Wrap Text
Reviewed provisional condensed consolidated financial results for the year ended 31 August 2018
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")
Reviewed provisional condensed consolidated financial results for the year ended 31 August 2018
Highlights
Property portfolio increase to R8.6 billion up 25%
Non-core disposals of R290 million
Vacancies down to 7.5%
Reduction in office vacancies of 51%
Capital raise of R790 million (32% oversubscribed)
Distributable earnings R504.2 million up 17.8%
Market capitalisation R4.8 billion up 9%
A-share dividend 105.80560 cents per share up 4.45%
B-share dividend 99.67872 cents per share up 4.38%
Commentary
Profile
Dipula is an internally managed, South African focused Real Estate Investment Trust ("REIT") that
owns a diversified portfolio, primarily comprising retail, office and industrial properties located
across all provinces in South Africa. The majority are located in Gauteng.
Dipula is listed on the JSE Limited ("JSE") with a combined market capitalisation of R4.8 billion
and assets valued at R8.6 billion. Dipula has two classes of shares in issue that trade under the
codes DIA and DIB. DIA shares are entitled to a preferred income growth of the lower of 5% or
CPI, while DIB shares receive the remaining net distributable income.
Dipula's strategy is to own a diversified portfolio with a retail bias and good tenant
covenants.
Financial results
During the year ended 31 August 2018 ("the year") distributable earnings increased 17.8% to
R504.2 million (2017: R428.2 million), amounting to a combined dividend per share of 205.48432
cents which represents a 4.41% (2017: 5.8%) growth in dividend per share, in line with market
guidance.
The dividend per A-share increased by 4.45% year-on-year to 105.80560 cents per share (2017:
101.29784 cents) and is in accordance with the A-share dividend policy. The dividend per
B-share increased by 4.38% year-on-year to 99.67872 cents per share (2017: 95.49384 cents).
Efficient management resulted in the property cost-to-income ratio remaining in line
with the prior year at 33.7% (2017: 33.6%).
Dipula's net asset value per share was R10.03 (2017: R10.13), 0.9% lower than the prior year due
to write off of goodwill.
A total of R1.5 billion of property acquisitions had transferred by year-end. This included portfolios
acquired from Setso Holdco Proprietary Limited ("Setso") and Rec Group Property Trust
("RecTrust") amounting to R1.25 billion which became effective in June 2018. In order to fund
these acquisitions the company raised equity of R790 million in a 32% oversubscribed
accelerated book-build.
Property portfolio
At year-end Dipula's property portfolio consisted of 203 properties valued at R8.6 billion
with a total gross lettable area ("GLA") of 932 492m2 (2017: 174 properties; R6.9 billion
value; 757 363m2 GLA).
Acquisitions
As announced on SENS on 10 November 2017 and 22 March 2018, Dipula acquired a portfolio
valued at R1.25 billion from Setso and RecTrust with a forward yield of 11.8%. The transactions
became effective on 26 June 2018.
During the period under review, Dipula acquired sections in Firestation Rosebank,
Harding Shopping Centre (50% undivided interest) and 14 Kramer (Kramerville) for
a purchase price of R229.50 million at an aggregate forward yield of 9.7%.
Sectoral and geographic profile
The sector and geographic breakdown of Dipula's portfolio at 31 August 2018 is set out below:
Sectoral profile by GLA (%)
Retail 50.0%
Office 14.0%
Industrial 36.0%
Sectoral split by gross rental income (%)
Retail 66.4%
Office 19.0%
Industrial 14.6%
Geographic profile by GLA (%)
Gauteng 57.1%
Eastern Cape 11.4%
Limpopo 10.1%
KwaZulu-Natal 9.5%
North West 3.4%
Mpumalanga 3.2%
Western Cape 2.7%
Free State 2.4%
Northern Cape 0.2%
Geographic split by gross rental income (%)
Gauteng 63.6%
Eastern Cape 8.0%
Limpopo 9.6%
KwaZulu-Natal 8.0%
North West 3.6%
Mpumalanga 2.5%
Western Cape 2.6%
Free State 1.9%
Northern Cape 0.2%
Dipula lease expiry profile
Average
monthly
rental
GLA income
(000m2) (Rm)
Vacant 68
FY2019 204 20
FY2020 102 10
FY2021 119 13
FY2022 88 8
>FY2022 333 22
Vacancies
Vacancies reduced by 12% to 7.5% (2017: 8.5%) due mainly to a 51% reduction in office
vacancies. The breakdown of vacancies by sector is as follows: Retail 8.1%
(2017: 7.1%), Offices 9.2% (2017: 18.7%) and Industrial 5.8% (2017: 5.4%).
