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DIPULA INCOME FUND LIMITED - Unaudited condensed consolidated interim results for the six months ended 28 February 2017

Release Date: 17/05/2017 07:28
Code(s): DIA DIB     PDF:  
Wrap Text
Unaudited condensed consolidated interim results for the six months ended 28 February 2017

Dipula Income Fund Limited                         
(Incorporated in the Republic of South Africa)    
(Registration number 2005/013963/06)               
JSE share code: DIA       
ISIN: ZAE000203378                  
JSE share code: DIB                   
ISIN: ZAE000203394                    
(Approved as a REIT by the JSE)                    
("Dipula" or "the company", or "the fund",
and together with its subsidiaries, "the group")

UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2017

Distributable
earnings increase
9,5%
to R194.2 million

Combined dividends
per share increase
6,3%

A-share dividend
5% increase
to 50.64892 cents
per share

B-share dividend
7,9% increase
to 41.83993 cents
per share

Interest rate hedging
in excess of
80%

In progress
Acquisitions
R500 million
Revamps
R200 million

28
non-core disposals
R400 million
including post period

COMMENTARY

Introduction
The unaudited condensed consolidated interim results for the six months ended 28 February 2017 ("the period") highlights Dipula's
continued growth in a challenging environment, with distributable earnings up 9.5%, resulting in an increase in combined dividends
per share of 6.3%, in line with management guidance.

This organic growth is the result of effective value extraction and "sweating our assets".

Profile
Dipula owns a sectorally and geographically diversified portfolio valued at approximately R7 billion, including retail, industrial and
offices in all nine provinces of South Africa. Dipula trades under JSE share codes DIA and DIB. The A-shares are entitled to a 5%
preferred dividend growth while the B-shares receive the remaining net dividend declared.

Distributable earnings
Distributable earnings increased 9.5% over the prior period to R194.2 million (February 2016: R177.3 million). This translated into
a 6.3% growth in dividends per combined share (February 2016: 7.1%).

The dividend attributable to the A-shares increased 5% over the prior period to 50.64892 cents per share (February 2016: 48.23707
cents per share) in line with the dividend policy of the A-share. The dividend attributable to B-shares is 41.83993 cents per share
(February 2016: 38.78144 cents per share), which equates to an increase of 7.9% over the prior period.

Property portfolio
At period end Dipula's portfolio consisted of 193 properties valued at approximately R7 billion with a total gross lettable area (GLA)
of 789 753m(2) (February 2016: 201 properties valued at R6.7 billion with a GLA of 807 229m(2)).

The net asset value per combined share increased 7% on the prior period to R10.07.

Cost-to-income ratios                                                                         February 2017        February 2016
Property cost to income (gross basis)                                                                 35.0%                35.7%
Property cost to income (net basis)                                                                   18.0%                19.3%
Total cost to income (net basis)                                                                      22.2%                23.8%

Vacancies
Vacancies remained at 9.2% compared to the prior period. This level of vacancy is due to challenging market conditions
particularly in the office sector where vacancies had increased from 11.7% in the prior period to 15.1% at reporting date.

Industrial vacancies reduced significantly to 8.8% from 11.5%. Retail vacancies increased marginally from 7.6% in February 2016
to 7.9% at period end.

Acquisitions
During the period, acquisitions of R21.7 million were concluded. Acquisitions of approximately R500 million at yields ranging
between 9% to 10.5% are in progress.

Disposals
During the period eight properties valued at R72.3 million were sold and transferred. Subsequent to the period end, twenty
properties worth R325.4 million were sold at an aggregate yield of 10%. These properties are at various stages of transfer.

Refurbishments and redevelopments
A total of R17.6 million was spent on refurbishments during the period. A further R200.8 million will be spent on refurbishments over
the next 18 months at income enhancing yields.

Dipula lease expiry profile
Subsequent to the period end, a further 23% of the leases expiring before 31 August 2017 were renewed.

