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Unaudited condensed consolidated interim results for the six months ended 28 February 2014
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")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS for the six months ended 28 February 2014
HIGHLIGHTS
- Revenue increased by 45.2% to R223 million
- Net operating profit increased by 49.2% to R187 million
- 14.9% increase in distributable earnings to R117.8 million
- 5% increase in A-linked distribution to 43.752 cents
- 8.5% increase in B-linked distribution to 32.338 cents
- Acquisitions totalling R267 million transferred at an aggregate yield of 9.9%
- Portfolio value increased to R4 billion
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited six Unaudited six Audited year
months ended months ended ended
28 February 28 February 31 August
2014 2013 2013
R'000 R'000 R'000
REVENUE
Property portfolio 241 354 159 347 374 720
Rental income 223 175 153 649 338 301
Straight-line rental income accrual 18 179 5 698 36 419
Total revenue 241 354 159 347 374 720
Other income – – 13 276
Property expenses (45 303) (27 218) (70 136)
Administration and corporate costs (8 803) (6 590) (14 244)
Net operating profit 187 248 125 539 303 616
Changes in fair values of investment properties (18 579) (270) 126 537
Profit from operations 168 669 125 269 430 153
Net finance charges (49 968) (19 669) (54 676)
Finance charges (58 098) (38 864) (80 863)
Amortisation of debenture premium 6 367 2 382 7 146
Finance income 1 763 16 813 19 041
Profit before debenture interest and taxation 118 701 105 600 375 477
Debenture interest (117 807) (102 563) (215 216)
A-linked units (67 352) (59 795) (119 590)
B-linked units (50 455) (42 768) (95 626)
Profit/(loss) before taxation 894 3 037 160 261
Taxation – 1 738 39 011
Total comprehensive income for the year
attributable to equity holders 894 4 775 199 272
Unaudited six Unaudited six Audited year
months ended months ended ended
28 February 28 February 31 August
2014 2013 2013
R'000 R'000 R'000
Reconciliation of earnings, headline earnings
and distributable earnings
Profit (loss) for the year attributable to equity holders 894 4 775 199 272
Debenture interest 117 807 102 563 215 216
Earnings 118 701 107 338 414 488
Change in fair value of properties (net of deferred
taxation) 18 579 220 (178 872)
Change in fair value of properties 18 579 270 (126 537)
Deferred taxation – (50) (52 335)
Headline earnings attributable to linked
unitholders/shareholders 137 280 107 558 235 616
Straight-line rental income accrual (net of deferred
taxation) (18 179) (4 103) (45 590)
Straight-line rental income accrual (18 179) (5 698) (36 419)
Deferred taxation – 1 595 (9 171)
Lease cancellation income distributed 4 642 4 660 9 511
Deferred taxation reversed/(raised) on tax losses
and doubtful debts – (3 284) 22 467
Amortisation of debenture premium (6 367) (2 382) (7 146)
Amortisation of structuring fee 431 114 330
Taxation paid – – 28
Distributable earnings attributable to linked
unitholders 117 807 102 563 215 216
Total number of linked units 309 962 824 286 999 366 286 999 366
Number of A-linked units in issue 153 941 061* 143 499 683* 143 499 683*
Number of B-linked units in issue 156 021 763* 143 499 683* 143 499 683*
Weighted average number of A-linked units in issue 153 652 625* 126 533 296* 135 074 065*
Weighted average number of B-linked units in issue 155 675 849* 126 533 296* 135 074 065*
Basic earnings/(loss) per share (cents) 0.29 1.89 73.76
Headline earnings/(loss) per share (cents) 6.30 1.97 7.55
Basic earnings per A-linked unit (cents) 44.13 49.14 162.30
Basic earnings per B-linked unit (cents) 32.70 35.69 144.56
Headline earnings per A-linked unit (cents) 50.17 49.23 96.09
Headline earnings per B-linked unit (cents) 38.66 35.77 78.35
Distributable earnings per A-linked unit (cents) 43.752 41.669 83.338
– Interim 43.752 41.669 41.669
– Final N/A N/A 41.669
Distributable earnings per B-linked unit (cents) 32.338 29.804 66.639
– Interim 32.338 29.804 29.804
– Final N/A N/A 36.835
*Excluding treasury shares.
