Wrap Text
Summarised consolidated audited annual results for the year ended 30 September 2017
INDLUPLACE PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2013/226082/06)
JSE share code: ILU ISIN: ZAE000201125
(Approved as a REIT by the JSE)
("Indluplace" or "the company")
Summarised consolidated audited annual results for the year ended 30 September 2017
Dividend growth of 5,6% within guidance
Portfolio growth of 23% to year end
Vacancies, arrears and bad debts stable
Forecast dividend growth of between 4% and 7%
Nature of business
Indluplace is the first focused residential REIT listed on the JSE. The company listed on the main board of the
JSE in 2015 and has since grown its portfolio by over 85% to 6 859, residential units and 14 800 sqm of associated
retail, valued at approximately R2,9 billion. Indluplace will continue growing the portfolio aggressively by acquiring
yield enhancing properties and portfolios that provide income from the day of acquisition to pay growing dividends to
its shareholders. Indluplace is positioned to assist in overcoming the shortage of rental housing in South Africa by
providing an exit for developers and owners of residential stock or portfolios who may reinvest the capital in
additional stock. By utilising specialist outsourced property managers for the respective portfolios, Indluplace ensures
that its growing portfolio remains professionally managed to provide investment returns while providing value for money
accommodation to all its tenants.
Summarised distributable income analysis for the year ended:
R 30 SEPTEMBER 2017 30 SEPTEMBER 2016
Contractual rental income 330 048 127 284 565 745
Net property expenses (73 952 618) (66 141 768)
Net property income 256 095 509 218 423 977
DISTRIBUTABLE INCOME
Amount available for distribution 266 786 847 222 474 034
Distributed for the quarter ended:
31 December (57 654 491) (55 087 474)
31 March (59 796 630) (55 430 505)
30 June (71 505 648) (55 863 048)
Amount declared for the quarter ended 30 September 77 830 078 56 093 007
DIVIDEND PER SHARE (CENTS) FOR THE QUARTER ENDED:
31 December 23,82951 22,93067
31 March 24,71489 23,07346
30 June 24,72452 23,25351
30 September 24,48003 23,34923
Dividend for the year ended 97,74895 92,60687
Property expense ratio - Net 22,4% 23,2%
Net asset value per share (cents) 1 029,98 1 023,54
SHARES USED IN CALCULATION OF THE DIVIDENDS FOR THE QUARTER ENDED:
31 December 241 945 767 240 234 907
31 March 241 945 767 240 234 907
30 June 289 209 449 240 234 907
30 September 317 932 853* 240 234 907
* Includes the 28 723 404 shares issued post year end
COMMENTARY
Revenue
Total revenue includes contractual rental income and expenditure that is recoverable from tenants. Revenue, excluding
straight line rental income, has increased from R349,0 million at 30 September 2016 to R409,4 million at 30 September 2017.
The acquisition of Diluculo Properties (Proprietary) Limited ("Diluculo"), with effect from 1 July 2017, accounts for about
R19 million of the increase. The full effect of the acquisitions concluded during the previous year, along with annual
escalations accounts for the balance.
Property portfolio
30 SEPTEMBER 2017 30 SEPTEMBER 2016
Residential Buildings 125 116
Units 6 859 5 447
Vacancy 3,5% 3,5% Vacancies of 3.5% at 30 September 2017 are
Retail GLA – m(2) 14 803 12 647 in line with the 3,5% at 30 September 2016.
Vacancy 1,0% 2,1%
We have provided for non-paying units that
are part of a rental boycott experienced in
Windsor, west of Johannesburg, as vacant
RESIDENTIAL UNIT SPREAD % RESIDENTIAL UNIT CATEGORY % RESIDENTIAL BUILDING TYPE % units in the above figure. The financial effects
of this have been provided for both in the
Johannesburg suburbs 39 Rooms 5 High rise 38 year end results and the forecast for the
next year.
Johannesburg inner city 36 Bachelors 18 Walk–up 62
Pretoria/Midrand 14 One bed 19
Witbank 6 Two Bed 47
Vanderbijlpark 4 Three bed 9
Bloemfontein 1 Other 2
100 100 100
Operating costs
Operating costs have increased from R130,6 million to R153,3 million which is in line with the increased property portfolio. The net property
expense ratio of 22,4% is in line with expectations and the nature of our current portfolio.
Administration costs
Administration costs have increased from R11,8 million to R13,4 million which is in line with the increased expansion of the company's
management team.
