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DIA DIB
DIF
DIA/DIB - Dipula Income Fund - Unaudited condensed consolidated interim
results for the six months ended 29 February 2012
Dipula Income Fund
(Incorporated in the Republic of South Africa
(Registration number 2005/013963/06)
JSE code for A-linked units: DIA ISIN for A-linked units: ZAE000158317
JSE code for B-linked units: DIB ISIN for B-linked units: ZAE000158325
("Dipula" or "the company", and together with its subsidiaries, "the Fund")
Unaudited condensed consolidated interim results
for the six months ended 29 February 2012
Salient features for the period
- Actual distributions in line with Prospectus forecast
- Property rental income of R137,4 million
- Distribution per A-linked unit of 39,685 cents
- Distribution per B-linked unit of 27,741 cents
- Post reporting period acquisitions of R250 million concluded
as at 29 February 2012:
- Combined market capitalisation of A- and B-linked units of R1,5 billion
- Portfolio asset value of R2,1 billion
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
REVENUE
Property portfolio 142 752 48 849 110 171
Rental income 137 417 48 849 106 647
Straight-line rental income 5 335 - 3 524
accrual
Total revenue 142 752 48 849 110 171
Property expenses (30 755) (12 911) (27 394)
Administration and corporate (4 964) (2 050) (4 691)
costs
Net operating profit 107 033 33 888 78 086
Changes in fair values of (7 043) (7 697) 3 350
investment properties
Fair value (loss)/gain on (1 708) (7 697) 6 874
investment property
Adjustment resulting from (5 335) - (3 524)
straight-lining of rental
revenue
Profit from operations 99 990 26 191 81 436
Net finance charges (30 542) (36 037) (140 573)
Finance charges (31 176) (36 232) (140 895)
Finance income 634 195 322
Profit/(Loss) before debenture 69 448 (9 846) (59 137)
interest and taxation
Debenture interest (71 156) - (5 096)
Loss before taxation (1 708) (9 846) (64 233)
Taxation (8 589) 1 678 9 771
Loss for the period after (10 297) (8 168) (54 462)
taxation
Other comprehensive income - - -
Total comprehensive loss for (10 297) (8 168) (54 462)
the period attributable to
equity holders
Reconciliation of
(loss)/earnings,
headline(loss)/earnings and
distributable earnings
Loss for the period (10 297) (8 168) (54 462)
attributable to equity holders
Debenture interest 71 156 - 5 096
Earnings/(Loss) 60 859 (8 168) (49 366)
Change in fair value of 5 728 6 019 (3 006)
properties - net of deferred
taxation
Change in fair value of 7 043 7 697 (3 350)
properties
Deferred taxation (1 315) (1 678) 344
Headline earnings/(loss) 66 587 (2 149) (52 372)
attributable to linked
unitholders
Straight line rental income (3 841) (2 537)
accrual - net of deferred
taxation
Straight-line rental income (5 335) (3 524)
accrual
Deferred taxation 1 494 987
Deferred taxation asset raised 8 410 (11 102)
on tax losses and doubtful debt
provisions
Debt breakage costs - 71 107
Distributable earnings 71 156 5 096
attributable to linked
unitholders
Number of A-linked units in 105 532 393# * 105 532 393
issue
Number of B-linked units in 105 532 393# * 105 532 393
issue
Total number of linked units 211 064 786 * 211 064 786
Weighted average number of A- 105 532 393# * 4 336 948
linked units in issue
Weighted average number of B- 105 532 393# * 4 336 948
linked units in issue
Basic loss per share (cents) (4,88) * (627,88)
Headline loss per share (cents) (2,16) (662,54)
Basic earnings/(loss) per A- 34,81 * (560,60)
linked unit (cents)
Basic earnings/(loss) per B- 22,86 * (577,66)
linked unit (cents)
Headline earnings/(loss) per A- 37,52 * (595,26)
linked unit (cents)
Headline earnings/(loss) per B- 25,58 * (612,32)
linked unit (cents)
Distributable earnings per A- 39,685 * 2,77
linked unit (cents)
Distributable earnings per B- 27,741 * 2,06
linked unit (cents)
* The company had no linked units in issue during the 2011 financial year.