The company does not have any dilutionary
instruments in issue.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
28 February 28 February 31 August
2014 2013 2013
R'000 R'000 R'000
ASSETS
Non-current assets 4 058 221 2 935 127 3 779 817
Investment property 4 000 941 2 886 645 3 722 994
Goodwill 48 482 48 482 48 482
Other non-current receivables 8 798 8 341
Current assets 133 294 242 517 88 071
Trade and other receivables 30 926 16 204 33 983
Cash and cash equivalents 102 368 226 313 54 088
Non-current assets held for sale
Investment property held for sale 8 900 28 850 30 250
Total assets 4 200 415 3 206 494 3 898 138
EQUITY AND LIABILITIES
Equity 754 796 559 405 753 902
Stated capital 427 852 427 852 427 852
Reserves 326 944 131 553 326 050
Non-current liabilities 3 288 881 2 505 894 2 974 791
Debentures 1 682 718 1 504 498 1 499 420
Interest-bearing liabilities 1 606 163 964 123 1 475 371
Deferred taxation – 37 273 –
Current liabilities 156 738 141 195 169 445
Trade and other payables 38 931 38 632 56 793
Linked unitholders for distribution 117 807 102 563 112 652
Total equity and liabilities 4 200 415 3 206 494 3 898 138
Net asset value per A-linked unit (cents) 791.70 719.13 785.13
Net asset value per B- linked unit (cents) 791.70 719.13 785.13
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated
Capital/ Fair Accumu-
Share value lated Total
Capital reserve loss equity
R'000 R'000 R'000 R'000
Balance at 1 September 2012 427 852 175 562 (48 784) 554 630
Total comprehensive income for the six months – – 4 775 4 775
Transfer of capital items to fair value reserve – (35) 35 –
Balance at 28 February 2013 427 852 175 527 (43 974) 559 405
Balance at 1 September 2013 427 852 400 024 (73 974) 753 902
Total comprehensive income for the six months – – 894 894
Transfer of capital items to fair value reserve – (400) 400 –
Balance at 28 February 2014 427 852 399 624 (72 680) 754 796
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
six months six months
ended ended Audited
28 February 28 February year ended
2014 2013 31 August
R'000 R'000 2013
Cash flows from operating activities (5 807) 11 460 29 805
Cash outflows from investing activities (265 938) (446 764) (1 143 180)
Cash inflows from financing activities 320 025 519 464 1 005 310
Net movement in cash and cash equivalents 48 280 64 160 (108 065)
Cash and cash equivalents at the beginning of the year 54 088 162 153 162 153
Cash and cash equivalents at the end of the year 102 368 226 313 54 088
SEGMENTAL INFORMATION
For the six months ended 28 February 2014
Extracts from statement of comprehensive Retail Industrial Offices Total
income R'000 R'000 R'000 R'000
Total revenue from property portfolio 134 988 27 706 60 481 223 175
Property expenses (26 558) (6 411) (12 334) (45 303)
Net property income 108 430 21 295 48 147 177 872
Extracts from statement of financial position
Investment property 2 366 698 450 585 1 183 658 4 000 941
Investment property held for sale 1 400 – 7 500 8 900
For the six months ended 28 February 2013
Extracts from statement of comprehensive Retail Industrial Offices Total
income R'000 R'000 R'000 R'000
Total revenue from property portfolio 86 811 21 063 45 775 153 649
Property expenses (18 691) (5 070) (3 457) (27 218)
Net property income 68 120 15 993 42 318 126 431
Extracts from statement of financial position
Investment property 1 489 964 357 279 1 039 402 2 886 645
NOTES
1. Basis of preparation
The unaudited condensed consolidated interim financial results for the six months ended 28 February 2014 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).
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 2013.
The directors are not aware of any matters of circumstances arising subsequent to 28 February 2014 that require
any additional disclosure or adjustments to the interim financial results.
These results were not audited or reviewed by the company's auditors.
2. Summary of financial performance
Unaudited Unaudited Audited
28 February 28 February 31 August
2014 2013 2013
R'000 R'000 R'000
Distribution per A-linked unit (cents) 43.752 42 83.338
– Interim 43.752 41.669 41.669
– Final N/A N/A 41.669
Distribution per B-linked unit (cents) 32.338 30 66.639
– Interim 32.338 29.804 29.804
– Final N/A N/A 36.835
A-linked units in issue* 153 941 061* 143 499 683* 143 499 683*
B-linked units in issue* 156 021 763* 143 499 683* 143 499 683*
Net asset value per combined linked unit (cents)** 1 583.41 1 438.26 1 570.26
Net asset value per A-linked unit (cents) 791.70 719.13 785.13
Net asset value per B-linked unit (cents) 791.70 719.13 785.13
Gearing ratio*** (%) 38.1 30.1 37.9
* Excluding treasury shares.
