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VUKILE PROPERTY FUND LIMITED - Unaudited condensed consolidated interim results for the six months ended 30 September 2018

Release Date: 29/11/2018 08:05
Wrap Text
Unaudited condensed consolidated interim results for the six months ended 30 September 2018

Vukile Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/027194/06)
JSE share code: VKE ISIN: ZAE000056370
NSX share code: VKN
Debt company code: VKEI
(Granted REIT Status with the JSE)
(Vukile or the group or the company)

UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018

Highlights

7.5% increase
- In dividends in line with guidance to 78.10 cents per share

Gathering significant momentum in Spain
- Investment properties increased to c.EUR900 million from EUR308 million followingthe acquisition of 
  5 dominant shopping centres 
- Castellana* listed on the junior board in Madrid on 25 July 2018
- Positive benefits of diversification with a solid pipeline of opportunities
* Castellana Properties SOCIMI S.A, a 97.5% held Spanish subsidiary of the Vukile group

Impressive asset management result from Castellana
- 11 retail parks acquired in June 2017 now fully let post yield enhancing asset management initiatives 
- Organic growth in the value of investment properties of 8.8% relative to acquisition price
- Full strength, experienced team now in place

Solid operating performance in southern Africa
- Like for like net income growth of 5.1%
- Retail reversions still positive at +4.3% in difficult trading conditions 
- Retail vacancies maintained at 3.4% with 87% tenant retention
- Portfolio rent to sales ratio remains ahead of industry averages

Strong capital market support
- Gearing at 38% with 94% of debt hedged
- Corporate long-term credit rating upgraded to A+(ZA)
- Raised R1.6 billion in over-subscribed book-build in July 2018
- Raised R825 million in domestic medium term note programme


Commentary
1.  NATURE OF OPERATIONS
    Vukile is a property holding and investment company with direct and indirect ownership of immovable property. 
    The group has invested in a portfolio of predominantly retail property assets in southern Africa as well as 
    strategic shareholdings in listed Real Estate Investment Trusts (REITs). 

    The company is listed on the Johannesburg Stock Exchange (JSE) and the Namibian Stock Exchange (NSX) under the 
    Retail REITs sector. Castellana Properties Socimi S.A (Castellana), a 97.5% owned subsidiary of Vukile, is listed 
    on the Mercado Alternativo Bursatil (MAB) in Spain.

    The group has significant property investments in Spain and in the United Kingdom with a focus on retail and 
    logistics respectively. The group has more than trebled its investment in retail properties in Spain from 
    R4.56 billion at 31 March 2018 to R14.77 billion at 30 September 2018. The group has maintained its clear 
    strategy of investing in dominant, high quality retail parks and shopping centres in Spain, whilst retaining 
    an appetite for earnings enhancing local acquisitions.

2.  SIGNIFICANT EVENTS AND TRANSACTIONS
    The following significant events and transactions took place during the six months to 30 September 2018:
    - Castellana acquired the Habaneras Shopping Centre on 9 May 2018 for EUR80.6 million;
    - Vukile subscribed for a 51% stake in Morzal Properties Iberia S.L. (Morzal). The balance of the shareholding 
      in Morzal was subscribed for by co-investors. Morzal acquired four shopping centres from Unibail - Rodamco - 
      Westfield at a cost of EUR480 million, including acquisition costs of EUR19 million, effective on 31 July 2018. 
      The shares in Morzal were exchanged for shares in Castellana on 27 November 2018 on a share-for-share basis, 
      resulting in Morzal becoming a 100% subsidiary of Castellana. Subsequent to these acquisitions the Spanish 
      investment properties will represent 50.2% of Vukile's group investment properties*;
    - Vukile raised capital of R1.63 billion on 18 July 2018 of which R1.38 billion was raised pursuant to a heavily
      oversubscribed book-build at R18.66 per share, and R250 million was raised by way of a placement with the 
      Encha Special Purpose Vehicle in terms of the Encha equity funding platform;
    - Global Credit Rating Co. (GCR) upgraded Vukile's corporate long-term credit rating to A+(ZA) with the outlook 
      accorded as stable, and reaffirmed Vukile's corporate short-term rating of A1(ZA) and secured long-term credit 
      rating of AA+(ZA).This has resulted in a tightening of margins when issuing unsecured bonds; and
    - Castellana was listed on the MAB on 25 July 2018. The shares were listed by way of introduction at 
      EUR6.00 per share, which attributed a market capitalisation to Castellana of c.EUR204 million at that date. 
      The listing ensures that Castellana complies with applicable Spanish tax legislation in order for Castellana 
      to maintain its REIT status. 
    * net of straight-lining, based on the summarised operating segment report at 30 September 2018

3.  COMMENTARY ON GROUP RESULTS FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER 2018
    Dividend growth
    The directors of Vukile are pleased to report that the dividend for the six months ended 30 September 2018 has
    increased by 7.5% to 78.10251 cents per share (prior period: 72.65350 cents per share).
            
    The group's net profit available for distribution amounted to R713.5 million for the six months to 30 September 2018
    (September 2017: R578.5 million), which represents an increase of 23.3% over the comparable period.

    Property income and profit before taxation
    At reporting date, the geographic contribution and percentage split to group gross and net property income is
    represented below:      
                                                                                    30 September 2018
                                                                         Gross Property              Net Profit from
                                                                           Revenue(2)              Property Operations
    Operating Segment                                                    R000          %             R000          %    
    Vukile (Southern Africa)                                          721 251       70.0          594 432       71.3    
    Castellana and Morzal(1) (Spain)                                  309 142       30.0          239 363       28.7    
    Vukile group total                                              1 030 393      100.0          833 795      100.0    
    (1) Results for Morzal are for a two month period from 1 August 2018 to 30 September 2018
    (2) The property revenue and property expense have been reflected net of recoveries in terms of the Best Practice
        Recommendations of the SA REIT Association. The unaudited condensed consolidated statement of profit and 
        loss reflects gross property revenue and gross property expenses.
            
    The geographic contribution to group profit before taxation and fair value adjustments, including the group's share
    of equity accounted profits from associates, is represented below:
                                                                                                   30 September 2018
    Operating Segment                                                                                R000          %    
    Vukile (Southern Africa)                                                                      415 814       68.0    
    Atlantic Leaf Properties Limited (UK) (Atlantic Leaf) share of profits                         46 482        7.6    
    Castellana and Morzal (Spain)                                                                 149 157       24.4    
    Vukile Group profit before taxation and fair value adjustments                                611 453      100.0    

    Key financial indicators
    A summary of the group's key financial indicators at reporting date is shown below:

                                                                       30 September      30 September       31 March     
                                                                               2018              2017           2018    
    Net asset value per share (cents)                                         2 027             1 917          2 010    
    Dividend per share (cents)                                                78.10             72.65         168.82    
    Loan to value ratio (%)(1)                                                 41.3              30.5           32.9    
    Loan to value ratio net of available cash (%)                              39.7              28.8           28.2    
    Gearing ratio (%)(2)                                                       38.0              28.9           29.6    
   (1) Interest-bearing debt which includes R77.0 million commercial paper issued to a Namibian subsidiary 
       (eliminated on consolidation), is divided by the directors' valuation of the group's property portfolio at 
       30 September 2018, plus equity investments.                                                       
   (2) Gearing is calculated by dividing total group interest-bearing borrowings by group total assets, per the 
       group's unaudited condensed consolidated statement of financial position at 30 September 2018. Interest 
       bearing borrowings are reduced by the group's unamortised portion of capitalised borrowing costs, calculated 
       in terms of International Financial Reporting Standards (IFRS) of R237.2 million (comprising R17.7 million on 
       ZAR debt and EUR14.5 million on Castellana EUR debt, converted to ZAR at 30 September closing spot rates 
       where applicable.)
    
    A reconciliation of distributable earnings for the period to 30 September 2018 is set out under the segmental 
    report below.

    Equity and equity issuances            
    During the 12 months ended 30 September 2018, 359 million Vukile shares were traded, which equates to approximately  
    30 million shares per month. The total value of shares traded during the 12 months ended 30 September 2018
    amounted to R7.4 billion or 41.5% of the company's market capitalisation at 30 September 2018 (31 March 2018: 41%). 
    This demonstrates the liquidity of Vukile's shares in the market.

    Equity issuances and dividend reinvestments (DRIP) during the period totalled R1.71 billion. These issuances
    comprised the following:
    - Vukile issued 73.9 million shares under general authority by way of an accelerated book-build on 26 July 2018 at
      R18.66 per share - equating to R1.38 billion;
    - 12.7 million shares were issued to Encha on 26 July 2018 at R19.60 per share, under the Encha equity approval 
      scheme - totalling R250 million; and
    - Shares issued under an election to reinvest cash dividend in return for shares on 22 June 2018 - totalling 
      3.9 million shares at R20.30 - equating to R78 million.

    Cash flow
    The major items reflected in the composition of cash generated and utilised during the period under review are 
    set out below:
                                                                                                        30 September     
                                                                                                                2018    
                                                                                                                R000    
    Cash flow from operating activities                                                                      912 928    
    Issue of shares                                                                                        1 697 242    
    Interest bearing borrowings received                                                                   5 107 446    
    Equity contribution from non-controlling interest in new subsidiary                                    1 784 121    
    Acquisitions of and improvements to investment properties                                             (9 057 728)   
    Dividends paid                                                                                          (757 729)   

    Issues of shares to the value of R1.7 billion, contributions from minorities of R1.8 billion, and additional
    borrowings of R5.1 million were utilised to acquire investment properties of R9.1 billion in Spain during the 
    period under review.

    Extracts from the unaudited condensed consolidated statement of profit or loss for the six months ended 
    30 September 2018
  
                                                      30 September 2018      30 September 2017
                                                                                                           %  
                                                       R000       R000         R000       R000    Variance     Notes    
    Net profit from property operations(1)                     813 543                 602 864       34.9         (a)   
    Investment and other income                                 93 451                 158 006      (40.9)        (b)   
    - Dividends received                             49 869                  67 213                 (25.8)              
    - Interest and other income                      43 582                  90 793                 (52.0)              
    Share of income from associate (Atlantic Leaf)              46 482                  34 358       35.3               
    Corporate and administrative expenses                      (96 588)                (56 801)     (70.0)        (c)   
    Finance costs                                             (246 810)               (171 601)     (43.8)        (d)   
    Taxation                                                   (16 594)                 (8 986)     (84.7)        (e)   
    (1) Excludes straight-line rental income

    (a) Net profit from property operations
        The group's net profit from property operations, exclusive of straight-line rental accruals, has increased 
        by R210.6 million (34.9%) over the comparable period, from R602.9 million to R813.5 million. The southern 
        African stable portfolio reflected a pleasing like-for-like growth of c. 5.1% for the six months ended 
        30 September 2018. The Spanish portfolio has experienced a significant increase in the growth of net property 
        revenue over the comparative period due to ongoing acquisitions.

        Further details of the group's property portfolio performance are shown under paragraphs 7 and 8 and in 
        the operating segment analysis section.
        
        Gross rental receivables (tenant arrears)
        Group tenant arrears were R102.2 million at 30 September 2018 (31 March 2018: R87.7 million). Gross rental 
        receivables have increased by R14.5 million over the six month period, mainly attributable to the acquisition 
        of Morzal which contributed R12.8 million.
        
        Impairment allowance for tenant receivables
        The allowance for the impairment of tenant receivables has increased to R47.1 million at 30 September 2018. 
        The explanation for the increase is represented below, including the impact of the adoption of IFRS 9. 
        Further details of this IFRS 9 adoption are set out in Note 1 to the unaudited condensed consolidated 
        financial statements at 30 September 2018. 
        
        The impairment allowance represents 2.0% of gross rental income for the 12 months ended 30 September 2018 
        (31 March 2018: 2.2%). A summary of the movement in the impairment allowance for trade receivables by 
        operating segment is set out below:
                                                                                   Southern                             
                                                                                     Africa      Spain        Total    
                                                                                       R000       R000         R000    
        Impairment allowance 1 April 2018                                            43 710      1 230       44 940    
        Adjustment to retained income due to IFRS 9 adoption                         (4 807)         -       (4 807)   
        Foreign Currency Translation Reserve                                              -         70           70    
        Allowance for receivables impairment for the six month period                 4 577      2 280        6 857    
        Impairment allowance 30 September 2018                                       43 480      3 580       47 060    

    (b) Investment and other income
        Investment and other income has reduced significantly from R158.0 million (30 September 2017) to R93.5 million 
        at 30 September 2018. The reduction of R64.5 million is mainly attributable to the following:
                                                                                                                 Rm    
        Interest earned on Cross Currency Interest Rate Swaps (CCIRS) in 
        prior year reflected under investment income and now reflected separately*                            (32.3)   
        Additional interest earned on staff loans over prior period**                                           7.7    
        Atlantic Leaf pre-commitment fee earned in prior period (non-recurring)                                (9.4)   
        Reduced interest earned on call and money market deposits over prior 
        period due to acquisitions made                                                                       (13.4)   
        Increase in dividends earned from Fairvest Property Holdings Limited 
        (Fairvest) over prior period                                                                            5.0    
        Reduced Gemgrow Properties Limited (Gemgrow) dividends over prior period due to change from quarterly 
        to a bi-annual dividend cycle and which will normalise over the full reporting period                 (22.4)   
        Other                                                                                                   0.3    
        Total variance to prior period                                                                        (64.5)   
        *  Current period interest on CCIRS reflected separately in the condensed statement of profit or loss equates 
           to c. R74.3 million
        ** The cost to Vukile of financing these loans was R8 million for the period ended 30 September 2018

    (c) Corporate and administrative expenses
        Group corporate administrative expenditure of R96.6 million is R39.8 million (70.0%) higher than the previous 
        period's expenditure of R56.8 million. The majority of this increase is due to the employment of an experienced 
        property team in Spain, who have been in place for the six month period ended 30 September 2018. The staff 
        complement employed in Spain has increased from four employees at 30 September 2017 to 21 at 30 September 2018, 
        to cater for the significant expansion in investment properties. The table below shows the geographic split 
        of expenditure by segment, and the primary categories contributing to the increase on a like for like basis 
        compared to prior periods.
                                                                     30 September 2018             30 September 2017
                                                                       R000          %              R000          %    
        Southern Africa                                              67 987      100.0            54 666      100.0    
        Salary and related costs                                     48 506       71.3            37 986       69.5    
        Directors fees                                                2 365        3.5             1 307        2.4    
        Professional, regulatory, valuation and legal fees            3 869        5.7             3 226        5.9    
        Premises, property, plant and equipment                       5 662        8.3             5 182        9.5    
        Audit fees                                                    1 944        2.9             1 679        3.0    
        Consulting fees                                               1 676        2.5             1 464        2.7    
        General operating costs                                       3 609        5.3             3 338        6.1    
        Loss on foreign exchange transactions                           356        0.5               484        0.9    
                                                                                                                       
        Spain                                                        28 601      100.0             2 135      100.0    
        Salary and related costs                                     16 725       58.5               609       28.5    
        Directors fees                                                  566        2.0                 -        0.0    
        Professional, regulatory, valuation and legal fees            6 303       22.0             1 277       59.8    
        Premises, property, plant and equipment                         890        3.1                 -        0.0    
        Audit fees                                                    1 108        3.9                 -        0.0    
        Consulting fees                                                 402        1.4                 -        0.0    
        General operating costs                                       2 607        9.1               249       11.7    

        Vukile has increased its staff complement mainly in finance and asset management which has led to an increase 
        in remuneration costs. 

