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DIPULA INCOME FUND LIMITED - Unaudited condensed consolidated interim results for the six months ended 29 February 2016

Release Date: 11/05/2016 07:26
Code(s): DIA DIB     PDF:  
Wrap Text
Unaudited condensed consolidated interim results for the six months ended 29 February 2016

Dipula Income Fund Limited                         
(Incorporated in the Republic of South Africa)    
(Registration number 2005/013963/06)               
JSE share code for A-shares: DIA                   
ISIN for A-shares: ZAE000203378                  
JSE share code for B-shares: DIB                   
ISIN for B-shares: ZAE000203394                    
(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 29 FEBRUARY 2016

HIGHLIGHTS

Distributable earnings 13% to R177,3 million
Interim distribution up 7,1% to 87,01851 cents per share
A-share distribution up 5% to 48,23707 cents per share
B-share distribution 9,7% to 38,78144 cents per share
Portfolio value 43% to R6,7 billion
Rennaissance Park Fully let

COMMENTARY

Introduction
The unaudited condensed consolidated interim results for the six months ended 29 February 2016 ("the period") saw
Dipula continue to grow in a challenging market, with portfolio growth of 43%, distributable earnings up 13,0% and a
7,1% increase in distributions on the combined shares. The growth was driven by solid asset management, decreased
vacancies, astute portfolio acquisitions and enhancing redevelopments and revamps.

Profile
Dipula is a diversified REIT, owning a R6,7 billion portfolio comprising retail, office and industrial properties located
across nine provinces in South Africa. The majority are situated in Gauteng. Dipula trades under the JSE share codes DIA and DIB. 
The A-shares are entitled to a 5% preferred income growth while the B-shares receive the remaining net distributable income.

Distributable earnings
Distributable earnings increased to R177,3 million (February 2015: R156,9 million) translating into 7,1% growth in
distributions on the combined share (February 2015: 6,8%).

The distribution attributable to A-shares increased 5,0% year-on-year to 48,23707 cents per share (February 2015:
45,94007 cents per share) and is in line with the distribution policy to A-shareholders. The distribution attributable to
the B-shares is 38,78144 cents per share (February 2015: 35,34590 cents per share), which equates to an increase
of 9,7% year-on-year.

Property portfolio
Dipula's property portfolio consists of 201 properties valued at R6,7 billion with a total gross lettable area (GLA) of
807 229 m² (February 2015: 176 properties; R4,7 billion property value; 615 526 m² GLA).

During the period properties valued at R1,2 billion transferred, which included the Gillwell Taxi Retail Park mall as well
as properties owned by 80% Dipula subsidiaries, Jarrabilla Investments (Pty) Ltd and Lizinex (Pty) Ltd, which are
co-owned with the Moolman Group.

The net asset value per combined share was R18,83, an increase of 13% year-on-year, compared to a combined
share price of R19,25 on 9 May 2016.

                                                          February   February    August
                                                              2016       2015      2015
Property cost-to-income ratio                                  (%)        (%)       (%)
Net basis                                                     19,3       22,1      19,7
Gross basis                                                   35,7       35,8      34,5
Total cost to income                                          23,8       27,3      24,1

Dipula lease expiry profile 
Lease Expiry Profile                       GLA   Average Monthly 
                                                    Gross Income
Vacant                                 73 887  
Un-letteable Areas                      6 059   
    
Expiring before 31 Aug 2016           178 796         14 574 121 
Expiring before 31 Aug 2017           146 078         10 197 838 
Expiring before 31 Aug 2018           110 466          8 527 143 
Expiring before 31 Aug 2019            89 698          7 716 286 
Expiring After 31 Aug 2019            202 244         16 476 655 
                                      807 229         57 492 042 

The segmental and geographic breakdown of Dipula's portfolio as at 29 February 2016 was as follows:

Sectoral profile by GLA (%)  Sectoral profile by revenue (%)  Geographic profile by GLA (%)  Geographic profile by revenue (%)

                                                            Eastern Cape 9%               Eastern Cape 11%
Retail 60%                  Retail 70%                      Free State 3%                 Free State 2%
Industrial 25%              Offices 17%                     Gauteng 58%                   Gauteng 59%
Offices 15%                 Industrial 13%                  Limpopo 14%                   Limpopo 12%
                                                            North West 4%                 Mpumalanga 3%
                                                            Northern Cape 2%              North West 4%
                                                            Western Cape 3%               Northern Cape 1%
                                                            KwaZulu-Natal 5%              Western Cape 2%
                                                            Mpumalanga 2%                 KwaZulu-Natal 6%

Vacancies
Vacancies were down 4% year-on-year to 9,2% (February 2015: 9,6%) overall. Office vacancies reduced 17% to 11,7%
(February 2015: 14%) with retail vacancies down 24% to 7,6% (February 2015: 10%). While industrial vacancies stood
at 11,5% at period-end (February 2015: 4%), this has since reduced to 3,2% following the letting of the redeveloped
Renaissance Park warehouse. This has had the knock-on effect of reducing the overall vacancy rate by 25% post
period-end to 6%, compared to 8% at August 2015.