** Net asset value includes total equity attributable to equity holders and linked debentures.
*** The gearing ratio is calculated by dividing interest-bearing liabilities, excluding short-term portion of bank funding and excluding
linked debenture liabilities, by total assets.
3. Current utilised debt facilities
Maturity R'million
August 2015 506,7
July 2016 111,8
August 2016 298,3
July 2017 125
July 2018 410,5
November 2018 22,9
December 2018 31,7
January 2019 91,8
August 2022 11,1
TOTAL 1 609,8
4. Lease expiry profile
Average
Monthly
Gross
GLA Income
Vacant 66 900
Un-letteable Areas 11 633
Expiring before 31 Aug 2014 70 255 4 749 513
Expiring before 31 Aug 2015 107 170 9 156 921
Expiring before 31 Aug 2016 121 581 8 969 122
Expiring before 31 Aug 2017 68 831 4 385 275
Expiring After 31 Aug 2017 130 794 10 160 663
577 164 37 421 494
5. Payment of interim distributions
The board has approved and notice is hereby given of final cash distributions (distribution no 6) of 43,752 cents per
A-linked unit and 32,338 cents per B-linked unit for the period ended 28 February 2014 set out below:
In accordance with Dipula's status as a REIT, linked unitholders are advised that the 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"). The distribution on the linked units will be deemed to be a dividend, for South African tax
purposes, in terms of section 25BB of the Income Tax Act.
The distribution received by or accrued to South African tax residents must be included in the gross income of
such linked unitholders and will not be exempt from income tax (in terms of the exclusion to the general dividend
exemption, contained in paragraph (aa) of section 10(1)(k)(i) of the Income Tax Act) because it is a dividend
distributed by a REIT. This distribution is, however, exempt from dividend withholding tax in the hands of South
African tax resident linked unitholders, provided that the South African resident linked unitholders provided the
following forms to their Central Securities Depository Participant ("CSDP") or broker, as the case may be, in respect
of uncertificated linked units, or the company, in respect of certificated linked units:
(a) a declaration that the distribution is exempt from dividends tax; and
(b) a written undertaking to inform the CSDP, broker or the company, as the case may be, should the circumstances
affecting the exemption change or the beneficial owner cease to be the beneficial owner, both in the form
prescribed by the Commissioner for the South African Revenue Service. Linked unitholders are advised to
contact their CSDP, broker or the company, as the case may be, to arrange for the abovementioned documents
to be submitted prior to payment of the distribution, if such documents have not already been submitted.
Distributions received by non-resident linked unitholders will not be taxable as income and instead will be treated as
an ordinary dividend which is exempt from income tax in terms of the general dividend exemption in section 10(1)(k)
(i) of the Income Tax Act. It should be noted that up to 31 December 2013 distributions received by non-residents
from a REIT were not subject to dividend withholding tax. From 1 January 2014, any distribution received by a
non-resident from a REIT will be subject to dividend withholding tax at 15%, unless the rate is reduced in terms
of any applicable agreement for the avoidance of double taxation ("DTA") between South Africa and the country
of residence of the linked unitholders. Assuming dividend withholding tax will be withheld at a rate of 15%, the
net dividend amount due to non-resident linked unitholders is 37.1892 cents per A-linked unit and 27.4873 cents
per B-linked unit. A reduced dividend withholding rate in terms of the applicable DTA, may only be relied on if the
non-resident linked unitholder has provided the following forms to their CSDP or broker, as the case may be, in
respect of uncertificated linked units, or the company, in respect of certificated linked units:
(a) a declaration that the dividend is subject to a reduced rate as a result of the application of a DTA; and
(b) a written undertaking to inform their CSDP, broker or the company, as the case may be, should the circumstances
affecting the reduced rate change or the beneficial owner cease to be the beneficial owner, both in the form
prescribed by the Commissioner for the South African Revenue Service. Non-resident linked unitholders are
advised to contact their CSDP, broker or the company, as the case may be, to arrange for the abovementioned
documents to be submitted prior to payment of the distribution if such documents have not already been
submitted, if applicable.
The distribution is payable to A- and B-linked unitholders in accordance with the timetable set out below:
2014
Last date to trade cum distribution Thursday, 12 June
Linked units trade ex distribution Friday, 13 June
Record date Friday, 20 June
Payment date Monday, 23 June
Linked unit certificates may not be dematerialised or rematerialised between Friday, 13 June 2014 and Friday, 20 June 2014,
both days inclusive
A-linked units in issue at the date of declaration of interim distribution: 153 965 561
B-linked units in issue at the date of declaration of interim distribution: 156 046 263
Income tax number: 9743/798/14/3
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 during this period.