Disposals
During the year seven properties were sold for R290 million at an average yield of 9.2%. The
largest being the 30% undivided interest in Eyethu Orange Farm Mall.
Refurbishments and developments
A total of R195 million was spent on capital expenditure including redevelopments during
the year. The conversion of Broadwalk Place and Finance House from office to residential
is expected to be completed in October and December 2018 respectively.
The company plans to spend R250 million on refurbishments over the next 18 months.
Cost to income ratios
31 August 31 August
2018 2017
Property cost to income (gross basis) 33.7% 33.6%
Property cost to income (net basis) 18.6% 17.8%
Total cost to income (gross basis) 35.9% 36.6%
Total cost to income (net basis) 21.4% 21.6%
Funding
At 31 August 2018, Dipula's all-in blended rate of interest was 9.25% (2017: 9.17%). The
company has total debt of R3.5 billion. The weighted average debt expiry is 2.7 years and hedge expiry is 2.1 years.
87% of the interest on the debt had been fixed at the end of the year (2017: 90%).
Debt maturity and hedging profile
Facility Fixed/swap Floating
Financial year-end R'000 % R'000 % R'000 %
FY2019 975 195 27.7 1 148 601 32.6 (173 406) (4.9)
FY2020 650 391 18.5 756 250 21.5 (105 859) (3.0)
FY2021 845 067 24.0 450 000 12.8 395 067 11.2
FY2022 633 238 18.0 400 000 11.4 233 238 6.6
FY2023 420 000 11.8 300 000 8.4 120 000 3.4
3 523 891 100.0 3 054 851 86.7 469 040 13.3
Management company ("Manco") internalisation
Effective 1 September 2017, the internalisation of the Manco was finalised through the acquisition
of 100% of the beneficial interest in the Dipula Asset Management Trust, for an aggregate
acquisition cost of R150 million. The internalisation is consistent with industry best practice and
more closely aligns the interests of the company's management with investors.
Changes to the board of directors
Mr NS Gumede resigned as a director effective from 22 December 2017. The directors of Dipula
would like to thank Saul for his dedication and valuable contribution to the company and wish him
well in his future endeavours.
Prospects
The board remains cautious regarding trading conditions in the near term. The group remains
focused on integrating acquisitions and extracting maximum value from the existing portfolio.
Despite the negative sentiment, Dipula has a "pipeline" of projects that will add significant value
in the long term.
Notwithstanding flat growth in dividends per share for the next year due to various initiatives
undertaken in the current period which impact distributions in the year ahead but which have
set a solid foundation for the medium to long term, the board is confident of delivering 7%
growth in dividends per share for the year ending 31 August 2020.
This forecast 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
with no further property acquisitions or disposals assumed. This forecast has not been reviewed
or reported on by the group's independent external auditors.
Payment of dividend
The board has approved and notice is hereby given of the final gross dividend (dividend
number 15) for the period 1 March 2018 to 31 August 2018 of 53.13072 cents per A-share and
55.60278 cents per B-share.
The dividend is payable to Dipula shareholders in accordance with the timetable set out below:
Last day to trade cum dividend Tuesday, 4 December 2018
Shares trade ex dividend Wednesday, 5 December 2018
Record date Friday, 7 December 2018
Payment date Monday, 10 December 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 5 December
2018 and Friday, 7 December 2018, both days inclusive.
The dividend will be transferred to dematerialised shareholders' CSDP accounts/broker accounts
on Monday, 10 December 2018. Certificated shareholders' dividend payments will be paid to
certificated shareholders' bank accounts on or about Monday, 10 December 2018.
An announcement relating to the tax treatment will be released separately on SENS.