    (d) Finance costs
        Group finance costs have increased by R75.2 million from R171.6 million to R246.8 million. The increase in 
        finance costs is primarily due to additional finance costs incurred in the financing of the acquisition of five 
        shopping centres in Spain during the past six months. A comparison of the group's cost of funding is split by 
        currency in the table below:
                                                                                    30 September       30 September     
                                                                                            2018               2017    
                                                                                               %                  %    
        ZAR                                                                                 9.08               9.27    
        GBP                                                                                 3.47               3.10    
        EUR                                                                                 2.85               2.12    

        Vukile's weighted average historical cost of finance equates to c. 4.74%, with 94.2% of interest-bearing 
        term debt hedged.

    (e) Taxation
        The first six month's tax accrual of R16.6 million is higher than the comparable period of R9.0 million, 
        primarily as a result of additional taxation arising in Castellana of R4.5 million, compared to the prior period. 

4.  LISTED INVESTMENTS 
    Fairvest
    Vukile held a 27.3% shareholding in Fairvest at 30 September 2018 (31 March 2018: 31.4%).
    
    Vukile's investment in Fairvest is valued at R622.0 million at 30 September 2018, based on R2.30 per share 
    (31 March 2018: R2.20 per share).
    
    Dividends received during the six months ended 30 September 2018 amount to R13.8 million of which 50% is related to
    the year ended 31 March 2018. Based on the public guidance provided by Fairvest management, it is anticipated that
    dividends of c.R58.0 million will be received or accrued for the period ending 31 March 2019.
    
    Gemgrow 
    Vukile holds 4.7 million and 114.4 million Gemgrow "A" and "B" shares respectively, equating to 26.3% of total shares
    in issue. 
    
    These shares are valued at R771.0 million at 30 September 2018 based on the market prices of R9.35 and R6.35 
    (31 March 2018: R9.79 and R6.50) for the A and B shares respectively. 
    
    Vukile has received dividends during the period amounting to R23.4 million, which related to the period ended 
    31 March 2018. Dividends of R91.6 million are budgeted to be received and accrued for the period ending 
    31 March 2019 in terms of public guidance issued by Gemgrow management.
    
    Investment in associate
    Atlantic Leaf - 34.9%
    Vukile held a 34.9% shareholding in Atlantic Leaf at 30 September 2018 (31 March 2018: 34.9%). Vukile currently holds
    66.0 million shares in Atlantic Leaf. 
    
    In terms of IFRS, Atlantic Leaf is regarded as an associate of Vukile. As such, all dividends received reduce the
    carrying value of the investment in Atlantic Leaf, which amounted to R1.3 billion at 30 September 2018.
    
    However, as dividends receivable for the six month period to 30 September 2018 of R56.0 million are represented by
    cash, these dividends are regarded as distributable.
    
    Based on the guidance contained in the prospects statement issued by Atlantic Leaf in October 2018, dividends,
    inclusive of forward exchange contracts (FECs), of R112.0 million are anticipated to be received and accrued by 
    Vukile for the period ending 31 March 2019.
    
    The share of profits earned by Atlantic Leaf for the six month period to 30 September 2018 amounts to R46.5 million 
    as determined under IFRS. 
    
    Investment in subsidiaries 
    Castellana - 97.5% and Morzal - 50.9% 
    During the six month period Castellana acquired the Habaneras shopping centre for EUR83.8 million together with
    transaction costs. The acquisition was funded via an equity injection of EUR42.7 million and a loan from Aareal Bank.  
    
    Castellana's total property portfolio was valued at EUR406.3 million at 30 September 2018. 
    
    The Castellana portfolio is well diversified across Spain (none of the properties are situated in Catalonia) and
    comprises high-quality retail parks and shopping centres with solid long-term trading histories. The low-average 
    base rentals provide room for income growth going forward.
    
    Vukile anticipates dividends of EUR6.4 million from Castellana for the six month period ended 30 September 2018.
    
    Vukile announced on 31 July 2018 that its subsidiary, Morzal, had acquired four high-quality shopping centres in 
    Spain at a cost of EUR480.6 million (including acquisition costs), at an attractive pre-gearing yield of 5.7%. 
    EUR256.0 million of the acquisition was funded through a bank loan and the remainder through equity, which included 
    two external investors who contributed EUR115.0 million.
    
    Morzal's total property portfolio was valued at EUR494.0 million at 30 September 2018.
    
    Vukile's 50.9% shareholding in Morzal is expected to generate a dividend of EUR1.1 million for the two-month period to
    30 September 2018 based on dividends calculated under Spanish GAAP. The dividends for the second period will be 
    increased to adjust for the depreciation of the four properties under Spanish GAAP to better match the IFRS earnings 
    generated by Morzal. 
    
    Post a share swap on 27 November 2018, Morzal has become a 100% subsidiary of Castellana and Vukile's shareholding 
    in Castellana has reduced from 97.5% to 72.6%.
    
                                                                           30 September 2018          31 March 2018    
    Cash dividends (net of withholding taxes of 2.66%)                        EUR7.5 million    EUR10.4 million (1)    
    Investment properties                                                     EUR898 million         EUR308 million    
    Interest-bearing debt(2)                                                  EUR444 million         EUR146 million    
    Loan to value ratio                                                                49.4%                  47.4%    
    Loan to value ratio net of cash                                                    47.2%                  42.2%    
    (1) Declared and paid to Vukile in May 2018 for year ended 31 December 2017
    (2) Interest bearing borrowings are reduced by Castellana's and Morzal's unamortised portion of capitalised 
        borrowing costs, calculated in terms of IFRS of EUR14.5 million at 30 September 2018

    It should be noted that under Spanish law, Castellana and its subsidiaries are required to utilise Spanish GAAP 
    in the preparation of their individual annual financial statements and also requires Castellana's consolidated 
    annual financial statements to be prepared under IFRS. These consolidated IFRS financial statements have been 
    used in the Vukile group's consolidation, in terms of the basis of preparation as set out in note 10.

5.  GROUP BORROWINGS
    The group's finance strategy is to optimise funding costs and minimise refinance risk. Total debt as at 30 September
    2018 amounted to R13,2 billion. A detailed breakdown is provided below:
   
                                                                Rm  
    Foreign Spanish                                                  Secured against Castellana and Morzal's investment
    funders (EUR)                                            7 290   properties with no recourse to Vukile.
    Local funders (EUR)                                      2 160   Secured against a major          
    Local funders (GBP)                                        528   portion of Vukile's         
    Local funders (ZAR)                                      1 338   southern Africa         
    DMTN (ZAR)                                               1 884   balance sheet         
                                                            13 200            

    Vukile's funding of R13.2 billion (including R77.0 million commercial paper issued by Vukile to its Namibian 
    subsidiaries, which is eliminated on consolidation, reducing group debt to R13.1 million), is well diversified 
    across a number of funders, in line with its strategy of reducing refinancing risk.

    Sources of funding
                                                                                                               Debt    
                                                                                                           exposure    
                                                                                                 Debt      per bank    
                                                                                                 R000             %    
    Aareal                                                                                  4 894 670          37.1    
    Absa                                                                                    1 703 413          12.9    
    Banco Popular                                                                             184 923           1.4    
    Banco Santander                                                                           963 560           7.3    
    Caixabank                                                                               1 246 924           9.5    
    DMTN - Corporate bonds                                                                  1 707 000          12.9    
    DMTN - Commercial paper                                                                   177 000           1.3    
    Investec                                                                                  828 584           6.3    
    Nedbank                                                                                   100 000           0.8    
    RMB                                                                                       610 843           4.6    
    Standard Bank                                                                             783 463           5.9    
    Grand total                                                                            13 200 380         100.0    
   
    Vukile group loan and hedging (swap and fixed term debt) expiry profile at 30 September 2018

                                               2019    2020    2021    2022    2023    2024   2025    2026    Total    
    Loan expiry profile (Rm)                    356   1 116   1 402   2 133   1 313   1 430      -   4 895   12 645    
    Commercial Paper and                                                                                     
    Access Facility                                                                                          
    expiry profile (Rm)                         177     339      39       -       -       -      -       -      555    
    Hedging (Swap & Fixed                                                                                    
    debt) profile (Rm)                          245     519   1 050   2 253   1 271   1 655     25   4 895   11 913    
    Loan expiry profile (%)                     2.7     8.5    10.6    16.2     9.9    10.8      -    37.1     95.8    
    Commercial Paper and                                                                                     
    Access Facility                                                                                          
    expiry profile (%)                          1.3     2.6     0.3       -       -       -      -       -      4.2    
    Hedging (Swap and                                                                                        
    Fixed debt) profile (%)                     2.1     4.4     8.8    18.9    10.6    13.9    0.2    41.1    100.0    

    EUR42.3 million of debt with Aareal related to Habaneras is fixed. EUR256.0 million of debt with Aareal, related to 
    Morzal, is initially floating for three months and will be fixed for five years on 14 December 2018, in terms 
    of the loan agreement with Aareal Bank and has therefore been included in the interest bearing debt hedged 
    ratio and fixed rate maturity profile. 
    
    The strategy of the group is to ensure that no more than 25% of debt expires in any one year. More than 25% 
    of debt will mature in FY2026. Aareal provided funding of EUR42.3 million for the Habaneras acquisition and 
    EUR256.0 million for the Morzal acquisition. The intention is that as this debt reaches maturity, Castellana's 
    overall debt will have increased and as a percentage this debt will be less than 25% of total debt at that 
    point in time. It should also be noted that Aareal intends to syndicate up to 50% of the EUR256.0 million loan 
    which will reduce Vukile's exposure to Aareal. As can be observed from the above expiry profile, there is a 
    low refinance risk over the next five years. 

   A summary of group debt ratios at 30 September 2018 is provided below:
                                                                                              Southern                 
                                                                                  Group         Africa        Spain    
                                                                                   R000           R000       EUR000    
    Total debt (excluding access facilities and commercial paper)            12 645 584      5 355 506      444 330    
    Interest-bearing debt hedged (%)                                               94.2           86.3        100.0    
    Debt maturity profile (years)                                                   4.3            2.2          6.0    
    Hedging (swap and fixed debt) - maturity profile (years)                        4.7            2.8          6.0    
    Directors' valuation loan-to-value (LTV) ratio (net of cash)(1) (%)            39.7           33.4         47.2    
    Gearing ratio(2) (%)                                                           38.0           31.5         45.8    
    Interest cover ratio (times)(3)                                                2.88           2.89         2.85    
    (1) Directors' Valuation LTV ratio (net of cash) calculated as a ratio of actual interest-bearing debt
        owing less cash and cash equivalents (excluding tenant deposits & restricted cash) divided by the sum of 
        (i) the amount of the Director's Valuation of all the Properties in the Vukile Group Property Portfolio 
        at 30 September 2018, on a consolidated basis and (ii) the market value of equity investments.
    (2) Gearing is calculated by dividing total group interest-bearing borrowings by group total assets, per the 
        group's unaudited condensed consolidated statement of financial position at 30 September 2018. Interest 
        bearing borrowings are reduced by the group's unamortised portion of capitalised borrowing costs, calculated 
        in terms of IFRS of R237.2 million (comprising R17.7 million on ZAR debt and EUR14.5 million on Castellana 
        EUR debt, converted to ZAR at 30 September closing spot rates where applicable.)
    (3) Calculated for the six month period ended 30 September 2018.

    Undrawn facilities at 30 September 2018
    Undrawn facilities amount to c.R1.46 billion and are detailed as follows:
                                                                             Facility       Facility       Facility     
                                                                               amount          drawn        undrawn    
                                                                                 R000           R000           R000    
    ABSA revolving credit facility (RCF)                                      850 000        300 733        549 267    
    Investec Access Facility                                                  100 000         38 083         61 917    
    Investec RCF (ZAR)                                                        100 000              -        100 000    
    Investec Term Loan (EUR)                                                  388 770        246 104        142 667    
    RMB Access Facility                                                       200 000         38 980        161 020    
    Standard Bank Access Facility                                              80 000              -         80 000    
    Standard Bank Term Loan (EUR)                                             360 952              -        360 952    
    Grand total                                                             2 079 722        623 900      1 455 823    
    
    Total DMTN Commercial paper issued for R117 million is fully backed by undrawn facilities.

    Ratings
    GCR upgraded Vukile's corporate long-term credit rating to A+(ZA) with the outlook accorded as stable, and 
    reaffirmed Vukile's corporate short-term rating of A1(ZA) and secured long-term credit rating of AA+(ZA).
    
    Group debt movement during the six months ended 30 September 2018
    During the six month period ended 30 September 2018:
    - c. R256 million of Bank debt was repaid;
    - c. R88.5 million of Access Facilities were utilised primarily for South African development or expansion 
      projects;
    - Corporate bonds of R690 million were repaid during the six month period;
    - R825 million of new Corporate bonds were issued;
    - c. EUR6 million of EUR Bank debt was entered into to acquire shares in Castellana for the Habaneras acquisition; 
    - Within Castellana, EUR42.3 million of fixed Bank debt was entered into for the Habaneras acquisition - this debt 
      is non-recourse to Vukile;
    - A large percentage of the proceeds of the Vukile equity book-build issuance of c. R1.6 billion was utilised 
      together with R400 million of ZAR Bank debt and EUR15 million of EUR Bank debt to acquire shares in Morzal;
    - Within Morzal, EUR256 million of Bank debt (which is to be fixed on 14 December 2018) was concluded - this 
      debt is non-recourse to Vukile;
    - Vukile extended ZAR Interest Rate Swaps totalling c. R961.3 million, at an estimated new annualised
      additional cost of R1.5 million.
    
    The group has complied with all the bank's group LTV covenants of 50%. The group has also complied with the 
    DMTN's LTV covenant of 45% in respect of those properties mortgaged as security under the DMTN programme.
    
    Group foreign exchange currency hedges at 30 September 2018
    Vukile has adopted a strategy of hedging its foreign dividend exposure at c.75% over a three to five-year period 
    in line with anticipated dates of dividend receipts.
    