Instead 100 ordinary shares of R1,00 each were in issue. Based on this fact
basic loss per share was R81 630 per share and headline loss per share was
R21 440.
# Excluding 24 500 A-linked and 24 500 B-linked treasury linked units.
The company does not have any dilutionery instruments in issue.
Condensed consolidated statement of changes in equity
Stated
capital/ Fair
Share value Accumulated Total
capital reserve loss equity
R`000 R`000 R`000 R`000
Balance at 1 September - 111 589 (11 168) 100 421
2010
Total comprehensive loss - - (8 168) (8 168)
for the six months
Transfer of capital items - (6 620) 6 620 -
to fair value reserve
Balance at 28 February - 104 969 (12 716) 92 253
2011
Balance at 1 September 427 852 116 895 (70 936) 473 811
2011
Total comprehensive loss - - (10 297) (10 297)
for the six months
Transfer of capital items - (11 405) 11 405 -
to fair value reserve
Balance at 29 February 427 852 105 490 (69 828) 463 514
2012
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Cash flows from operating 63 111 3 471 (62 319)
activities
Cash generated from operations 98 749 39 508 78 254
Net finance costs (30 542) (36 037) (140 573)
Distributions paid (5 096) - -
Cash outflows from investing (4 498) (566) (517 840)
activities
Cash (outflows)/inflows from - (2 725) 603 978
financing activities
Net movement in cash and cash 58 613 180 23 819
equivalents
Cash and cash equivalents at the 25 260 1 441 1 441
beginning of the period
Cash and cash equivalents at the 83 873 1 621 25 260
end of the period
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
ASSETS
Non-current assets 2 155 581 805 158 2 155 581
Investment property 2 107 099 801 437 2 107 099
Goodwill 48 482 - 48 482
Other non-current assets - 3 721 -
Current assets 98 277 6 813 46 338
Trade and other receivables 14 404 5 192 21 078
Cash and cash equivalents 83 873 1 621 25 260
Non-current assets held for sale
Investment property held for 1 400 - 21 400
sale
Total assets 2 255 258 811 971 2 223 319
EQUITY AND LIABILITIES
Equity 463 514 92 253 473 811
Stated capital 427 852 - 427 852
Reserves 35 662 92 253 45 959
Non-current liabilities 1 686 964 268 070 1 677 216
Debentures 900 629 - 900 629
Interest-bearing liabilities 759 550 251 878 759 500
Deferred taxation 26 785 16 192 17 087
Current liabilities 104 780 451 648 71 182
Trade and other payables 33 624 14 907 66 086
Loans from related parties - 291 391 -
Interest-bearing liabilities - 145 350 -
Unitholders for distribution 71 156 - 5 096
Non-current liabilities held for
sale
Investment property held for - - 1 110
sale - Deferred taxation
Total equity and liabilities 2 255 258 811 971 2 223 319
Net asset value per A-linked 659,01 659,81
unit (excluding deferred
taxation) (cents)
Net asset value per B-linked 659,01 659,81
unit (excluding deferred
taxation) (cents)
Net asset value per A-linked 646,31 651,19
unit (cents)
Net asset value per B-linked 646,31 651,19
unit (cents)
Segmental information
For the six months ended 29 February 2012
Extracts from the Retail Industrial Offices Total
condensed consolidated
statement of
comprehensive income
R`000 R`000 R`000 R`000
Rental income 75 209 20 921 41 287 137 417
Property expenses (15 965) (5 854) (8 936) (30 755)
Net property income 59 244 15 067 32 351 106 662
Extracts from the
condensed consolidated
statement of financial
position
Investment property 1 124 730 332 300 650 069 2 107 099
For the six months ended
28 February 2011
Extracts from the Retail Industrial Offices Total
condensed consolidated
statement ofcomprehensive
income
R`000 R`000 R`000 R`000
Rental income 25 148 3 193 20 508 48 849
Property expenses (5 503) (787) (6 621) (12 911)
Net property income 19 645 2 406 13 887 35 938
Extracts from the
condensed consolidated
statement offinancial
position
Investment property 408 387 47 400 345 650 801 437
Notes
1. Basis of preparation
The unaudited condensed consolidated interim financial statements have been
prepared in accordance with the requirements of International Financial
Reporting Standards, the AC 500 series of interpretations, IAS 34: Interim
Financial Reporting, the JSE Limited ("JSE") Listings Requirements and the
requirements of the South African Companies Act, 2008, as amended. These
results have been prepared by the Financial Director, Brigitte de Bruyn,
CA(SA).