On behalf of the board
Zanele Matlala
Chairperson
Izak Petersen
CEO
19 November 2018
Condensed consolidated statement of financial position
Reviewed Audited
year ended year ended
31 August 31 August
2018 2017
R'000 R'000
ASSETS
Non-current assets 8 944 839 6 989 754
Investment property 8 607 859 6 882 691
Fair value of property portfolio 8 427 249 6 727 095
Straight-line rental income accrual 180 610 155 596
Goodwill - 13 327
Intangible assets 112 500 -
Property, plant and equipment 3 886 1 267
Derivative financial assets 26 315 -
Loans receivable 194 279 92 469
Current assets 298 532 374 260
Trade and other receivables 208 266 153 817
Loans receivable - 89 936
Derivative financial assets 1 202 281
Cash and cash equivalents 89 064 130 226
Non-current assets held for sale
Investment property held for sale 30 013 42 942
Total assets 9 273 384 7 406 956
EQUITY AND LIABILITIES
Shareholders' interest 5 308 816 4 424 473
Stated capital 4 243 513 3 346 742
Fair value reserve 1 037 803 998 793
Retained income 27 500 78 938
Non-controlling interests 155 796 -
Non-current liabilities 2 602 100 2 306 139
Interest-bearing liabilities 2 546 926 2 271 057
Non-interest-bearing liabilities 51 124 -
Derivative financial liabilities 4 050 35 082
Current liabilities 1 206 672 676 344
Interest-bearing liabilities 974 225 551 008
Bank overdraft 20 048 -
Trade and other payables 209 648 125 336
Derivative financial liabilities 2 751 -
Total equity and liabilities 9 273 384 7 406 956
Condensed consolidated statement of comprehensive income
Reviewed Audited
31 August 31 August
2018 2017
R'000 R'000
Revenue 1 141 348 1 069 660
Contractual rental income 860 027 825 555
Municipal and property recoveries 217 557 226 962
Other income 38 750 -
Straight-line rental income accrual 25 014 17 143
Property-related expenses (362 824) (353 463)
Net property income 778 524 716 197
Administration and corporate costs (24 470) (31 887)
Net operating profit 754 054 684 310
Net finance cost (231 605) (243 632)
Finance income 42 103 20 606
Finance cost (273 708) (264 238)
Net profit after finance cost 522 449 440 678
Transaction costs on business
combination (2 543) -
Loss on sale of property, plant
and equipment (153) -
Amortisation of intangible assets (37 500) -
Goodwill impaired (13 327) (35 155)
Fair value adjustments 13 996 1 352
Investment properties and
properties held for sale (16 507) 57 512
Straight-line rental income
accrual (25 014) (17 143)
Interest rate swaps 55 517 (39 017)
Profit before taxation 482 922 406 875
Taxation - -
Profit for the year after taxation 482 922 406 875
Other comprehensive income - -
Total comprehensive income
for the year 482 922 406 875
Total profit and comprehensive
income for the year attributable to:
Shareholders of the company 471 540 387 922
Non-controlling interests 11 382 18 953
482 922 406 875
Basic and diluted earnings per A-share (cents) 99.09 91.59
Basic and diluted earnings per B-share (cents) 99.09 91.59
Earnings, headline earnings and dividends
Reviewed Audited
31 August 31 August
2018 2017
R'000 R'000
Reconciliation between profit, earnings
and headline earnings
Earnings 471 540 387 922
Adjustments: 96 595 7 372
Amortisation of intangible
asset/goodwill impaired 50 827 35 155
Non-controlling interest portion
of fair value adjustment 4 247 12 586
Fair value - investment properties
and held for sale 16 507 (57 512)
Fair value - straight-line rental income 25 014 17 143
Headline earnings 568 135 395 294
Total number of shares in issue* 529 282 638 436 932 798
Number of A-shares in issue 264 641 319 218 466 344
Number of B-shares in issue 264 641 319 218 466 454
Total weighted average number
shares in issue* 475 853 506 423 543 004
Weighted average number of
A-shares in issue* 236 062 841 211 771 488
Weighted average number of
B-shares in issue* 239 790 665 211 771 516
Headline earnings per A-share (cents) 119.39 93.33
Headline earnings per B-share (cents) 119.39 93.33
Dividend per A-share 105.80560 101.29784
Interim 52.67488 50.64892
Final 53.13072 50.64892
Dividend per B-share 99.67872 95.49834
Interim 44.07594 41.83993
Final 55.60278 53.65841
Combined share 205.48432 196.79618
Interim 96.75082 92.48885
Final 108.73350 104.30733
Net asset value per
A-share (cents) 1 003.02 1 012.62
Net asset value per
B-share (cents) 1 003.02 1 012.62
Loan to value ("LTV") 40.6% 38.9%
* Net of treasury shares.
