Vukile Property Fund Limited - INTEGRATED ANNUAL REPORTproperty portfolios in South Africa and Namibia and interests in other listed property companies. Synergy Income Fund Limited,

2016

I N T E G R AT E D ANNUAL REPORT

Vision Through our proactive

management and the

sustainable growth of our

predominantly retail-focused

portfolio, Vukile aspires to be

a leading property company

by providing a top-quality

experience for our tenants

and their customers and, in

so doing, generate superior

returns for our stakeholders.

CONTENTSAbout Vukile

IFC Vision1 Key stakeholders1 Corporate profile1 Integrated reporting and scope1 Approval1 Values2 Strategy4 Significant achievements6 Highlights8 Twelve-year review highlights

Business review

12 From the chairman14 From the chief executive

Governance review

22 Directorate26 Corporate governance and risk

management30 Social, ethics and human resources

committee report

Results and sustainability

Results38 Financial performance45 Portfolio review66 Partnerships

Sustainability68 Human capital68 Environment, health and safety69 Transformation and social

responsibility

Annual financial statements

72 Directors’ responsibility statement72 Company secretary’s certification73 Independent auditor’s report74 Directors’ report78 Report of the audit and risk

committee80 Statements of financial position82 Statements of profit and loss84 Statements of comprehensive income85 Statements of changes in equity87 Statements of cash flow

88 Notes to the annual financial statements

Shareholders’ information

158 Shareholders’ analysis159 Shareholders’ diary160 Corporate information

Notice of annual general meeting to be posted separately

Corporate profileVukile Property Fund Limited (Vukile or the group) is a retail-focused property company, which was listed on the JSE Limited on 24 June 2004 (JSE code: VKE) and on the Namibian Stock Exchange on 11 July 2007 (NSX code: VKN). Vukile’s market capitalisation was approximately R11.01 billion at 31 March 2016 and its property portfolio was valued at R15.7 billion at year-end. The value of the portfolio of listed strategic investments amounts to R1.1 billion. There were 647 667 287 shares in issue at year-end. On 1 April 2013, Vukile became the first property company to be awarded Real Estate Investment Trust (REIT) status by the JSE Limited.

Integrated reporting and scope The group takes pleasure in presenting its 12th annual report to stakeholders for the year ended 31 March 2016. This integrated annual report has been prepared to assist stakeholders in assessing Vukile’s ability to create and sustain value. Vukile’s approach is to report on the significant issues within the business along with material matters identified through engagement with its stakeholders. The company believes that by following this approach it is able to provide stakeholders with information that is relevant to their decision making and interaction with the group. This integrated annual report covers the group’s business, sustainability and financial activities from 1 April 2015 to 31 March 2016. In addition, material post-reporting date events and business developments are also covered in this report. Reporting is based on applicable legislation and accounting guidelines, the King III Report on Corporate Governance and JSE Listings Requirements.

The scope and boundaries of the information contained in this report describe the group’s business activities and property portfolios in South Africa and Namibia and interests in other listed property companies. Synergy Income Fund Limited, a 65.02% held listed subsidiary, has been included in the scope and boundaries of this report for the first time. This report aims to indicate how Vukile will create and sustain value for stakeholders over the short-, medium- and long-term.

Approval At its meeting held on 24 May 2016 the audit and risk committee reviewed and recommended the integrated annual report and the supplementary documents for approval by the directors. The directors acknowledge that they are responsible for the content of the Vukile integrated annual report and the supplementary documents. The board has applied its mind to this report and believes that, read with the supplementary documents made available online, it addresses all material issues and fairly represents the financial, operational and sustainability performance of the group.

For more information please visit our website:

www.vukile.co.za

VALUESWe act with integrity.

We make a difference as a team.

We are client focused.

We are passionate about success.

We deliver results to shareholders.

We treasure our partnerships.

We are responsible corporate citizens.

We are proactive.

KEY STAKEHOLDERS

Communities in which

we operate

Shareholders and debt funders

Service providers

and clients

Tenants and their

customers

Employees+ + + +

About Vukile

1

Vu

kile Integrated annual rep

ort 2016

STRATEGY

Optimise short-term and long-term returns

Notable achievements

Annual growth in distribution of 7.0% continues the unbroken record of growth in dividends since listing in 2004.

Delivered a compound annual growth rate in total return to shareholders of 21.7% over a 12-year period.

Growth in the retail portfolio of 23.3% over the past year, now valued at R10.5 billion.

Critical success factorsVukile has developed a strategy aimed at creating and sustaining value over the short-, medium- and long-term through operating a retail-focused fund. Our strategy is underpinned by the achievement of the following critical success factors (CSFs).

Strategic intent

Improve customer and tenant focus

Strategic intent

Minimise cost of funding and refinance risk

Strategic intent

Optimise short-term and long-term returns

Strategic intent

Stakeholder engagement

Strategic intent

Grow the portfolio

Strategic intent

Transformation

Strategic intent

Invest in our people

Strategic intent

Operational efficiencies Operational efficiencies

08

Transformation

06

Invest in our people

07

Optimise short-term and long-term

returns

01

Grow the portfolio

02

Improve customer and tenant focus

04

Minimise cost of funding and

refinance risk

05

Stakeholder engagement

03

Critical success factors

About Vukile

2

Vu


ort 2016

Delivering on stated strategyDuring the year under review, Vukile made significant progress in achieving and delivering on its critical success factors as reflected in the table below.

STRATEGY continued


Annual growth in dividends of 7.0% continues the unbroken record of growth in dividends since listing in 2004. Delivered a compound annual growth rate in total return to shareholders of 21.7% over a 12-year period.


Acquired a 26.1% stake in Atlantic Leaf Properties Limited. Growth in the total portfolio of 16.9% over the past year, now valued at R15.7 billion. Growth in the retail portfolio of 23.3% over the past year, now valued at R10.5 billion.


Ongoing interaction and communication with shareholders and debt providers. Strong relationships forged with property managers, ensuring their alignment with Vukile’s strategy. Further expanding our leasing broker network as a result of broker incentive programmes. Engaging with the communities in which our retail centres are located.


Further progress with Vukile Alternative Income Management (Vukile AIM) which will further seek to understand customer and tenant needs. Ongoing research in respect of lower LSM retail. Continuous engagement with major retailers and large office and industrial tenants.


Bank funding is diversified across five funding providers. Overall average cost of funding for the year of 8.5%. 86.4% of term debt funding hedged. Maintained an A-corporate credit rating and AA+ rating for the senior secured bonds.


Encha’s shareholding in Vukile comprises 7.9%. Encha’s effective shareholding under the property sector charter code comprises 26.6%. Board representation aligned with property sector charter requirements. Achievement of an Empowerdex B-BBEE certification at level 3 – 100% recognition level.


Maintained strong workforce having more than 230 years’ experience in the property industry. Stable and consistent workforce with very low staff turnover. Enhancing workforce diversity in respect of age, skill and race by the introduction of new finance, investment and alternative income skills.