Finance income
R 30 SEPTEMBER 2017 30 SEPTEMBER 2016 Finance income has increased from
Interest on Share Purchase and Option Scheme 18 662 768 16 280 431 R19,7 million to R31,4 million for the year
Interest received from Arrowhead and on cash balances 11 560 928 3 050 436 ended 30 September 2017 as a result of
excess funds being placed with Arrowhead,
Interest received – other 1 167 346 342 805 in terms of the Group treasury policy, and in
the available facilities.
Total 31 391 042 19 673 672
Finance charges
R 30 SEPTEMBER 2017 30 SEPTEMBER 2016
Interest paid on secured financial liabilities & swaps 17 688 726 1 669 808
Interest paid to Arrowhead 7 997 099 5 815 518 Finance charges increased as a result of the
Amortisation of structuring fee 209 000 17 178 R200 million loan facility entered into with
Standard Bank towards the end of the 2016
financial year, the details of which have been
Other 112 172 131 490 included below.
Total 26 006 997 7 633 994
Investment property
The increase in Investment property relates
mainly to the acquisition of Diluculo,
effective 1 July 2017, for R475 million which
owns a portfolio of 1 320 residential units
in 8 properties. Garden Views, a 64-unit
complex in Randburg was acquired for
R25 million. These acquisitions increased
the number of residential units to 6 859 and
retail space to GLA of 14 803m(2).
Trade and other receivables
Trade and other receivables increased
from R46,6 million to R68,7 million. Of this
amount, net trade receivables amounts
to R3,3 million. The balance comprises
municipal deposits, amounts receivable from
property managers and the interest element
relating to the loans to participants of the
Indluplace share scheme. Cash in excess of
R36,2 million, held by the company's property
managers in trust accounts, is included in the
aforesaid balance.
Cash and cash equivalents
Cash and cash equivalents decreased from
R46,3 million at 30 September 2016 to
R40,9 million at 30 September 2017.
Stated capital
The increase in stated capital is as a result
of an accelerated book build to fund the
acquisition of Diluculo.
Secured financial liabilities
Secured financial liabilities increased
from R149,4 million to R199,6 million at
30 September 2017. The loan to value
ratio is 6,8% measured against investment
properties valued at R2,9 billion. R150 million
of the R200 million facility is covered by
a three–year fixed rate swap of 10,11%,
the fair value of which is R3,6 million. The
balance of R50 million is priced at 8,95%
variable funding.
Trade and other payables
Trade and other payables increased from
R50,8 million to R65,3 million. Of this amount,
tenants deposits increased by R6,3 million as
a result of the Diliculo acquisition.
Change in directorate
As released on SENS on 19 December 2016,
Gerald Leissner, one of Indluplace's founders
and executive directors, passed away on
Friday, 16 December 2016. Yondela Silimela
has been appointed as an independent
non-executive director to the board of
directors with effect from 1 November 2017.
Post balance sheet event
and Buffet
In terms of the Buffet transaction announced
on SENS on 28 September 2017, Indluplace
acquired 2 803 residential units and
2 970 m2 of retail space, which became
effective 1 October 2017. To fund this
transaction, Indluplace entered into finance
agreements with ABSA and Investec for an
amount of R1,5 billion, combined with issuing
28 723 404 shares post year end to the
vendors and in terms of the sale agreement.
Indluplace's loan to value (LTV) ratio post the
transaction, on the basis that only R1,2 billion
was utilised in terms of the bank finance,
increasing from LTV 6,8% to 32,9%. The facility
comprises R100 million revolving credit facility,
R645 million expiring in three years
and R480 million expiring in five years with a
funding cost of 9,4%.
Prospects
The Board acknowledges the difficult
environment in which Indluplace operates.
Given the defensive nature of its diverse
residential portfolio, coupled with strong
hands-on management and with the strong
fundamentals in this sector, Indluplace is well
placed to continue its good performance.
Indluplace projects growth in dividends for
the next year of between 4% and 7%.
As mentioned above, Indluplace has
increased its LTV substantially post year
end to part-fund the Buffet transaction.
Nevertheless, Indluplace still has financing
headroom available to fund future
acquisitions. This forecast has not been
reviewed or reported on by the company's
auditors.
Given the nature of its business,
Indluplace uses dividend per share as its key
performance measure as it is considered a
more relevant performance measure than
earnings or headline earnings per share.