    EUR net income exposure - as at 30 September 2018
        
    Dividend payment        Dec-18   Jun-19   Dec-19   Jun-20   Dec-20   Jun-21   Dec-21   Jun-22   Dec-22   Jun-23    
    dates                   EUR000   EUR000   EUR000   EUR000   EUR00    EUR000   EUR000   EUR0     EUR000   EUR000    
    Net EUR                                                                                                 
    dividends forecast       4 294    6 853    6 986    7 149    7 115    7 283    8 762    8 933   10 134   10 309    
    Existing forward                                                                                        
    exchange contract                                                                                       
    (FEC) hedges on                                                                       
    dividends               (3 209)  (4 884)  (5 375)  (5 289)  (5 495)  (5 508)  (4 600)  (4 600)  (4 600)  (4 600)   
    Fixed FEC                                                                             
    EUR/ZAR rate           16.4265  17.1270  17.7734  18.4981  18.5148  19.4321  20.6629  21.5255  22.4193  23.3412    
    Unhedged dividend                                                                     
    income                   1 085    1 969    1 611    1 860    1 620    1 775    4 162    4 333    5 534    5 709    
    Percentage EUR                                                                        
    income hedged over                                                                    
    three years                75%      71%      77%      74%      77%      76%      53%      51%      45%      45%    
    Average hedge (%)          75%                                                                                     

    GBP net income exposure - as at 30 September 2018
                                                         Nov-18       May-19       Nov-19       May-20       Nov-20    
    Dividend payment dates                                 £000         £000         £000         £000         £000    
    Net GBP dividends forecast                            2 595        2 434        2 322        2 378        2 434    
    FEC hedges on dividends                              (1 981)      (2 035)      (1 996)      (2 045)      (2 070)   
    Fixed FEC GBP/ZAR rate                              18.5923      19.2135      19.9029      20.6072      21.3622    
    Unhedged dividend income                                614          400          326          332          364    
    Percentage EUR income hedged over three years           76%          84%          86%          86%          85%    
    Average hedge                                           83%                                                        
    
    Group cost of finance at 30 September 2018
    Group cost of finance for the period ended 30 September 2018 at the historic weighted average interest cost of 
    4.74% comprises the following:
    - ZAR - 9.08%
    - EUR - 2.85%.
    - GBP - 3.47%.
    
    The table below shows actual funding costs and nominal borrowing by currency between FY2018, HY2019 and a forecast 
    for FY2019. Historic rates are based on actual interest costs including hedging and amortised transaction costs, 
    divided by the average debt by month over the respective period. Forecast rates are based on assuming R160 million 
    of new ZAR debt utilised in December 2018 with assumptions for current debt and swaps expiring during the 
    forecast period. 
                                             FY2019         HY2019          FY2018              Debt           Debt     
                                           12 month       Historic        Historic             as at          as at     
                                           forecast        cost of         cost of      30 September       31 March    
                                            of debt           debt            debt              2018           2018    
                                                  %              %               %              R000           R000    
    ZAR                                        9.23           9.08            9.24         3 221 796      2 854 530    
    EUR                                        2.72           2.85            2.28         9 450 145      3 740 248    
    GBP                                        3.49           3.47            3.34           528 439        476 102    
    Total                                      4.52           4.74            5.74        13 200 380      7 070 880    
    
    
6.  CCIRS AS A PERCENTAGE OF FOREIGN INVESTMENT EXPOSURE
    CCIRS have the ability to hedge both foreign exchange fluctuations on Vukile's earnings and asset exposure. 
    To minimise the impact of unexpected risks at the maturity of the CCIRS, Vukile has chosen to limit the utilisation 
    of CCIRS to 45% of total international investments.

    The CCIRS ratio to total value of international investments (on a consolidated basis) is 34.5%.
    
                                                                           EUR Fixed     ZAR Average
                                       EUR          ZAR        EUR/ZAR     Rate over      Rate over
                                   Nominal      Nominal   Initial Rate          Term           Term        Maturity    
                                    EUR000         R000
    Nedbank CCIRS June 2018         93 200    1 346 240        14.4446         1.90%          8.81%      14-06-2021    
    Nedbank CCIRS June 2018         23 800      360 380        15.1420         1.29%          8.81%      14-06-2021    
    ABSA CCIRS July 2018            40 000      629 860        15.7465         3.70%         11.88%      13-06-2022    
    Investec CCIRS July 2018        25 500      401 370        15.7400         3.72%         11.88%      13-06-2022    
    Total                          182 500    2 737 850                                                                

    Vukile's foreign exchange rate hedging policy's intention is to reduce the impact of foreign currency fluctuations, 
    and not to necessarily profit from ZAR weakness, however investors may expect Vukile's foreign investments to 
    provide some "Rand Hedge" which is currently the case from both an earnings perspective where 25% of foreign 
    earnings are hedged. 

7.  SOUTHERN AFRICA
    7.1 SOUTHERN AFRICAN PROPERTY PORTFOLIO OVERVIEW
        The southern Africa property portfolio at 30 September 2018 consisted of 60 properties with a total market value 
        of R14.5 billion excluding capitalised lease commissions, and gross lettable area (GLA) of 939 123m2, with an 
        average value of R242 million per property. The southern African retail portfolio which accounts for c.91.0% 
        of the value of the assets, was valued at R13.3 billion and consists of 45 properties with an average value 
        of R295 million.

        The geographical and sectoral distribution of the group's southern African property portfolio is indicated 
        in the tables below. The portfolio is well-represented in most of the South African provinces and Namibia. 
        Some 75.0% of the gross income is derived from Gauteng, KwaZulu-Natal, Western Cape and Namibia.

        Geographic profile
                                                                                                    Total portfolio    
        % of gross income                                                                                         %    
        Gauteng                                                                                                  36    
        KwaZulu-Natal                                                                                            23    
        Namibia                                                                                                   8    
        Western Cape                                                                                              8    
        Limpopo                                                                                                   7    
        Free State                                                                                                6    
        North West                                                                                                5    
        Mpumalanga                                                                                                4    
        Eastern Cape                                                                                              3    

        Based on market value, 91% of the southern African portfolio is in the retail sector followed by 3% in 
        offices, 3% in industrial, 2% in motor-related and 1% in the residential sectors.

        The tenant profile is listed in the table below:
        Tenant profile
                                                                                                    Total portfolio    
        % of Total GLA                                                                                            %    
        Large national and listed tenants and major franchises                                                   67    
        National and listed tenants, franchised and medium to large professional firms                           10    
        Other                                                                                                    23    

        The retail portfolio's exposure to national, listed and franchised tenants is 82% in total.

        Vukile's tenant concentration risk is considered to be low as the top 10 tenants account for 47% of total GLA. 
        Shoprite is the single largest tenant, occupying 8.5% of total GLA with Pick n Pay the second largest at 7% 
        of total GLA.

        The top 15 properties, all of which are retail assets, have 82% exposure to national, listed and franchised 
        tenants and represent 58.2% of the total portfolio value and 47% of the total portfolio GLA.

        Top 15 properties by value
                                                                               Directors'                               
                                                                             valuation at                              
                                                                             30 September          %          
                                                                    GLA              2018         of      Valuation     
        Property                             Location                m2                Rm      total           R/m2          
        Boksburg East Rand Mall*             Gauteng             34 064           1 396.6        9.6         40 999    
        Durban Phoenix Plaza                 KwaZulu-Natal       24 351             925.9        6.4         38 023    
        Pinetown Pine Crest                  KwaZulu-Natal       40 086             897.4        6.2         22 387    
        Gugulethu Square                     Western Cape        25 322             572.0        3.9         22 589    
        Soweto Dobsonville Mall              Gauteng             26 628             556.3        3.8         20 892    
        Queenstown Nonesi Mall               Eastern Cape        27 898             478.0        3.3         17 134    
        Oshakati Shopping Centre             Namibia             24 632             432.6        3.0         17 563    
        Daveyton Shopping Centre             Gauteng             17 774             420.6        2.9         23 664    
        Germiston Meadowdale Mall**          Gauteng             33 046             414.4        2.9         12 540    
        Bloemfontein Plaza                   Free State          43 771             412.8        2.8          9 431    
        Phuthaditjhaba Maluti Crescent       Free State          21 680             408.8        2.8         18 856    
        Randburg Square                      Gauteng             40 767             406.7        2.8          9 976    
        Thohoyandou Thavhani Mall***         Limpopo             17 602             406.1        2.8         23 071    
        Moruleng Mall#                       North West          25 137             370.3        2.6         14 731    
        Roodepoort Hillfox Power Centre      Gauteng             38 245             341.4        2.4          8 927    
        Total top 15                                            441 003           8 439.9       58.2         19 138    
        *   Represents an undivided 50% share in this property.                 
        **  Represents an undivided 67% share in this property.                 
        *** Represents an undivided 33% share in this property.                 
        #   Represents 80% share in the company.                   

    7.2 SOUTHERN AFRICAN PROPERTY PORTFOLIO VALUATIONS
        The accounting policies of the group require that the directors value the entire portfolio every six months 
        at fair market value. Approximately one-half of the portfolio is valued every six months, on a rotational 
        basis, by registered independent third-party valuers. The directors have valued the southern African 
        property portfolio at R14.5 billion as at 30 September 2018(1). This is R22.4 million, or 0.2% higher 
        than the valuation as at 31 March 2018. The calculated recurring forward yield for the portfolio is a 
        conservative 8.4%.

        The external valuations by Quadrant Properties (Pty) Ltd and Knight Frank (Pty) Ltd at 30 September 2018 
        of 52% of the total portfolio are in line with the directors' valuations of the same properties.

        (1) The group's property portfolio value takes into account Moruleng Mall at 80%, whereas in the financial
            statements the group property value reflects 100% of Clidet, the entity which owns Moruleng Mall.

    7.3 SOUTHERN AFRICAN PROPERTY PORTFOLIO PERFORMANCE
        The financial performance of the stable portfolio is set out below:
                                                                               September      September                
        Financial performance for the stable portfolio                              2018           2017           %    
        (excluding acquisitions and sales)                                            Rm             Rm      change    
        Property revenue                                                           681.0          647.2         5.2    
        Net property expenses                                                     (113.3)        (106.9)       (6.0)   
        Net property income                                                        567.7          540.3         5.1    
        Property expense ratios (%)*                                                16.6           16.5         0.6    
        * Recurring cost to property revenue ratios (including rates and taxes and electricity costs; excluding 
          asset management fee).

        New leases and renewals in excess of 119 000m2 with a contract value of R878 million were concluded year 
        to date keeping tenant retention at 82%.

        Details of large contracts concluded
                                                                                            Contract          Lease     
                                                                                               value       duration     
        Tenant                    Property                                      Sector            Rm          Years    
        Pick n Pay                Pinetown Pine Crest                           Retail          77.7             10    
        Cashbuild                 Phuthaditjhaba Maluti Crescent                Retail          31.8             10    
        Shoprite Checkers         Durban Phoenix Plaza                          Retail          25.6              5    
        Shoprite Checkers         Mbombela Shoprite Centre                      Retail          24.0              5    
        Truworths                 Boksburg East Rand Mall (50%)                 Retail          22.9              5    
        Shoprite Checkers         Tzaneen Maake Plaza (70%)                     Retail          19.8              5    
        Spar                      Ulundi King Senzangakona Shopping Centre      Retail          14.1              5    
        The Hub                   Durban Phoenix Plaza                          Retail          13.3              5    
        Spar                      Hammanskraal Renbro Shopping Centre           Retail          13.0              5    
      
        Group lease expiry
        The group lease expiry table reflects that 15% of the leases are due for renewal in the second half 
        of the year. Approximately 49% of leases are due to expire in 2022 and beyond (up from 38%).
                                                                                                             Beyond    
                                                                 March      March      March      March       March    
        % of contractual rent                                     2019       2020       2021       2022        2022    
        Rent                                                        15         19         17         15          34    
        Cumulative as at September 2018                             15         34         51         66         100    
        Cumulative as at March 2018                                 29         47         62         73         100    

                                                                                                             Beyond    
                                                              March       March       March       March       March    
        % of GLA                                 Vacant        2019        2020        2021        2022        2022    
        GLA                                         4.3          14          15          13          12          42    
        Cumulative as at September 2018             4.3          18          33          46          58         100    
        Cumulative as at March 2018                 4.2          31          46          59          68         100    

        Vacancies
        At 30 September 2018, the portfolio's vacancy (measured as a percentage of gross rental) was 3.9% compared 
        to 3.7% at 31 March 2018 and the portfolio's vacancy (measured as a percentage of GLA) was 4.3% compared 
        to 4.2% at 31 March 2018. The retail portfolio vacancy based on gross rental is unchanged at 3.4% 
        (31 March 2018: 3.4%)
                                                                                              September       March     
        Vacancies (% of gross rental)                                                              2018        2018    
        Retail                                                                                      3.4         3.4    
        Industrial                                                                                  2.1         6.0    
        Offices                                                                                    19.5        10.3    
        Motor Related                                                                               0.0         0.0    
        Portfolio vacancy                                                                           3.9         3.7    

        Office vacancies increased due to a tenant vacating 3721m2 at Sandton Sunninghill Sunhill Park. We are 
        currently evaluating various options to convert the property. This vacancy will be moved to development 
        vacancy in future.

        The vacancy per sector (measured as a percentage of gross lettable area) is indicated in the table below.
                                                                                              September       March     
        Vacancies (% of GLA)                                                                       2018        2018    
        Retail                                                                                      3.7         3.9    
        Industrial                                                                                  1.6         3.5    
        Offices                                                                                    22.0        13.5    
        Motor Related                                                                               0.0         0.0    
        Portfolio Vacancy                                                                           4.3         4.2    

        GLA summary                                                                                          GLA m2    
        Balance at 31 March 2018                                                                            937 463    
        GLA adjustments                                                                                       1 660    
        Disposals                                                                                                 0    
        Acquisitions and extensions                                                                               0    
        Balance at 30 September 2018                                                                        939 123    
                                                                                                                       
        Vacancy summary                                                                        Area m2            %    
        Balance at 31 March 2018                                                                39 681          4.2    
        Less: Properties sold since 31 March 2018                                                    0                 
        Remaining portfolio balance at 31 March 2018                                            39 681          4.2    
        Leases expired or terminated early                                                     120 678                 
        Tenants vacated                                                                         21 674                 
        Renewal of expired leases                                                              (78 960)                
        Contracts to be renewed                                                                (19 652)         0.1    
        Development vacancy                                                                     (5 547)                
        New letting of vacant space                                                            (37 236)                
        Balance at 30 September 2018                                                            40 638          4.3    
                                                                                             
        Base rentals (excluding recoveries)
        The weighted average monthly base rental rates per sector, between 31 March 2018 and 30 September 2018, 
        are set out in the table below:
                                                                              September       March                    
        Weighted average base rentals (R/m2) excluding recoveries                  2018        2018      Escalation    
        Retail                                                                   132.66      130.44             1.8    
        Industrial                                                                55.94       54.42             2.8    
        Offices                                                                   97.77       95.74             2.2    
        Motor Related                                                            134.24      128.64             4.4    
        Portfolio weighted average base rentals                                  124.99      122.77             1.8    

        Average contractual rental escalations are 7.1%.

        The average escalation on expiry rentals on the total portfolio of 4.1% is positive against the backdrop 
        of a difficult trading environment. Positive reversions of 4.3% were achieved in the retail sector.

        Expense categories and ratios
        The largest expense categories contribute 82% to the total expenses. These are government services (46%), 
        rates and taxes (18%), cleaning and security (11%) and property management fees (7%).

        The group continuously evaluates methods of containing costs in the portfolio. The stable portfolio's 
        recurring net costs to income ratio of 17.3% is still in line with the ratio of 16.6% at 31 March 2018.