Vacancies reduced to 3.9% despite the difficult trading environment, especially within the office sector. Positive lease reversions across all sectors, with a healthy 12.3% in retail. The ratio of net recurring cost to revenue was contained at 15.8%. Significant progress made with energy-saving initiatives and the reduction of net utility costs.

About Vukile

3

Vu


ort 2016

SIGNIFICANT ACHIEVEMENTSGrowth in retail focus

Total portfolio value:

R7.7 bnRetail portfolio value:

R3.7 bnRetail asset percentage:

48%

•›

•›

•›

� Acquisition of a 50% undivided share in East Rand Mall

•›

�Relaunch of Randburg Square following an extensive upgrade

•›

Acquisition of a 31.5%

stake in Fairvest Property Holdings – a lower LSM

market retail-focused property fund




54%

•›

•›

•›




63%

� Securing control of Synergy Income Fund Limited as a subsidiary

•›

�Acquisition of an80% stake in Moruleng Mall in partnership with Bakgatla-Ba-KgafelaSeptember 2013

•›

About Vukile

4

Vu


ort 2016

March 2013

February 2015

January 2014

March 2014

April 2015

March 2015

April 2013

OUR SUCCESS CONTINUES

Retail portfolio value:

R10.5 bn


R15.6 bn

Retail asset percentage:

67%

�Relaunch of Durban Workshop following an extensive upgrade

•›

•›

•›

•›

�Acquisition of Nonesi Mall in Queenstown•›

� Relaunch of Germiston Meadowdale Mall

following an extension and upgrade in partnership with

the Moolman Group

•›

�Acquisition of Bedworth Centre•›

SIGNIFICANT ACHIEVEMENTS continued

Growth in retail focus

About Vukile

5

Vu


ort 2016

June 2015

October 2015

November 2015

May 2016

March 2016

HIGHLIGHTS

Vukile has continued its proud track record of unbroken growth in dividends since listing. The results reflect a very strong operating performance and a continued improvement in the high quality of the portfolio. Retail now accounts for c.70% of the value of the fund.

Dividend of 83.126 cents per share

7.0%six months ended 31 March 2016

Increase in dividend of

7.0%146.35 cents per share

for the full year

Successful refinance of

R2 billion debt during the reporting period

Gearing ratio of

29.5% with 86.4% of debt hedged

Successful R760 million offshore investment through acquiring a

26.1% stake in Atlantic LeafProperties Limited

Successful equity raise of

R1.1 billion in May 2015

About Vukile

6

Vu


ort 2016

HIGHLIGHTS continued

Acquisition of an interest in two regional mall developments at a cost of

R600 million

Acquisition of four retail shopping centres at a total cost of

R1.2 billion

Achieved

level 3 B-BBEE rating

Vacancies reduced to

3.9% of GLA

About Vukile

7

Vu


ort 2016

Summarised income statements

Group2016R000

2015R000

2014R000

2013R000

2012R000

2011R000

2010R000

2009R000

2008R000

2007R000

2006R000

2005R000

Property revenue 2 096 400 1 579 099 1 389 625 1 166 940 933 269 836 124 742 072 673 285 612 727 553 480 567 688 400 954Straight-line rental income accrual 243 221 97 315 53 493 4 829 45 993 14 368 7 041 6 209 7 226 22 100 19 144 27 062Property expenses (780 584) (585 372) (516 517) (452 811) (334 421) (293 603) (267 061) (235 606) (208 851) (195 751) (201 174) (137 992)

Net profit from property operations 1 559 037 1 091 042 926 601 718 958 644 841 556 889 482 052 443 888 411 102 379 829 385 658 290 024Income from asset management business 2 074 24 694 92 654 77 974 53 317 65 146 10 208 – – – – –Expenditure from asset management business – (34 388) (38 917) (32 022) (30 792) (20 233) (7 141) – – – – –Corporate administrative expenses (84 288) (36 992) (34 964) (29 192) (25 919) (25 509) (23 781) (20 137) (20 914) (12 032) (21 598) (9 320)Investment and other income 99 337 76 269 64 279 25 615 13 557 14 380 21 188 8 712 9 262 12 122 4 355 2 438Income from associate 19 423 – – – – – – – – – – –

Operating profit before finance costs 1 595 583 1 120 625 1 009 653 761 333 655 004 590 673 482 526 432 463 399 450 379 919 368 415 283 142Finance costs (394 301) (273 498) (256 605) (194 285) (165 633) (161 803) (145 340) (131 358) (124 059) (139 022) (144 978) (110 865)

Profit before debenture interest 1 201 282 847 127 753 048 567 048 489 371 428 870 337 186 301 105 275 391 240 897 223 437 172 277Debenture interest – – (691 667) (554 368) (437 224) (403 948) (319 231) (288 755) (260 292) (213 088) (200 632) (149 582)

Profit before capital items 1 201 282 847 127 61 381 12 680 52 147 24 922 17 955 12 350 15 099 27 809 22 805 22 695

Headline earnings per share (cents) 168.00 186.81 163.68 136.16 134.48 124.36 107.89 99.56 91.36 83.19 74.14 72.91

Summarised statements of financial position

Group2016R000

2015R000

2014R000

2013R000

2012R000

2011R000

2010R000

2009R000

2008R000

2007R000

2006R000

2005R000

ASSETSInvestment properties 13 737 892 13 105 328 9 989 994 7 389 656 5 806 158 5 083 993 4 811 152 4 545 731 4 277 548 3 876 332 3 094 470 3 141 623Straight-line rental income adjustment (435 506) (281 206) (202 581) (148 411) (131 179) (99 153) (85 715) (79 024) (72 142) (66 036) (40 697) (29 105)Other non-current assets 2 223 295 805 735 951 825 529 061 501 650 502 579 546 733 166 845 199 984 127 511 124 194 88 155Current assets 831 794 621 451 626 399 1 351 664 266 881 409 218 261 066 89 935 77 844 223 382 99 357 41 029Investment properties held for sale 1 997 744 280 019 312 567 323 202 321 195 281 422 92 333 – 53 450 – 574 256 –

Total assets 18 355 219 14 531 327 11 678 204 9 445 172 6 764 705 6 178 059 5 625 569 4 723 487 4 536 684 4 161 189 3 851 580 3 241 702

EQUITY AND LIABILITIES Equity attributable to owners of the parent 11 932 574 9 830 646 3 108 689 2 626 187 2 074 470 1 696 065 1 381 502 1 145 101 1 095 851 836 137 482 739 207 621Non-controlling interest 556 681 516 317 – – – – – – – – – –Non-current liabilities 4 114 331 2 830 180 6 668 564 5 755 367 3 022 150 3 618 098 3 463 718 3 258 160 3 184 109 3 079 211 2 995 529 2 869 235

Linked debentures and premium – – 4 526 816 3 275 222 2 113 213 2 116 916 1 890 753 1 534 420 1 535 427 1 535 971 1 351 708 1 391 463Other interest-bearing borrowings 4 098 319 2 816 088 2 133 878 2 414 522 448 790 1 226 282 1 012 203 1 245 827 1 190 744 1 127 403 1 315 974 1 300 815Derivative financial instruments 5 269 12 919 – 59 330 25 644 21 867 28 136 16 493 – 7 720 47 166 20 562Deferred taxation liabilities 10 743 1 173 7 870 6 293 434 503 253 033 532 626 461 420 457 938 408 117 280 681 156 395