Annual general meeting
Indluplace's integrated annual report
for the year ended 30 September 2017,
containing a notice of annual general meeting
and incorporating the audited annual
financial statements for the year ended
30 September 2017, will be posted to
shareholders who have requested that these
items be posted to them in due course.
Payment of dividend for the
quarter ended 30 September 2017
The board of directors has declared a
gross dividend of 24,48003 cents per share
(dividend number 10) for the quarter ended
30 September 2017, in accordance with the
timetable set out below:
Last date to trade cum dividend
Tuesday, 28 November 2017
Shares trade ex dividend
Wednesday, 29 November 2017
Record date
Friday, 1 December 2017
Payment date
Monday, 4 December 2017
Shares may not be dematerialised or
rematerialised between Wednesday,
29 November 2017 and Friday,
1 December 2017, both days inclusive.
Payment of the dividend will be made to
shareholders on Monday, 4 December 2017.
In respect of dematerialised shares, the
dividend will be transferred to the CSDP/
broker accounts on Monday, 4 December 2017.
Certificated shareholders' dividend payment
will be deposited on or about Monday,
4 December 2017.
Tax treatment of dividend
In accordance with Indluplace's status as
a REIT, shareholders are advised that the
dividend 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 shares will be deemed to be a dividend,
for South African tax purposes, in terms of
section 25BB of the Income Tax Act.
The dividend received by or accrued to
South African tax residents must be included
in the gross income of such shareholders
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 they are dividends distributed
by a REIT. This dividend is, however, exempt
from dividends withholding tax in the hands
of South African tax resident shareholders,
provided that the South African resident
shareholders provided the following forms
to their Central Securities Depository
Participant ("CSDP") or broker, as the
case may be, in respect of uncertificated
shares, or the company, in respect of
certificated shares:
a) a declaration that the dividend 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. Shareholders 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 dividend,
if such documents have not already
been submitted.
Dividends received by non–resident
shareholders will not be taxable as income
and instead will be treated as ordinary
dividends which are exempt from income tax
in terms of the general dividend exemption
in section 10(1)(k)(i) of the Income Tax
Act. On 22 February 2017, the dividends
withholding tax rate was increased from
15% to 20% and accordingly any dividend
received by a non–resident from a REIT is
subject to dividends withholding tax at 20%,
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 shareholders. Assuming dividend
withholding tax will be withheld at a rate of
20%, the net dividend amount due to non–
resident shareholders is 19,58402 cents per
share. A reduced dividend withholding rate
in terms of the applicable DTA, may only be
relied on if the non–resident shareholders
have provided the following forms to their
CSDP or broker, as the case may be, in
respect of uncertificated shareholders,
or the company, in respect of certificated
shareholders:
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 shareholders 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 dividend
if such documents have not already been
submitted, if applicable.
Shares in issue at the date of declaration of
this dividend: 317 932 853
Indluplace's income tax reference number:
9390/649/177
Dividend declaration after
reporting date
In line with IAS 10 Events after the Reporting
Period, the declaration of the dividend
occurred after the end of the reporting
period, resulting in a non–adjusting
event which is not recognised in the
financial statements.
Dividends
The board of directors is considering
amending the dividend payment policy
from quarterly to twice per year and once
the Board has made a decision the Company
will communicate accordingly.
Litigation statement
There are no legal or arbitration
proceedings, including any proceedings
that are pending or threatened, of which
Indluplace is aware, that may have or have
had in the recent past, being the previous
12 months, a material effect on the group's
financial position.
Basis of preparation
These summarised audited consolidated financial
statements have been prepared in
accordance with the requirements of
International Financial Reporting Standards,
the SAICA Financial Reporting Guides as
issued by the Financial Practices Committee
as issued by the Financial Reporting
Standard Council, IAS 34: Interim Financial
Reporting, the JSE Listings Requirements
and the requirements of the South African
Companies Act, 2008. The accounting
policies applied in the preparation of these
summarised audited consolidated financial statements
are consistent with those of the previous
annual financial statements. These results
have been prepared under the supervision
of Terry Kaplan CA (SA), Indluplace's
Financial Director.
These summarised audited consolidated
financial statements have been extracted
from audited information, but are not themselves
audited. The directors take full responsibility
for the preparation of the summarised
report and for ensuring that the financial
information has been correctly extracted
from the underlying audited annual financial
statements. The auditors, Grant Thornton
have issued their unmodified opinion on
the annual financial statements for the year
ended 30 September 2017 and a copy of the
audit opinion, together with the underlying
audited annual financial statements is
available for inspection at the company's
registered office.