Disposals
Five properties were disposed of during the period for a total of R61,7 million which was valued at R60,6 million in line
with group strategy of selling non-core assets. Properties held-for-sale amounted to R27,7 million.

Refurbishments and developments
The group is planning R400 million refurbishments and upgrades to the existing portfolio over the next 18 months at
an average yield of approximately 11%.

Funding
At 29 February 2016 the group's all-in-blended rate of debt was 8,73% (February 2015: 8,51%). The company has total
debt facilities of R3,0 billion with R2,9 billion utilised to date.

An aggregate of 48% of the debt has been fixed.

Debt maturity and hedging profile

Financial            Facility              Fixed/Swap            Floating
year            R'000          %         R'000       %        R'000        %
2016          455 865       15,0       189 506     6,2      266 359      8,8
2017          450 000       14,8       125 000     4,1      325 000     10,7
2018        1 024 905       33,7     1 006 123    33,1       18 782      0,6
2019          356 492       11,7       123 601     4,1      232 891      7,7
2020          750 832       24,8        21 250     0,7      729 582     24,0
            3 038 094      100,0     1 465 480    48,2    1 572 614     51,8

Swap maturity profile
                                 Nominal rate
                          R'000           (%)
16 January 2020          21 250          6,78
16 January 2018          85 000          6,47
1 December 2017         506 666          7,10
27 October 2017          70 000          6,95
4 February 2020         100 000          8,27
                        682 916

Dipula's R2 billion Domestic Medium Term Note Programme was registered with the JSE in November 2015. The
programme has been structured to issue secured and unsecured notes of varying maturities.

Prospects
The board expects difficult economic conditions to prevail which may have an impact on tenant defaults. In addition,
an increasing interest rate environment coupled with higher CPI will also present challenges. Management anticipates
an improvement in the vacancy profile and will remain focused on extracting maximum value from the portfolio
including further revamps and refurbishments.

The board expects growth in distributions of between 7,0% to 8,0% for the year ending 31 August 2016. This growth is
based on an assumption that stable macro-economic conditions prevail, no major corporate failures will occur and that
tenants will be able to absorb rising utility costs and rates recoveries. Forecast rental income was based on contractual
escalations and market-related renewals. This forecast has not been reviewed or reported on by the group's auditors.

Payment of interim dividends
The board has approved and notice is hereby given of the interim dividends (dividend number 10) for the period
1 September 2015 to 29 February 2016 of 48,23707 cents per A-share and 38,78144 cents per B-share.

The dividends are payable to Dipula shareholders in accordance with the timetable set out below:

Last day to trade cum dividend          Friday, 27 May 2016
Shares trade ex dividend                Monday, 30 May 2016
Record date                             Friday, 3 June 2016
Payment date                            Monday, 6 June 2016

Share certificates may not be dematerialised or rematerialised between Monday, 30 May 2016 and Friday,
3 June 2016, both days inclusive.

In respect of dematerialised shareholders, the dividends will be transferred to the CSDP account/broker accounts on
Monday, 6 June 2016. Certificated shareholders' dividend payments will be paid to certificates shareholders' bank
accounts on or about Monday, 6 June 2016.

An announcement relating to the tax treatment will be released separately on SENS.