Current liabilities 1 751 633 1 354 184 1 900 951 1 063 618 1 668 085 863 896 780 349 320 226 256 724 245 841 373 312 164 846

Total equity and liabilities 18 355 219 14 531 327 11 678 204 9 445 172 6 764 705 6 178 059 5 625 569 4 723 487 4 536 684 4 161 189 3 851 580 3 241 702

TWELVE-YEAR REVIEW HIGHLIGHTS

About Vukile

8

Vu


ort 2016

Summarised income statements

Group2016R000

2015R000

2014R000

2013R000

2012R000

2011R000

2010R000

2009R000

2008R000

2007R000

2006R000

2005R000

Property revenue 2 096 400 1 579 099 1 389 625 1 166 940 933 269 836 124 742 072 673 285 612 727 553 480 567 688 400 954Straight-line rental income accrual 243 221 97 315 53 493 4 829 45 993 14 368 7 041 6 209 7 226 22 100 19 144 27 062Property expenses (780 584) (585 372) (516 517) (452 811) (334 421) (293 603) (267 061) (235 606) (208 851) (195 751) (201 174) (137 992)

Net profit from property operations 1 559 037 1 091 042 926 601 718 958 644 841 556 889 482 052 443 888 411 102 379 829 385 658 290 024Income from asset management business 2 074 24 694 92 654 77 974 53 317 65 146 10 208 – – – – –Expenditure from asset management business – (34 388) (38 917) (32 022) (30 792) (20 233) (7 141) – – – – –Corporate administrative expenses (84 288) (36 992) (34 964) (29 192) (25 919) (25 509) (23 781) (20 137) (20 914) (12 032) (21 598) (9 320)Investment and other income 99 337 76 269 64 279 25 615 13 557 14 380 21 188 8 712 9 262 12 122 4 355 2 438Income from associate 19 423 – – – – – – – – – – –

Operating profit before finance costs 1 595 583 1 120 625 1 009 653 761 333 655 004 590 673 482 526 432 463 399 450 379 919 368 415 283 142Finance costs (394 301) (273 498) (256 605) (194 285) (165 633) (161 803) (145 340) (131 358) (124 059) (139 022) (144 978) (110 865)

Profit before debenture interest 1 201 282 847 127 753 048 567 048 489 371 428 870 337 186 301 105 275 391 240 897 223 437 172 277Debenture interest – – (691 667) (554 368) (437 224) (403 948) (319 231) (288 755) (260 292) (213 088) (200 632) (149 582)

Profit before capital items 1 201 282 847 127 61 381 12 680 52 147 24 922 17 955 12 350 15 099 27 809 22 805 22 695

Headline earnings per share (cents) 168.00 186.81 163.68 136.16 134.48 124.36 107.89 99.56 91.36 83.19 74.14 72.91

Summarised statements of financial position

Group2016R000

2015R000

2014R000

2013R000

2012R000

2011R000

2010R000

2009R000

2008R000

2007R000

2006R000

2005R000

ASSETSInvestment properties 13 737 892 13 105 328 9 989 994 7 389 656 5 806 158 5 083 993 4 811 152 4 545 731 4 277 548 3 876 332 3 094 470 3 141 623Straight-line rental income adjustment (435 506) (281 206) (202 581) (148 411) (131 179) (99 153) (85 715) (79 024) (72 142) (66 036) (40 697) (29 105)Other non-current assets 2 223 295 805 735 951 825 529 061 501 650 502 579 546 733 166 845 199 984 127 511 124 194 88 155Current assets 831 794 621 451 626 399 1 351 664 266 881 409 218 261 066 89 935 77 844 223 382 99 357 41 029Investment properties held for sale 1 997 744 280 019 312 567 323 202 321 195 281 422 92 333 – 53 450 – 574 256 –

Total assets 18 355 219 14 531 327 11 678 204 9 445 172 6 764 705 6 178 059 5 625 569 4 723 487 4 536 684 4 161 189 3 851 580 3 241 702

EQUITY AND LIABILITIES Equity attributable to owners of the parent 11 932 574 9 830 646 3 108 689 2 626 187 2 074 470 1 696 065 1 381 502 1 145 101 1 095 851 836 137 482 739 207 621Non-controlling interest 556 681 516 317 – – – – – – – – – –Non-current liabilities 4 114 331 2 830 180 6 668 564 5 755 367 3 022 150 3 618 098 3 463 718 3 258 160 3 184 109 3 079 211 2 995 529 2 869 235

Linked debentures and premium – – 4 526 816 3 275 222 2 113 213 2 116 916 1 890 753 1 534 420 1 535 427 1 535 971 1 351 708 1 391 463Other interest-bearing borrowings 4 098 319 2 816 088 2 133 878 2 414 522 448 790 1 226 282 1 012 203 1 245 827 1 190 744 1 127 403 1 315 974 1 300 815Derivative financial instruments 5 269 12 919 – 59 330 25 644 21 867 28 136 16 493 – 7 720 47 166 20 562Deferred taxation liabilities 10 743 1 173 7 870 6 293 434 503 253 033 532 626 461 420 457 938 408 117 280 681 156 395

Current liabilities 1 751 633 1 354 184 1 900 951 1 063 618 1 668 085 863 896 780 349 320 226 256 724 245 841 373 312 164 846

Total equity and liabilities 18 355 219 14 531 327 11 678 204 9 445 172 6 764 705 6 178 059 5 625 569 4 723 487 4 536 684 4 161 189 3 851 580 3 241 702

TWELVE-YEAR REVIEW HIGHLIGHTS continued

About Vukile

9

Vu


ort 2016

Business review

10

Vu


ort 2016

Continued growth in the portfolio of high-quality shopping centres.

Launch of international investment strategy.

Business review

11

Vu


ort 2016

Anton BothaChairman

From the chairman I am pleased to report that

Vukile continued to build on its solid track record for investors.

StrategyVukile has now established a proud 12-year unbroken track record of growth in dividends and net worth per share. During this time, it has delivered a total annualised return of 21.7% to shareholders, grown its total portfolio from R3.1 billion to R15.6 billion, and increased its market capitalisation from R1.3 billion to R11.01 billion. The portfolio now comprises 104 properties with an average market value of R150 million per property. During its first seven years, Vukile grew to a mid-size South African property company. Shareholders did very well during this period when Vukile grew its dividends much faster than the market and achieved a top-decile total return to shareholders. Five years ago, when Laurence Rapp took over as CEO, Vukile started a major reconstruction of its portfolio. To achieve long-term sustainable growth, it changed its portfolio by introducing larger higher-quality assets and selling smaller lower-quality assets. This was largely achieved in 2015 and set the stage for the next phase in its strategic development.