Basic and headline earnings per share are based on the weighted average number of shares in
issue during the year.
The company does not have any dilutionary instruments in issue.
Condensed consolidated statement of changes in equity
Fair
Stated value Retained
capital reserve income
R'000 R'000 R'000
Balance at 31 August 2016
(audited) 3 107 931 992 884 93 599
Total comprehensive income
for the year - - 387 922
Acquisition of non-controlling
interests - - 8 310
Shares issued net of share
issue expenses 238 811 - -
Dividends declared - - (404 984)
Transfer to fair value reserve
- investment properties - 44 926 (44 926)
Transfer from fair value
reserve - interest rate swaps - (39 017) 39 017
Balance at 31 August 2017
(audited) 3 346 742 998 793 78 938
Total comprehensive income
for the year - - 471 540
Equity contributed by
non-controlling interests - - -
Shares issued net of share
issue expenses 896 771 - -
Dividends declared - - (483 968)
Transfer from fair value
reserve - investment properties - (16 507) 16 507
Transfer to fair value reserve
- interest rate swaps - 55 517 (55 517)
Balance at 31 August 2018
(reviewed) 4 243 513 1 037 803 27 500
Non-
controlling Total
interests equity
R'000 R'000
Balance at 31 August 2016
(audited) 131 190 4 325 604
Total comprehensive income
for the year 18 953 406 875
Acquisition of non-controlling
interests (141 943) (133 633)
Shares issued net of share
issue expenses - 238 811
Dividends declared (8 200) (413 184)
Transfer to fair value reserve
- investment properties - -
Transfer from fair value
reserve - interest rate swaps - -
Balance at 31 August 2017
(audited) - 4 424 473
Total comprehensive income
for the year 11 382 482 922
Equity contributed by
non-controlling interests 151 549 151 549
Shares issued net of share
issue expenses - 896 771
Dividends declared (7 135) (491 103)
Transfer from fair value
reserve - investment properties - -
Transfer to fair value reserve
- interest rate swaps - -
Balance at 31 August 2018
(reviewed) 155 796 5 464 612
Condensed consolidated statement of cash flow
Reviewed Audited
31 August 31 August
2018 2017
R'000 R'000
Cash flows from operating activities
Cash generated from operations 713 649 691 395
Net finance cost (237 337) (245 228)
Dividends paid (491 103) (413 184)
Net cash (utilised in)/generated
from operating activities (14 791) 32 983
Cash flows from investing activities
Acquisition of investment properties
and capital expenditure (1 982 997) (110 424)
Acquisition of business combination (47 382) -
Contribution by/(acquisition of)
non-controlling interests 151 549 (133 633)
Net acquisition of property, plant
and equipment (3 344) (460)
Proceeds on disposal of investment
properties 201 416 111 642
Repayment of loans advanced 89 936 -
Net cash utilised in investing
activities (1 590 822) (132 875)
Cash flows from financing activities
Issue of shares net of share issue
expenses 796 471 238 811
Non-interest-bearing liabilities
raised 51 124 -
Interest-bearing liabilities raised/
(repaid) 696 808 (67 425)
Net cash generated from financing
activities 1 544 403 171 386
Net (decrease)/increase in cash and
cash equivalents (61 210) 71 494
Cash and cash equivalents at the
beginning of the year 130 226 58 732
Cash and cash equivalents at the
end of the year 69 016 130 226
Condensed consolidated segmental information
Retail Offices Industrial
R'000 R'000 R'000
Year to 31 August 2018 (reviewed)
Extracts from the statement of
comprehensive income
Contractual rental income and
recoveries (excluding straight-line) 734 157 201 269 142 158
Other income 8 358 24 392 6 000
Property-related expenses (250 529) (56 972) (36 094)
Net property income 491 986 168 689 112 064
Extracts from the statement
of financial position
Investment property at fair value 5 423 068 1 760 137 1 394 504
Investment property held for sale 22 050 6 475 -
Total 5 445 118 1 766 612 1 394 504
Year to 31 August 2017 (audited)
Extracts from the statement
of comprehensive income
Contractual rental income and
recoveries (excluding straight-line) 737 589 177 611 137 317
Property-related expenses (259 152) (57 808) (36 488)
Net property income 478 437 119 803 100 829
Extracts from the statement
of financial position
Investment property at fair value 4 633 166 1 221 630 1 001 315
Investment property held for sale 40 500 - -
Total 4 673 666 1 221 630 1 001 315
Land Corporate Total
R'000 R'000 R'000
Year to 31 August 2018 (reviewed)
Extracts from the statement of
comprehensive income
Contractual rental income and
recoveries (excluding straight-line) - - 1 077 584
Other income - - 38 750
Property-related expenses (21) (19 208) (362 824)
Net property income (21) (19 208) 753 510
Extracts from the statement
of financial position
Investment property at fair value 30 150 - 8 607 859
Investment property held for sale 1 488 - 30 013
Total 31 638 - 8 637 872
Year to 31 August 2017 (audited)
Extracts from the statement
of comprehensive income
Contractual rental income and
recoveries (excluding straight-line) - - 1 052 517
Property-related expenses (15) - (353 463)
Net property income (15) - 699 054
Extracts from the statement
of financial position
Investment property at fair value 26 580 - 6 882 691
Investment property held for sale 2 442 - 42 942
Total 29 022 - 6 925 633
The entity has five reportable segments based on the sectoral 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.