Portfolio LEP     
    
                                                                                          Average 
                                                                                          Monthly 
                                                                                           Rental 
                                                                           GLA(m2)    Income(Rand)
Vacant                                                                     71 806               -
Expiring before 31 Aug 2017                                               195 651      15 701 218 
Expiring before 31 Aug 2018                                               123 548      10 568 489 
Expiring before 31 Aug 2019                                               125 289      12 190 666 
Expiring before 31 Aug 2020                                                59 531       6 811 321 
Expiring after 31 Aug 2020                                                205 410      17 959 116 
    

Segmental and geographic profile
Dipula's portfolio as at 28 February 2017 is set out below:

Sectoral profile by GLA (%)
Retail                                                                                       61%
Offices                                                                                      15%
Industrial                                                                                   24%
                                     
Sectoral profile by revenue (%)                                     
Retail                                                                                       70%
Offices                                                                                      16%
Industrial                                                                                   14%
                                     
Geographic profile by GLA (%)                                     
Gauteng                                                                                      58%
Limpopo                                                                                      14%
Eastern Cape                                                                                  9%
KwaZulu-Natal                                                                                 6%
North West                                                                                    4%
Free State                                                                                    3%
Western Cape                                                                                  2%
Mpumalanga                                                                                    2%
Northern Cape                                                                                 2%
                                     
Geographic profile by revenue (%)                                     
Gauteng                                                                                      60%
Limpopo                                                                                      13%
Eastern Cape                                                                                  9%
KwaZulu-Natal                                                                                 7%
North West                                                                                    4%
Mpumalanga                                                                                    2%
Western Cape                                                                                  2%
Free State                                                                                    2%
Northern Cape                                                                                 1%
                                          
Funding
At 28 February 2017, Dipula's all-in blended rate of interest was 9.06% (2016: 8.73%). The company has total debt facilities of
R3.0 billion with R2.9 billion utilised to date. The aggregate period of borrowings and hedges is two years.

Approximately 70.6% of the interest on the debt had been fixed at the end of the period (2016: 48.2%). Subsequently, further swaps
were contracted into, improving the hedge to 82.1% of the debt facilities.

Debt maturity and hedging profile
Financial                            Facility                                Fixed/Swap                        Floating
year-end                  R'000                      %              R'000                   %          R'000                 %
2017                    125 000                    4.1            125 000                 4.1             -                  -
2018                  1 329 342                   43.9            906 123                29.9       423 219               14.0
2019                    821 107                   27.1            473 601                15.7       347 506               11.5
2020                    407 156                   13.5            631 250                20.9     (224 094)              (7.4)
2021                    343 676                   11.4                  -                   -       343 676               11.3
                      3 026 281                    100          2 135 974                70.6       890 307               29.4

Swap maturity profile
                                                                                                                  Nominal rate
Maturity date                                                                                            R'000               %
27 Oct 2017                                                                                             70 000            6.95
1 Dec 2017                                                                                             506 667            7.10
16 Jan 2018                                                                                             85 000            6.47
29 Aug 2019                                                                                            150 000            7.66
29 Aug 2019                                                                                            200 000            8.05
28 Oct 2019                                                                                            150 000            7.67
16 Jan 2020                                                                                             21 250            6.78
4 Feb 2020                                                                                             100 000            8.27
4 Jul 2020                                                                                             360 000            7.85
                                                                                                     1 642 917
Prospects
The current economic environment is one of almost no growth which has a significant impact on the property sector. The ability to
lease new space or expand existing tenants is greatly reduced. The board of directors ("the board") expects the current economic
conditions to continue in the short to medium term. Management will continue to focus on extracting the maximum value from the
portfolio and reducing the vacancy factor.

Reflecting the challenging environment, the board expects growth in distributions of between 5% and 6.5% for the year ending
31 August 2017. This growth assumes that macroeconomic conditions do not deteriorate further, no major corporate failures occur
and that tenants will be able to absorb rising utility and assessment rates costs. Forecast rental income is 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 dividend
The board has approved and notice is hereby given of the interim dividend (dividend number 12) for the period 1 September 2016
to 28 February 2017 of 50.64892 cents per A-share and 41.83993 cents per B-share.

Dipula shareholders will be offered an election, in respect of all or part of their shareholding, to re-invest the cash dividend
of 50.64892  cents per A-share and 41.83993 cents per B-share in return for A-shares or B-shares, as the case may be
(the  "re-investment  option"). By electing to participate in this re-investment option, shareholders will be able to increase their
shareholding in Dipula without incurring dealing costs. In turn, Dipula will benefit from an increase in the amount of shareholders'
funds available to support continued growth.