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
Company secretary: Probity Business Services Proprietary Limited
COMMENTARY
PROFILE
Dipula is a JSE listed REIT which owns a sectoraly and geographically diversified portfolio. It trades under the codes
DIA and DIB. DIA units are entitled a 5% preferred income growth whilst DIB's receive the remainder of the growth.
DISTRIBUTABLE EARNINGS
During the six months ended 28 February 2014, Dipula achieved total distribution growth of 6.5% over the prior
comparable period.
The distribution attributable to the A-linked units of 43.752 cents (2013: 41.669 cents) per unit equates to the 5%
preferred increase on the prior year.
The distribution attributable to the B-linked units of 32.338 cents (2013: 29.804 cents) per unit equates to an 8.5%
increase on the prior year.
PROPERTY PORTFOLIO
The group owns 179 investment properties with a gross lettable area ("GLA") of 577 164 m2 and a value of R4 billion.
Property expenses have been contained at 20.3% of revenue, (2013: 21.9%).
The segmental and geographic breakdown of property holdings as at 28 February 2014 was as follows:
Sectoral profile by GLA (%) Sectoral profile by revenue (%)
Retail 54.6% Retail 60.5%
Offices 23.2% Offices 27.1%
Industrial 22.2% Industrial 12.4%
Geographic profile by GLA (%) Geographic profile by revenue (%)
Gauteng 70.5% Gauteng 73.1%
KwaZulu-Natal 6.4% KwaZulu-Natal 6.7%
Limpopo 4.5% Limpopo 5.0%
Western Cape 4.1% Western Cape 1.7%
Free State 3.9% Free State 3.4%
Mpumalanga 2.2% Mpumalanga 2.1%
Eastern Cape 4.1% Eastern Cape 5.2%
North West 4.0% North West 2.6%
Northern Cape 0.3% Northern Cape 0.2%
VACANCIES
Vacancies increased from 9.1% at 31 August 2013 to 11.8% at 28 February 2014. However, subsequently they
reduced by 25% to 9%.
Retail vacancies increased from 7% at 31 August 2013 to 7.6% at 28 February 2014.
Industrial vacancies increased from 8% at 31 August 2013 to 16% at 28 February 2014, mainly due to the
refurbishment of Range Road.
Office vacancies increased from 15% at 31 August 2013 to 17.8% at 28 February 2014.
ACQUISITIONS
R267 million worth of acquisitions transferred during the period. These were acquired at an aggregate acquisition
yield of 9.9%, a total GLA of 31 804m2 and major tenants including Pick n Pay, Shoprite and Gauteng Provincial
Government.
Dipula will continue to acquire properties that enhance the overall quality of the portfolio and which have good
growth prospects.
DISPOSALS
Two properties totaling R21.5 million at an aggregate yield of 5% were transferred during the period under review.
The strategy is to dispose of non-performing properties that constitute a drag on the portfolio. To this end, further
properties have been earmarked for sale. The intention is to reduce Dipula's exposure to certain nodes.
FUNDING
Dipula has an all-in blended rate of 8.42% at 28 February 2014. The company has total debt facilities of R2 billion,
with R1.6 billion utilised to date.
Currently, 67% of the debt is fixed.
DIRECTORATE
Mr Syd Halliday has been appointed as Independent Non-Executive Director to the board on 27 May 2014.
Mr Halliday (CAIB (SA); ACIS) retired from Nedbank in 2004. He held various senior credit risk management
positions in the property finance departments of Nefic, Syfrets, Nedcor Investment Bank and Nedbank. He served
as the Independent Chairman of Nedbank Corporate Property Finance's main property lending committee up to
December 2012. Mr Halliday has over 30 years' experience as a lending banker. Mr Halliday currently serves on the
board of Hospitality Property Fund.
PROSPECTS
For the past twelve months South Africa has seen tougher than expected trading conditions which were
exacerbated by the challenges posed by an election period. It is expected that this will have some impact on
Dipula and accordingly distribution growth for the 2014 financial year is anticipated to be between 6% and 7%. The
forecast has not been reviewed or reported on by the group's independent auditors.
Management is committed to extracting maximum value from the portfolio by further reducing vacancies, adding
portfolio enhancing assets, and disposing of under-performing assets.
By order of the Board
Johannesburg
28 May 2014
Website: www.dipula.co.za
Date: 28/05/2014 05:31:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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