On behalf of the board
Zanele Matlala                                                 Izak Petersen
Chairperson                                          Chief Executive Officer

11 May 2016

Directors
ZJ Matlala* (Chairperson), IS Petersen (CEO), BH Azizollahoff*#, R Asmal (FD), NS Gumede, E Links*, Y Waja*,
SA Halliday*                                                                 
                                                                        * Independent non-executive #British
There were no changes to the board during this period.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                                                           Unaudited     Unaudited        Audited
                                                          six months    six months           year
                                                               ended         ended          ended
                                                         29 February   28 February      31 August
                                                                2016          2015           2015
                                                               R'000         R'000          R'000
ASSETS
Non-current assets                                         6 779 046     4 731 179      5 562 466
Investment property                                        6 718 299     4 682 697      5 511 350
Fair value of property portfolio                           6 587 553     4 562 409      5 413 107
Straight-line rental income accrual                          130 746       120 288         98 243
Goodwill                                                      48 482        48 482         48 482
Property, plant and equipment                                  1 615             –          1 231
Derivative financial assets                                   10 650             –          1 403
Current assets                                               192 896       586 766        161 234
Trade and other receivables                                  142 278        85 060         98 188
Cash and cash equivalents                                     50 618       501 706         63 046
Non current assets held-for-sale
Investment property held for sale                             27 716        30 900         49 366
Total assets                                               6 999 658     5 348 845      5 773 066
EQUITY AND LIABILITIES
Equity                                                     3 972 851       836 200      3 603 971
Stated capital                                             3 032 696       427 852      2 799 016
Fair value reserve                                           716 248       489 223        705 947
Retained income/(accumulated loss)                            87 984      (80 875)         99 008
Non-controlling interest                                     135 923             –              –
Non-current liabilities                                    2 104 322     4 279 388      1 752 422
Debenture capital                                                  –     2 377 937              –
Interest-bearing liabilities                               2 104 322     1 895 605      1 752 422
Derivative liability                                               –         5 846              –
Current liabilities                                          922 485       233 257        416 673
Interest-bearing liabilities                                 780 864             –        288 822
Trade and other payables                                     141 621        76 385        127 851
Linked unitholders for distribution                                –       156 872              –

Total equity and liabilities                               6 999 658     5 348 845      5 773 066
Number of A-shares in issue*                             202 154 037   192 987 583    192 987 583
Number of B-shares in issue*                             205 782 249   192 987 583    192 987 583
Net asset value per A-share (excluding NCI)    (cents)        941,29        832,73         933,73
Net asset value per B-share (excluding NCI)    (cents)        941,29        832,73         933,73
Loan to value                                      (%)          42,0          29,6           35,6
* Excluding treasury shares

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                                            Unaudited     Unaudited       Audited
                                                           six months    six months          year
                                                                ended         ended         ended
                                                          29 February   28 February     31 August
                                                                 2016          2015          2015
                                                                R'000         R'000         R'000
Revenue                                                       525 302       362 606       729 109
Contractual rental income                                     385 333       274 764       578 550
Recoveries and other income                                   106 505        61 873       146 482
Straight-line rental income accrual                            33 464        25 969         4 077
Property expenses                                           (175 762)     (120 634)     (250 216)
Net property income                                           349 540       241 972       478 893
Administration and corporate costs                           (17 766)      (14 274)      (25 789)
Net operating profit                                          331 774       227 698       453 104
Net finance cost                                            (114 413)     (202 229)     (269 644)
Finance income                                                  5 302         3 070         7 626
Finance cost                                                (119 715)      (73 425)     (149 456)
Debenture interest                                                  –     (131 874)     (127 814)
Net profit after finance cost                                 217 361        25 469       183 460
Transaction costs on business combination                     (2 943)             –             –
Fair value adjustments                                       (23 163)      (31 225)       207 391
Investment properties and held-for-sale                         1 054           590       210 065
Straight-line rental income accrual                          (33 464)      (25 969)       (4 077)
Interest rate swaps                                             9 247       (5 846)         1 403

Profit before taxation                                        191 255       (5 756)       390 851
Taxation                                                            –             –             –
Profit for the period after taxation                          191 255       (5 756)       390 851
Other comprehensive income                                          –             –             –
Total comprehensive income for the period
attributable to equity holders                                191 255       (5 756)       390 851
Total profit and comprehensive income for the period
attributable to:
Shareholders of the company                                   183 563       (5 756)       390 851
Non-controlling interests                                       7 692             –             –
                                                              191 255       (5 756)       390 851