Condensed consolidated statement of comprehensive income
FOR THE YEAR ENDED 30 SEPTEMBER 2017
R/ AUDITED 2017 2016
PROPERTY PORTFOLIO REVENUE
Contractual rental income 330 048 127 284 565 745
Recoveries 79 328 680 64 420 785
Straight line rental income accrual 513 434 2 052 249
Total revenue 409 890 241 351 038 779
Operating costs (153 281 298) (130 562 553)
Administration costs (13 409 923) (11 845 062)
Net operating profit 243 199 020 208 631 164
Changes in fair values 35 723 690 35 722 600
Profit from operations 278 922 710 244 353 764
Net finance income 5 384 045 12 039 678
Finance charges (26 006 997) (7 633 994)
Finance income 31 391 042 19 673 672
Profit before taxation 284 306 755 256 393 442
Taxation - -
Total comprehensive income for the year 284 306 755 256 393 442
RECONCILIATION OF EARNINGS, HEADLINE EARNINGS AND DISTRIBUTABLE EARNINGS
Profit for the year attributable to shareholders 284 306 755 256 393 442
Change in fair value of properties (36 881 197) (38 177 641)
Deferred tax thereon - -
Headline earnings attributable to shareholders 247 425 558 218 215 801
Number of shares in issue at year end 289 209 449 240 234 907
Number of shares in issue used for the calculation of dividend per share (last quarter) 317 932 853 240 234 907
Weighted average number of shares in issue used for the calculation of earnings and headline
earnings per share 253 384 729 236 360 737
Basic and diluted earnings per share (cents) 112,20 108,48
Headline earnings per share (cents) 97,65 92,32
Dividends per share (cents) 97,75 92,61
Condensed consolidated statement of financial position
As at 30 September 2017
R/AUDITED 2017 2016
ASSETS
Non–current assets 3 137 624 685 2 567 674 551
Investment property 2 945 718 828 2 391 762 000
Fair value of investment property 2 942 468 514 2 389 025 120
Straight line rental income accrual 3 250 314 2 736 880
Computer software 201 229 118 921
Loans to participants of Indluplace Share Purchase and Option Scheme 191 704 628 175 793 630
Current assets 109 686 991 93 894 256
Trade and other receivables 68 738 896 46 589 696
Loan to shareholder - 1 037 797
Cash and cash equivalents 40 948 095 46 266 763
Total assets 3 247 311 676 2 661 568 807
EQUITY AND LIABILITIES
Shareholders' interest 2 978 791 568 2 458 890 539
Stated capital 2 755 180 753 2 274 536 709
Reserves 223 610 815 184 353 830
Other non–current liabilities 203 211 727 151 845 219
Secured financial liabilities 199 599 178 149 390 178
Derivative instruments 3 612 549 2 455 041
Current liabilities 65 308 381 50 833 049
Trade and other payables 65 308 381 50 833 049
Total equity and liabilities 3 247 311 676 2 661 568 807
Number of shares in issue at year end 289 209 449 240 234 907
Net asset value per ordinary share (cents) 1 029,98 1 023,54
Condensed consolidated statement of changes in equity
FOR THE YEAR ENDED 30 SEPTEMBER 2017
R/AUDITED STATED CAPITAL RESERVES TOTAL
Balance at 30 September 2015 1 786 251 674 148 596 834 1 934 848 508
Issue of shares 488 285 035 - 488 285 035
Total comprehensive income for the year - 256 393 442 256 393 442
Dividends - (220 636 446) (220 636 446)
Balance at 30 September 2016 2 274 536 709 184 353 830 2 458 890 539
Issue of shares 480 644 044 - 480 644 044
Total comprehensive income for the year - 284 306 755 284 306 755
Dividends - (245 049 770) (245 049 770)
Balance at 30 September 2017 2 755 180 753 223 610 815 2 978 791 568
Consolidated statements of cash flow
FOR THE YEAR ENDED 30 SEPTEMBER 2017
R/AUDITED 30 SEPTEMBER 2017 30 SEPTEMBER 2016
Net cash (utilised)/generated from operating activities (4 383 862) 13 187 080
Cash generated from operations 235 281 863 221 783 848
Dividends paid (245 049 770) (220 636 446)
Finance charges paid (26 006 997) (7 633 994)
Finance income received 31 391 042 19 673 672
Net cash utilised in investing activities (516 705 648) (640 204 579)
Net acquisition of investment property (516 562 197) (640 074 750)
Additions to computer software (143 451) (129 829)
Net cash generated from financing activities 515 770 842 637 878 453
Proceeds from share issue 464 733 045 488 285 035
Proceeds from secured financial liabilities 50 000 000 150 000 000
Loan from shareholder 1 037 797 (406 582)
Net movement in cash and cash equivalents (5 318 668) 10 860 954
Cash and cash equivalents at the beginning of the period 46 266 763 35 405 809
Cash and cash equivalents at the end of the period 40 948 095 46 266 763
Condensed consolidated segmental analysis
Indluplace has three reportable segments based on the geographic split of the entity's strategic business segments. For each strategic
business segment, the entity's executive directors, the group's operating decision-making forum, review internal management reports on
a monthly basis to assess its performance and to make decisions about resources to be allocated to the segments for which separate financial
information is available. All segments are located in South Africa. There are no single major tenants. The following summary describes
the operations in each of the entity's reportable segments. The executive directors, the group's operating decision-making forum reviews the
distributable earnings calculations every quarter to determine the appropriate dividend to declare.
