Headline earnings attributable to linked unitholders/shareholders 235 616 168 448
Straight-line rental income accrual (net of deferred taxation) (45 590) 827
Straight-line rental income accrual (36 419) 1 148
Deferred taxation (9 171) (321)
Lease cancellation income distributed (not distributed) 9 511 (19 003)
Deferred taxation reversed/(raised) on tax losses and doubtful debts 22 467 (3 591)
Taxation paid 28
Amortisation of debenture premium (7 146)
Amortisation of debt raising fee 330
Pre-acquisition profits of Asakhe Realty Investments acquired in 2011 1 266
Distributable earnings attributable to linked unitholders 215 216 147 947
Total number of linked units 286 999 366 211 064 786
Number of A-linked units in issue 143 499 683 105 532 393
Number of B-linked units in issue 143 499 683 105 532 393
Weighted average number of A-linked units in issue 135 074 065* 105 532 393*
Weighted average number of B-linked units in issue 135 074 065* 105 532 393*
Basic earnings per share (cents) 73.76 38.29
Headline earnings per share (cents) 7.55 9.71
Basic earnings per A-linked unit (cents) 162.30 117.66
Basic earnings per B-linked unit (cents) 144.56 99.11
Headline earnings per A-linked unit (cents) 96.09 89.08
Headline earnings per B-linked unit (cents) 78.35 70.53
Distributable earnings per A-linked unit (cents) 83.338 79.370
Interim 41.669 39.685
Final 41.669 39.685
Distributable earnings per B-linked unit (cents) 66.639 60.821
Interim 29.804 27.741
Final 36.835 33.080
*Excluding treasury shares.
The company does not have any dilutionary instruments in issue.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
year ended year ended
31 August 2013 31 August 2012
R'000 R'000
ASSETS
Non-current assets 3 779 817 2 441 968
Investment property 3 722 994 2 393 486
Goodwill 48 482 48 482
Other non-current receivables 8 341
Current assets 88 071 188 665
Trade and other receivables 33 983 25 310
Loan to related party 1 202
Cash and cash equivalents 54 088 162 153
Non-current assets held for sale
Investment property held for sale 30 250 54 987
Total assets 3 898 138 2 685 620
EQUITY AND LIABILITIES
Equity 753 902 554 630
Stated capital 427 852 427 852
Reserves 326 050 126 778
Non-current liabilities 2 974 791 1 848 872
Debenture capital 1 499 420 900 629
Interest-bearing liabilities 1 475 371 906 562
Deferred taxation 41 681
Current liabilities 169 445 282 118
Interest-bearing liabilities 159 208
Trade and other payables 56 793 46 120
Linked unitholders for distribution 112 652 76 790
Total equity and liabilities 3 898 138 2 685 620
Total number of linked units 286 999 366 211 064 786
Number of A-linked units in issue 143 499 683 105 532 393
Number of B-linked units in issue 143 499 683 105 532 393
Net asset value per A-linked unit (excluding deferred taxation)
(cents) 785.13 707.98
Net asset value per B-linked unit (excluding deferred taxation)
(cents) 785.13 707.98
Net asset value per A-linked unit (cents) 785.13 689.48
Net asset value per B-linked unit (cents) 785.13 689.48
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Fair Accumu-
Stated value lated Total
capital reserve loss equity
R'000 R'000 R'000 R'000
Balance at 1 September 2011 427 852 116 895 (70 936) 473 811
Total comprehensive income for the year ended 80 819 80 819
Transfer of capital items to fair value reserve 58 667 (58 667)
Balance at 1 September 2012 427 852 175 562 (48 784) 554 630
Total comprehensive income for the year ended 199 272 199 272
Transfer of capital items to fair value reserve 224 462 (224 462)
Balance at 31 August 2013 427 852 400 024 (73 974) 753 902
CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
Year ended Year ended
31 August 31 August
2013 2012
R'000 R'000
Cash flows from operating activities 29 805 91 275
Cash generated from operations 268 549 232 637
Net finance costs (59 362) (65 109)
Taxation paid (28)
Distribuiton paid (179 354) (76 253)
Cash outflows from investing activities (1 143 180) (142 144)
Cash inflows from financing activities 1 005 310 187 762