    7.4 DEVELOPMENTS AND ACQUISITIONS
        Upgrades/Redevelopments - R607.9 million
        As part of the ongoing strategy to improve the quality of the existing portfolio, the following projects 
        have been completed or are in progress:

        Phuthaditjhaba: Maluti Crescent
        Maluti Crescent, previously known as Setsing Crescent, is located in Phuthaditjhaba in the eastern Free 
        State. It has a GLA of 22 000m2 and the major tenants include Spar, Game, Cashbuild, Clicks, all five 
        major banks and a very strong national fashion component. The centre is currently being extended and 
        upgraded. The total project cost has increased from R338.0 million, with a projected yield of 8.5%, 
        to R391.6 million (8.1%). The cost increase is mainly due to scope variations and additional maintenance 
        work not foreseen in the initial feasibility. The extension area is due for completion by March 2019 
        while the relocation of tenants in the existing mall will be completed by August 2019.

        The centre is being transformed from a strip mall into an almost fully enclosed mall. The multi-level 
        extension includes new under cover parking and taxi ranks on the ground and mezzanine levels with 
        12 357m2 of new retail space on the top level. Tenants in the extension area include Pick n Pay, 
        Mr Price, additional Foschini Group outlets and a relocated and enlarged Woolworths. More than 90% 
        of the leases for the extension area have been finalised.

        The existing centre is being upgraded to complement the new mall. Provision has been made for a new 
        PV cell solar installation on the roof of the extension. 

        Flanagan & Gerard, who have extensive experience in shopping centre development, are the development 
        managers.

        Pinetown: Pine Crest Centre
        Vukile acquired SA Corporate Real Estate's 50% shareholding in Pine Crest Centre in April 2017. 

        Pine Crest Centre is the biggest shopping centre in the Pinetown central business district with a GLA 
        of 40 087m2 spread over three levels. Major tenants include Pick n Pay, Game, Dischem, Virgin Active,
        Woolworths, Foschini, Ackermans, Edgars Active, Truworths, Mr Price, Jet Stores, Wimpy, KFC, SA Post 
        Office as well as the five major banks. The centre is currently being extended and upgraded at a total 
        cost of R200.0 million at a projected yield of 7.4%. At the same time major maintenance work will be 
        done, mainly to the roof waterproofing, the escalators and the HVAC systems. The project is due to be 
        completed in June 2019.

        The existing ground level mall is being extended into the adjacent parking deck and new GLA of about 
        5 000m2 as well as a new street level entrance and additional escalator access to the upper shopping 
        levels, are being provided. 

        The food court on the third level is being extended and upgraded. New tenants to this area include a 
        Spur restaurant and a Galaxy Bingo, while the existing food outlets, including KFC and Nando's, will 
        be upgraded.

        Germiston Meadowdale Mall
        At the beginning of 2018 Vukile partnered with the Moolman Group to invest a total of R23 million to 
        relocate Cashbuild into a new standalone 1 350m2 store, reconfigure their former store to accommodate 
        new tenants (4x4 Mega World and Crazy Pets), and undertake other essential improvements. Vukile's 
        two-thirds capital contribution amounted to R16.3 million at a yield of 11.5%. The brand-new Cashbuild 
        store reopened to the public on 8 August 2018. 

        The centre is currently fully let with a weighted average lease expiry (WALE) of 5.7 years on GLA and 
        the trading density growth higher than benchmark. 

        Current Vukile projects
        A summary of major capex projects approved and incurred to 30 September 2018 is set out below:
                                                                                         Paid to             Budget     
                                                                                    30 September       October 2018    
                                                                     Approved               2018      to March 2019    
                                                     Completion          R000               R000               R000    
        Phuthaditjhaba: Maluti Crescent          31 August 2019       391 650            140 923            141 650    
        Pinetown: Pine Crest Centre                30 June 2019       200 000             35 497            120 350    
        Germiston: Meadowdale Mall                 31 July 2018        16 264             13 499              2 765    
        Total                                                         607 914            189 919            264 765    

        Developments 
        No developments during the period.

        Acquisitions - R470.6 million
        Kolonnade Retail Park
        Vukile acquired the property and letting enterprise known as Kolonnade Retail Park measuring 39 450m2 from 
        Sasol Pension Fund for a purchase price of R470.6 million. The acquisition is expected to be yield neutral 
        in the first year. The centre is conveniently situated 2.5km from the N1 Highway, on the corner of Sefako 
        Makgatho Drive (previously Zambesi Drive) and Enkeldoorn Avenue. Kolonnade Retail Park is a typical value 
        centre with big box retailers and is anchored by a 12 957m2 Pick n Pay Hyper and Liquor, a 4 592m2 Mr Price 
        Home & Sport and a 2 333m2 West Pack Lifestyle. The centre is fully let and has a weighted average lease 
        expiry of just under four years and a national tenant component of 88% of the total GLA. Kolonnade Retail 
        Park was transferred post half-year end in November 2018.

        Property sales - Southern Africa
        No properties were sold during the period.

        Investment properties held for sale - R2.04 billion 
        The investment properties held for sale comprise the Namibian portfolio and Vukile's non-retail, commercial 
        and industrial portfolio. It is intended to redeploy the proceeds from the sale of these portfolios, once 
        concluded, into Spain.

8.  SPAIN
    8.1 SPANISH PROPERTY PORTFOLIO OVERVIEW
        The Spanish property portfolio at 30 September 2018 consisted of 19 properties with a total market value 
        of EUR897.9 million, excluding capitalised lease commissions, and GLA of 318 622m2, with an average value of 
        EUR47.3 million per property.

        The geographical and sectoral distribution of the group's property portfolio is indicated in the tables 
        below. Some 87% of gross income is derived from Andalucia, Extremadura, Castilla Leon and Valencia.

        Geographic profile
                                                                                                              Total     
                                                                                                          portfolio     
        % of gross income                                                                                         %    
        Andalucia                                                                                                44    
        Extremadura                                                                                              22    
        Castilla Leon                                                                                            11    
        Valencia                                                                                                 10    
        Madrid                                                                                                    8    
        Asturias                                                                                                  4    
        Murcia                                                                                                    1    

        Based on market value, 97% of the group portfolio is in the retail sector followed by 3% in the office sector.

        The tenant profile is listed in the table below:

        Tenant profile
                                                                                                              Total    
                                                                                                          portfolio    
        % of gross income                                                                                         %    
        Large national and international tenants                                                                 91    
        Local tenant                                                                                              9    

        The tenant concentration risk is considered to be low as the top 10 tenants account for 30% of gross income. 
        AKI is the single largest tenant, occupying 6.1% of total GLA with Media Markt the second largest at 5.7% 
        of total GLA.

        List of total portfolio by value
                                                                                    Market                             
                                                                                     value   % of total   Valuation    
        Property                          Province               Sector     GLAm2    EUR'm    portfolio      EUR/m2    
        El Faro                        Extremadura      Shopping Centre    43 423    161.5         18.0       3 719    
        Bahia Sur                        Andalucia      Shopping Centre    24 760    119.5         13.0       4 826    
        Los Arcos                        Andalucia      Shopping Centre    17 906    114.3         13.0       6 383    
        Vallsur                      Castilla Leon      Shopping Centre    35 211     96.4         11.0       2 738    
        Habaneras                         Valencia      Shopping Centre    24 158     85.2          9.0       3 527    
        Centro Comercial Alameda         Andalucia          Retail Park    27 913     59.8          7.0       2 142    
        Parque Oeste de Alcorcon            Madrid          Retail Park    13 604     52.7          6.0       3 874    
        Kinepolis Retail Park            Andalucia          Retail park    18 508     34.1          4.0       1 842    
        Parque Principado                 Asturias          Retail Park    16 396     32.8          4.0       2 000    
        Marismas del Polvorin            Andalucia          Retail Park    20 000     29.1          3.0       1 455    
        Edificio Alcobendas                 Madrid              Offices    11 046     20.4          2.0       1 847    
        Merida                         Extremadura          Retail Park    13 447     20.0          2.0       1 487    
        Villanueva                     Extremadura          Retail Park    12 405     16.1          2.0       1 298    
        Kinepolis Leisure Centre         Andalucia      Shopping Centre     7 420     14.1          1.0       1 900    
        Pinatar Park                        Murcia          Retail Park    10 637     11.5          1.0       1 081    
        Motril                           Andalucia          Retail Park     5 559      8.9          1.0       1 601    
        Mejostilla                     Extremadura          Retail Park     7 281      8.7          1.0       1 195    
        Ciudad del Transporte             Valencia          Retail Park     3 250      7.2          1.0       2 215    
        Edificio Bollullos                                                                               
        de la Mitacion                   Andalucia              Offices     5 698      5.7          1.0       1 000    
        Total                                                             318 622    898.0        100.0       2 818    

    8.2 SPANISH PROPERTY PORTFOLIO VALUATIONS
        The Castellana and Morzal property portfolios comprising 19 properties, which include the two call centres 
        acquired in 2016, were valued by Colliers International at EUR897.9 million as at 30 September 2018. 

        The 11 retail parks acquired in July 2017 for EUR193.0 million have increased in value by 15.9% to 
        EUR223.6 million as a result of strong asset management initiatives. The Alameda and Pinatar properties 
        acquired in December 2017 have increased in value by 9.2% to EUR71.3 million. 

        The 4 properties acquired at a cost of EUR480.6 million were externally valued at EUR491.7 million at 
        30 September 2018, two months after the acquisition. 

    8.3 SPANISH PROPERTY PORTFOLIO PERFORMANCE
        Details of large contracts concluded
                                                                                               Annual         Lease      
                                                                                                 Rent      duration     
        Tenant                              Property                      Sector                  EUR         Years  
        Fransveta, S.L.                     Kinepolis Leisure Centre      Shopping Centre     155 000            15    
        Masquepet, S.L.U.                   Motril                        Retail Park          79 272            15    
        Tiendas Espacio Casa, S.L.          Villanueva                    Retail Park          74 304            14    
        Marvimundo, S.L.                    Habaneras                     Shopping Centre      97 161            10    
        Villanueva Pomodoro Global, S.L.    Villanueva                    Retail Park          44 694            20    
        Reji Car Tuning, S.L.               Kinepolis Leisure Centre      Shopping Centre      68 283            10    
        Worten Espana Distribucion, S.L.    Villanueva                    Retail Park          64 350             9    
        El Italoamericano, S.L.             Kinepolis Leisure Centre      Shopping Centre      35 466            15    
        Indaloretail, S.L.                  Centro Comercial Alameda      Retail Park          44 400             5    
        Restabell Franquicias, S.L.U.       Centro Comercial Alameda      Retail Park          65 484             3    

        Expiry profile 
        The Spanish properties' lease expiry profile table reflects that 2%, based on rent, of the leases are due 
        for renewal in the 2019 financial year. Approximately 47% of leases are due to expire in 2028 and beyond.

        Lease expiry                                                                   
        % of contractual               March  March  March  March  March  March  March  March  March  March  Beyond     
        rent (Expiry date)              2019   2020   2021   2022   2023   2024   2025   2026   2027   2028    2028
        Rent                              2%     7%     6%     5%     7%     6%     5%     3%     4%     8%     47%    
        Cumulative as                                                                                        
        at September 2018                 2%     9%    15%    20%    27%    33%    38%    41%    45%    53%    100%    

        Break profile
        Castellana's lease break profile table reflects that 7%, based on rent, of the leases have break options 
        in the 2019 financial year.

        The break profiles by expiry date and first break date are also shown by GLA below:
        % of contractual rent          March  March  March  March  March  March  March  March  March  March  Beyond     
        (First break date)              2019   2020   2021   2022   2023   2024   2025   2026   2027   2028    2028
        Rent                              7%    29%    18%     9%    14%     4%     5%     1%     -%     3%     10%    
        Cumulative as                                                                                        
        at September 2018                 7%    36%    54%    63%    77%    81%    86%    87%    87%    90%    100%    
                                                                                                             
        % of GLA                       March  March  March  March  March  March  March  March  March  March  Beyond 
        (Expiry date)          Vacant   2019   2020   2021   2022   2023   2024   2025   2026   2027   2028    2028
        GLA                        2%     1%     4%     3%     2%     3%     3%     3%     1%     3%    10%     65%    
        Cumulative as                                                                                        
        at September 2018          2%     3%     7%    10%    12%    15%    18%    21%    22%    25%    35%    100%    

        % of GLA (First break date)
        % of GLA                       March  March  March  March  March  March  March  March  March  March  Beyond
        (First break date)     Vacant   2019   2020   2021   2022   2023   2024   2025   2026   2027   2028    2028  
        GLA                        2%     4%    26%    16%    11%    12%     3%     6%     2%     -%     4%     14%    
        Cumulative as                                                                                        
        at September 2018          2%     6%    32%    48%    59%    71%    74%    80%    82%    82%    86%    100%    

        Vacancies
        At 30 September 2018, the portfolio's vacancy (measured as a percentage of GLA) was 1.8% compared to 2.8% 
        at 30 September 2017. 
        Vacancies (% of GLA)                                               30 September 2018      30 September 2017    
        Shopping Centre                                                                  3.4                   31.1    
        Retail Park                                                                      0.4                    1.7    
        Offices                                                                          0.0                    0.0    
        Portfolio vacancies                                                              1.8                    2.8    

        A reconciliation of GLA and vacancy movements for the six months is shown below:
        GLA summary                                                                                          GLA m2    
        Balance at 31 March 2018                                                                            172 974    
        GLA adjustments                                                                                         190    
        Disposals                                                                                                 -    
        Acquisitions and extensions                                                                         145 458    
        Balance at 30 September 2018                                                                        318 622    

        Vacancy summary                                                                           Area m2         %    
        Balance at 31 March 2018                                                                    4 924      2.8%    
        Vacancy on new acquisitions since 31 March 2018                                             4 579              
        Stable Portfolio                                                                           (3 660)              
        Balance at 30 September 2018                                                                5 843      1.8%    

        Base rentals (excluding recoveries)
        The weighted average monthly base rental rates per sector are set out in the table below:
                                                                                               September      March    
        Weighted average base rentals (EUR/m2) excluding recoveries                                 2018       2018    
        Shopping Centre                                                                             19.2        8.9    
        Retail Park                                                                                  9.2        9.2    
        Offices                                                                                      9.3        9.1    
        Weighted average base rentals                                                               14.0        9.2    
       
        Contractual rental escalation's in the European market are CPI linked.

        The Castellana asset management team have systematically added additional Net Operating Income (NOI) to 
        the portfolio through a combination of re-letting of vacant space in the portfolio (Alameda, Habaneras, 
        Motril), redevelopment projects (Kinepolis Leisure Centre) and value-add initiatives that increase rentals 
        through splitting up larger boxes into smaller spaces that command higher rental rates per m2 (Parque Oeste, 
        Huelva, Motril, Kinepolis Retail Park, Villanueva). The team will add EUR1.2 million of additional annualised 
        net operating income to the portfolio through these initiatives. This additional income will be fully 
        reflected for FY2020.

    8.4 DEVELOPMENTS AND ACQUISITIONS
        Acquisitions - Spanish retail
        In May 2018, Castellana acquired the Habaneras shopping centre for EUR83.8 million. The GLA of the centre is 
        24 158m2, the average unexpired lease term is 6.1 years with an occupancy rate of 95.8%. The shopping centre 
        has a 91.9% national tenant component. 
        