The accounting policies adopted are consistent with those applied in the
prior periods.
The directors are not aware of any matters of circumstances arising
subsequent to 29 February 2012 that require any additional disclosure or
adjustments to the financial statements.
These interim results have not been audited or reviewed by the company`s
external auditors.
2. Summary of financial performance
Unaudited Unaudited Audited
29 February 28 February 31 August
2012 2011 2011
Distribution per A-linked 39,69 N/A 2,77
unit (cents)
Distribution per B-linked 27,74 N/A 2,06
unit (cents)
A-linked units in issue 105 532 393 N/A 105 532 393
B-linked units in issue 105 532 393 N/A 105 532 393
Net asset value per combined 1 292,62 N/A 1 302,38
linked unit (cents)*
Net asset value per A-linked 646,31 N/A 651,19
unit (cents)
Net asset value per B-linked 646,31 N/A 651,19
unit (cents)
Gearing ratio (%)** 33,7 34,2
* Net asset value includes total equity attributable to equity holders and
linked debentures.
** The gearing ratio is calculated by dividing interest-bearing liabilities,
excluding linked debenture liabilities, by total assets.
3. Debt facilities
Margin Rate below
over jibar prime
for for
Fixed floating floating
Expiry Type Amount rate facility facility
R`million % % %
2015 Fixed 506,7 8,63
2016 Fixed 100,0 9,26
2016 Floating 137,3 2,04
2016 Floating 99,4 0,95
843,4
4. Payment of final distributions
The Board has approved and notice is hereby given of interim cash interest
distributions (distribution No. 2) of 39,685 cents per A-linked unit and
27,741 cents per B-linked unit for the period ended 29 February 2012 in
accordance with the abbreviated timetable set out below:
Last date to trade cum distribution Friday, 1 June 2012
Linked units trade ex distribution Monday, 4 June 2012
Record date Friday, 8 June 2012
Payment date Monday, 11 June 2012
Linked unit certificates may not be dematerialised or rematerialised between
Monday, 4 June 2012 and Friday, 8 June 2012, both days inclusive.
COMMENTARY
PROFILE AND PROPERTY PORTFOLIO
Dipula was formed in 2011 out of a merger between Mergence Africa Property
Fund and Dipula Property Fund ("the merger"), two majority black-owned
property funds. Dipula listed on the JSE on 17 August 2011 following a
successful capital-raising exercise.
Investors in Dipula can invest in either A-linked units or B-linked units or
both. A-linked units entitle the investor to a preferential 5% annual growth
in distributions until 2017, and thereafter distributions will grow at the
lower of 5% or CPI. B-linked unitholders receive all the residual income not
distributed to the A-linked unitholders, thus benefiting from any growth in
distributions above 5%.
The Fund has a well-diversified portfolio, both sectorally and
geographically, with a retail bias. The portfolio comprises 55% retail, 30%
office and 15% industrial properties by gross rental revenue. Approximately
75% of the portfolio is concentrated in Gauteng with properties in all eight
other provinces. The portfolio has a total of 175 properties spread
throughout South Africa.
The Fund is externally managed by Dipula Asset Management Trust with
exceptional BEE credentials in terms of management control and shareholding.
The Fund recently announced a transaction where management and a broad-based
consortium will acquire additional linked units. Management and the
consortium will then own up to 25% of Dipula. This will make Dipula the
listed Fund with the highest level of black ownership and management control.
Dipula invests in individual assets of between R20 million and R200 million
across all sectors throughout South Africa. The strategy is to prudently grow
the portfolio to R10 billion over the next four to six years, with specific
focus on sustainable income growth. Management will continue to ensure first-
class property and asset management whilst conservatively managing interest
rate and funding risks.