Net movement in cash and cash equivalents (108 065) 136 893
Cash and cash equivalents at the beginning of the year 162 153 25 260
Cash and cash equivalents at the end of the year 54 088 162 153
SEGMENTAL INFORMATION
For the year ended 31 August 2013
Extracts from statement of comprehensive Retail Industrial Offices Total
income R'000 R'000 R'000 R'000
Total revenue from property portfolio 182 963 45 893 109 445 338 301
Property expenses (34 567) (10 888) (24 681) (70 136)
Net property income 148 396 35 005 84 764 268 165
Extracts from statement of financial position
Investment property 2 143 464 449 625 1 129 905 3 722 994
Non-current assets held for sale 6 250 24 000 30 250
For the year ended 31 August 2012
Extracts from statement of comprehensive Retail Industrial Offices Total
income R'000 R'000 R'000 R'000
Total revenue from property portfolio 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
Extracts from statement of financial position
Investment property 1 443 149 353 419 596 918 2 393 486
Non-current assets held for sale (excluding
deferred taxation) 17 075 9 770 25 500 52 345
Notes
1.Basis of preparation
The audited provisional consolidated financial statements have been prepared in accordance with the requirements
of International Financial Reporting Standards, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, 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) and have been audited by the company's auditors, Grant Thornton (Jhb) Inc.
Other than the adoption of the amendment to IAS 1 effective for financial periods beginning on or after 1 July 2012,
the accounting policies adopted are consistent with those applied in the prior periods.
The directors are not aware of any matters of circumstances arising subsequent to 31 August 2013 that require any
additional disclosure or adjustments to the financial statements.
Grant Thornton (Jhb) Inc. have issued their unmodified opinion on the group financial statements for the year ended
31 August 2013, which is available for inspection at the company's registered office.
2. Summary of financial performance
Audited Audited
year ended year ended
31 August 31 August
2013 2012
R'000 R'000
Distributable earnings per A-linked unit (cents) 83.338 79.370
Interim 41.669 39.685
Final 41.669 39.685
Distributable earnings per B-linked unit (cents) 66.639 60.821
Interim 29.804 27.741
Final 36.835 33.080
A-linked units in issue* 143 499 683 105 532 393
B-linked units in issue* 143 499 683 105 532 393
Net asset value per A-linked unit (cents) 785.13 689.48
Net asset value per B-linked unit (cents) 785.13 689.48
Gearing ratio*** (%) 37.9 38.1
* Excluding treasury shares.
** Net asset value includes total equity attributable to equity holders and linked debentures.
*** The gearing ratio is calculated by dividing total net interest-bearing liabilities, excluding linked debenture liabilities, by total assets.
3. Current debt facilities
Margin Rate
over below
JIBAR prime
for for
Utilised Fixed floating floating
Facility amount rate facility facility
R'million R'million Expiry % % %
Provider and type of loan
Standard Bank Fixed 506.7 506.7 2015 8.63
Standard Bank Fixed 100.0 100.0 2016 9.26
Standard Bank Floating 117.2 117.2 2016 2.38
Standard Bank Floating 99.4 99.4 2016 0.95
Standard Bank Floating 23.5 20.9 2018 1.9
Standard Bank Fixed 46.4 46.4 2018 9.16
Standard Bank Floating 11.6 11.6 2018 2.0
Standard Bank Fixed 89.5 89.5 2016 8.34
Standard Bank Floating 22.3 22.3 2016 1.7
Standard Bank Fixed 89.5 89.5 2018 9.06
Standard Bank Floating 22.3 22.3 2018 1.9
Nedbank Fixed 125.0 125.0 2017 8.95
Nedbank Fixed 108.6 108.6 2018 9.31
Nedbank Floating 108.6 108.6 2018 1.45
Nedbank Unutilised 182.9 *
Nedbank Unutilised 22.8 *
Nedbank Unutilised 91.8 *
Nedbank Unutilised 27.2 *
Nedbank Unutilised 31.7 *
Other non-bank 11.1 11.1 2022 6.5
1 838.1 1 479.1
*Five years from date of first draw down.
The average all-in rate for borrowings at 31 August 2013 was 7.96% (2012: 8.39%) as 50% (2012: 70%) of the
borrowings were not fixed.
