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INDLUPLACE PROPERTIES LIMITED - Summarised consolidated audited annual financial statements for the year ended 30 September 2018

Release Date: 14/11/2018 07:09
Code(s): ILU     PDF:  
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Summarised consolidated audited annual financial statements for the year ended 30 September 2018

INDLUPLACE PROPERTIES LIMITED  
(Incorporated in the Republic of South Africa)
(Registration number: 2013/226082/06)
JSE share code: ILU ISIN: ZAE000201125
(Approved as a REIT by the JSE)
("Indluplace" or "the company")

SUMMARISED CONSOLIDATED AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2018

Dividend of 97,75 cents per share

Investment property growth of 45%

Implementation of R1,4 billion of asset acquisitions

Nature of business
Indluplace is the first focused residential REIT listed on the main board of the JSE. Since listing in
June 2015 the company has grown its residential portfolio by over 265% to 9 788 units valued at about
R4,3 billion. Indluplace added 2 803 units in the last year, increasing its national footprint and the diversity
in the portfolio. Indluplace is a proudly South African property investor with a portfolio primarily focused
on the affordable end of the market and strives to assist in overcoming the shortage of rental housing in
South Africa by providing an exit for developers and owners of residential properties or portfolios, who
may reinvest the capital in additional properties. By utilising specialist outsourced property managers for
the respective portfolios, Indluplace ensures that its growing portfolio remains professionally managed
to provide positive investment returns, while providing value for money accommodation to all its tenants.

Summarised distributable income analysis for the year ended:

R/ AUDITED                                                                                    30 SEPTEMBER 2018   30 SEPTEMBER 2017   
Contractual rental income                                                                           563 481 852         330 048 127   
Net property expenses                                                                             (146 817 312)        (73 952 618)   
Net property income                                                                                 416 664 540         256 095 509   
DISTRIBUTABLE INCOME                                                                                                                  
Amount available for distribution                                                                   311 483 183         266 786 847   
Distributed for the six months/three months ended:                                                                                    
3 months ended - 31 December                                                                                  -        (57 654 491)   
3 months ended - 31 March                                                                                     -        (59 796 630)   
6 months ended - 31 March*                                                                        (154 738 052)       (117 451 121)   
3 months ended - 30 June                                                                                      -        (71 505 648)   
3 months ended - 30 September                                                                                 -        (77 830 078)   
6 months ended - 30 September*                                                                    (156 745 131)       (149 335 726)   
Dividend for the six months/three months ended:                                                           cents               cents   
3 months ended - 31 December                                                                                  -            23,82951   
3 months ended - 31 March                                                                                     -            24,71489   
6 months ended - 31 March*                                                                             48,56125            48,54440   
3 months ended - 30 June                                                                                      -            24,72452   
3 months ended - 30 September                                                                                 -            24,48003   
6 months ended - 30 September*                                                                         49,19113            49,20455   
Dividend for the year ended                                                                            97,75238            97,74895   
Property expense ratio - Net (%)                                                                           26,1                22,4   
Net asset value per share (cents)                                                                      1 009,30            1 029,98   
SHARES USED IN CALCULATION OF THE DIVIDENDS FOR THE SIX MONTHS/THREE MONTHS ENDED:                                                    
31 December                                                                                                             241 945 767   
31 March                                                                                           318 645 019^         241 945 767   
30 June                                                                                                                 289 209 449   
30 September                                                                                       318 645 019^      317 932 853(#)   

*   In line with the announcement released on SENS on 22 January 2018, dividends will be paid twice a year compared to quarterly as in 
    previous periods.
(#) Includes the 28 723 404 shares issued during October 2017.
^   Per IFRS 2, 22 440 285 shares that were issued to part fund the Buffet acquisition have been excluded from the number of shares in issue.