Reviewed Audited
31 August 31 August
2018 2017
R'000 R'000
Reconciliation of reportable segment
revenue and profit
Revenue
Total revenue for reportable segments 1 116 334 1 052 517
Straight-line rental income accrual 25 014 17 143
Consolidated revenue 1 141 348 1 069 660
Profit
Total profit for reportable segments 753 510 699 054
Straight-line rental income accrual 25 014 17 143
Administration and corporate costs (24 470) (31 887)
Net finance cost (231 605) (243 632)
Transaction costs on business
combination (2 543) -
Fair value adjustments 13 996 1 352
Loss on sale of property, plant
and equipment (153) -
Amortisation of intangible assets/
goodwill impaired (50 827) (35 155)
Profit before taxation 482 922 406 875
Reconciliation of profit for the year
to distributable earnings
Profit attributable to shareholders
of the company 471 540 387 922
Fair value - investment properties
revaluation 16 507 (57 512)
Fair value - straight-line rental income 25 014 17 143
Fair value - interest rate swaps (55 517) 39 017
NCI portion of fair value adjustment 4 247 12 586
Antecedent interest 13 881 10 991
Transaction costs on business
combination 2 543 -
Loss on sale of property, plant
and equipment 153 -
Amortisation of intangible assets/
goodwill impaired 50 827 35 155
Straight-line rental income accrual (25 014) (17 143)
Distributable earnings and
dividends declared 504 181 428 159
Distribution statement
Revenue 1 116 334 1 052 517
Contractual rental income 860 027 825 555
Recoveries and other income 256 307 226 962
Property-related expenses (362 824) (353 463)
Net property income 753 510 699 054
Administration and corporate
costs (24 470) (31 887)
Net operating profit 729 040 667 167
Net finance cost (231 605) (243 632)
Antecedent dividend 13 881 10 991
Non-controlling interests (7 135) (6 367)
Distribution 504 181 428 159
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 CA(SA).
The reviewed provisional condensed consolidated financial results for the year ended
31 August 2018 have been prepared in accordance with the requirements of the JSE Limited
Listings Requirements and the requirements of the Companies Act of South Africa. The JSE
Listings Requirements require provisional consolidated financial 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 contain the information required
by IAS 34: Interim Financial Reporting. The accounting policies and methods of computations
applied are consistent with those applied in the previous year's consolidated annual financial
statements.
Auditor's report
The condensed consolidated financial statements for the year ended 31 August 2018 have been
reviewed by Deloitte & Touche, and their unmodified review conclusion report is available for
inspection at the company's registered office.
The auditor's review conclusion report does not necessarily report on all of the information
contained in these provisional condensed financial results.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of
the auditor's engagement they should obtain a copy of the auditor's review conclusion report
together with the accompanying financial information from the issuer's registered office. The
directors take full responsibility for the preparation of these provisional condensed consolidated
financial results and for ensuring that this financial information has been correctly extracted
from the underlying financial statements.
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 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 7.8% and 13.25%. 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. 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 year and there
were no transfers between levels.