Further details regarding the re-investment option, including the manner in which the number of shares to which a participating
shareholder is entitled will be determined and the action to be taken by A and B shareholders in order to participate in the
re-investment option, will be set out in a circular to shareholders to be issued on or about 17 May 2017, and will also be released
on SENS.

The dividend is payable to Dipula shareholders in accordance with the timetable set out below:
                                                                                                                          2017
Last day to trade cum dividend                                                                                 Tuesday, 6 June
Shares trade ex-dividend                                                                                     Wednesday, 7 June
Record date                                                                                                     Friday, 9 June
Payment date                                                                                                   Monday, 12 June

Share certificates may not be dematerialised or rematerialised between Wednesday, 7 June 2017 and Friday, 9 June 2017 both days 
inclusive.

The dividend will be transferred to dematerialised shareholders CSDP accounts/broker accounts on Monday, 12 June 2017.
Certificated shareholders' dividend payments will be paid to certificated shareholders' bank accounts on or about Monday,
12 June 2017.

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

On behalf of the board

Zanele Matlala                                                    Izak Petersen
Chairperson                                                       CEO

17 May 2017

BASIS OF PREPARATION AND ACCOUNTING POLICIES
These results were prepared by the Financial Director, Mr R Asmal and the Group Financial Manager, Mrs N Kotze.

The unaudited condensed consolidated financial results for the six months ended 28 February 2017 have been prepared in
accordance with 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 interim financial statements have not been reviewed or reported on by Dipula's independent external auditor.

Subsequent events
Subsequent to the reporting date, the fund acquired the additional 20% interest that it does not currently own in Jarabilla Investments
Proprietary Limited and Lizinex Proprietary Limited ("Moolman transaction") for R134 million.

Basis of measurement
Given the nature of its business, Dipula uses distribution per share as its key performance measure as it is considered a more
relevant performance measurement than earnings or headline earnings per share.

Measurement of fair value

Investment property
On an annual basis, properties above R12 million (at the last valuation date) and one-third of properties below R12 million are valued
by independent registered valuers.

The remaining two-thirds are valued internally by directors.

The properties are valued using either the discounted cash flow or capitalisation of net income 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 7.75% and 12%. Investment properties
held for sale were valued at the 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 and 2 respectively. There has been no
material change between levels during the period.

                                                                                                                           2017
Fair value measurements for investment properties categorised as Level 3:                                                 R'000
Balance at beginning of the year                                                                                      6 963 015
Acquisitions/additions                                                                                                   45 293
Transferred to non-current assets held for sale                                                                       (315 122)
Tenant installation/lease commission                                                                                      (445)
Balance at end of the period                                                                                          6 692 741

Valuation technique and significant unobservable inputs
                                                                                               Inter-relationship between
                                                        Significant unobservable               key unobservable inputs and
Valuation technique                                     inputs                                 fair value measurement
Discounted cash flows: The valuation model              - Expected rental growth varies        The estimated fair value would
considers the present value of net cash flows to be       between 6% to 8% per annum.          increase/(decrease) if:
generated from the property taking into account         - Risk-adjusted discount rates         - expected rentals were higher/
expected rental and capitalisation rates. The             varies between 14% and 16%.            (lower); and
expected net cash flows are discounted using risk-      - Capitalisation rates vary between    - risk-adjusted discount rates                                                       
adjusted discount rates. Among other factors, the         7.75% to 12%.                          and capitalisation rates were                                                       
discount rate estimation considers the quality of the                                            lower/(higher).
property, its location and lease terms.
Capitalisation model - establishes the market
related rental income for the property and applies an
appropriate capitalisation rate.

The group's Audit Committee determines the policies and procedures for recurring fair value measurement.

At each reporting date, management analyses the movements in the values of assets and liabilities which are required to be
remeasured or re-assessed as per the group's accounting policies. For this analysis, management verifies the major inputs applied
in the latest valuation by agreeing the information in the valuation computation to market conditions and other relevant documents.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                                                                                             Unaudited      Unaudited
                                                                                            six months     six months       Audited
                                                                                                 ended          ended    year ended
                                                                                           28 February    29 February     31 August
                                                                                                  2017           2016          2016
                                                                                                 R'000          R'000         R'000
ASSETS                                                    
Non-current assets                                                                           6 742 881      6 779 046     7 017 087
Investment property                                                                          6 692 741      6 718 299     6 963 015
  Fair value of property portfolio                                                           6 541 767      6 587 553     6 822 860
  Straight-line rental income accrual                                                          150 974        130 746       140 155
Goodwill                                                                                        48 482         48 482        48 482
Property, plant and equipment                                                                    1 658          1 615         1 374
Derivative financial assets                                                                          -         10 650         4 216
Current assets                                                                                 275 398        192 896       206 704
Trade and other receivables                                                                    170 632        142 278       147 972
Cash and cash equivalents                                                                      104 766         50 618        58 732
Non-current assets held for sale                                                     
Investment property held for sale                                                             336 722          27 716        93 850
Total assets                                                                                 7 355 001      6 999 658     7 317 641
                                                     