COMMENTARY

Revenue
Contractual rental income has increased from R330,0 million at 30 September 2017, to R563,5 million at 30 September 2018. 
The acquisition of Diluculo Properties (Pty) Ltd ("Diluculo"), with effect from 1 July 2017, combined with the Buffet portfolio acquisition,
with effect from 1 October 2017, accounts for R52,1 million and R186,1 million of the increase in revenue respectively.

Property portfolio
                                                                                           30 SEPTEMBER 2018    30 SEPTEMBER 2017
                                        Buildings                                                        176                  125
                                        Units                                                          9 788                6 859
Residential (including student units)
                                        Vacancy (%)                                                      8,4                  3,5
                                        Vacancy excluding Highveld View (refer below)(%)                 5,2
                                        GLA - m2                                                      18 163               14 803
Retail
                                        Vacancy (%)                                                      0,7                  1,0

RESIDENTIAL UNIT SPREAD             %   RESIDENTIAL UNIT CATEGORY                       %   EXPOSURE TO HEAD/BULK LEASES        %
                                                                                            (BUDGETED RENTAL INCOME FY2019)
Johannesburg suburbs               47   Rooms                                           7   No exposure                        86

Johannesburg inner city            31   Bachelors                                      14   Vanderbijlpark                     13
Pretoria/Midrand                   10   One bed                                        21   Other                               1
Witbank                             5   Two bed                                        47
Vanderbijlpark                      5   Three bed                                       9
Durban                              1   Other                                           2
Bloemfontein                        1
Total                             100   Total*                                        100                                     100
                                        * Including student units housing 2655 beds

The residential vacancy rate of 8,4% at the end of September 2018 was heavily impacted by a single property, Highveld View. Highveld View 
is situated in Witbank and has been impacted by the reduction in employment due to reduced Eskom activity and the consequential non-renewal 
of bulk residential contracts with contractors. If this building is excluded the vacancy rate for the remainder of the portfolio was 5,2%. 
We expect vacancies in the remainder of the portfolio to remain around these levels. We are looking at various options to deal with 
Highveld View, with a view to dispose of the property in the medium term.

Property Expenses
Property expenses have increased from R153,3 million to R253,1 million, which is in line with the increased property portfolio. The net 
property expense ratio of 26,1% is in line with expectations and the nature of our current portfolio.

Administration costs
Administration costs have increased from R13,4 million at 30 September 2017 to R15,9 million at 30 September 2018 which is in line with 
the expansion of the company's management team.

Finance income
R                                                              30 SEPTEMBER 2018    30 SEPTEMBER 2017
Interest on Share Purchase and Option Scheme                          20 627 583           18 662 768
Interest received on cash balances                                     6 716 799           12 782 274
Total                                                                 27 344 382           31 391 042

Finance income has decreased from R31,4 million to R27,3 million for the year ended 30 September 2018.

Finance charges
Finance charges increased from R26,0 million to R117,2 million for the period ended 30 September 2018, as a result of the Buffet transaction. 
The transaction was funded by way of a joint ABSA and Investec Bank loan facility of R1,3 billion in addition to a R200 million 
Standard Bank facility. The details of the facilities have been included in the note below.

Investment property
The increase in investment property relates to the acquisition of a residential property portfolio for R1,4 billion from the Buffet Group 
(as announced on SENS on 20 June 2017) comprising 2 803 units spread over 48 properties, including the two properties where the 50% not 
already owned by Indluplace, was acquired. This increased the number of residential properties in the portfolio to 176. In addition to the 
vendor shares issued to the Buffet Group to discharge the purchase price, an additional 22 440 285 shares valued at R240,8 million  were 
issued to the Buffet Group pursuant to the transaction. Indluplace provided the funding to the Buffet Group for the purchase of  these 
22 440 285 shares. The funding is secured by the pledge of shares issued to the Buffet Group and bears interest at  a rate equal to the 
dividends received on those shares. The security will be released on the payment of the outstanding amounts which can take place from year 
three, but the loans must be settled by year 10. The issue of shares using the proceeds of a loan made by the share issuer, when the loan 
is recourse only to the shares, is treated as an option grant, in which options are exercised on the date or dates when the loan is repaid. 
This is based on an International Financial Reporting Interpretations Committee agenda decision issued in November 2005. This option grant is 
accounted for in terms of IFRS 2, more specifically as an equity-settled share-based payment, valued using a Black Scholes option pricing model. 
The issue of these options to the Buffet Group was considered to be part of the acquisition costs of the properties and has therefore been 
capitalised to the cost of the investment property. A further impact of this is that the shares are not treated as being in issue, until 
such time as the debt is settled.