        Vukile announced on 31 July 2018 that its subsidiary, Morzal, had acquired four high quality shopping centres 
        in Spain at a cost of EUR480.6 million (including acquisition costs), at an attractive pre-gearing yield of 
        5.7%. The acquisition is in line with Vukile's strategy of increasing its international exposure to 
        developed Europe.
        
        The 5 shopping centres referred to above have a WALE of 5 years. The total GLA of the shopping centres is 
        145 458 m2 and  of gross revenue is derived from leading Spanish national and international retail tenants 
        including Media Markt, Decathlon, Carrefour, Inditex Group, Primark, AKI and Mercadona. The average monthly 
        rental of EUR19.68 per m2 across the centres is at the lower end of the market rental which is between EUR15 
        and EUR32 per m2, which is well positioned for income growth.
                                                                                          
                                                                                         Weighted          Purchase    
                                                                                          average      price of the    
                                                                                           rental          property    
        Property                                           Province        GLA m2          per m2             EUR'm    
        El Faro                                             Badajoz        43 423           16.70            157.36    
        Bahia Sur                                             Cadiz        24 760           24.72            120.92    
        Los Arcos                                           Seville        17 906           32.28            110.70    
        Vallsur                                          Valladolid        35 211           14.71             91.61    
        Habaneras                                          Alicante        24 158           17.80             83.81    
        Total                                                             145 458                            564.40    

        The weighted average rental per m2 for the total portfolio is EUR19.68.

        Kinepolis
        The Kinepolis redevelopment project is due to be completed in March 2019. The project is 99.5% let to strong 
        national food and beverage operators including Burger King and Muerde la Pasta. The project has upgraded 
        the finishes and increases natural light into the centre. A children's play area and outdoor plaza will be 
        added to the centre to improve the centre's appeal to families and take advantage of the region's favourable 
        weather. The centre will also be integrated with the adjacent Alameda centre to create a coherent retail 
        precinct.  The project is set to yield 10% on a capital expenditure of EUR5.5 million and should see an 
        increase in value on completion of the project.

        Asset management initiatives and increased letting
                                                                                         Additional      % increase      
                                                                        GLA signed       Annualised         in base
        Asset                                              Project            (m2)        NOI (EUR)         rentals   
        Parque Oeste Alcorcon                     Worten split box             843           43 278           6.55%    
        Huelva                                       C&A split box             150           15 984           5.86%    
        Motril                       Worten split box, vacancy let           1 639           23 066           5.21%    
        Kinepolis LC                                 Redevelopment           2 678          552 266          60.89%    
        Kinepolis RP                         Media Markt split box           1 230            4 998           0.82%    
        Villanueva                           Electrocasa split box           2 172          151 994          59.45%    
        Alameda                                        Vacancy let           1 946          201 322         100.00%    
        Habaneras                                      Vacancy let             692          208 924         100.00%    
        TOTAL                                                               11 350        1 201 832                    

        The percentage increase in base rentals for the above asset management initiatives amounts to 37.6%. 

9.  DECLARATION OF A CASH DIVIDEND WITH THE ELECTION TO REINVEST THE CASH DIVIDEND IN RETURN FOR VUKILE SHARES
    Notice is hereby given of the declaration of a dividend amounting to 78.10251 cents per share, out of 
    distributable income, for the six month period ended 30 September 2018.

    Shareholders will be entitled to elect (in respect of all or part of their holding) to reinvest the cash dividend 
    of 78.10251 cents per share, in return for shares (the dividend reinvestment alternative), failing which they will 
    receive the cash dividend in respect of (all or part of) their holdings.
    
    A circular providing further information in respect of the cash dividend and the dividend reinvestment alternative 
    will be posted to shareholders on Thursday, 29 November 2018.
    
    Shareholders who have dematerialised their shares are required to notify their duly appointed Central Securities 
    Depository Participant (CSDP) or broker of their election in the manner and time stipulated in the custody agreement 
    governing the relationship between the shareholder and their CSDP or broker.
    
    Tax implications
    Vukile was granted REIT status by the JSE Limited with effect from 1 April 2013 in line with the REIT structure as 
    provided for in the Income Tax Act, 58 of 1962, as amended (the Income Tax Act) and section 13 of the JSE Listings 
    Requirements.
    
    The REIT structure is a tax regime that allows a REIT to deduct qualifying dividends paid to investors, in 
    determining its taxable income.
    
    The cash dividend of 78.10251 cents per share meets the requirements of a qualifying distribution for the purposes
    of section 25BB of the Income Tax Act (a qualifying distribution) with the result that:
    - qualifying distributions received by resident Vukile shareholders must be included in the gross income of such 
      shareholders (as a non-exempt dividend in terms of section 10(1)(k)(i)(aa) of the Income Tax Act), with the 
      effect that the qualifying distribution is taxable as income in the hands of the Vukile shareholder. These 
      qualifying distributions are, however, exempt from dividends withholding tax, provided that the South African 
      resident shareholders provided the following forms to their CSDP or broker, as the case may be, in respect of 
      uncertificated shares, or the company, in respect of certificated shares:
      - a declaration that the dividend is exempt from dividends tax; and
      - 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 above mentioned documents 
      to be submitted prior to payment of the dividend, if such documents have not already been submitted.
    - qualifying distributions received by non-resident Vukile shareholders will not be taxable as income and 
      instead will be treated as ordinary dividends but which are exempt in terms of the usual dividend exemptions 
      per section 10(1)(k) of the Income Tax Act. Qualifying distributions are 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 shareholder. Assuming dividends withholding tax 
      will be withheld at a rate of 20%, the net dividend amount due to non-resident shareholders is 62.48201 cents 
      per share. A reduced dividend withholding rate in terms of the applicable DTA may only be relied upon if the 
      non-resident holder has provided the following forms to their CSDP or broker, as the case may be, in respect 
      of uncertificated shares, or the company, in respect of certificated shares:
      - a declaration that the dividend is subject to a reduced rate as a result of the application of a DTA; and
      - 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 
        holders are advised to contact their CSDP, broker or the company, as the case may be, to arrange for the 
        above mentioned documents to be submitted prior to payment of the dividend if such documents have not 
        already been submitted, if applicable.

    Shareholders who are South African residents are advised that in electing to participate in the dividend 
    reinvestment alternative, pre-taxation funds are utilised for reinvestment purposes and that taxation will 
    be due on the total cash dividend amount of 78.10251 cents per share.

    Shareholders are further advised that:
    - the issued capital of Vukile is 898 228 624 no par value shares before any election to reinvest the cash; and
    - Vukile's tax reference number is 9331/617/114/3.

    This cash dividend or share reinvestment alternative may have tax implications for resident as well as non-resident 
    shareholders. Shareholders are therefore encouraged to consult their tax and/or professional advisers should they
    be in any doubt as to the appropriate action to take.

    Summary of the salient dates relating to the cash dividend and dividend reinvestment alternative are as follows:
    Salient dates and times                                                                                    2018      
    Interim results including declaration 
    announcement released on SENS                                                             Thursday, 29 November    
    Circular and form of election posted to shareholders                                      Thursday, 29 November    
    Finalisation information including the share ratio and 
    price per share published on SENS                                                           Monday, 10 December    
    Last day to trade in order to participate in the election to receive 
    the dividend reinvestment alternative or to receive a cash dividend (LDT)                  Tuesday, 18 December    
    Shares trade 'ex' dividend                                                               Wednesday, 19 December    
    Listing of maximum possible number of shares under the dividend 
    reinvestment alternative and trading in new shares commences                                Friday, 21 December    
    Last day to elect to receive the dividend reinvestment alternative 
    or to receive a cash dividend (no late forms of election will 
    be accepted) at 12:00 (SA time)                                                             Friday, 21 December    
    Record date for the election to receive the dividend reinvestment 
    alternative or to receive a cash dividend (record date)                                     Friday, 21 December    
    Results of cash dividend and dividend reinvestment alternative published on SENS            Monday, 24 December    
    Cash dividends paid to certificated shareholders by electronic 
    funds transfer on or about                                                                  Monday, 24 December    
    Accounts credited by CSDP or broker to dematerialised shareholders 
    with the cash dividend payment                                                              Monday, 24 December    
    Share certificates posted to certificated shareholders on or about                        Thursday, 27 December    
    Accounts updated with the new shares (if applicable) by CSDP or broker 
    to dematerialised shareholders                                                            Thursday, 27 December    
                                                                                                               2019    
    Adjustment to shares listed on or about                                                    Wednesday, 2 January    

    Notes
    1. Shareholders electing the share reinvestment alternative are alerted to the fact that the new shares will be
       listed on LDT +3 and that these new shares can only be traded on LDT +3, due to the fact that settlement 
       of the shares will be three days after record date, which differs from the conventional one day after 
       record date settlement process.
    2. Shares may not be dematerialised or rematerialised between Wednesday, 19 December 2018 and Friday, 
       21 December 2018, both days inclusive.
    3. The above dates and times are subject to change. Any changes will be released on SENS.
    
    Foreign shareholders
    The distribution of the circular and/or accompanying documents and the right to elect shares under the dividend 
    reinvestment alternative in jurisdictions other than the Republic of South Africa may be restricted by law and 
    a failure to comply with any of these restrictions may constitute a violation of the securities laws of any such 
    jurisdictions. It is the responsibility of each foreign shareholder to satisfy himself as to the full observation 
    of the laws and regulatory requirements of the relevant foreign jurisdiction in connection with the share 
    reinvestment alternative. The shares have not been and will not be registered for the purposes of the election 
    under the securities laws of the United Kingdom, European Economic Area, Canada, United States of America, Japan 
    or Australia and accordingly are not being offered, sold, taken up, re-sold or delivered directly or indirectly 
    to recipients with registered addresses in such jurisdictions.

10. BASIS OF PREPARATION
    The unaudited condensed consolidated interim financial statements have been prepared in accordance with and 
    containing the information required by IFRS, IAS 34 - Interim Financial Reporting, the SAICA Financial Reporting 
    Guides as issued by the Accounting Practices Committee and Financial Reporting Announcements as issued by the 
    Financial Reporting Standards Council, the JSE Listings Requirements and the relevant sections of the South 
    African Companies Act.
    
    All amendments to standards applicable for Vukile's financial period beginning on 1 April 2018 have been 
    considered. All accounting policies applied in the preparation of these interim financial statements are 
    consistent with those applied by Vukile in its consolidated annual financial statements for the year ended 
    31 March 2018, other than the adoption of those amendments or new standards that became effective or were 
    early adopted in the current period. Note 1.3 to the financial statements explains these changes in further
    detail.
    
    Preparation of the unaudited condensed consolidated interim financial statements was supervised by 
    Michael Potts CA(SA) in his capacity as financial director. These unaudited condensed consolidated interim 
    financial statements have not been reviewed by Vukile's independent external auditors.

11. POST-PERIOD EVENTS
    Dividend
    Declaration of dividend
    In line with IAS 10 - Events after the Reporting Period, the declaration of the dividend of 78.10251 cents per 
    share in respect of the six month period ended 30 September 2018 amounting to R701.5 million occurred after the 
    reporting period, resulting in a non-adjusting event that is not recognised in the financial statements.

    Acquisition of immovable property
    Pretoria Kolonnade Retail Park
    After the reporting period, Vukile entered into an agreement to acquire the Pretoria Kolonnade Retail Park in 
    Montana Park, Pretoria. The effective date of the transaction was 1 November 2018, with a total purchase price 
    of R470.6 million. 
    
    Board changes
    Mr AD Botha resigned as independent non-executive director and chairman of the board at the annual general 
    meeting of the company held on 14 August 2018. The company thanks Mr Botha for his invaluable contribution, 
    wisdom and guidance during his time as chairman of the board since the company's listing in 2004. 
    
    Further to the SENS dated 3 September 2018, shareholders are advised that Mr E Bosch has resigned from Vukile 
    and that the current financial director, Mr MJ Potts, has withdrawn his intention to retire by 31 March 2019, 
    and will continue to occupy the role of financial director until further notice. 

12. PROSPECTS
    With the South African market continuing to be beset by macroeconomic challenges, Vukile is expected to continue
    benefiting from the defensive nature of its local retail portfolio as well as the geographic diversification 
    achieved through its increased investment in Spain as evidenced by the performance of the high quality, low risk 
    Castellana portfolio. 

    While still dependent on the local economy not worsening significantly from current levels, the full-year growth 
    in dividends is expected to be in line with the growth achieved in the first half of the current financial year 
    and is in line with the previous guidance provided. 

    On behalf of the board

    NG Payne      LG Rapp                    
    Chairman      Chief executive officer    

    Melrose Estate
    29 November 2018
    
    JSE sponsor: Java Capital, 6A Sandown Valley Crescent, Sandown 2146
    PO Box 522606, Saxonwold, 2132
    
    NSX sponsor: IJG Group, Windhoek, Namibia
    
    Executive directors: LG Rapp (chief executive), MJ Potts (financial director), HC Lopion (managing director: 
    southern Africa), GS Moseneke
    
    Non-executive directors: NG Payne (chairman), PS Moyanga, SF Booysen, RD Mokate, H Ntene, HM Serebro,
    B Ngonyama
    
    Registered office: Ground floor, One-on-Ninth, Cnr Glenhove Road and Ninth Street, Melrose Estate, 2196
    
    Company secretary: J Neethling
    
    Transfer secretaries: Link Market Services South Africa (Pty) Ltd,19 Ameshoff Street, Braamfontein, Johannesburg
    
    Investor and media relations: Instinctif Partners, The Firs, 3rd Floor, cnr Cradock and Biermann Road, Rosebank,
    2196, Johannesburg, South Africa, Telephone +27 11 447 3030
    Marketing Concepts, 1st Floor, Wierda Court, 107 Johan Avenue, Wierda Valley, Sandton, Johannesburg, 2196,
    Telephone +27 11 783 0700, Fax +27 11 783 3702

    www.vukile.co.za

Unaudited condensed consolidated statement of financial position
at 30 September 2018
                                                                       Unaudited          Unaudited         Audited    
                                                                       September       30 September        31 March     
                                                                            2018               2017            2018    
GROUP                                                                       R000               R000            R000    
ASSETS                                                                                                               
Non-current assets                                                    30 752 813         19 663 689      22 028 749    
Investment properties                                                 27 295 764         16 435 657      18 821 251    
Investment properties                                                 27 372 502         16 607 207      19 102 209    
Investment properties under development                                  208 859            150 598          54 476    
                                                                      27 581 361         16 757 805      19 156 685    
Straight-line rental income adjustment                                  (285 597)          (322 148)       (335 434)   
Other non-current assets                                               3 457 049          3 228 032       3 207 498    
Straight-line rental income asset                                        285 597            322 148         335 434    
Equity investments at fair value through profit and loss               1 392 924          1 357 556       1 384 645    
Investment in associate                                                1 326 700          1 290 589       1 199 292    
Goodwill                                                                  44 006             64 797          63 288    
Furniture, fittings, computer equipment and other intangible assets       11 080             13 240          12 054    
Executive share scheme financial asset                                    40 204             42 785          34 099    
Derivative financial instruments                                           8 168                  -          26 039    
Long-term loans granted                                                  237 452            109 360         103 672    
Deferred taxation assets                                                 110 918             27 557          48 975    
  Current assets                                                       1 045 906            684 712       1 287 893    
Trade and other receivables                                              218 900            240 931         186 743    
Derivative financial instruments                                           2 145                489               -    
Current taxation assets                                                   10 946                  2           7 290    
Cash and cash equivalents                                                813 915            443 290       1 093 860    
Non-current assets held for sale                                       2 057 190          1 189 508          10 500    
Total assets                                                          33 855 909         21 537 909      23 327 142    
EQUITY AND RESERVES                                                                                                    
Equity attributable to owners of the parent                           17 746 450         14 534 204      15 770 080    
Non-controlling interest                                               2 151 646             82 672          81 311    
Non-current liabilities                                               12 258 339          5 264 179       5 484 980    
Borrowings                                                            11 863 455          5 023 096       5 346 371    
Derivative financial instruments                                         387 288            231 896         131 304    
Deferred taxation liabilities                                              7 596              9 187           7 305    
  Current liabilities                                                  1 699 474          1 656 854       1 990 771    
Trade and other payables                                                 681 266            539 825         428 733    
Borrowings                                                             1 004 969          1 112 475       1 554 359    
Derivative financial instruments                                           5 876                  -             175    
Current taxation liabilities                                               7 363              4 554           7 504    
                                                                                                                       
Total equity and liabilities                                          33 855 909         21 537 909      23 327 142    
Net asset value (cents per share)(1)                                       2 027              1 917           2 010    
(1) Excluding non-controlling interest.