2017 2016
R GAUTENG FREE STATE MPUMALANGA TOTAL GAUTENG MPUMALANGA TOTAL
PROPERTY PORTFOLIO REVENUE
Contractual rental income and recoveries 363 098 186 783 450 45 495 171 409 376 807 307 479 317 41 507 213 348 986 530
Straight line rental income accrual 513 434 - - 513 434 2 052 249 - 2 052 249
Total revenue 363 611 620 783 450 45 495 171 409 890 241 309 531 566 41 507 213 351 038 779
Operating costs (139 820 967) (198 141) (13 262 190) (153 281 298) (119 499 150) (11 063 403) (130 562 553)
Administration costs (13 409 923) (11 845 062)
Net operating profit 243 199 020 208 631 164
Changes in fair values 35 723 690 35 722 600
Profit from operations 278 922 710 244 353 764
Net finance income 5 384 045 12 039 678
Finance income 31 391 042 (7 633 994)
Finance charges (26 006 997) 19 673 672
Profit before taxation 284 306 755 256 393 442
Taxation - -
Total comprehensive income for the year 284 306 755 256 393 442
Reportable segment assets 2 851 959 169 23 338 558 325 902 763 3 201 200 490 2 115 731 980 316 674 589 2 432 406 569
Corporate segment assets - - - 46 111 186 - - 229 162 238
Reportable segment liabilities (16 988 203) (23 338 558) (8 622 615) (48 949 376) (48 352 011) (2 481 038) (50 833 049)
Corporate segment liabilities - - - (219 570 732) - - (151 845 219)
2 834 970 966 - 317 280 148 2 978 791 568 2 067 379 969 314 193 551 2 458 890 539
R 30 SEPTEMBER 2017 30 SEPTEMBER 2016
RECONCILIATION OF HEADLINE EARNINGS TO DISTRIBUTABLE EARNINGS
Headline profit attributable to equity holders 247 425 558 218 215 801
Change in fair value of derivative instruments 1 157 508 2 455 041
Straight line rental income accrual (513 434) (2 052 249)
Deferred tax thereon - -
Antecedent dividends 18 717 215 3 855 441
Amount avaliable for distribution 266 786 847 222 474 034
RECONCILIATION OF AMOUNT AVALIABLE FOR DISTRIBUTION PER QUARTER
Amounts available for distribution to shareholders 266 786 847 222 474 034
31 December (57 654 491) (55 087 474)
31 March (59 796 630) (55 430 505)
30 June (71 505 648) (55 863 048)
Amount available for distribution for the quarter ended 30 September 77 830 078 56 093 007
By order of the Board
8 November 2017 Transfer secretaries
Computershare Investor Services Proprietary Limited
Directors
T Adler (Chairperson)*, C Abrams*^, C de Wit (CEO), M Kaplan, Sponsor
T Kaplan (FD), G Kinross*^ (Lead independent director), S Noik*, Java Capital
A Rehman*^, Y Silimela* , I Suleman.
*Non–executive, ^ Independent. All directors are South African. Company secretary
CIS Company Secretaries Proprietary Limited
Registered office
3rd Floor, 1 Sturdee Avenue, Rosebank, Johannesburg, 2196 Website
PO Box 685, Melrose Arch, 2076. www.indluplace.co.za
Date: 08/11/2017 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