FROM THE CHAIRMAN

Business review

12

Vu


ort 2016

The current strategy aims to further improve Vukile’s quality and size. During the year, significant progress was made in its retail focus. Retail properties now comprise about 70% of the portfolio, and transactions to change the Southern Africa portfolio to mostly retail are under way. Retail properties have been more stable and showed higher growth than office or industrial, thus leading to a higher-quality portfolio. Vukile also entered into its first venture outside of southern Africa with the acquisition of 26.1% of Atlantic Leaf Properties. It is a strategic partnership that currently invests in low-risk, long-lease UK properties. Further advances on this strategy are planned. Using financial gearing to partially fund Vukile’s portfolio is important to lower its cost of capital. Vukile has always used debt conservatively. Its debt-to-asset ratio is managed at less than 35% and is currently below 30%. Interest rates are hedged well into the future. This prudent approach makes the company very robust and it is in a position to quickly act on new opportunities. Vukile continues to be a robust, high- quality property fund and its strategy should take it further on this road in the foreseeable future.

Operating environmentConcern for lower growth in China and possible higher interest rates in the world occupy the global economic stage, while African growth has slowed down, mostly due to low commodity prices. In Southern Africa, the local context remains challenging with a weakening economy, depreciating currency and political volatility. Limited economic growth, rising interest rates, and the looming threat of sovereign credit downgrade make it difficult to do business. Business confidence is diminished and so too, is consumer confidence. Vukile’s retail portfolio is more robust than most others in South Africa as it caters for the lower middle-income group, which continues to grow faster than the national average. However, the portfolio as a whole

should find trading more difficult in the year ahead. A weak Rand inhibits expansion in the foreign portfolio, but is enhancing current income. In this environment, dividends are still expected to grow in the 2017 financial year.

The Vukile boardThe board strives for the highest standards of corporate governance. It comprises a considered balance of high-level property experience, financial skills and independent oversight. Sonja de Bruyn Sebotsa resigned from her position as an independent non-executive director of the board on 23 November 2015. She has been a valued board member and the contribution she made as a director and member of the social, ethics and human resources committee over the past two and half years, is highly appreciated. We wish her well. AcknowledgementsVukile is most dependent on the shoppers of its malls and the tenants in all its buildings. We appreciate their continued support and strive to make their choice of Vukile-owned centres more rewarding. Our property managers are essential to our success, and the role played by JHI, Broll, Encha and McCormick is highly appreciated. I thank Laurence Rapp and his executive and management team for delivering this most commendable performance. Their hard work, energy and innovation can be seen in our positioning and performance. It is also reflected in the promising new direction Vukile is taking. Thanks must go to my fellow directors for the informed perspectives, insight and sage judgement they bring to the board’s deliberations. We thank Vukile’s shareholders and debt providers for their confidence in our company and continued support. Vukile will strive to continue to provide value to them by becoming a stronger, more robust and profitable company in which to invest.

FROM THE CHAIRMAN continued

DIVIDEND GROWTH (%)

47.6

63.8

111.

413

.4

52.2

68.2

120.

411

.2

54.8

71.7

126.

513

.8

59.1

77.7

136.

8

63.2

83.1

146.

3

■ Interim ■ Final ■ Normalised total ■ Non-recurring

Mar-12 Mar-13 Mar-14 Mar-15 Mar-16

3 23

4

3 74

1

5 47

2

8 52

1

10 5

07


GROWTH IN RETAIL ASSET VALUE(Rm)

16%

46%

56%

23%

84

97

130

144 15

0


AVERAGE VALUEPER PROPERTY(Rm)

Business review

13

Vu


ort 2016

Vukile has produced a solid set of results that are on target and show a very impressive operational performance. We remain conservatively geared and achieved real growth in dividends for our investors.

We have expanded our horizons, yet continue to build a portfolio of assets for lasting success, reflecting our belief that property is a long-term endeavour.

Vukile is in a confident position as a high-quality, low-risk, retail-focused fund with a growing and sustainable earnings profile.

FROM THE CHIEF EXECUTIVE

From the chief executive

This has been another successful year for

Vukile. We stayed true to our stated strategy

and delivered key achievements, growing

our portfolio of high-trading shopping centres, improving

the quality of our properties and launching our international

investment strategy.

Laurence RappChief executive

Business review

14

Vu


ort 2016

Performance overviewVukile’s distribution increased 7.0% on the prior year, despite a tough operating environment, to deliver results in line with market guidance. This was achieved notwithstanding a large R12.9 million provision created for incorrect municipal billings, without which our distribution growth would have exceeded 8.0%.

On a like-for-like basis, net property income grew by a pleasing 5.8%, with a strong performance from our mainstay retail portfolio at a growth of 6.7%. On a like-for-like basis, gross property revenue increased by 5.6% where costs were controlled well with recurring property expenses increasing by 7.4%, keeping our total net costs ratio largely unchanged at 15.8%.

Yet again, the macro-economic environment was extremely challenging during the year, but Vukile’s experienced, hands-on asset management team succeeded in delivering excellent operational results. Our portfolio is in an exceptionally healthy position. We have improved vacancies to attractive lows, costs were well contained, our portfolio value has increased and average property values are up.

Importantly, we have grown our retail property portfolio significantly. Vukile’s prudent programme of asset acquisitions, developments and upgrades, and disposals are all aimed at consolidating its position as a retail-focused fund.

In terms of direct assets, Vukile is now largely a retail property fund. Nearly 70% of our direct-owned portfolio comprises retail assets.

We now have 104 properties in our portfolio. The value of our physical properties grew by 17% year-on-year, from R13.346 million to R15.597 million (excluding the 20% non-controlling interest in Moruleng Mall). Further, these values are calculated conservatively with an average discount rate of 14.2% and an average exit capitalisation rate of 9.7%. Our portfolio grew by nearly 90 000m2 of GLA to 1.43 million m2 of gross lettable commercial real estate area.

Vukile’s average value per property increased from R144 million to R150 million. Our average value per retail property is now R228 million.

We are still seeing the problem of government administered expenses growing at rates faster than inflation, which certainly puts pressure on the ability of tenants to absorb increases in rentals. Yet, rental reversions are positive across the entire portfolio by 9.1% and exceptionally strong for retail at 12.3%. This shows the high quality of the Vukile retail portfolio, which achieves very strong footfall from shoppers and trading densities among tenants. As a result, we experience consistent demand for space at our shopping centres.

We have noted, however, that smaller, independent line stores are bearing the brunt of the economic downturn. This has resulted in bad debts edging up slightly, albeit within the levels of our provisions at a conservative 1.34% of rentals. Guarding against this risk, 81% of our retail portfolio is occupied by national retailers that represent strong, low-risk leases.

Overall portfolio vacancies based on GLA improved from 4.6% to a remarkable 3.9%. Retail vacancies remain stable at a low 3.5%. Office vacancies made a dramatic improvement from 10.2% to 5.0%. Coming off an exceptionally low base of 1.9%, our industrial portfolio vacancies adjusted to 4.3%. Sovereign portfolio vacancies decreased from 5.9% to 4.2%.