Trade and other receivables
Trade and other receivables increased from R68,7 million to R97,9 million. The increase relates to the increased portfolio and monthly billings. 
Of this amount, net trade receivables amounts to R2,5 million. The balance comprises municipal deposits, amounts receivable from property managers 
and the interest element relating to the loans to participants of the Indluplace Share Purchase and Option Scheme.

Cash in excess of R53,2 million, held by the company's property managers in trust accounts, is included in the aforesaid balance.

Cash and cash equivalents
Cash and cash equivalents decreased from R40,9 million at 31 September 2017 to R286 407 at 30 September 2018 as all available cash was placed 
in the company's access facilities. At 30 September 2018, Indluplace was able to draw down on R123 million in terms of its access facilities.

Stated capital
The increase in stated capital is as a result of the 28,7 million shares issued to part fund the acquisition of the Buffet portfolio.

Secured financial liabilities and derivative instrument
Loans increased to R1,3 billion from R200 million as a result of indluplace entering into a R1,3 billion joint facility with ABSA and
Investec banks comprising a R100 million access facility, a R685,7 million three year facility and a R514,3 million five year loan
facility. At year end, Indluplace was able to draw down on R194 million comprising R123 million in terms of access facilities and
R71 million in terms of undrawn facilities. Measured against investment properties, the loan to value ratio is 30,1% (2017 6,8%).

The interest rate swaps result in 81,3% of the total loan exposure being fixed at year end.

Loans workings
SECURED FINANCIAL LIABLITIES
                                                 MATURITY           DRAWN                               BASE     MARGIN
Standard Bank                                01 September 2019     150 000 000                 Prime             -1,26%
ABSA                                RCF      04 October 2020        13 500 000                 Prime             -1,35%
Investec                            RCF      04 October 2020        13 500 000                 Prime             -1,35%
ABSA                                3 year   04 October 2020       342 857 142                 3 month JIBAR      2,05%
Investec                            3 year   04 October 2020       342 857 142                 3 month JIBAR      2,05%
ABSA                                5 year   04 October 2022       212 163 437                 3 month JIBAR      2,20%
Investec                            5 year   04 October 2022       212 163 437                 3 month JIBAR      2,20%
                                                                 1 287 041 160

Hedging/SWAPS                                                         NATIONAL       FIXED RATE
Standard Bank                       3 year                         150 000 000           10,11%
ABSA                                3 year                         275 025 021            7,14%
Investec                            3 year                         275 025 021            7,14%
ABSA                                3 year                          28 484 987            7,35%
Investec                            3 year                          28 484 987            7,35%
ABSA                                5 year                         144 979 382             7,7%
Investec                            5 year                         144 979 382             7,7%
                                                                 1 046 978 780
Drawn debt fixed at year end:       81,3%
Average cost of debt at year end:   9,40%

Trade and other payables
Trade and other payables increased from R65,3 million to R77,2 million at 30 September 2018. The balance comprises trade
payables and accruals of R20,4 million, prepayment of tenant rentals of R15,5 million and deposits from tenants amounting to
R41,3 million.

Change in directorate
As published on SENS on 13 October 2017, Yondela Silimela was appointed to the company's board with effect from 1 November 2017.