RECONCILIATION BETWEEN PROFIT, EARNINGS AND HEADLINE EARNINGS

                                                          Unaudited      Unaudited        Audited
                                                         six months     six months           year
                                                              ended          ended          ended
                                                        29 February    28 February      31 August
                                                               2016           2015           2015
                                                              R'000          R'000          R'000
Profit attributable to shareholders of the company          183 563        (5 756)        390 851
Debenture interest                                                –        131 874        127 814
Earnings                                                    183 563        126 118        518 665
Adjustments:                                                 32 410         25 379      (205 988)
Fair value – investment properties revaluation              (1 054)          (590)      (210 065)
Fair value – straight-line rental income                     33 464         25 969          4 077
Headline earnings                                           215 973        151 497        312 677
Total number of shares in issue*                        407 936 286    385 975 166    385 975 166
Number of A-shares in issue                             202 154 037    192 987 583    192 987 583
Number of B-shares in issue                             205 782 249    192 987 583    192 987 583
Weighted average number of A-shares in issue*           201 650 386    164 044 125    178 765 274
Weighted average number of B-shares in issue*           203 878 376    165 951 435    179 705 865
Earnings per A-share (cents)                                  45,27          38,22         144,69
Earnings per B-share (cents)                                  45,27          38,22         144,69
Headline earnings per A-share (cents)                         53,26          45,91          87,23
Headline earnings per B-share (cents)                         53,26          45,91          87,23
Distribution per A-share (cents)                           48,23707       45,94007       91,88014
Interim                                                    48,23707       45,94007       45,94007
Final                                                                                    45,94007
Distribution per B-share (cents)                           38,78144       35,34590       80,29606
Interim                                                    38,78144       35,34590       35,34590
Final                                                                                    44,95016
Combined share (cents)                                     87,01851       81,28597      172,17620
Interim                                                    87,01851       81,28597       81,28597
Final                                                                                    90,89023

* Net of treasury shares

Basic and headline earnings per share are based on the weighted average number of shares in issue during
the year.

Following the conversion of the linked units to ordinary shares on 20 July 2015, linked units no longer exist.

The company does not have any dilutionery instruments in issue.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

                                                                      Retained
                                                                       income/
                                                           Fair         (accu-          Non-
                                               Stated     value        mulated   controlling       Total
                                              capital   reserve          loss)      interest      equity
                                                R'000     R'000          R'000         R'000       R'000
Balance at
31 August 2014 (audited)                     427 852    494 479       (80 375)             –     841 956
Total comprehensive loss for the period                                (5 756)             –     (5 756)
Transfer to fair value reserve
– investment properties                                     590          (590)             –           –
Transfer to fair value reserve
– interest rate swaps                                   (5 846)          5 846             –           –
Balance at
28 February 2015 (unaudited)                 427 852    489 223       (80 875)             –     836 200
Balance at
31 August 2015 (audited)                   2 799 016    705 947         99 008             –   3 603 971
Total comprehensive income for the period                              183 563         7 692     191 255
Dividends                                                            (184 286)                 (184 286)
Issue of shares                              233 680                                             233 680
Equity contributed by
non-controlling shareholders                                                         128 231     128 231
Transfer to fair value reserve
– investment properties                                   1 054        (1 054)             –           –
Transfer to fair value reserve
– interest rate swaps                                     9 247        (9 247)             –           –
Balance at
29 February 2016 (unaudited)                3 032 696   716 248         87 984       135 923   3 972 851

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

                                                                  Unaudited      Unaudited      Audited
                                                                 six months     six months         year
                                                                      ended          ended        ended
                                                                29 February    28 February    31 August
                                                                       2016           2015         2015
                                                                      R'000          R'000        R'000
Cash flows from operating activities
Cash generated from operations                                      270 093        175 413      460 952
Net finance cost                                                  (114 413)       (65 579)    (141 830)
Distribution paid                                                 (184 286)      (131 314)    (265 290)
Net cash (outflow)/inflow from operating activities                (28 606)       (21 480)       53 832
Cash flows from investing activities
Acquisition of investment properties and capital expenditure    (1 250 255)      (569 379)  (1 251 784)
Acquisition of property, plant and equipment                          (384)              –      (1 231)
Proceeds on disposal of investment properties                        60 965         43 900       92 819
Non-controlling interest                                            128 231              –            –
Net cash outflow from investment activities                     (1 061 443)      (525 479)  (1 160 196)
Cash flows from financing activities
Issue of shares                                                     233 680        718 274      692 668
Interest-bearing liabilities raised                                 843 941        269 617      444 724
Net cash inflow from financing activities                         1 077 621        987 891    1 137 392
Net (decrease)/increase in cash and cash equivalents               (12 428)        440 932       31 028
Cash and cash equivalents at the beginning of the year               63 046         60 774       32 018
Cash and cash equivalents at end of period                           50 618        501 706       63 046