Subsequent to year-end the all-in rate has moved to 8.40% and 74% of the facilities have been fixed.
4. Lease expiry profile (Unaudited)
Based on Based on rental
Lease expiry GLA revenue
Vacant 9.1%
Unlettable space# 3.0%
August 2014 25.1% 30.6%
August 2015 19.0% 23.5%
August 2016 18.4% 19.7%
August 2017 9.6% 8.9%
August 2018 and beyond 15.8% 17.3%
100.0% 100.0%
#Unlettable space is space that forms part of the GLA but which management considers to be structurally incapable
of being let.
5. Payment of final distributions
The board has approved and notice is hereby given of final cash interest distributions (distribution number 5) of
41.669 cents per A-linked unit and 36.835 cents per B-linked unit for the six months ended 31 August 2013.
In accordance with Dipula's status as a REIT, linked unitholders are advised that the interest distribution meets the
requirements of a "qualifying distribution" for the purposes of section 25BB of the Income Tax Act, No. 58 of 1962
("Income Tax Act"). Accordingly, qualifying interest distributions received by local tax residents must be included
in the gross income of such linked unitholders (as a non-exempt dividend in terms of section 10(1)(k)(aa) of the
Income Tax Act), with the effect that the qualifying distribution is taxable as income in the hands of the linked unitholder.
These qualifying distributions are however exempt from dividend withholding tax.
Qualifying distributions received by non-resident linked unitholders will not be taxable as income and instead will be
treated as ordinary dividends but which are exempt in terms of the usual dividend exemptions per section 10(1)(k) of the
Income Tax Act. It should be noted that until 31 December 2013 qualifying distributions received by non-residents are not
subject to dividend withholding tax. From 1 January 2014, any qualifying distribution will be subject to dividends tax.
This distribution, similarly to any other normal distribution, may have tax implications for resident as well as
non-resident linked unitholders. Linked unitholders are therefore encouraged to consult their professional advisors should
they be in any doubt as to the appropriate action to take.
The payment of the distributions will be in accordance with the abbreviated timetable set out below:
2013
Last date to trade cum distribution Friday, 29 November
Linked units trade ex distribution Monday, 2 December
Record date Friday, 6 December
Payment date Monday, 9 December
Linked unit certificates may not be dematerialised or rematerialised between Monday, 2 December 2013 and
Friday, 6 December 2013, both days inclusive.
COMMENTARY
PROFILE
Dipula is a JSE-listed REIT, effective 1 September 2013, which owns a sectorally and geographically
diversified portfolio. It trades under the codes DIA and DIB. DIA units are entitled to a 5% preferred income
growth whilst DIB's receive the remainder of the growth.
DISTRIBUTABLE EARNINGS
During the twelve months ended 31 August 2013 Dipula achieved total distribution growth of 7.0% over
the prior comparable period. This is in line with management's previous guidance of between 6.5% and
7.5%.
The total distribution attributable to the A-linked units of 83.338 cents (2012: 79.37 cents) per unit includes
41.669 cents (2012: 39.685 cents) for the final distribution, which equates to the 5% preferred increase on
the prior year.
The total distribution attributable to the B-linked units of 66.639 cents (2012 : 60.821 cents) per unit
includes 36.835 cents (2012: 33.08 cents) for the final distribution, which equates to an 11.4% increase
on the prior year.
Included in net operating profit is a R9 milion rental guarantee received.
Finance income included R13.6 million of antecedent income relating to the private placement.
PROPERTY PORTFOLIO
The group owns 176 investment properties with a gross lettable area ("GLA") of 550 656 m2 and a value of
R3.75 billion.
During the period under review, R1.1 billion worth of properties were acquired. These properties were
acquired at an average yield of 9.8% which contributed positively to the increases in revenue and net
operating profit.
Property expenses have been contained at 20.7% of revenue, (2012:19.3%).
The segmental and geographic breakdown of property holdings as at 31 August 2013 was as follows:
See press release for graphs.
VACANCIES
There was a marked improvement of 13% in total portfolio vacancy from 10.4% at 31 August 2012 to
9.1% at 31 August 2013. The Industrial (8.1%) and Retail (7.3%) portfolios showed an improvement of
24% and 15%, respectively, relative to 31 August 2012, whilst office vacancies (15.1%) increased by 2%
due to difficult trading conditions that persist in this sector.