Prospects
The board remains cognisant of the difficult environment in which Indluplace continues to operate. The weak local economy, high 
unemployment statistics and high increased cost of living have especially affected consumers and negatively impacted the company's 
ability to grow dividends in the short-term while making accurate forecasting in the short-term difficult. Taking into consideration 
the non-renewal of bulk contracts at Highveld View and the expected slow take-up of individual units, at lower market rentals than 
previously obtained Indluplace expects dividends for the next year to be down by between 3% and 10%. Indluplace remains positive 
about the investment case for the rental residential market in the longer term and will continue to look for opportunities in 
South Africa. In the short-term the focus will however be on disposing of non-performing and non-core assets, including gradually 
reducing its exposure to the remaining head leases and ensuring the rest of the diverse portfolio operates optimally to position 
the portfolio for long term, sustainable growth. Our experienced management team with industry leading property managers, have 
introduced various initiatives over the last year to improve tenant retention and the marketability of our units. The effects of 
these are expected to be seen in the medium-term.

This forecast has not been reviewed or reported on by the company's auditors. Given the nature of its business, Indluplace uses 
dividend per share as its key performance measure as it is considered to be a more relevant performance measure than earnings or 
headline earnings per share.

Annual general meeting
Indluplace's annual report for the year ended 30 September 2018, containing a notice of annual general meeting and incorporating 
the audited annual financial statements for the year ended 30 September 2018, will be posted in due course to shareholders who 
have requested that these items be posted to them.

Payment of dividend for the 6 months ended
30 September 2018
The board has declared a gross dividend of 49,19113 cents per share (dividend number 12) for the six months ended 30 September 2018, 
in accordance with the timetable set out below:

Last date to trade cum dividend
Tuesday, 4 December 2018
Shares trade ex dividend
Wednesday, 5 December 2018
Record date
Friday, 7 December 2018
Payment date
Monday, 10 December 2018

Shares may not be dematerialised or rematerialised between Wednesday, 5 December 2018 and Friday, 7 December 2018, both days inclusive.

Payment of the dividend will be made to shareholders on Monday, 10 December 2018. In respect of dematerialised shares, the dividend 
will be transferred to the Central Securities Depository Participant (CSDP)/ broker accounts on Monday, 10 December 2018. Certificated 
shareholders' dividend payment will be deposited on or about Monday, 10 December 2018.

Tax treatment of dividend
In accordance with Indluplace's status as a REIT, shareholders are advised that the dividend meets the requirements of a 
"qualifying distribution" for the purposes of section 25BB of the Income Tax Act, No. 58 of 1962 ("Income Tax Act"). 
The distribution on shares will be deemed to be a dividend, for South African tax purposes, in terms of section 25BB of the 
Income Tax Act.

The dividend received by or accrued to South African tax residents must be included in the gross income of such shareholders 
and will not be exempt from income tax (in terms of the exclusion to the general dividend exemption, contained in paragraph 
(aa) of section 10(1)(k)(i) of the Income Tax Act) because they are dividends distributed by a REIT. This dividend is, however, 
exempt from dividends withholding tax in the hands of South African tax resident shareholders, provided that the South African 
resident shareholders furnished 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) a declaration that the dividend is exempt from dividends
   tax; and

b) a written undertaking to inform the CSDP, broker or the
   company, as the case may be, should the circumstances
   affecting the exemption change or the beneficial owner
   cease to be the beneficial owner,

both in the form prescribed by the Commissioner for the South African Revenue Service. Shareholders are advised to contact their 
CSDP, broker or the company, as the case may be, to arrange for the above-mentioned documents to be submitted prior to payment 
of the dividend, if such documents have not already been submitted.