EQUITY AND LIABILITIES                                                     
Equity                                                                                       4 356 792      3 972 851     4 325 604
Stated capital                                                                               3 132 915      3 032 696     3 073 687
Fair value reserve                                                                             978 810        716 248       992 884
Retained income                                                                                115 711         87 984       127 843
Non-controlling interest                                                                       129 356        135 923       131 190
Non-current liabilities                                                                      1 881 495      2 104 322     2 631 664
Interest-bearing liabilities                                                                 1 881 495      2 104 322     2 631 664
Current liabilities                                                                          1 116 714        922 485       360 373
Interest-bearing liabilities                                                                   979 667        780 864       255 000
Derivative financial liability                                                                   9 037              -             -
Trade and other payables                                                                       128 010        141 621       105 373
                                                      
Total equity and liabilities                                                                 7 355 001      6 999 658     7 317 641
 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                                                                             Unaudited      Unaudited
                                                                                            six months     six months       Audited
                                                                                                 ended          ended    year ended
                                                                                           28 February    29 February     31 August
                                                                                                  2017           2016          2016
                                                                                                 R'000          R'000         R'000
Revenue                                                                                        537 439        525 302     1 065 387
Contractual rental income                                                                      411 367        385 333       797 557
Recoveries and other income                                                                    115 253        106 505       225 918
Straight-line rental income accrual                                                             10 819         33 464        41 912
Property expenses                                                                            (184 434)      (175 762)     (349 646)
Net property income                                                                            353 005        349 540       715 741
Administration and corporate costs                                                            (17 559)       (17 766)      (32 013)
Net operating profit                                                                           335 446        331 774       683 728
Net finance cost                                                                             (125 713)      (114 413)     (242 002)
Finance income                                                                                   3 801          5 302         8 540
Finance cost                                                                                 (129 514)      (119 715)     (250 542)
Net profit after finance cost                                                                  209 733        217 361       441 726
Transaction costs on business combination                                                            -        (2 943)       (3 032)
Fair value adjustments                                                                        (24 893)       (23 163)       245 025
Investment properties and held for sale                                                          (821)          1 054       284 124
Straight-line rental income accrual                                                           (10 819)       (33 464)      (41 912)
Interest rate swaps                                                                           (13 253)          9 247         2 813
                                    
Profit before taxation                                                                         184 840        191 255       683 719
Taxation                                                                                             -              -             -
Profit for the period after taxation                                                           184 840        191 255       683 719
Other comprehensive income                                                                           -              -             -
Total comprehensive income for the period                                                      184 840        191 255       683 719
Total profit and comprehensive income for the period                                    
attributable to:                                    
Shareholders of the company                                                                    178 474        183 563       666 049
Non-controlling interests                                                                        6 366          7 692        17 670
                                                                                               184 840        191 255       683 719
Earnings and diluted earnings per share                                     
A-share (cents)                                                                                  42.87          45.27        163.18
B-share (cents)                                                                                  42.87          45.27        163.18
 