CONDENSED CONSOLIDATED SEGMENTAL INFORMATION

                                               Retail       Offices   Industrial       Land     Segments
                                                R'000         R'000        R'000      R'000        R'000
2016
Six months ended 29 February
Revenue from property portfolio#              342 015        83 978       65 845          –      491 838
Property expenses                           (125 477)      (28 873)     (21 405)        (7)    (175 762)
Net property income                           216 538        55 105       44 440        (7)      316 076
Investment property at fair value           4 569 697     1 188 777      947 075     12 750    6 718 299
Investment property held-for-sale               1 116        25 200            –      1 400       27 716
                                            4 570 813     1 213 977      947 075     14 150    6 746 015
2015
Six months ended 28 February
Revenue from property portfolio#              149 911       101 260       23 593          –      274 764
Property expenses                            (31 474)      (21 435)      (5 952)          –     (58 861)
Net property income                           118 437        79 825       17 641          –      215 903
Investment property at fair value           2 728 867     1 666 629      274 451     12 750    4 682 697
Investment property held-for-sale               4 900        26 000            –          –       30 900
                                            2 733 767     1 692 629      274 451     12 750    4 713 597
# Excluding straight-line rental income

The entity had four reportable segments based on the sectorial nature, these are the entity's strategic business
segments. For each strategic business segment, the entity's executive directors review internal management reports
on a monthly basis.

DISTRIBUTABLE EARNINGS

                                                       Unaudited      Unaudited      Audited
                                                      six months     six months         year
                                                           ended          ended        ended
                                                     29 February    28 February    31 August
                                                            2016           2015         2015
                                                           R'000          R'000        R'000
Reconciliation of profit for the period
to distributable earnings
Profit attributable to shareholders of the company       183 563        (5 756)      390 851
Debenture interest                                             –        131 874      127 814
Fair value – investment properties revaluation           (1 054)          (590)    (210 065)
Fair value – straight-line rental income                  33 464         25 969        4 077
Interest rate swaps                                      (9 247)          5 846      (1 403)
Amortisation of debt raising fee                               –          2 604        2 187
Antecedent dividend                                        1 113         22 894       22 895
Transaction costs on business combination                  2 943              –            –
Straight-line rental income accrual                     (33 464)       (25 969)      (4 077)
Distributable earnings and dividends declared            177 318        156 872      332 279
Distribution
Revenue                                                  491 838        336 637      725 032
Contractual rental income                                385 333        274 764      578 550
Recoveries and other income                              106 505         61 873      146 482
Property expenses                                      (175 762)      (120 634)    (250 216)
Net property income                                      316 076        216 003      474 816
Administration and corporate costs                      (17 766)       (14 274)     (25 789)
Net operating profit                                     298 310        201 729      449 027
Net finance cost                                       (114 413)       (70 355)    (141 830)
Antecedent dividend                                        1 113         22 894       22 895
Amortisation of debt raising fee                               –          2 604        2 187
Non-controlling interests                                (7 692)              –            –
Distribution                                             177 318        156 872      332 279

BASIS OF PREPARATION AND ACCOUNTING POLICIES

These results were prepared by the Financial Director, Mr R Asmal.
The unaudited condensed consolidated financial results for the six months ended 29 February 2016 have been
prepared in accordance with the requirements of the JSE Listings Requirements and the requirements of the
Companies Act of South Africa. The JSE Listings Requirements require interim reports to be prepared in accordance with
the framework concepts and the measurement and recognition requirements of International Financial Reporting
Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
the Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum,
contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied are consistent
with those applied in the previous year's consolidated annual financial statements.

The directors are not aware of any matters or circumstances arising subsequent to 29 February 2016 that require any
additional disclosure or adjustment to the financial statements.

The interim financial statements have not been reviewed or audited by Dipula's independent external auditor.

Measurement of fair value

Investment property
On an annual basis, properties above R8 million (at the last valuation date) and one-third of properties below
R8 million are valued by independent registered valuers.

The remaining two-thirds are valued internally by directors. At interim reporting periods the property portfolio is valued
by directors.

At the annual reviews the properties are valued using either the discounted cash flow or capitalisation methods by the
internal and external valuers. The valuations are done on an open market basis with consideration given to the future
earnings potential and applying an appropriate capitalisation rate to a property. The capitalisation rates used range between
8,5% and 12%. At interim reporting the directors consider the fair values of the portfolio by assessing the performance of
the properties against the earnings potential utilised at the annual review and adjust for any material changes. Investment
properties held-for-sale are valued at the expected net sale price, which is considered to be the fair value.

Financial instruments
Financial instruments are measured at fair value including derivatives. The fair value of interest rate swaps is based
on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on
the terms and maturity of each contract and using market interest rates for a similar instrument at the reporting date.