Dividends received by non-resident shareholders will not be taxable as income and instead will be treated as ordinary dividends 
which are exempt from income tax in terms of the general dividend exemption in section 10(1)(k)(i) of the Income Tax Act. 
Any dividend received by a non-resident from a REIT is subject to dividends withholding tax at 20%, unless the rate is reduced 
in terms of any applicable agreement for  the avoidance of double taxation ("DTA") between South Africa and the country of residence 
of the shareholders. Assuming dividend withholding tax will be withheld at a rate of 20%, the net dividend amount due to non-resident 
shareholders is 39,35290 cents per share. A reduced dividend withholding rate in terms of the applicable DTA, may only be relied on if 
the non-resident shareholders have provided the following forms to their CSDP or broker, as the case may be, in respect of uncertificated 
shareholders, or the company, in respect of certificated shareholders:

a) a declaration that the dividend is subject to a reduced rate
   as a result of the application of a DTA; and

b) a written undertaking to inform their CSDP, broker or the
   company, as the case may be, should the circumstances
   affecting the reduced rate change or the beneficial owner
   cease to be the beneficial owner,

both in the form prescribed by the Commissioner for the South African Revenue Service. Non-resident shareholders are advised to contact 
their CSDP, broker or the company, as the case may be, to arrange for the above-mentioned documents to be submitted prior to payment of 
the dividend if such documents have not already been submitted, if applicable.

The number of shares in issue at the date of declaration of this dividend was 341 085 402.

Indluplace's income tax reference number: 9390/649/177.

Dividend declaration after reporting date
In line with IAS 10 Events after the Reporting Period, the declaration of the dividend occurred after the end of the reporting period, 
resulting in a non-adjusting event which is not recognised in the financial statements.

Litigation statement
There are no legal or arbitration proceedings, including any proceedings that are pending or threatened, of which Indluplace is aware, 
that may have or have had during the previous 12 months, a material effect on the group's financial position.

Basis of preparation
These summarised consolidated audited annual financial statements for the year ended 30 September 2018 ("summarised results") have been 
prepared in accordance with the requirements of International Financial Reporting Standards, the SAICA Financial Reporting Guides as issued 
by the Financial Practices Committee as issued by the Financial Reporting Standard Council, IAS 34: Interim Financial Reporting, the 
JSE Listings Requirements and the requirements of the South African Companies Act, 2008. The accounting policies applied in the preparation 
of these summarised results are consistent with those of the previous annual financial statements. These summarised results have been 
prepared under the supervision of Terry Kaplan CA (SA), Indluplace's Financial Director.

These summarised results have been extracted from audited annual financial statements, but are not audited. The directors take full 
responsibility for the preparation of the abridged report and for ensuring that the financial information has been correctly extracted 
from the underlying audited annual financial statements. The auditors, Grant Thornton have issued an unmodified opinion on the 
annual financial statements for the year ended 30 September 2018 and a copy of the audit opinion, together with the underlying audited 
annual financial statements are available for inspection at the company's registered office.

Condensed consolidated statement of comprehensive income
FOR THE YEAR ENDED 30 SEPTEMBER 2018

R/ AUDITED                                                                                                                 2018            2017   
PROPERTY PORTFOLIO REVENUE                                                                                                                        
Contractual rental income                                                                                           563 481 852     330 048 127   
Recoveries                                                                                                          106 293 266      79 328 680   
Straight line rental income accrual                                                                                   2 774 044         513 434   
Total revenue                                                                                                       672 549 162     409 890 241   
Operating costs                                                                                                   (253 110 578)   (153 281 298)   
Administration costs                                                                                               (15 864 641)    (13 409 923)   
Net operating profit                                                                                                403 573 943     243 199 020   
Changes in fair values                                                                                            (141 851 379)      35 723 690   
Profit from operations                                                                                              261 722 564     278 922 710   
Net finance income                                                                                                 (89 827 109)       5 384 045   
Finance charges                                                                                                   (117 171 491)    (26 006 997)   
Interest received                                                                                                    27 344 382      31 391 042   
Profit before taxation                                                                                              171 895 455     284 306 755   
Taxation                                                                                                                      -               -   
Total comprehensive income for the period                                                                           171 895 455     284 306 755   
RECONCILIATION OF EARNINGS, HEADLINE EARNINGS AND DISTRIBUTABLE EARNINGS                                                                          
Profit for the year attributable to equity holders                                                                  171 895 455     284 306 755   
Change in fair value of properties                                                                                  148 337 819    (36 881 197)   
Deferred tax thereon                                                                                                          -               -   
Headline profit attributable to equity holders                                                                      320 233 274     247 425 558   
Number of shares in issue at year end                                                                              318 645 019^     289 209 449   
Number of shares in issue used for the calculation of dividend per share (last quarter)                            318 645 019^     317 932 853   
Weighted average number of shares in issue used for the calculation of earnings and headline earnings per share     317 646 864     253 384 729   
Basic and diluted earnings per share (cents)                                                                              54,12          112,20   
Headline earnings per share (cents)                                                                                      100,81           97,65   
Dividends per share (cents)                                                                                               97,75           97,75   