Unaudited condensed consolidated statement of profit and loss and other comprehensive income
for the six months ended 30 September 2018
                                                                       Unaudited          Unaudited         Audited    
                                                                    30 September       30 September        31 March     
                                                                            2018               2017            2018    
GROUP                                                                       R000               R000            R000    
Property revenue                                                       1 239 518            942 840       2 014 966    
Straight-line rental income accrual                                       20 252              4 947           5 401    
Gross property revenue                                                 1 259 770            947 787       2 020 367    
Property expenses                                                       (425 975)          (339 976)       (705 891)   
Net profit from property operations                                      833 795            607 811       1 314 476    
Corporate and administrative expenses                                    (96 588)           (56 801)       (127 474)   
Investment and other income                                               93 451            158 006         323 255    
Ineffectiveness on cross-currency interest rate swaps                    (32 447)                 -               -    
Net interest from cross-currency interest rate swaps                      74 334                  -               -    
Operating profit before finance costs                                    872 545            709 016       1 510 257    
Finance costs                                                           (246 810)          (171 601)       (367 808)   
Profit before capital items                                              625 735            537 415       1 142 449    
Profit on sale of investment properties                                        -              4 134          13 405    
Profit/(loss) on sale of furniture and equipment                              (3)                43             144    
Fair value (loss)/gain on listed property securities                       8 279            (37 740)        (16 411)   
Fair value movement of derivative financial instruments                        -             (3 961)          7 408    
Cost of terminating derivative financial instruments                           -                  -          (3 250)   
Executive share scheme financial assets - current period loss            (16 563)                 -               -    
Foreign exchange (loss)/profit                                           (51 136)          (103 054)         59 936    
Other capital items                                                            -               (248)              -    
Loss on sale of listed property securities                                     -                  -         (26 240)   
Fair value gain/(loss) on net settled derivative                          (1 341)                 -               -    
Profit before fair value adjustments                                     564 971            396 589       1 177 441    
Fair value adjustments                                                   369 052            558 501       1 149 988    
Gross change in fair value of investment properties                      389 304            563 448       1 155 389    
Straight-line rental income adjustment                                   (20 252)            (4 947)         (5 401)   
Profit before equity-accounted investment                                934 023            955 090       2 327 429    
Profit share of associate                                                 46 482             34 358          95 485    
Profit before taxation                                                   980 505            989 448       2 422 914    
Taxation                                                                 (16 594)            (8 986)        (10 668)   
Profit for the period                                                    963 911            980 462       2 412 246    
Profit attributable to:                                                                                                
Owners of the parent                                                     833 095            975 787       2 401 943    
Non-controlling interests                                                130 816              4 675          10 303    
Other comprehensive income/(loss) net of tax:                                                                           
Items that will be reclassified subsequently to profit or loss:                                                         
Currency gain/(loss) on translation of investment in                                                   
foreign entities                                                         222 681            231 200         (69 326)   
Currency gain/(loss) on translation of associate                         116 294                                       
Currency gain/(loss) on translation of subsidiaries                      106 387                                       
Currency gain/(loss) on translation of goodwill                            1 897                  -             279    
Cash flow hedges                                                          52 452            (26 850)        (60 202)   
Available for sale financial assets - current period loss                      -             (8 924)        (17 610)   
Other comprehensive income/(loss) for the period                         277 030            195 426        (146 859)   
Total comprehensive income for the period                              1 240 941          1 175 888       2 265 387    
Total comprehensive income attributable to:                                                        
Owners of the parent                                                   1 000 592          1 168 882       2 254 319    
Non-controlling interest                                                 240 349              7 006          11 068    
Basic and diluted earnings per share (cents)                                 102                137             321    
Number of shares in issue                                            875 339 319        758 041 475     784 766 367    
Vukile has no dilutionary shares in issue

Unaudited reconciliation of earnings to headline earnings
for the six months ended 30 September 2018
                                       Unaudited                    Unaudited                       Audited
                                   30 September 2018             30 September 2017               31 March 2018
                                  Group          Cents          Group           Cents          Group          Cents     
                                   R000      per share           R000       per share           R000      per share    
Attributable profit to                                                                  
owners of the parent            833 095         101.77        975 787          136.72      2 401 943         320.65    
Earnings per share              833 095         101.77        975 787          136.72      2 401 943         320.65    
Change in fair value                                                                    
of investment properties                                                                
(net of allocation to                                                                   
non-controlling interest)      (283 651)        (34.65)      (560 427)         (78.52)    (1 148 906)       (153.37)   
Profit on sale of                                                                
investment properties                 -              -         (4 134)          (0.58)       (13 405)         (1.79)   
Profit/loss on sale of                                                             
furniture, fittings, computer                                                             
equipment and other                   3              -            (43)          (0.01)          (144)         (0.02)   
Remeasurement included in                                                               
equity-accounted earnings                                                               
of associate                     (9 305)         (1.14)             -               -        (10 267)         (1.37)   
Headline earnings                                                                       
per shares                      540 142          65.98        411 183           57.61      1 229 221         164.10    
Weighted average                                                                        
number of shares in issue       643 584                   713 695 323                    749 084 702                   
Headline and diluted                                                                    
headline earnings per share                      65.98                          57.61                        164.10    
                               

Unaudited condensed consolidated statement of cash flow
for the six months ended 30 September 2018
                                                                       Unaudited          Unaudited        Audited    
                                                                    30 September       30 September       31 March     
                                                                            2018               2017           2018    
GROUP                                                                       R000               R000           R000    
Cash flow from operating activities                                      912 928            571 156      1 333 611    
Cash flow from investing activities                                   (6 914 925)        (2 282 336)    (4 599 117)   
Cash flow from financing activities                                    5 723 788            814 895      3 031 306    
Net decrease in cash and cash equivalents                               (278 209)          (896 285)      (234 200)   
Foreign currency movements in cash                                        (1 736)             9 630         (1 885)   
Cash and cash equivalents at the beginning of the period               1 093 860          1 329 945      1 329 945    
Cash and cash equivalents at the end of the period                       813 915            443 290      1 093 860    
Major items included in the above:                                                                                    
Cash flow from operating activities                                                                                   
Profit before tax                                                        980 505            989 448      2 422 914    
Adjustments                                                             (255 935)          (431 826)    (1 216 409)   
Cash flow from investing activities                                                                                   
Acquisition of and improvements to investment properties              (9 057 728)          (566 298)    (4 703 030)   
Investment in associate                                                        -           (417 829)      (418 287)   
Equity contribution from non-controlling interest in new subsidiary    1 784 121                  -              -    
Investment in a subsidiary                                                     -         (1 538 855)        13 649    
Net proceeds on sale of investment properties                                  -             19 925        175 316    
Cash flow from financing activities                                                                                   
Issue of shares                                                        1 697 242          1 038 004      1 556 631    
Dividends paid                                                          (757 729)          (627 940)    (1 180 331)   
Finance costs                                                           (209 349)          (167 521)      (352 990)   
Interest-bearing borrowings advanced                                   5 107 446            635 911      3 094 928    

Unaudited condensed consolidated statement of changes in equity
for the six months ended 30 September 2018
                                                                                                      
                                                   Other                                                              
                                                  compo-                       Share-           Non-                   
                                     Share      nents of      Retained       holders'    controlling                   
                                   capital        equity      earnings       interest       interest         Total    
GROUP                                 R000          R000          R000           R000           R000          R000    
Balance at                                                                                            
30 September 2017                9 008 818     5 139 972       385 414     14 534 204         82 672    14 616 876    
Issue of capital                   518 627             -             -        518 627              -       518 627    
Dividend distribution                    -             -      (550 744)      (550 744)        (2 741)     (553 485)   
                                 9 527 445     5 139 972      (165 330)    14 502 087         79 931    14 582 018    
Profit for the period                    -             -     1 426 156      1 426 156          5 628     1 431 784    
Change in fair value                                                                                  
of investment properties                 -       591 941      (591 941)             -              -             -    
Change in fair value of                                                                               
investment properties                                                                                 
attributable to                                                                                       
non-controlling interest                 -        (3 465)        3 465              -              -             -    
Share-based remuneration                 -        11 139             -         11 139              -        11 139    
Deferred taxation on change                                                                           
in fair value of derivatives             -        (2 931)            -         (2 931)             -        (2 931)   
Transfer to                                                                                           
non-distributable reserve                -       154 358      (146 021)         8 337              -         8 337    
Fair value movement on cross                                                                          
currency interest rate swaps             -       162 784             -        162 784              -       162 784    
Share issue expenses                                                                                  
of a subsidiary                          -          (850)            -           (850)           (11)         (861)   
Change in shareholding                                                                                
of subsidiary                            -         4 077             -          4 077         (2 671)        1 406    
Legal reserve transfer                                                                                
- foreign subsidiary                     -           217          (217)             -              -             -    
Revaluation of investments               -        21 329       (21 329)             -              -             -    
Other comprehensive loss                 -      (340 719)            -       (340 719)        (1 566)     (342 285)   
Balance at 31 March 2018         9 527 445     5 737 852       504 783     15 770 080         81 311    15 851 391    
Issue of capital                 1 697 242             -             -      1 697 242              -     1 697 242    
Dividend distribution                    -             -      (754 680)      (754 680)        (3 049)     (757 729)   
                                11 224 687     5 737 852      (249 897)    16 712 642         78 262    16 790 904    
Adjustment from initial                                                                               
application of IFRS 9:                   -       113 152       (88 278)        24 874            492        25 366    
Lease receivables:                                                                                    
Impairment provision                     -             -         4 541          4 541            266         4 807    
Deferred tax on above                    -             -        (1 707)        (1 707)           (56)       (1 763)   
Executive share scheme:                                                                               
change in classification                 -       113 152      (113 152)             -              -             -    
Borrowings: Non-substantial                                                                           
loan modification                        -             -        22 040         22 040            282        22 322    
Profit for the period                    -             -       833 095        833 095        130 816       963 911    
Change in fair value of                                                                               
investment properties                    -       389 304      (389 304)             -              -             -    
Change in fair value of                                                                               
investment properties                                                                                 
attributable to                                                                                       
non-controlling interest                 -      (105 653)      105 653              -              -             -    
Share-based remuneration                                                                              
transferred to                                                                                        
non-distributable reserve                -      (129 715)      129 715              -              -             -    
Change in fair value of                                                                               
equity investments                       -         8 279        (8 279)             -              -             -    
Share based remuneration                 -        11 382             -         11 382              -        11 382    
Fair value loss on                                                                              
net settled derivative                   -        (1 341)        1 341              -              -             -    
Ineffectiveness on                                                                                     
cross-currency interest                                                                               
rate swaps                               -       (32 447)       32 447              -              -             -    
Change in ownership                                                                                   
recognised in equity                     -        (3 040)            -         (3 040)     1 832 543     1 829 503    
Other comprehensive                                                                                   
income net of tax                                                                                     
Currency gain on translation 
of associate                             -       116 294             -        116 294              -       116 294    
Currency gain/(loss)                                                                                  
on translation of subsidiaries           -        (3 204)            -         (3 204)       109 591       106 387    
Currency gain on translation 
of goodwill                              -         1 897             -          1 897              -         1 897    
Cash flow hedges                         -        52 510             -         52 510            (58)       52 452    
Balance at 30 September 2018    11 224 687     6 155 270       366 493     17 746 450      2 151 646    19 898 096    
                                            

Summarised operating segment report
for the six months ended 30 September 2018
The group identifies and presents operating segments based on the information that is provided internally to 
the executive management committee (Exco). This forum reviews the performance of its offshore investments and  
investment properties held by the group, on an individual basis. Reportable segments for the six month period 
ended 30 September 2018, is consistent with that reported as at 31 March 2018. Exco, the group's operating 
decision-making forum, driven by its international strategy and the fact that in excess of 90% of the southern 
African portfolio is Retail, has taken a decision to aggregate operating segments and disclose such reportable 
segments on a geographical basis, namely: 
- Southern Africa;
- United Kingdom; and
- Spain.

The results of the operating segments are reviewed regularly by Exco to assess performance and make decisions to
allocate capital to each of the segments. The measurement policies that the group uses for segment reporting under 
IFRS 8 are the same as those used in its financial statements, except that the following items, inter alia, are not
included in arriving at operating profit of the operating segments:
- Corporate administrative expenditure
- Investment and other income.