Reviewed Audited
31 August 31 August
2018 2017
R'000 R'000
Fair value measurements for investment
properties categorised as Level 3:
Balance at the beginning of the year 6 882 691 6 963 015
Acquisitions/additions 2 014 350 101 151
Transferred to non-current assets held for
sale/disposals (256 748) (306 648)
Tenant installation/lease commission 2 781 2 237
Change in fair value and expenses incurred
in properties sold (35 215) 122 455
Depreciation - 481
Balance at the end of the year 8 607 859 6 882 691
Valuation technique and significant unobservable inputs
Investment properties
Inter-relationship
between key
unobservable inputs
Significant and fair value
Valuation technique unobservable inputs measurement
Discounted cash flows: - Expected rental The estimated fair
The valuation model growth varies between value would increase/
considers the present 6% and 8% per (decrease) if:
value of net cash flows annum; - expected rentals
to be generated from - Risk-adjusted were higher/(lower);
the property taking into discount rates vary and
account expected between 14% and - risk-adjusted
rental and 16.5%. discount rates and
capitalisation rates. capitalisation rates
The expected net cash were lower/(higher).
flows are discounted
using risk-adjusted
discount rates. Among
other factors, the
discount rate
estimation considers
the quality of the
property, its location
and lease terms.
Capitalisation model: - Capitalisation rates
Establishes the vary between 7.8%
market-related rental to 13.25%.
income for the property
and applies an
appropriate
capitalisation rate.
Derivative financial instruments - Level 2:
Interest rate swaps
Valuation technique Significant unobservable inputs
Valued by discounting the future - Interest rate swap curve
cash flows using the South African
swap curve at the dates when the
cash flows take place.
The fair value of other financial instruments approximate carrying values.
Subsequent events
Declaration of dividend after reporting date
The declaration of dividend occurred after the end of the reporting period, resulting in a
non-adjusting event that is not recognised in the financial statements.
Business Combination
During the year ended 31 August 2018, the group acquired 100% of the beneficial interest in its
asset management entity, Dipula Asset Management Trust ("DAMT") for R150 million. This
acquisition was in terms of the group's agreement to internalise its asset management and
obtain total control of DAMT.
The acquisition was funded by the allotment and issue of 9 931 631 Dipula "B" shares for the
equivalent of R100,3 million issued at a 30-day volume weighted average price per Dipula "B"
share and a cash payment of R49.7 million.
The practical effective date of the acquisition was 1 September 2017.
The acquisition of 100% of the beneficial interest in DAMT is accounted for in terms of IFRS 3:
Business Combinations. The asset management internalisation will better align the interests of
management with that of the group's shareholders.
DAMT
31 August
2017
R'000
The assets and liabilities arising from
the acquisition are as follows:
Property, plant and equipment 74
Trade and other receivables* 852
Cash and cash equivalents 4 861
Assets 5 787
Trade and other payables 5 787
Liabilities 5 787
Fair value of assets and liabilities acquired -
Total purchase consideration 150 000
Difference recognised as - intangible asset 150 000
* Carrying value of trade and other
receivables approximates their fair
value, with all gross contractual
cash flows collectable.
Transaction costs of R2.54 million were
incurred on the acquisition and have
been reflected in the statement of
comprehensive income.
Purchase consideration 150 000
Add: Acquisition-related costs 2 543
Less: Settled in Dipula "B" shares (100 300)
Purchase consideration settled
in cash 52 243
Cash and cash equivalents in
trust acquired (4 861)
Net cash outflow on acquisition 47 382
Revenue of DAMT included in the
statement of comprehensive income
and eliminated on consolidation -
1 September 2017 to 31 August 2018 28 317
Profit of DAMT included in the statement
of comprehensive income and eliminated
on consolidation - 1 September 2017
to 31 August 2018 12 118
Corporate information
Directors
ZJ Matlala* (Chairperson)
IS Petersen (CEO)
BH Azizollahoff*#
R Asmal (FD)
E Links*
Y Waja*
SA Halliday*
* Independent non-executive
# British
Registered office and business address
12th Floor
Firestation Rosebank
16 Baker Street
Rosebank
2196
Independent auditors
Deloitte & Touche
Practice number: 902276
Registered Auditors
Deloitte Place
20 Woodlands Drive
Woodmead
Sandton
2052
Transfer secretaries
Link Market Services South Africa Proprietary Limited
(Registration number 2000/007239/07)
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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