RECONCILIATION BETWEEN PROFIT, EARNINGS AND HEADLINE EARNINGS

                                                                                             Unaudited      Unaudited
                                                                                            six months     six months       Audited
                                                                                                 ended          ended    year ended
                                                                                           28 February    29 February     31 August
                                                                                                  2017           2016          2016
                                                                                                 R'000          R'000         R'000
Earnings                                                                                       178 474        183 563       666 049
Adjustments:                                                                                    11 640         32 410     (242 212)
Fair value - investment properties revaluation                                                     821        (1 054)     (284 124)
Fair value - straight-line rental income                                                        10 819         33 464        41 912
Headline earnings                                                                              190 114        215 973       423 837
Weighted average number of A-shares in issue*                                              208 160 748    201 650 386   203 078 454
Weighted average number of B-shares in issue*                                              208 160 748    203 878 376   205 098 372
Basic earnings per A-share (cents)                                                               42.87          45.27        163.18
Basic earnings per B-share (cents)                                                               42.87          45.27        163.18
Headline earnings per A-share(cents)                                                             45.67          53.26        103.84
Headline earnings per B-share (cents)                                                            45.67          53.26        103.84
Dividend per A-share (cents)                                                                  50.64892       48.23707      96.47414
  Interim                                                                                     50.64892       48.23707      48.23707
  Final                                                                                                                    48.23707
Dividend per B-share (cents)                                                                  41.83993       38.78144      89.49361
  Interim                                                                                     41.83993       38.78144      38.78144
  Final                                                                                                                    50.71217
Combined dividend per share (cents)                                                           92.48885       87.01851     185.96775
  Interim                                                                                     92.48885       87.01851      87.01851
  Final                                                                                                                    98.94924
Total number of shares in issue*                                                           419 921 746    407 936 286   413 655 926
Number of A-shares in issue                                                                209 960 873    202 154 037   206 827 963
Number of B-shares in issue                                                                209 960 873    205 782 249   206 827 963
                   
Net asset value per A-share (cents)                                                           1 006.72         940.57       1013.99
Net asset value per B-share (cents)                                                           1 006.72         940.57       1013.99
Loan to Value (LTV)                                                                              39.2%          42.0%         40.1%

* Net of treasury shares
Basic and headline earnings per share are based on the weighted average number of shares in issue during the period.
The company does not have any dilutionary instruments in issue.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

                                                                                                                 Non-
                                                                      Stated   Fair value     Retained    controlling        Total
                                                                     capital      reserve       Income       interest       equity
                                                                       R'000        R'000        R'000          R'000        R'000
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 declared                                                         -            -    (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
Balance at 31 August 2016                                   
(Audited)                                                          3 073 687      992 884      127 843        131 190    4 325 604
Total comprehensive income                                  
for the period                                                             -            -      178 474          6 366      184 840
Dividends declared                                                         -            -    (204 680)        (8 200)    (212 880)
Issue of shares                                                      59 228             -            -              -       59 228
Transfer to fair value reserve                                  
- investment properties                                                    -        (821)          821              -            -
Transfer to fair value reserve                                  
- interest rate swaps                                                      -     (13 253)       13 253              -            -
Balance at 28 February 2017                                  
(Unaudited)                                                        3 132 915      978 810      115 711        129 356    4 356 792

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

                                                                                            Unaudited      Unaudited
                                                                                           six months     six months       Audited
                                                                                                ended          ended    year ended
                                                                                          28 February    29 February     31 August
                                                                                                 2017           2016          2016
                                                                                                R'000          R'000         R'000
CASH FLOWS FROM OPERATING ACTIVITIES                           
Cash generated from operations                                                                329 801        270 093       577 007
Net finance cost                                                                            (125 713)      (114 413)     (242 002)
Net cash generated from operating activities                                                  204 088        155 680       335 005
CASH FLOWS FROM INVESTING ACTIVITIES                           
Acquisition of investment properties and capital expenditure                                 (50 006)    (1 250 255)   (1 282 882)
Acquisition of property, plant and equipment                                                    (324)          (384)         (474)
Proceeds on disposal of investment properties                                                  71 430         60 965        60 703
Contribution from non-controlling interest                                                          -        128 231       128 212
Net cash generated from/(utilised in) investment activities                                    21 100    (1 061 443)   (1 094 441)
CASH FLOWS FROM FINANCING ACTIVITIES                           
Issue of shares                                                                                59 228        233 680       274 671
Interest-bearing liabilities (repaid)/raised                                                 (25 502)        843 941       845 420
Dividend paid                                                                               (212 880)      (184 286)     (364 969)
Net cash (utilised in)/generated from financing activities                                  (179 154)        893 335       755 122
Net increase/(decrease) in cash and cash equivalents                                           46 034       (12 428)       (4 314)
Cash and cash equivalents at the beginning of the year                                         58 732         63 046        63 046
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                    104 766         50 618        58 732