Summarised operating segment report (continued)                                                                           
                                                   Southern Africa                                     Spain                      Group        
                                                                                United                                                 
                                            Retail      Other        Total     Kingdom      Retail      Other        Total        Total     
                                              R000       R000         R000        R000        R000       R000         R000         R000    
Group income for the six                                                                                                      
months ended 30 September 2018                                                                                                
Property revenue(1)                        653 849     67 402      721 251           -     289 742     19 400      309 142    1 030 393    
Straight-line rental income accrual         18 135      1 819       19 954           -         298          -          298       20 252    
Gross property revenue                     671 984     69 221      741 205           -     290 040     19 400      309 440    1 050 645    
Property expenses(1)                      (141 774)    (4 999)    (146 773)          -     (69 712)      (365)     (70 077)    (216 850)   
Net profit from property operations        530 210     64 222      594 432           -     220 328     19 035      239 363      833 795    
Corporate and administrative expenses            -                 (67 987)          -           -          -      (28 601)     (96 588)   
Investment and other income                  6 366     75 973       82 339           -       6 578      4 534       11 112       93 451    
Ineffectiveness on cross-currency                                                                                              
interest rate swaps                              -          -      (32 447)          -           -          -            -      (32 447)   
Net cash flow from cross-currency                                                                                             
interest rate swaps                              -          -       74 334           -           -          -            -       74 334    
Operating profit before finance costs            -          -      650 671           -           -          -      221 874      872 545    
Finance costs                              (36 536)  (138 899)    (175 435)          -     (68 632)    (2 743)     (71 375)    (246 810)   
Profit before capital items                      -          -      475 237           -                             150 498      625 735    
Loss on sale of furniture                                                                                            
and equipment                                    -          -           (3)          -           -          -            -           (3)   
Fair value gain on listed                                                                                              
property securities                              -          -        8 279           -           -          -            -        8 279    
Executive share scheme financial                                                                                              
assets - current period loss                     -          -      (16 563)          -           -          -            -      (16 563)   
Foreign exchange loss                            -          -      (51 136)          -           -          -            -      (51 136)   
Fair value loss on cash                                                                                                       
settled derivative                               -          -            -           -           -          -       (1 341)      (1 341)   
Profit before fair value                                                                                                      
adjustments                                      -          -      415 814           -                             149 157      564 971    
Fair value adjustments                     (38 686)   (11 029)     (49 715)          -     412 438      6 329      418 767      369 052    
Gross change in fair value                                                                                                    
of investment properties                   (20 551)    (9 210)     (29 761)          -     412 736      6 329      419 065      389 304    
Straight-line rental                                                                                                          
income adjustment                          (18 135)    (1 819)     (19 954)          -        (298)         -         (298)     (20 252)   
Profit before equity-accounted                                                                                                
investment                                       -          -      366 099           -           -          -      567 924      934 023    
Profit share of associate                        -          -            -      46 482           -          -            -       46 482    
Profit before taxation                           -          -      366 099      46 482           -          -      567 924      980 505    
(1) The property revenue and property expense have been reflected net of recoveries in terms of the Best 
    Practice Recommendations of the SA REIT Association. The unaudited condensed consolidated statement of 
    profit and loss reflects gross property revenue and gross property expenses.

Summarised operating segment report (continued)
                                                   Southern Africa                                     Spain                      Group      
                                                                                United                                                  
                                            Retail      Other        Total     Kingdom      Retail      Other        Total        Total 
                                              R000       R000         R000        R000        R000       R000         R000         R000   
Group statement of financial                                                            
position at 30 September 2018                                                                                    
Assets                                                                                                                                     
Non-current assets                               -          -   14 636 038   1 326 700           -          -   14 790 075   30 752 813    
Investment properties                    2 166 702    358 431   12 525 133           -  14 390 050    380 581   14 770 631   27 295 764    
Investment properties                    2 233 076    368 359   12 601 435           -  14 390 486    380 581   14 771 067   27 372 502    
Investment properties under                                                                                    
development                                208 859          -      208 859           -           -          -            -      208 859    
Straight-line rental                                                                                           
income adjustment                         (275 233)    (9 928)    (285 161)          -        (436)         -         (436)    (285 597)   
Other non-current assets                         -          -    2 110 905   1 326 700           -          -       19 444    3 457 049    
Straight-line rental income asset          275 233      9 928      285 161           -         436          -          436      285 597    
Equity investments at FVTPL                      -          -    1 392 924           -           -          -            -    1 392 924    
Investment in associate                          -          -            -   1 326 700           -          -            -    1 326 700    
Goodwill                                         -          -       27 039           -           -          -       16 967       44 006    
Furniture, fittings,                                                                                           
computer equipment and other                                                                                   
intangible assets                                -          -        9 892           -           -          -        1 188       11 080    
Executive share scheme                                                                                         
financial asset                                  -          -       40 204           -           -          -            -       40 204    
Derivative financial instruments                 -          -        8 168           -           -          -            -        8 168    
Long-term loans granted                          -          -      237 452           -           -          -            -      237 452    
Deferred taxation assets                         -          -      110 065           -           -          -          853      110 918    
Current assets                                   -          -      438 905           -           -          -      607 001    1 045 906    
Trade and other receivables                      -          -      183 162           -           -          -       35 738      218 900    
Derivative financial instruments                 -          -        2 145           -           -          -            -        2 145    
Current taxation assets                          -          -        2 046           -           -          -        8 900       10 946    
Cash and cash equivalents                        -          -      251 552           -           -          -      562 363      813 915    
Investment properties                                                                                          
held for sale                            1 036 783  1 020 407    2 057 190           -           -          -            -    2 057 190    
Total assets                                                                                                                 33 855 909    
Equity and NCI Liabilities                                                                                               -   19 898 096    
Non-current liabilities                          -          -    5 192 899           -           -          -    7 065 440   12 258 339    
Borrowings                                       -          -    4 810 588           -           -          -    7 052 867   11 863 455    
Derivative financial instruments                 -          -      381 889           -           -          -        5 399      387 288    
Deferred taxation liabilities                    -          -          422           -           -          -        7 174        7 596    
Current liabilities                              -          -    1 330 167           -           -          -      369 307    1 699 474    
Trade and other payables                         -          -      314 594           -           -          -      366 672      681 266    
Borrowings                                       -          -    1 004 969           -           -          -            -    1 004 969    
Derivative financial instruments                 -          -        5 876           -           -          -            -        5 876    
Current taxation liabilities                     -          -        4 728           -           -          -        2 635        7 363    
                                                                                                                                           
Total equity and liabilities                                                                                                 33 855 909    

Summarised operating segment report (continued)
                                                                                                  United          Spain           Group    
                                                               Southern Africa                   Kingdom                                   
                                                      Retail          Other           Total        Total          Total           Total     
GROUP                                                   R000           R000            R000         R000           R000            R000    
Group income for the six months                                                               
ended 30 September 2017                                                                                    
Property revenue(1)                                  597 495         65 440         662 935            -         65 659         728 594    
Straight-line rental income accrual                    1 191            139           1 330            -          3 617           4 947    
                                                     598 686         65 579         664 265            -         69 276         733 541    
Property expenses (net of recoveries)(1)            (112 035)        (8 949)       (120 984)           -         (4 746)       (125 730)   
Profit from property and other operations            486 651         56 630         543 281            -         64 530         607 811    
Profit from associate                                      -              -               -       34 358              -          34 358    
(1) The property revenue and property expense have been reflected net of recoveries     
    in terms of the Best Practice Recommendations of the SA REIT Association.           
    The unaudited condensed consolidated statement of profit and loss reflects          
    gross property revenue and gross property expenses.                                 
                                                                                        
Group statement of financial position 
at 30 September 2017
Assets                                                                                                                                     
Investment properties                             11 770 676      1 210 891      12 981 567            -      3 604 044      16 585 611    
Add: Lease commissions                                19 914          1 682          21 596            -              -          21 596    
                                                  11 790 590      1 212 573      13 003 163            -      3 604 044      16 607 207    
Goodwill                                              48 218              -          48 218            -         16 579          64 797    
Investment properties held for sale                1 118 508         71 000       1 189 508            -              -       1 189 508    
                                                  12 957 316      1 283 573      14 240 889            -      3 620 623      17 861 512    
Add: Excluded items                                                                                                                   -    
Investment property under development                150 598              -         150 598            -              -         150 598    
Equity investments                                         -              -       1 357 556            -              -       1 357 556    
Investment in associate                                    -              -               -    1 290 589              -       1 290 589    
Furniture, fittings, computer equipment                                                       
and other intangible assets                                -              -          13 066            -            174          13 240    
Available-for-sale financial asset                         -              -          42 785            -              -          42 785    
Derivative financial instruments                           -              -             489            -              -             489    
Loans receivable                                           -              -          88 897            -         20 463         109 360    
Deferred taxation assets                                   -              -          27 557            -              -          27 557    
Trade and other receivables                                -              -         211 306            -         29 625         240 931    
Taxation refundable                                        -              -               2            -              -               2    
Cash and cash equivalents                                  -              -         345 840            -         97 450         443 290    
Total assets                                               -              -      16 478 985    1 290 589      3 768 335      21 537 909    
Equity and liabilities                                                                                                                    
Stated capital                                     6 589 824      2 418 994       9 008 818            -              -       9 008 818    
Interest-bearing borrowings                        4 488 084         27 171       4 515 255            -      1 620 316       6 135 571    
                                                  11 077 908      2 446 165      13 524 073            -      1 620 316      15 144 389    
Add: Excluded items                                                                                                                        
Other components of equity and                                                                
retained earnings                                          -              -       5 515 984            -          9 402       5 525 386    
Non-controlling interest                                   -              -          49 765            -         32 907          82 672    
Derivative financial instruments                           -              -         231 896            -              -         231 896    
Deferred taxation liabilities                              -              -           9 187            -              -           9 187    
Trade and other payables                                   -              -         539 825            -              -         539 825    
Current taxation liabilities                               -              -           4 347            -            207           4 554    
Total equity and liabilities                               -              -      19 875 077            -      1 662 832      21 537 909    

Reconciliation of distributable earnings
                                                                    30 September       30 September          
                                                                            2018               2017       Variance  
                                                                            R000               R000              %    
Property revenue                                                       1 030 393            728 594             41    
Property expenses (net of recoveries)                                   (216 850)          (125 730)           (73)   
Net profit from property operations per segmental                                                      
report excluding straight-line rental income accrual                     813 543            602 864             35    
Corporate administration expenses                                        (96 588)           (56 801)           (70)   
Net cash flow from cross-currency interest rate swaps                     74 334                  -           >100    
Investment and other income                                               93 451            158 006            (41)   
Operating profit before finance costs                                    884 740            704 069             26    
Finance costs                                                           (246 810)          (171 601)           (44)   
Profit before taxation                                                   637 930            532 468             20    
Taxation                                                                 (16 594)            (8 986)           (85)   
Profit for the period                                                    621 336            523 482             19    
Dividends from associate                                                  46 482             34 358             35    
Profit for the period                                                    667 818            557 840             20    
Other capital items                                                            -               (248)          >100    
Net profit attributable to non-controlling interests                     (25 163)            (1 654)        (1 421)   
Attributable to Vukile group                                             642 655            555 938             16    
Non-IFRS adjustments                                                                                                  
Shares issued cum dividend                                                70 888             22 588            214    
Available for distribution                                               713 543            578 526             23    
Proposed dividend                                                        701 539                                      
Number of shares in issue at 30 September(1)                         875 339 319                                      
Dividend per share                                                      78.10251                                      
(1) An additional 22 889 305 shares were issued in terms of the Kolonade Retail Park acquisition post 30 September
    2018 and qualify for the above dividend. 

Notes to the condensed financial statements for the six months ended 30 September 2018

1.  COMPLIANCE WITH IFRS 
    1.1 Basis of accounting
        This is the first set of group financial statements where IFRS 15 and IFRS 9 have been applied. Changes to 
        significant accounting policies are described in Note 1.3.

    1.2 Use of estimates and judgements
        In preparing these interim financial statements, management has made judgements and estimates that affect the
        application of accounting policies and the reported amounts of assets and liabilities, income and expenses. 
        Actual results may differ from these estimates. The significant judgements made by management in applying the 
        group's accounting policies and the key sources of estimation uncertainty were the same as those described in 
        the last annual financial statements, except for new significant judgements and key sources of estimation 
        uncertainty related to the application of IFRS 9, which are described in Note 1.3.
        
        Estimates
        The revaluation of investment properties requires judgement in the determination of future cash flows from leases 
        and an appropriate reversionary capitalisation rate. Note 2.2 sets out further details of the fair measurement 
        of investment properties.

        Judgements
        Business combination versus asset acquisition
        Management assessed properties acquired and has concluded that in its view, except for Castellana (acquired 
        in a prior period), all acquisitions are property acquisitions in terms of IAS 40 - Investment Property and 
        are therefore accounted for in terms of that standard. Apart from Castellana, in the opinion of management, 
        these properties did not constitute a business as defined in terms of IFRS 3 - Business Combinations, as 
        there were no adequate processes identified within these properties to warrant classification as businesses.

    1.3 Change in accounting policies
        Except as described below, the accounting policies applied in these interim financial statements are 
        the same as those applied in the group's consolidated financial statements as at and for the year ended 
        31 March 2018. The changes in accounting policies are also expected to be reflected in the group's 
        consolidated financial statements as at and for the year ending 31 March 2019. The group has initially 
        adopted IFRS 15 - Revenue from Contracts with Customers and IFRS 9 - Financial Instruments from 
        1 April 2018. IFRS 15 does not have a material effect on the group's financial statements. 
        
        IFRS 9
        IFRS 9 sets out requirements for recognising and measuring financial assets and financial liabilities. 
        This standard replaces IAS 39 - Financial Instruments: Recognition and Measurement. The group has elected 
        not to restate comparatives on initial application. The group also elected to early adopt the IFRS 9 hedge 
        accounting requirements which is applied prospectively. 
        
        Hedge accounting: 
        IFRS 9 requires that the group's hedge accounting relationships are aligned with risk management 
        objectives and strategies and to apply a more qualitative and forward-looking approach in assessing 
        hedge effectiveness. 
        
        All hedging relationships designated under IAS 39 at 31 March 2018 met the criteria for hedge 
        accounting under IFRS 9 at 1 April 2018. The following table summarises the group's hedging 
        relationships under IFRS 9:

        Hedging instrument                      Hedged item                                Hedging relationship    
        Interest rate swaps                     Floating rate debt                         Cash flow hedge           
        GBP forward exchange contracts          GBP dividend income                        Net investment hedge      
        EUR forward exchange contracts          Net investment in a foreign operation      Net investment hedge      
        Cross currency interest rate swaps      Net investment in a foreign operation      Net investment hedge      
        EUR denominated debt                    Net investment in a foreign operation      Net investment hedge      
        
        Classification and measurement: 
        IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of 
        financial liabilities. However, it eliminates the previous IAS 39 categories for financial assets of held 
        to maturity, loans and receivables and available for sale. The adoption of IFRS 9 has not had a significant 
        effect on the group's accounting policies related to financial liabilities and derivative financial instruments.
        The following accounting policies apply to the subsequent measurement of financial assets:

        Financial assets at fair         These assets are subsequently measured at fair value. Net gains and
        value through profit             losses, including any interest or dividend income, are recognised        
        and loss (FVTPL)                 in profit or loss.

        Financial assets at              These assets are subsequently measured at amortised cost using the
        amortised cost                   effective interest method. The amortised cost is reduced by impairment
                                         losses. Interest income, foreign exchange gains and losses and
                                         impairments are recognised in profit or loss. Any gain or loss on
                                         derecognition is recognised in profit or loss.

        Equity investments at fair       These assets are subsequently measured at fair value. Dividends are
        value through other              recognised as income in profit or loss unless the dividend clearly
        comprehensive income (FVOCI)     represents a recovery of part of the cost of the investment. Other net
                                         gains and losses are recognised in OCI and are never reclassified to
                                         profit or loss.