Hierarchy levels
The fair value hierarchy reflects the significance of the inputs used in making fair value measurements. The level within
which the fair value measurement is categorised in its entirety shall be determined on the basis of the lowest level
input that is significant to the fair value measurement in its entirety.

The different levels have been defined as follows:
   
-Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;
-Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
          either directly or indirectly;
-Level 3: Inputs for assets or liabilities that are not based on observable market data.

Investment properties and derivative financial instruments have been categorised as Level 3 an 2, respectively.
There has been no material change between levels change between levels during the period  

                                                                                R'000
Fair value measurements for investment properties categorised as Level 3:
Balance at beginning of year                                                5 511 350
Acquisitions/additions                                                      1 245 210
Transferred to non-current assets held-for-sale                              (38 261)
Change in fair value                                                                –
Balance at end of year                                                      6 718 299

Valuation technique and significant unobservable inputs

                                                              Significant                Unobservable inputs
Valuation technique                                           unobservable inputs        and fair value
Discounted cash flows: The valuation model considers        – Expected rental growth     The estimated fair
the present value of net cash flows to be generated from      varies between 6% to       value would increase/
the property taking into account expected rental and          8% per annum;              (decrease) if:
capitalisation rates. The expected net cash flows are       - Risk-adjusted discount    – Expected rentals were
discounted using risk-adjusted discount rates. Among          rates varies between        higher/(lower);
other factors, the discount rate estimation considers the     14% and 16%;              – Risk-adjusted discount 
quality of the property, its location and lease terms.      – Capitalisation rates        rates and capitalisation
Capitalisation model – establishes the market related         vary between 8,5%           rates were lower/
rental income for the property and applies an appropriate     to 12%.                     (higher).
capitalisation rate.

Business combinations and acquisition of non-controlling interest
Acquisition of interest in Jarrabilla Investments (Pty) Ltd and Lizinex (Pty) Ltd referred to as the "Moolman
transaction"
The effective date of the acquisition of the 80% interest in Jarrabilla Investments (Pty) Ltd and Lizinex (Pty) Ltd
("Moolman transaction"), both unlisted companies based in South Africa, was 1 August 2015.

The group acquired an interest in the above entities which owns 28 properties and the conclusion of the transaction
significantly enlarged Dipula's portfolio with quality assets.

This transaction is accounted for as a single business combination as the acquisitions were linked to each other.

Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of Jarrabilla and Lizinex as at the date of acquisition were:

                                                  R'000
Assets
Investment property (at fair value)             858 349
Liabilities                                           –
Total identifiable net assets at fair value     858 349
Non-controlling interest (20% of net assets)  (171 670)
Goodwill                                              –
Purchase consideration transferred              686 679

Transaction costs of R2,9 million was incurred on the acquisition and has been reflected in the statement of
comprehensive income.

The purchase consideration was settled in cash and funded from a combination of equity raised (R208 million), new
debt facilities (R436 million) and the balance from existing cash resources.

The fair value of the investment properties and the non-controlling interest has been calculated utilising the
capitalisation rate method.

From the date of acquisition the Moolman transaction contributed R67 million to contractual rent and recoveries and
R48 million to net property income of the group. If the acquisition had taken place at the beginning of the period, revenue
would have been R115 million and profit before for the group would have been R85 million for a 12 month period.

          
                                                   Bankers                                                  
Registered office                                  The Standard Bank of South Africa Limited
and business address                               3rd Floor, East Wing, 30 Baker Street
Block B Dunkeld Park                               Rosebank, 2196
6 North Road, Dunkeld West                         (PO Box 8786, Johannesburg, 2000)
Johannesburg, 2196
                                                   
Independent auditors                               Sponsor Java Capital
Deloitte & Touche                                  Registration number 2012/089864/07
Registered auditors                                6A Sandown Valley Crescent
Deloitte Place                                     Sandton, 2196
The Woodlands                                      (PO Box 2087, Parklands, 2121)
20 Woodlands Drive
Woodmead                                           Company secretary
Sandton                                            70 Marshall Street
Private Bag X6, Gallo Manor, 2052                  CIS Company Secretaries Proprietary Limited, Johannesburg
                  
Transfer secretaries
Link Market Services South Africa
Proprietary Limited
13th Floor, Rennie House
19 Ameshoff Street
Braamfontein, 2001
(PO Box 4844, Johannesburg, 2000)
                                                                                        

www.dipula.co.za



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