CONDENSED CONSOLIDATED SEGMENTAL
INFORMATION

                                                     Retail           Offices          Industrial              Land Segment total
                                                      R'000             R'000               R'000             R'000         R'000
SIX MONTHS ENDED 28 FEBRUARY 2017
Revenue from property portfolio*                    373 139            83 174              70 307                 -       526 620
Property expenses                                 (132 646)          (30 774)            (21 006)               (8)     (184 434)
Net property income                                 240 493            52 400              49 301               (8)       342 186
Investment property at fair value                 4 455 800         1 223 936             987 091            25 914     6 692 741
Investment property held for sale                   313 022            10 600              11 700             1 400       336 722
                                                  4 768 822         1 234 536             998 791            27 314     7 029 463
SIX MONTHS ENDED 29 FEBRUARY 2016
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
* Excluding straight-line rental income

The entity has 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.

Reconciliation of reportable segment revenues and profit
                                                                                 Unaudited          Unaudited
                                                                                six months         six months             Audited
                                                                                     ended              ended          year ended
                                                                               28 February        29 February           31 August
                                                                                      2017               2016                2016
                                                                                     R'000              R'000               R'000
Revenue      
Total revenue for reportable segments                                              526 620            491 838           1 023 475
Straight-line rental income accrual                                                 10 819             33 464              41 912
Consolidated revenue                                                               537 439            525 302           1 065 387
Profit      
Total profit for reportable segments                                               342 186            316 076             673 829
Straight-line rental income accrual                                                 10 819             33 464              41 912
Administration and corporate costs                                                (17 559)           (17 766)            (32 013)
Net finance cost                                                                 (125 713)          (114 413)           (242 002)
Transaction costs on business combination                                                -            (2 943)             (3 032)
Fair value adjustments                                                            (24 893)           (23 163)             245 025
Profit before taxation                                                             184 840            191 255             683 719



DISTRIBUTABLE EARNINGS
                                                                                 Unaudited          Unaudited
                                                                                six months         six months             Audited
                                                                                     ended              ended          year ended
                                                                               28 February        29 February           31 August
                                                                                      2017               2016                2016
                                                                                     R'000              R'000               R'000
Reconciliation of profit for the period to                                    
distributable earnings                                    
Profit attributable to shareholders of the company                                 178 474            183 563             666 049
Fair value - investment properties revaluation                                         821            (1 054)           (284 124)
Fair value - straight-line rental income                                            10 819             33 464              41 912
Fair value - Interest rate swaps                                                    13 253            (9 247)             (2 813)
Antecedent dividend                                                                  1 642              1 113               2 492
Transaction costs on business combination                                                -              2 943               3 032
Straight-line rental income accrual                                               (10 819)           (33 464)            (41 912)
Distributable earnings and dividends declared                                      194 190            177 318             384 636
Dividend statement                                    
Revenue                                                                            526 620            491 838           1 023 475
Contractual rental income                                                          411 367            385 333             797 557
Recoveries and other income                                                        115 253            106 505             225 918
Property expenses                                                                (184 434)          (175 762)           (349 646)
Net property income                                                                342 186            316 076             673 829
Administration and corporate costs                                                (17 559)           (17 766)            (32 013)
Net operating profit                                                               324 627            298 310             641 816
Net finance cost                                                                 (125 713)          (114 413)           (242 002)
Antecedent dividend                                                                  1 642              1 113               2 492
Non-controlling interests                                                          (6 366)            (7 692)            (17 670)
Dividend                                                                           194 190            177 318             384 636
    
                      
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.

Registered office and business address
Block B, Dunkeld Park
6 North Road, Dunkeld West
Johannesburg, 2196

Independent auditors
Deloitte & Touche
Practice number: 902276
Registered Auditors
Deloitte Place
The Woodlands
20 Woodlands Drive
Woodmead
Sandton

Transfer secretaries
Link Market Services South Africa Proprietary Limited
(Registration number 2000/007239/07)
13th Floor, Rennie House
19 Ameshoff Street
Braamfontein, 2001

Bankers
The Standard Bank of South Africa Limited
(Registration number 1962/000738/06)
3rd Floor, East Wing, 30 Baker Street
Rosebank, 2196

Corporate advisor and Sponsor
Java Capital
6A Sandown Valley Crescent
Sandton, 2196

Company secretary
CIS Company Secretaries Proprietary Limited
(Registration number 2006/024994/07)
Rosebank Towers
15 Biermann Avenue
Rosebank, 2196

www.dipula.co.za



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