In our high-quality, low-risk portfolio, the top 10 assets – of which eight are now retail properties – represent 32.4% of the value of the overall portfolio. We also have the benefit of a diverse tenant base, without sizeable exposure to any one large single tenant. Our top 10 tenants represent only 39% of overall tenant exposure.

70% of leases to be renewed during the period were renewed or are in the process of being renewed, and leases over 33% of the portfolio’s gross lettable area will now expire in March 2020 and beyond.

FROM THE CHIEF EXECUTIVE continued

6.1

6.8

6.5

4.6

3.9


VACANCY (% of GLA)

4.4

8.2

4.5

5.6

9.1


LEASE RENEWALS(% ESCALATION ON EXPIRY RENTALS)

17.2 18

.7

16.3

15.5

15.8


RATIO OF NET RECURRING COST TO PROPERTY REVENUE(%)

Business review

15

Vu


ort 2016

New leases were concluded for the portfolio marginally below budget, mainly because of our industrial portfolio. New rentals on our retail portfolio were achieved 6% ahead of our budgeted market rentals, office rentals were in line with budget, however, new rentals on industrial properties were down by 15%. While rentals on new industrial leases underperformed this year, tenants for these properties were prepared to sign longer leases with higher escalations for a lower starting rental.

The contractual escalation for the portfolio as a whole is 7.6%. This is broken down into 7.5% for both retail and office properties, 8.1% for the industrial portfolio and 8.9% for our sovereign leases.

Weighted average base rentals grew 6.4% over the year to R96.71/m2, with retail increasing 6% to R114.61/m2. The ability to continually achieve increases in escalations in a difficult trading environment confirms our portfolio is not over-rented.

Alternative income managementVukile’s asset management team benefits from specialists with deep retail expertise. To round this out, we have created an internal division to drive alternative income streams, primarily from our retail portfolio.

Besides creating new income streams, which we believe will have significant future potential, it also boosts our intellectual capital about consumers and how best to engage shoppers at our centres.

Across our portfolio of 46 shopping centres, Vukile has on average around 13 million monthly customer visits. Malls such as East Rand Mall, Durban Workshop and Pine Crest have average monthly footfall in excess of 1 million customers. We recognise the inherent value in our customer base and are keen to grow our knowledge of and interaction with our shoppers.

We are centralising certain elements of marketing expertise within our business to create a core competence. Our internal

expertise will form a central knowledge base within Vukile in line with our growth as a South African retail property fund. This will leverage the scale of our significant portfolio of dominant shopping centres. However, we will also rely on the local execution for promotional activities. In addition, our alternative income management will generate customer data and statistics to better understand our portfolio.

There are several initiatives we are pursuing, including in-mall opportunities such as way-finders, television screens, and external billboards to drive advertising revenue. We are also looking to leverage our national footprint to drive promotional activity within our centres. On the digital front, we are piloting Wi-Fi at Dobsonville Mall, which has been met with phenomenal take-up through word of mouth alone. Responding to this, we are preparing for a larger roll-out within the portfolio to capture this tremendous opportunity.

Energy management Sustainable energy management has also been added to our core competence, and we are already seeing benefits from various projects.

At the start of 2015 electricity cost-savings projects of 1.6 million kilowatt hours (kWh) were identified. By financial year-end, 2.14 million kWh were saved through different projects, all with pay-back periods of less than 14 months. A further R2.8 million worth of tariff improvements and recoveries was achieved.

Vukile successfully installed a 350kW photo voltaic (PV) solar power plant and is busy installing an additional 925kW PV plant at the newly renovated East Rand Mall. For the forthcoming financial year, Vukile has targeted an additional 1 400kW of PV installations and electricity cost-saving projects with an estimated saving of 2 million kWh.

Growing our portfolioVukile continued its growth trajectory which increased the size of the fund and furthered key portfolio strategies.


International expansionOur international investment strategy responds to the continued sluggish growth in the South African economy. On a micro-economic level, considering property industry fundamentals, there is further impetus for us to look beyond our borders for investment opportunities. On a macro-economic level, with low growth, the threat of a sovereign credit downgrade and instability in the political economy, the local market does not support investment. This drives the case for investment outside South Africa.

The retail property market is fairly mature with limited new development opportunities on the horizon. The office and industrial property sectors are both beset by a lack of growth in the economy. This has led to a merry-go-round of tenants moving from building to building. There is also a lack of good quality stock in the market, with too many players chasing any half decent asset, pushing up prices. With the rising interest rate environment and higher cost of finance, this has created negative yield spreads.

Considering all these factors, looking into international markets – specifically developed markets – makes sense to benefit from exposure to other economic drivers and other fundamentals where there may be higher growth and stability than we are experiencing in South Africa.

The sheer size of these markets means there is a lot of money flooding into property investment from all corners of the world. Nonetheless, with appropriate relationships, we believe there is a specific market where South African funds can participate and build scale.

There are appealing benefits to be derived from the positive yield gap, with a historically low cost of funding, which we believe will remain lower for even longer. We are not approaching our offshore investment purely for the benefit of currency devaluation, rather, we see good property opportunities with potential in some markets for rental growth coming off

Business review

16

Vu


ort 2016

a very depressed level following the global financial crisis.

European markets represent similar inflation-adjusted real returns to our local market but at much lower risk. For South African investors, these markets also deliver the benefit of a currency hedge.

Atlantic Leaf transactionOur strategy is to enter territories in partnership with people who have expertise in the local market, with access and proximity to deal flow.

Entering new international markets in this way during the year, Vukile launched its international investment strategy on 1 October 2015 by taking a stake in JSE AltX-listed Atlantic Leaf Properties. So far, we have invested R760 million and own a 26.1% stake in Atlantic Leaf. Vukile’s investment in Atlantic Leaf is an active stake with a board seat, which ensures our strategic influence.

For Vukile, this was an ideal entry point for international investment. It is a cost-effective and time-efficient investment strategy. We bought into a defensive portfolio at net asset value and successfully raised £18 million to part fund the investment.

Atlantic Leaf holds an approximately £264 million real estate portfolio in the UK. It has a solid management team and a very defensive underlying portfolio with a long lease expiry profile of over 12 years. It is largely focused on industrial and office assets where the underlying properties are generally single-tenanted triple-net leases. It has a blue-chip tenant base that has recognised ratings.

Vukile intends to expand its offshore exposure in future. We expect to maintain our percentage holding in Atlantic Leaf at current levels as the fund grows. We will also evaluate opportunities in other markets as well as direct co-investment offshore opportunities that offer good growth potential.

AcquisitionsGrowing our direct portfolio, Vukile acquired five new assets during the year. Four are shopping centres.

The retail properties acquired include an 80% stake in Moruleng Mall in North West for R325.8 million at an 8.68% yield, Batho Plaza in Soshanguve for R143.8 million at a 9.52% yield, Nonesi Mall in Queenstown for R376.6 million at an 8.25% yield and Bedworth Centre in Vereeniging for R335.0 million at an 8.75% yield. We also acquired an industrial portfolio in Silverton, Pretoria for R100.8 million at a 9.25% yield.