This set of interim results represents a six-month period ended 29 February
2012 and is Dipula`s maiden set of interim results since listing after having
reported for a 15-day period ended 31 August 2011 following its listing.
DISTRIBUTABLE INCOME
As a result of the merger and the acquisition of the Asakhe and Redefine
portfolios in August 2011, no comparison can be made to the prior year
earnings.
Actual earnings are in line with those presented in the forecast, with the B-
linked units benefitting from the marginally better than forecast
distributions mainly due to savings of costs and interest paid.
Actual
Six months
ended
29 February
2012
R`000
Distributable income
Property portfolio rental income 137 417
Property expenses (30 755)
Net property income 106 662
Administration and corporate costs (4 964)
Net interest paid (30 542)
Profit before debenture interest and taxation 71 156
Debenture interest (71 156)
Distribution per A-linked unit (cents) 39,685
Distribution per B-linked unit (cents) 27,741
For the six months ended 29 February 2012, A-linked unitholders will receive
39.855 cents per A-linked unit per their entitlement and B-linked unitholders
will receive the balance of the distributable income of 27,741 cents per B-
linked unit.
FINANCIAL RESULTS
Dipula has achieved its forecast distributions despite the challenging
economic climate. Net property income is substantially in line with the
Prospectus forecast. Positive variances from net interest paid as a result of
effective cash management and savings in operating expenses due to
efficiencies were achieved.
VACANCIES
Dipula has maintained a 95% retention rate on leases that came up for renewal
for the period under review. Vacancies have increased from 7.9% at listing to
8,9% at 29 February 2012. This has not impacted results as management`s
letting assumptions at listing were conservative.
ACQUISITIONS
On 20 December 2011 it was announced on SENS that the Fund had concluded
agreements for the acquisitions of Bochum and Blouberg Plaza and Nquthu Plaza
for a total consideration of R250 million. These retail acquisitions are in
line with the Fund`s strategy of improving the quality of its portfolio and
focusing on emerging market retail. All conditions precedent have been met
and transfer of the properties is imminent. This transaction will be
substantially funded by debt in an amount of R208 million, with the balance
of the consideration being funded by the issue of linked units.
DISPOSALS
The Fund has not disposed of any properties during the period under review,
but is implementing a strategy to dispose of smaller non-core properties.
FUNDING
Dipula has an all-in blended rate of funding of 8,59% and has fixed interest
debt of R506 million for 3.5 years and R100 million for 4.5 years
respectively. The floating facility of R236.9 million expires in
approximately four years. To ensure effective cash management, surplus cash
is deposited into the floating debt facility.
PROSPECTS
The global economic environment remains challenging as does the South African
economy with a forecast growth rate of around 2,5% for the year ahead.
Tenants, and consequently rentals achieved by landlords, will continue to be
under pressure. This is mainly as a result of fuel price increases,
electricity costs and municipal rates increases above inflation, and
secondary cost pressures throughout the economy that result from these
factors. This is further exacerbated by imported inflation due to sustained
Rand weakness. Despite these factors, the forecast for the year ending 31
August 2012 as presented in the Prospectus dated 28 July 2011, is expected to
be achieved. It is anticipated that the portfolio will continue to deliver
growth in 2013 and beyond. The forecast information presented in this
Prospects section has not been reviewed or reported on by the company`s
external auditors.
By order of the Board
Johannesburg
16 May 2012
Directors:
ZJL Matlala* (Chairperson)
IS Petersen (CEO)
BH Azizollahoff+
B de Bruyn (FD)
NS Gumede
E Links*
Y Waja*
* Independent non-executive
+ British
Registered office:
Block B Dunkeld Park
6 North Road, Dunkeld West, 2196
PO Box 875, Parklands, 2121
Transfer secretaries:
Link Market Services South Africa (Proprietary) Limited
Sponsor:
Java Capital
Company secretary:
Probity Business Services (Proprietary) Limited
Website: www.dipula.co.za
Date: 16/05/2012 13:00:01 Produced by the JSE SENS Department.
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