^ Per IFRS 2, 22 440 285 shares that were issued to part fund the Buffet acquisition have been excluded from the number of shares in issue.

Condensed consolidated statement of financial position
AS AT 30 SEPTEMBER 2018

R / AUDITED                                                                                                                2018            2017   
ASSETS                                                                                                                                            
Non-current assets                                                                                                4 483 743 613   3 137 624 685   
Investment property                                                                                               4 270 425 689   2 945 718 828   
Fair value of investment property portfolio for accounting purposes                                               4 264 401 331   2 942 468 514   
Straight line rental income accrual                                                                                   6 024 358       3 250 314   
Computer software                                                                                                       184 504         201 229   
Loans to participants of Indluplace Share Purchase and Option Scheme                                                208 526 646     191 704 628   
Derivative instruments                                                                                                4 606 774               -   
Current assets                                                                                                       98 184 154     109 686 991   
Trade and other receivables                                                                                          97 897 747      68 738 896   
Cash and cash equivalents                                                                                               286 407      40 948 095   
Total assets                                                                                                      4 581 927 767   3 247 311 676   
EQUITY AND LIABILITIES                                                                                                                            
Shareholders' interest                                                                                            3 216 099 141   2 978 791 568   
Stated capital                                                                                                    3 033 167 513   2 755 180 753   
Retained income                                                                                                     162 938 161     223 610 815   
Share based payment reserve                                                                                          19 993 467               -   
Other non-current liabilities                                                                                     1 136 849 338     203 211 727   
Secured financial liabilities                                                                                     1 136 849 338     199 599 178   
Derivative instruments                                                                                                        -       3 612 549   
Current liabilities                                                                                                 228 979 288      65 308 381   
Trade and other payables                                                                                             77 246 405      65 308 381   
Derivative instruments                                                                                                1 732 883               -   
Secured financial liabilities                                                                                       150 000 000               -   
Total equity and liabilities                                                                                      4 581 927 767   3 247 311 676   
Number of shares in issue                                                                                          318 645 019^     289 209 449   
Net asset value per ordinary share (cents)                                                                             1 009,30        1 029,98   

^ Per IFRS 2, 22 440 285 shares that were issued to part fund the Buffet acquisition have been excluded from the number of shares in issue.

Statement of changes in equity for the year ended 30 September 2018
FOR THE YEAR ENDED 30 SEPTEMBER 2018
                                                                                                                    SHARE BASED                   
R / AUDITED                                                                  STATED CAPITAL   RETAINED INCOME   PAYMENT RESERVE           TOTAL   
Balance at 30 September 2016                                                  2 274 536 709       184 353 830                 -   2 458 890 539   
Issue of shares                                                                 480 644 044                 -                 -     480 644 044   
Total comprehensive income for the year                                                   -       284 306 755                 -     284 306 755   
Dividends                                                                                 -     (245 049 770)                 -   (245 049 770)   
Balance at 30 September 2017                                                  2 755 180 753       223 610 815                 -   2 978 791 568   
Issue of shares                                                                 286 716 198                 -                 -     286 716 198   
Share buy-back                                                                  (8 729 438)                 -                 -     (8 729 438)   
Total comprehensive income for the year                                                   -       171 895 455                 -     171 895 455   
Share based payments                                                                      -                 -        19 993 467      19 993 467   
Dividends                                                                                 -     (232 568 109)                 -   (232 568 109)   
Balance at 30 September 2018                                                  3 033 167 513       162 938 161        19 993 467   3 216 099 141   