Given the current market dynamics, there is a very limited pipeline of deals evaluated and we are of the view that local assets need to reprice to higher yields in order to stimulate further acquisition activity.

Developments Vukile concluded a deal for stakes in two regional mall developments, 25% of Springs Mall at Blue Crane Eco Park in Ekurhuleni, Gauteng, and 33% of Thavhani Mall in Thohoyandou, Limpopo, with leading retail property developers Flanagan & Gerard Property Development & Investment. We acquired the two stakes for an investment of R600 million at guaranteed initial yields of 8.0%.

We are excited about the scale and market offering of both these malls, which will open to shoppers in 2017. They will add further quality to the Vukile retail portfolio. Leasing is currently going extremely well at both malls.

Vukile prefunded both developments, resulting in zero equity market risk and both properties will come on stream being earnings accretive.

Redevelopments and expansionsVukile has an excellent track record of investing in our assets and upgrading them for growth. This year, Vukile’s asset management team focused on an exciting

programme of upgrades and redevelopments. In this way, we sweat our assets to extract maximum value.

Projects completed during the year totalled R263.7 million. The largest was the R135 million expansion and upgrade of Meadowdale Mall, in which Vukile has a 67% stake in partnership with Moolman Group. It is now fully let with extended leases from key tenants and showing strong initial trading with an expected first-year yield of 10%.

We also modernised The Workshop Shopping Centre, an extremely well located, popular centre in the heart of the Durban CBD, which is creating new tenant demand. In Pretoria, we upgraded the exterior of the Sanlynn office block, thereby securing a new five-year lease from Sanlam. We also upgraded the Suncardia retail malls and entrances. At De Tijger in Bellville, Cape Town, Vukile added a new day hospital for Cure Day Clinics Group.

Projects underway during the year, but for future completion, include investments of R461.4 million. The biggest is the expansion and redevelopment of East Rand Mall, which Vukile co-owns equally with Redefine Properties. This improvement project, for which Vukile’s contribution is R220.0 million, has attracted strong tenant demand from local and international retailers, reinforcing East Rand Mall’s dominant position in the East Rand. The first phase of the revamped mall opened on 22 April 2016 and initial customer response has been very encouraging.

Vukile is also investing R105 million to extend and partially upgrade Dobsonville Centre in Soweto. In Cape Town’s Bellville we are upgrading two buildings in Tijger Park, and redeveloping portions of Barons VW building for Barloworld Ford in return for a new lease of 10 years.


Business review

17

Vu


ort 2016

In the first project of its kind for Vukile, we are investing R83 million to convert offices to residential apartments at Randburg Square, Johannesburg. The project is due for completion in September 2016.

Disposals In line with our strategy of building a high-quality, low-risk fund that is focused on the retail sector, we continued our strategy of disposing of non-core assets and recycling the proceeds either into new retail assets or repaying term debt. During the year under review, we sold five properties with a combined value of R271.0 million at a blended yield of 9.4%.

Post year-end we received a signed offer for the sale of our sovereign tenant portfolio. While the due diligence has been completed, the offer is still subject to certain conditions precedent. Proceeds from the sale will be earmarked for future offshore expansion.

Funding our growthVukile remains conservatively geared and well hedged. We closed the year with gearing of 29.5%. Post year-end this decreased to 27.3%. In addition, 86.4% of our interest-bearing debt was hedged at year-end. Our annualised cost of finance was 8.5%.

With low gearing and high hedging percentage, Vukile is well positioned against a rising interest rate cycle.

We continue to benefit from a strong A corporate credit rating and AA+ rating for the senior secured bonds, both with a stable outlook, recently reaffirmed by Global Credit Ratings. Vukile raised R1.1 billion in equity in May 2015, in part to finance its stakes in Springs Mall and Thavhani Mall. It was also the first REIT back in the debt capital markets post the December 2015 financial crisis. Vukile refinanced R2.0 billion of debt, at attractive margins during the year. We also raised R400 million in new equity post year-end in April 2016.

We will continue to be conservative with our approach to debt management. We will keep our gearing below 35% and our hedging levels above 75%.

Vukile enjoys access to diverse sources of funding, including bank debt, secured bonds and commercial paper. Vukile currently has facilities with five different funders.

TransformationWe are proud to have boosted Vukile’s empowerment credentials. During the year, we successfully raised our B-BBEE rating to level 3. We are committed to the principles of social and economic transformation and empowerment on all levels and will continue to pursue these objectives.

Our innovative transaction with Encha Properties in August 2013 continues to further our sustainable transformation success by growing our empowerment shareholding as our company grows. This is an exception in our industry, which continues to grapple with the challenge of growth at the expense of diluting black ownership. We are pleased to reap the benefits of the foresight applied in shaping this deal.

Strategic thrustsThe South African market remains difficult. This calls for a cautious approach, yet this must be balanced with being proactive and vigilant in seeking new opportunities to grow in this market and further afield.

Over the next 12 to 18 months, we will remain focused on strengthening our balance sheet further through debt reduction. Here, the sale of non-core assets will play an important role.

At the same time, Vukile will aim for high-quality, accretive and strategic growth opportunities in local and international markets.

Vukile intends to expand its offshore footprint, both through Atlantic Leaf and with other opportunities in other markets, with suitable partners.

Expanding our horizons, we continue to keep a watchful eye for opportunities in the residential sector that will offer a yield-boosting investment for Vukile.

We will continue to invest in our core retail sector, where we find opportunities appropriately repriced to reflect the higher capital cost environment in which we find ourselves. Our goal is to craft our direct South African assets into an almost exclusively retail property fund.

The proposed transaction between Vukile, Arrowhead Properties and Synergy Income Fund has the potential to further this goal significantly. The proposed transaction aims to create an initial R4 billion high-yield, high-growth fund within the existing entity of Synergy.

Included in the transaction is an asset swap where the bulk of Synergy’s retail assets will move into Vukile, and Vukile will inject the majority of its office and industrial assets into Synergy. This will result in Vukile becoming an almost solely retail property fund.

Four years ago, retail property represented 54% of Vukile’s overall portfolio. We have now grown this to around 70%. Should the transaction go ahead as envisioned, this will increase to about 90%.`The final terms of the potential transaction still need to be negotiated and related approvals obtained, however, it has already achieved broad consensus and is in advanced discussions.

We believe it is prudent to remain conservatively hedged and geared. We will also continue to focus on sector-leading corporate governance.


Business review

18

Vu


ort 2016

ProspectsWe remain concerned about the macro operating environment in South Africa, the spectre of rising interest rates and the concomitant pressure on the consumer.

The current volatility will impact on the operations of the business as well as the cost of capital, both of which are key value drivers.

The ongoing repositioning of the portfolio will continue during the year ahead as Vukile seeks to further enhance its portfolio quality through selective yield-accretive acquisitions and the disposal of non-core assets. Proceeds from asset sales will be used to strengthen Vukile’s balance sheet as well as provide capacity for offshore expansion.