        The following table explains the original measurement categories under IAS 39 and the new measurement 
        categories under IFRS 9 for each class of the group's financial instruments as at 1 April 2018. The 
        only change in classification relates to the executive share scheme that is now classified as fair 
        value through profit and loss:
            
        
                                                IAS 39                IFRS 9            IAS 39           IFRS 9     
        GROUP                           classification        classification       measurement      measurement    
        ASSETS
        Equity Investments          Fair value through    Fair value through         1 384 645        1 384 645    
                                       profit and loss       profit and loss 
                                                                 - mandatory
        Executive Share Scheme      Available-for-sale    Fair value through           (10 954)         (10 954)   
                                                             profit and loss 
                                                                 - mandatory
        Long term loans granted              Loans and        Amortised Cost           103 672          103 672    
                                           receivables
        
        Trade and other                      Loans and        Amortised Cost           186 743          178 346    
        receivables(1)                     receivables
        
        Cash and cash equivalents            Loans and        Amortised Cost         1 093 860        1 093 860    
                                           receivables
        Derivative                  Fair value through    Fair value through 
        financial instruments          profit and loss       profit and loss            26 039           26 039    
                                                                 - mandatory
        Total                                                                        2 784 005        2 775 608    

        LIABILITIES
        Executive Share Scheme      Available-for-sale    Fair value through            45 053           45 053    
                                                             profit and loss 
                                                                 - mandatory
        Borrowings                           Loans and        Amortised Cost         6 900 730        6 878 408    
                                           receivables
        
        Trade and other                      Loans and        Amortised Cost           428 733          428 733    
        payables                           receivables
        
        Shareholders                         Loans and        Amortised Cost                 -                -    
        for dividends                      receivables
 
        Derivative financial        Fair value through    Fair value through           131 479          131 479    
        instruments                    profit and loss       profit and loss
                                                                 - mandatory 
        Total                                                                        7 505 995        7 483 673    
        (1) Lease receivables continue to be measured in terms of IAS 17.

        Impairment of financial assets:
        IFRS 9 replaces the "incurred loss" model in IAS 39 with an "expected credit loss" (ECL) model. The 
        new impairment model applies to financial assets measured at amortised cost, lease receivables and 
        debt investments at fair value through other comprehensive income, but not to investments in 
        equity instruments.
        
        At each reporting date, the group assesses whether financial assets carried at amortised cost 
        (such as long-term loans granted) are credit-impaired. The group considers a financial asset to 
        be in default when:
        - the borrower is unlikely to pay its credit obligations to the group in full, without recourse by 
          the group to actions such as realising security (if any is held); or
        - the financial asset is more than 90 days past due.

        ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present 
        value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance 
        with the contract and the cash flows that the group expects to receive). 
        
        The group has elected to measure loss allowances for trade receivables (including lease receivables) at 
        an amount equal to lifetime ECLs by making use of the simplified impairment model. When estimating ECLs,
        the group considers reasonable and supportable information that is relevant and available without undue 
        cost or effort. This includes both quantitative and qualitative information based on the group's historical 
        experience and includes forward-looking information.

        The following analysis provides further detail about the calculation of ECLs related to lease receivables 
        on the adoption of IFRS 9. The group considers the model and some of the assumptions used in calculating 
        these ECLs as key sources of estimation uncertainty. The ECLs were calculated based on actual credit loss 
        experience over the past 12 months. The group performed the calculation of ECL rates separately for national 
        tenants, government entities, and other tenants.

        Exposures within each group were segmented based on common credit risk characteristics. The weighted 
        average loss rate was adjusted to reflect differences between economic conditions during the period over 
        which the historical data was collected, current conditions and the group's view of economic conditions 
        over the expected lives of the receivables. The following table provides information about the exposure 
        to credit risk and ECLs for lease receivables as at 1 April 2018:
       
                                                                           Gross                      Impairment     
                                                                        carrying       Weighted             loss    
                                                                          amount        average        allowance    
        GROUP                                                               R000      loss rate             R000    
        National tenants                                                                                            
        Current                                                            9 192         10.53%              968    
        30 days past due                                                   1 766         11.51%              203    
        60 days past due                                                     904         10.43%               94    
        90 days past due                                                     951         10.99%              104    
        120 days past due                                                    441         11.83%               52    
        150 days past due                                                  2 223         12.62%              281    
        South African Government                                                                                    
        Current                                                              401          6.17%               25    
        30 days past due                                                     316          9.63%               30    
        60 days past due                                                     168          9.63%               16    
        90 days past due                                                      57         10.24%                6    
        120 days past due                                                     68         11.56%                8    
        150 days past due                                                    191         15.60%               30    
        Namibian Government                                                                                         
        Current                                                              686         10.00%               69    
        30 days past due                                                     506         10.00%               51    
        60 days past due                                                     275         10.00%               27    
        90 days past due                                                     258         10.00%               26    
        120 days past due                                                    257         10.00%               26    
        150 days past due                                                  3 234         10.00%              323    
        Regular tenants                                                                                             
        Current                                                           12 365         28.54%            3 529    
        30 days past due                                                   5 825         36.91%            2 150    
        60 days past due                                                   4 112         38.51%            1 583    
        90 days past due                                                   3 511         44.77%            1 572    
        120 days past due                                                  3 437         49.87%            1 714    
        150 days past due                                                 40 966         55.01%           22 535    
        Other tenants                                                      5 889              -                -    

        Financial liabilities
        Under current IAS 39, a foreign subsidiary modified its financial liabilities without triggering derecognition. 
        Under IFRS 9, this modification resulted in an adjustment to opening retained earnings which will be amortised 
        over a six year period. 
        
        Conclusion
        The following table summarises the overall impact, net of tax, of the transition to IFRS 9: (R000)
             
                                                                               Non-
                                                                        controlling                               
                                         Opening                    interest net of                                  
                                        retained                       deferred tax     Impairment      Deferred    
                                        earnings      Borrowings            Dr/(Cr)      provision     tax asset    
                                         Dr/(Cr)         Dr/(Cr)                           Dr/(Cr)       Dr/(Cr)    
        Non-substantial loan                                                                          
        modifications                    (22 040)         22 322               (282)             -             -    
        Expected credit losses                                                                        
        on receivables                     6 423               -               (211)         8 397        (1 763)   

2.  MEASUREMENTS OF FAIR VALUE
    2.1 Financial instruments
        The following table presents financial assets and liabilities measured at fair value in the statement of 
        financial position in accordance with the fair value hierarchy. The level within which the financial asset 
        or liability is classified is determined based on the lowest level of significant input to the fair value.
      
                                                                                      30 September 2018
                                                                            Level 1       Level 2          Total    
        GROUP                                                                  R000          R000           R000    
        ASSETS                                                                                                      
        Equity investments at fair value through profit and loss          1 392 924             -      1 392 924    
        Executive share scheme financial asset                               73 054             -         73 054    
        Derivative financial instruments                                          -        10 313         10 313    
        Total                                                             1 465 978        10 313      1 476 291    
        LIABILITIES                                                                                                 
        Executive share scheme financial liabilities                              -       (32 850)       (32 850)   
        Derivative financial instruments (Note 1)                                 -       393 164        393 164    
        Total                                                                     -       360 314        360 314    
        Net fair value                                                    1 465 978       370 627      1 836 605    

        Note 1
        Derivative financial liabilities includes a net settled derivative of R1.3 million in respect of 
        the Morzal acquisition. The derivative has been valued using a Black Scholes Option pricing model 
        which assumes the efficient market hypothesis requiring that markets react to perfect information 
        and that share price movements are normally distributed. Although Castellana shares are listed but
        illiquid, the Black Scholes model still provides the best estimate of the value of this derivative. 
        
        On 31 July 2018, Vukile obtained a controlling interest in Morzal, with the minority partners being 
        Westbrooke Yield Plus (Westbrooke) and Morze European Real Estate Ventures (MEREV). The investment 
        agreement provided for a share swap of Morzal shares for Castellana shares on a 1 for 1 basis. The 
        share swap executed on 27 November 2017 reulted in the original shareholders of Morzal now holding a 
        proportionate number of Castellana shares, and Morzal becoming a 100% subsidiary of Castellana.
        
        The agreement grants Vukile the right to require MEREV to sell its Castellana shares to one or more 
        third parties. There is also a pre-emptive right in favour of Vukile should MEREV wish to sell its 
        Castellana shares to a third party. Should a trigger event or a repayment date occur, Castellana is 
        required to act as agent to sell MEREV's Castellana shares to a third party at a predetermined price. 
        In the event that Castellana does not successfully place the shares at the predetermined price, Vukile 
        will be required to make good the difference between the selling price and the predetermined rate, 
        namely will be required to net settle any shortfall.
        
        Similarly, Vukile has been awarded a pre-emptive right should Westbrooke wish to sell their shares 
        in Castellana. The agreement also provides for Westbrooke's monetisation right to request Castellana 
        to act as an agent to procure a purchaser for their Castellana shares, which purchaser could include 
        Vukile. Should Westbrooke's remaining Castellana shares not be purchased by a third party at a 
        predetermined price, Vukile will be obliged to net settle the difference between the selling price 
        and the predetermined rate. Should the monetisation right not be utilised, Vukile will have a Placement 
        Right to procure a third party to purchase the shares in Castellana.

                                                 30 September 2017                        31 March 2018
                                         Level 1     Level 2        Total        Level 1     Level 2        Total    
        GROUP                               R000        R000         R000           R000        R000         R000    
        ASSETS                                                                                                       
        Equity investments                                                                            
        at fair value through                                                                         
        profit and loss                1 357 556           -    1 357 556      1 384 645           -    1 384 645    
        Available-for-sale                                                                            
        financial asset                   71 519           -       71 519         79 152           -       79 152    
        Derivative financial                                                                          
        instruments                            -         489          489              -      26 039       26 039    
        Total                          1 429 075         489    1 429 564      1 463 797      26 039    1 489 836    
        LIABILITIES                                                                                                  
        Available-for-sale                                                                            
        financial liabilities                  -     (28 734)     (28 734)             -     (45 053)     (45 053)   
        Derivative financial                                                                          
        instruments                            -    (231 896)    (231 896)             -    (131 479)    (131 479)   
        Total                                  -    (260 630)    (260 630)             -    (176 532)    (176 532)   
        Net fair value                 1 429 075    (260 141)   1 168 934      1 463 797    (150 493)   1 313 304    
                                           
        There have been no significant transfers between levels 1 and 2 in the reporting period 
        under review.

        Measurement of fair value
        The methods and valuation techniques used for the purpose of measuring fair value are unchanged 
        compared to the previous reporting period.
        
        Equity investments
        This comprises shares held in listed property companies at fair value which is determined by 
        reference to quoted closing prices at the reporting date.
        
        Executive share scheme financial assets and liabilities (Previously: Available-for-sale financial 
        asset and liabilities)
        This comprises equity-settled share-based long-term incentive reimbursement rights, net of executive 
        rights, stated at fair value.
        
        Derivative financial instruments
        The fair values of these derivative instruments are determined by Absa Capital, Rand Merchant Bank, 
        Standard Bank, Nedbank, Investec Bank Limited, Banco Popular, Banco Santander and Caixabank using a 
        valuation technique that maximises the use of observable market inputs. Derivatives entered into by 
        the group are included in level 2 and consist of interest rate swap contracts, cross-currency interest 
        rate swaps and forward exchange contracts.

    2.2 Non-financial assets
        The following table reflects the levels within the hierarchy of non-financial assets measured at 
        fair value:
                                                                30 September       30 September          31 March     
                                                                        2018               2017              2018    
                                                                   Recurring          Recurring         Recurring     
                                                                  fair value         fair value        fair value     
                                                                measurements       measurements      measurements    
                                                                     Level 3            Level 3           Level 3    
        GROUP                                                           R000               R000              R000    
        ASSETS                                                                                                       
        Investment properties                                     27 372 502         16 607 207        19 102 209    
        Investment properties held for sale                        2 057 190          1 189 508            10 500    

        Fair value measurement of non-financial assets (investment properties)
        The fair value of commercial buildings is estimated using an income approach which capitalises the 
        estimated rental income stream, net of projected operating costs, using a discount rate derived from 
        market yields. The estimated rental stream takes into account current occupancy levels, estimates of 
        future vacancy levels, the terms of in-place leases and expectations of rentals from future leases 
        over the remaining economic life of the buildings.
        
        The most significant inputs are the discount rate and the reversionary capitalisation rate. The inputs 
        used in the valuations were:

                                                                              30 September 2018
                                                                                                Reversionary
                                                                   Discount rate            capitalisation rate
                                                                           Weighted                      Weighted     
        GROUP                                                    Range      average           Range       average    
        Southern Africa                                 12.4% to 17.5%        13.6%     7.4% to 13%          8.8%    
        Spain                                            7.5% to 10.3%         8.6%      5% to 9.1%            6%    
                                                                                                                             
                                                                            30 September 2017
                                                                                                Reversionary
                                                                   Discount rate            capitalisation rate
                                                                           Weighted                      Weighted    
                                                                 Range      average           Range       average    
        Southern Africa                                 12.8% to 19.6%        13.9%   7.8% to 15.1%          9.1%    
        Spain (at 30 June 2017)                          7.4% to 10.3%         8.4%    5.7% to 9.5%          6.5%    
                                                                                                                     
                                                                                31 March 2018
                                                                                                Reversionary
                                                                   Discount rate            capitalisation rate
                                                                           Weighted                      Weighted    
                                                                 Range      average           Range       average    
        Southern Africa                                 12.2% to 17.3%        13.4%   7.5% to 12.8%          8.6%    
        Spain                                            7.5% to 10.3%         8.8%      5% to 9.1%          6.1%    
       

        The estimated fair value would increase/(decrease) if the expected market rental growth was higher/(lower), 
        expected expense growth was lower/(higher), the vacant periods were shorter/(longer), the occupancy rate was 
        higher/(lower), the rent-free periods were shorter/(longer), the discount rate was lower/(higher) and/or the 
        reversionary capitalisation rate was lower/(higher).

    2.3 Investments outside South Africa
        The relevant exchange rates used to convert to Rand at the respective dates were as follows:

                                                            Spot rates at       Spot rates at       Spot rates at     
                                                             30 September        30 September            31 March     
                                                                     2018                2017                2018    
        EUR                                                       16.4069             16.0316             14.5730    
        GBP                                                       18.4125             18.1557             16.5889    

3.  ACQUISITION OF SUBSIDIARIES
    During the period under review, the group acquired two new subsidiaries in Spain which have been consolidated 
    since the acquisition date. Management concluded that in its view, these two acquisitions are property 
    acquisitions and are therefore accounted for in terms of IAS 40 - Investment Property. These properties did 
    not constitute a business as defined in terms of IFRS 3 - Business Combinations, as there were no adequate 
    processes identified within these properties to warrant classification as businesses.

                                                                          Purchase       Purchase                     
                                                                             price          price         Date of     
                                                                              R000         EUR000        purchase    
    Junction Parque Habaneras S.L.                                         636 390         42 700      08/05/2018    
    Morzal Property Iberia S.L.                                          1 827 888        119 000      27/07/2018    

4.  NON-CURRENT ASSETS HELD FOR SALE
    The group's investment in MICC Namibia and Vukile's non-retail, commercial and industrial portfolio are 
    held for sale in terms of IFRS 5. The non-current assets held for sale comprise of the following: 

                                                                                                     30 September     
                                                                                                             2018    
                                                                                                             R000    
    ASSETS                                                                                                         
    Investment Properties                                                                               1 965 922    
    Investment Properties                                                                               2 036 011    
    Straight-line rental income adjustment                                                                (70 089)   
    Straight-line rental income asset                                                                      70 089    
    Transfer of cash generating units goodwill from other non-current assets                               21 179    
    Non-current assets held for sale                                                                    2 057 190    

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