Consolidated statement of cash flow
FOR THE YEAR ENDED 30 SEPTEMBER 2018

R / AUDITED                                                                                                                2018            2017   
Net cash generated from utilised in operating activities                                                             61 460 477     (4 383 862)   
Cash generated from operations                                                                                      383 855 695     235 281 863   
Dividend paid                                                                                                     (232 568 109)   (245 049 770)   
Finance charges paid                                                                                              (117 171 491)    (26 006 997)   
Finance income received                                                                                              27 344 382      31 391 042   
Net cash utilised in investment activities                                                                      (1 310 438 501)   (516 705 648)   
Net acquisition of investment property                                                                         (1 312 383 136)*   (516 562 197)   
Net acquisition of computer software                                                                                   (50 900)       (143 451)   
Proceeds from disposal of assets                                                                                      1 995 535               -   
Net cash generated from financing activities                                                                      1 208 316 336     515 770 842   
Proceeds from share issue                                                                                          130 004 613*     464 733 045   
Proceeds from secured financial liabilities                                                                       1 210 041 161      50 000 000   
Share buy back                                                                                                      (8 729 438)               -   
Repayment of secured financial liabilities                                                                        (123 000 000)               -   
Loan from shareholder                                                                                                         -       1 037 797   
Net movement in cash and cash equivalents                                                                          (40 661 688)     (5 318 668)   
Cash and cash equivalents at the beginning of the year                                                               40 948 095      46 266 763   
Cash and cash equivalents at the end of the year                                                                        286 407      40 948 095   

* Excludes the non-cash flow effects of the 14 495 938 vendor shares that were issued at R9,65 to part fund the Buffet acquisition amounting 
to R139 885 802.

Condensed consolidated segmental analysis
Indluplace has increased its reportable segments to four based on the geographic split of the portfolio which are the entity's strategic 
business segments. For each strategic business segment, the entity's executive directors review internal management reports on a monthly basis. 
All segments are located in South Africa. There are no single major tenants. The following summary describes the operations for each of the entity's 
reportable segments.