Notwithstanding this, we anticipate that Vukile will deliver real growth in the year ahead, in line with that achieved in the current financial year.

The forecast growth in dividend is based on the assumptions that the macro-economic environment does not deteriorate further and no major corporate failures will occur. Forecast rental income is based on contractual escalations and market-related renewals. This forecast has not been reviewed or reported on by the company’s auditors.

AcknowledgementsVukile has made milestone achievements this year thanks to the hard work and commitment of our management team and staff. The depth of knowledge and

experience in Vukile is constantly growing and advancing. What remains unwavering, however, is the energy, passion and professionalism of our team. I extend my sincere appreciation for their drive and dedication to growing and strengthening Vukile.

A special thanks must go to the chairman and the board for their steadfast support and significant participation throughout the past year. We would also like to express our gratitude to Vukile’s business partners. Their dedication and exceptional efforts are instrumental in driving our performance, navigating new territories and attaining our goals.


Business review

19

Vu


ort 2016

Governance review

20

Vu


ort 2016

Corporate governance is a priority in driving the success

and sustainability of the business.

2121

Vu


ort 2016

Governance review

Executives

Laurence Gary Rapp (45)Chief executive officerBCom (Hons) cum laude, Wharton Executive Development Programme Laurence has been the driving force behind Vukile’s transformation and growth since his appointment in 2011. He is closely involved in all aspects of deal making and the corporate finance function of Vukile. Prior to joining Vukile, Laurence was a director of Standard Bank and head of the insurance and asset management division. His experience spans the areas of investment banking, private equity, retail banking, insurance and asset management. He currently serves as the chairman of SA REIT, an industry body driving listed property interests, chairman of Synergy Income Fund Limited and a non-executive director of Atlantic Leaf Properties Limited.Appointed: 1 August 2011

Michael John Potts (61)Financial directorCA(SA), HDip Tax Law (Wits)Michael is a founding director of Vukile and prior to joining Vukile was an independent adviser to the Bridge Capital Group on property transactions, property portfolio assembly, financial structuring and capital raising. Prior to that, he was managing and financial director of the South African group that forms part of the UK-based Hanover Acceptances Group and a non-executive director of Hanover Acceptances Limited (United Kingdom) and Outspan International Limited for six and seven years respectively. He currently serves as a non-executive director of Synergy Income Fund Limited.Appointed: 17 May 2004

Hermina (Ina) Christina Lopion (56)Executive director: asset managementBSc, University of Stellenbosch, Executive Development Programme: Manchester Business SchoolIna has 25 years’ experience in the property market. She is responsible for asset management within Vukile. Ina is responsible for driving the day-to-day management of the portfolio and delivery on key operational goals. Ina is a board member of the SA Council of Shopping Centres.Appointed: 1 January 2010

DIRECTORATE

Governance review

22

Vu


ort 2016

Gabaiphiwe Sedise Moseneke (39)Executive directorBDS, CCPPSedise is responsible for Vukile’s sovereign tenant sub-portfolio and for jointly driving Vukile’s overall portfolio growth and transformation objectives. He was chief executive of Encha Properties from 2004 up until Vukile’s acquisition of a portfolio of government-tenanted properties from Encha in 2013. He is a past president of the South African Property Owners Association (SAPOA) and also sits on the board of Nu-Hold Group, an upmarket residential and commercial property development and investment company, and is interim CEO of Synergy. He is a member of the South African Institute of Black Property Practitioners (SAIBPP).Appointed: 1 August 2013

Independent non-executives

Anton Dirk Botha (62)Chairman BProc, BCom (Hons), Stanford Executive ProgrammeAnton is a director and co-owner of Imalivest, an investment group. He also serves as a non-executive director on the boards of University of Pretoria, JSE Limited, Sanlam Limited and certain Sanlam subsidiaries, and African Rainbow Minerals Limited. Anton made his career in investments. As chief executive he led the team that built Gensec Limited into a leading South African investment banking group.Appointed: 17 May 2004

Stefanes (Steve) Francois Booysen (53)DCom, CA(SA)Steve is the former group chief executive officer of Absa Group Limited. Steve also serves on the boards of Steinhoff International Holdings Limited, Clover Industries Limited, Efficient Financial Holdings Limited and Senwes Limited.Appointed: 20 March 2012

DIRECTORATE continued

Governance review

23

Vu


ort 2016


Nigel George Payne (56)BCom (Hons), CA(SA), MBLNigel serves on the boards of Bidvest Group Limited, JSE Limited, BSi Steel Group Limited and Mr Price Group Limited, where he holds the position of chairman.Appointed: 20 March 2012

Hymie Mervyn Serebro (69)Mervyn is the former chief executive officer of Vusani Property Investments, a fully empowered privately held consortium embracing retail and office properties. He spent 32 years with the OK Bazaars Group within which he held a number of key positions and directorships, including that of group managing director. Mervyn was integrally involved in the establishment of the South African Bone Marrow Registry after the untimely death of his son Darren of leukemia. He is also the chairman of Reach for a Dream Foundation, a director of the Innovative Cancer Care Foundation and chairman of Syenap.Appointed: 17 May 2004

Peter Sipho Moyanga (51)Peter is an owner-operator franchisee of the world renowned fast foods franchise McDonald’s, with whom he has eight restaurants. Previously, Peter held a senior management position with McDonald’s Corporation for 10 years. In addition to his business interest, Peter is a director of Reach for a Dream Foundation.Appointed: 17 May 2004

Governance review

24

Vu


ort 2016

Hatla Ntene (62)BSc (QS)Hatla, a registered quantity surveyor, has over 25 years of experience in project management, cost engineering and contract administration. He is the executive chairman of Mvua Property Partners, a commercial property investment firm, and serves as a non-executive director of AECOM South Africa, Calgro M3 and Don Group.Appointed: 25 October 2013

Renosi Denise Mokate (58)BA, MA, PhDRenosi has over 27 years’ experience in the field of development economics and planning and has served in various academic and executive roles. She is a former executive director of the World Bank as well as a former deputy governor of the South African Reserve Bank. She currently serves as a director of Bidvest Bank and is the chairperson of the Government Employees Pension Fund.Appointed: 11 December 2013


Governance review

25

Vu


ort 2016

CORPORATE GOVERNANCE AND RISK MANAGEMENT

Vukile, incorporated under the provisions of the Companies Act, 71 of 2008 (the Companies Act), maintains a primary listing of its shares on the JSE Limited (JSE) and a secondary listing on the Namibian Stock Exchange (NSX).

The board considers corporate governance a priority and the application of sound corporate governance structures, policies and practices as paramount to the success of a sustainable business for the benefit of all Vukile stakeholders.

King IIIThe board is committed to complying with the Code of Governance Principles as set out in King III. The board further aims to apply the best practice recommendations, as set out in the King Report, in a manner that reflects the stature, market position and size of the group. A detailed list of the group’s application of the King III principles can be viewed on Vukile’s website at www.vukile.co.za/governance/king3.