ACQUISITIONS
In addition to the R1.1 billion worth of properties acquired by the group which transferred during the
financial year, a further R266 million acquisitions will transfer post year-end.
DISPOSALS
Properties totalling R27.2 million were sold and transferred during the period under review in line with the
group's strategy.
A total of 16 properties worth R112 million have been identified for disposal. These properties do not as
yet meet the criteria to be classified as held for sale.
REFURBISHMENTS, EXTENSIONS AND REDEVELOPMENTS
Refurbishments of approximately R97 million are planned for the next 12 to 24 months at an average yield
of 9.23%. Most of these refurbishments are tenant driven and therefore represent limited income dilution
risk. These projects will be funded by a combination of debt and equity that will be raised.
CONTINGENCIES AND COMMITMENTS
As mentioned in the SENS announcement on 28 June 2013, Rural Maintenance (Pty) Ltd ("Rural"),
which previously supplied electricity management services to the Dipula Trust, has launched arbitration
proceedings against Dipula. Having obtained legal advice, Dipula is satisfied that the claims are unfounded
and without merit and as such, no provision has been raised. There has been no change in the status of
this matter since the last reporting period.
Dipula has commitments for property acquisitions (R775.6 million) and capital outlays (R97 million) totalling
R872.6 million which will be funded by a combination of debt and equity that will be raised.
FUNDING
The group had an all-in blended rate of 7.96% at 31 August 2013 and post year-end the all-in rate is
8.40%. The company has total debt facilities of R1.8 billion, with R1.5 billion utilised to date.
Post-year-end 74% of the debt has been fixed.
PRIVATE PLACEMENT
On 21 November 2012, Dipula successfully raised R650 million in terms of a private placement that was
oversubscribed. In terms of the offer, 37 967 290 A-linked units were issued at a price of R10.45 and
37 967 290 B-linked units were issued at a price of R6.67. This increased the number to 143 524 183
each of the A-linked and B-linked units in issue.
The issue prices included an accrued distribution for the six months ended 31 August 2012 of
72.765 cents combined, which translated into 39.685 cents for the A-linked units and 33.080 cents
for the B-linked units, and an accrued distribution of 35.735 cents combined for the period 1 September
2012 to 20 November 2012. This translated to 20.834 cents for the A-linked units and 14.9 cents for
the B-linked units. Excluding the accrued distribution, the private placement linked units were issued at a
price of R9.485 per A-linked unit and R6.19 per B-linked unit. The purpose of the private placement was
to fund previously announced acquisitions. As a result of delays in the transfer of certain properties, the
opportunity cost of holding cash approximately amounted to 1.5 cents per B-linked unit.
PROSPECTS
The anticipated low economic growth forecasts, cost inflationary pressures driven mainly by administered
prices, municipal rates and high wage settlements will create a challenging environment for the 2014 financial
year. Management is committed to extracting maximum value from the portfolio and to making acquisitions
which are both quality and earnings enhancing. Excluding the Ideas portfolio, distribution growth for the 2014
financial year is anticipated to be between 7% and 8%. This is based on the assumption that there will be
no change in current trading conditions of the existing portfolio, a stable macro-economic environment will
prevail, tenants will be able to absorb rising utility costs and there will be no major corporate failures. The
forecast has not been reviewed or reported on by the group's independent auditors.
By order of the board
Johannesburg
14 November 2013
Directors: ZJ Matlala (Chairperson)*, IS Petersen (CEO), BH Azizollahoff*#, B de Bruyn (FD), NS Gumede, E Links*
Y Waja*
* Independent non-executive # British
There were no changes to the board of directors during the year.
Registered office: Block B, Dunkeld Park, 6 North Road, Dunkeld West, PO Box 875, Parklands, 2121
Transfer secretaries: Link Market Services South Africa Proprietary Limited
Sponsor: Java Capital Trustees and Sponsors Proprietary Limited
Company secretary: Probity Business Services Proprietary Limited
Website: www.dipula.co.za
Date: 14/11/2013 03:58:00 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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