2018
R / AUDITED                                      GAUTENG        FREE STATE          MPUMALANGA      KWAZULU NATAL              TOTAL
PROPERTY PORTFOLIO REVENUE
Contractual rental income and recoveries     623 328 763         3 254 706          35 604 831          7 586 817        669 775 118
Straight line rental income accrual            2 774 044                 -                   -                  -          2 774 044
Total revenue                                626 102 807         3 254 706          35 604 831          7 586 817        672 549 162
Operating costs                            (238 706 026)         (974 552)         (9 906 689)        (3 523 311)      (253 110 578)
                                             387 396 782         2 280 154          25 698 142          4 063 506        419 438 584
Administration costs                                                                                                    (15 864 641)
Net operating expense                                                                                                    403 573 943
Changes in fair values                                                                                                 (141 851 379)
Profit from operations                                                                                                   261 722 564
Net finance charges                                                                                                     (89 827 109)
Finance income                                                                                                            27 344 382
Finance charges                                                                                                        (117 171 491)
Profit before taxation                                                                                                   171 895 455
Taxation                                                                                                                           -
Total comprehensive income for the year                                                                                  171 895 455
Reportable segment assets                  3 985 836 536         26 770 615        255 188 416         50 326 978      4 318 122 544
Corporate segment assets                               -                  -                  -                  -        263 805 223
Reportable segment liabilities              (26 470 567)        (1 990 400)        (7 206 249)        (1 772 465)       (37 439 682)
Corporate segment liabilities                          -                  -                  -                  -    (1 328 388 944)
                                           3 959 365 968       (24 780 215)        247 982 167         48 554 513      3 216 099 141
2017
R / AUDITED                                      GAUTENG         FREE STATE         MPUMALANGA      KWAZULU NATAL              TOTAL
PROPERTY PORTFOLIO REVENUE
Contractual rental income and recoveries     363 098 186            783 450         45 495 171                  -        409 376 807
Straight line rental income accrual              513 434                  -                  -                  -            513 434
Total revenue                                363 611 620            783 450         45 495 171                  -        409 890 241
Operating costs                            (139 820 967)          (198 141)       (13 262 190)                  -      (153 281 298)
                                             223 790 653            585 309         32 332 981                  -        256 608 943
Administration costs                                                                                                    (13 409 923)
Net operating expense                                                                                                    243 199 020
Changes in fair values                                                                                                    35 723 690
Profit from operations                                                                                                   278 922 710
Net finance charges                                                                                                        5 384 045
Finance income                                                                                                            31 391 042
Finance charges                                                                                                         (26 006 997)
Profit before taxation                                                                                                   284 306 755
Taxation                                                                                                                           -
Total comprehensive income for the year                                                                                  284 306 755
Reportable segment assets                  2 851 959 169        23 338 558         325 902 763                  -      3 201 200 490
Corporate segment assets                               -                 -                   -                  -         46 111 186
Reportable segment liabilities              (16 988 203)      (23 338 558)         (8 622 615)                  -       (48 949 376)
Corporate segment liabilities                          -                 -                   -                  -      (219 570 732)
                                           2 834 970 966                 -         317 280 148                  -      2 978 791 568

R / AUDITED                                                                                    30 SEPTEMBER 2018   30 SEPTEMBER 2017   
RECONCILIATION OF COMPREHENSIVE INCOME TO DISTRIBUTABLE INCOME                                                                         
Total comprehensive income for the period                                                            171 895 455         284 306 755   
Change in fair value of derivative instruments                                                       (6 486 440)           1 157 508   
Change in fair value of properties                                                                   148 337 819        (36 881 197)   
Straight line rental income accrual                                                                  (2 774 044)           (513 434)   
Antecedent dividends                                                                                     510 393          18 717 215   
Amount available for distribution                                                                    311 483 183         266 786 847   
RECONCILIATION OF AMOUNT AVAILABLE FOR DISTRIBUTION FOR THE SIX/THREE MONTHS                                                           
Amounts available for distribution to shareholders                                                   311 483 183         266 786 847   
3 months ended - 31 December                                                                                   -        (57 654 490)   
3 months ended - 31 March                                                                                      -        (59 796 630)   
6 months ended - 31 March                                                                          (154 738 052)       (117 451 121)   
3 months ended - 30 June                                                                                       -        (71 505 648)   
Amount available for distribution for the six months/three months:                                   156 745 131          77 830 079   
Dividends per share (cents)                                                                                97,75               97,75   
Number of shares in issued at year end                                                              318 645 019^         241 945 767   

^ Per IFRS 2, 22 440 285 shares that were issued to part fund the Buffet acquisition have been excluded from the number of shares in issue.

By order of the Board
14 November 2018

Directors
T Adler (Chairperson)*, C Abrams*^, C de Wit (CEO), M Kaplan, T Kaplan (FD),
G Kinross*^ (Lead independent director), S Noik*, A Rehman*^, Y Silimela*^ ,
I Suleman.

*Non-executive, ^ Independent. All directors are South African.

Registered office
3rd Floor, 1 Sturdee Avenue, Rosebank, Johannesburg, 2196
PO Box 685, Melrose Arch, 2076.

Transfer secretaries
Computershare Investor Services Proprietary Limited

Sponsor
Java Capital

Company secretary
CIS Company Secretaries Proprietary Limited

www.indluplaceproperties.co.za

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