The board The board is collectively responsible to the group’s stakeholders for the long-term success of the group and for the overall strategic direction and control of the group. The board exercises this control through the governance framework of the group, which includes detailed reporting to the board and its committees, a system of internal controls and a delegation of authority through an approval framework.

The board discharges its responsibilities as contained within its charter. The board charter can be viewed at www.vukile.co.za/governance/boardcharter.

Composition and appointment of directorsThe details of the directors, including their qualifications, experience, expertise and appointment dates appear on pages 22 to 24 of this integrated annual report.

Directors are appointed by the board in a formal and transparent manner, after review and nomination by the nominations committee (NC). All nominated candidates are subject to an interview by the full board.

DirectorsAt the date of this report, the board consisted of 11 directors.

ChairmanAD (Anton) Botha

Executive directorsLG (Laurence) Rapp(Chief executive)

MJ (Mike) Potts(Financial director)

HC (Ina) Lopion* (Executive director: asset management)

GS (Sedise) Moseneke*(Executive director)

Independent non-executive directorsSF (Steve) BooysenPS (Peter) MoyangaNG (Nigel) Payne*HM (Mervyn) SerebroH (Hatla) Ntene*RD (Renosi) Mokate*

* Due to retire at the next AGM.

Chairman and independenceThe roles of the chairman and chief executive are separate and the office of the chairman is occupied by an independent non-executive director. The formal delegation of authority framework ensures there is a clear division of responsibilities between the chairman and CEO and those of the board as a whole. All other non-executive directors are also considered to be independent.

Chief executiveThe board appoints the chief executive (CEO). Mr Laurence Rapp serves as CEO and was appointed on 1 August 2011.

Rotation of directorsIn line with the provisions of the Memorandum of Incorporation, one-third of both non-executive and executive directors is required to retire annually at the company’s AGM. In addition to this, all directors appointed by the board during the year are required to retire at the AGM. In both of the aforementioned cases directors are eligible for re-election.

Information and professional adviceThe directors are entitled to seek independent professional advice at the group’s expense concerning group affairs and have access to any information they may require in discharging their duties as directors. They also have unrestricted access to the services of the company secretary.

Board evaluationThe board assesses its performance and that of its individual directors, as well as their independence, on an ongoing basis. The company secretary facilitates a comprehensive board and committee evaluation biennially. During May 2016 the company secretary facilitated a board and committee evaluation under supervision of the chairman of the board. Matters considered in the evaluation focused on the effectiveness of the board and its committees, including:�g Composition�g Performance�g Role of the chairman�g Appropriateness of the board charter and its committees’ terms of reference�g Communication and interpersonal relationships�g Board dynamics and leadership�g Independence considerations for all directors and specific consideration of directors with terms of service in excess of nine years.

The outcome of the evaluation has been considered by the board and actions have been agreed to enhance the effectiveness of the board and its committees, including directors’ development needs. In addition to the biennial formal board and committee evaluation, the board also conducts annual assessments of all directors who are being put forward for re-election at the AGM. The annual assessment includes an independence consideration.

Dealing in group securitiesA formal securities dealings policy has been developed and adopted by the board to ensure that directors and employees conduct securities dealings in compliance with the JSE Listings Requirements and the insider trading legislation in terms of the Financial Markets Act.

Governance review

26

Vu


ort 2016

Directors’ declarations and conflict of interestsDirectors’ declarations of interests are tabled and circulated at every board meeting. All directors are required to assess any potential conflict of interest and to bring such circumstances to the attention of the chairman.

Company secretaryThe company secretary is responsible for the duties set out in section 88 of the Companies Act and for ensuring compliance with the JSE Listings

Requirements. Director induction and training are part of the company secretary’s responsibilities. He is responsible to the board for ensuring the proper administration of board proceedings, including the preparation and circulation of board papers, drafting annual work plans, ensuring that feedback is provided to the board and board committees, and preparing and circulating minutes of board and board committee meetings. He provides practical support and guidance to the board and directors on governance and regulatory compliance matters.

The JSE Listings Requirements require that company boards must consider and satisfy themselves annually regarding the competence, qualifications and experience of the company secretary, and also whether he maintains an arm’s-length relationship with the board.

The board has evaluated the company secretary and it is satisfied that he is suitably qualified for the role and that he maintains an arm’s-length relationship with the board due to the fact that he is not a member of the board or a material shareholder.

CORPORATE GOVERNANCE AND RISK MANAGEMENT continued

Details of the qualifications and competencies of the company secretary are set out below:

Company secretary Johann Neethling

Date appointed June 2010

Qualifications FCIS, MCom, JSE Sponsor Development Programme

Experience and expertise Johann has 17 years’ experience in the areas of assurance, general and corporate finance, governance and company secretariat. He joined Vukile as part of the management team when Sanlam’s asset management business was acquired by Vukile. Prior to that he held various positions within the property division of Sanlam. He serves as a director and past president of Chartered Secretaries Southern Africa.

Board and committee attendance The attendance register of non-executive directors for each board and committee meeting for the year ended 31 March 2016, is set out below:

Director

Scheduled board

meetings attended

Special board

meetings attended

Audit and risk

committeeMeetings attended

Social, ethics

and human

resources committee

Meetings attended

Property and

investment committee

Meetings attended

Nomina-tions

committeeMeetings attended

AD Botha 4/4 0/1* Member 3/3 Chairman 3/3SF Booysen 4/4 0/1* Member 4/4 Chairman 3/3 Member 3/3PS Moyanga 4/4 1/1 Member 4/4 Member 4/4 RD Mokate 4/4 1/1 Member 3/3 Member 3/3 Member 3/3H Ntene 4/4 1/1 Member 4/4 SEN Sebotsa# 2/2 0/0 Member 1/1 Member 1/1HM Serebro 4/4 1/1 Chairman 4/4 NG Payne 4/4 1/1 Chairman 4/4 Member 4/4

* Absent with prior apology. The special board meeting was called with a very short notice period due to pressing board matters arising out of extreme market volatility in January 2016 following the cabinet changes in December 2015, and the directors in question were unable to attend due to other long-standing commitments.

# Resigned on 23 November 2015.

Executive directors attended every meeting that required their attendance during the year.

Governance review

27

Vu


ort 2016


Board committees Audit and risk committeeThe report by the audit and risk committee (AR committee) is set out on pages 78 and 79 of this integrated annual report. The committee’s terms of reference can be viewed at www.vukile.co.za/governance/termsofreference/arcommittee.

Internal control It is the board’s responsibility to oversee the group’s system of internal control and to keep its effectiveness under review. The system is designed to provide reasonable assurance against material misstatement and loss. The system of internal financial control is designed to provide assurance on the maintenance of proper accounting records and the reliability of financial information used within the business and for publication. The internal control system includes a reasonable division of responsibility and the implementation of

policies and procedures which are communicated throughout the group.

Internal auditThe group operates on an outsourced internal audit model, currently outsourced to Deloitte. Internal audit is responsible for assisting the board and management in maintaining an effective internal control environment by evaluating those controls continuously to determine whether they are adequately designed and operating efficiently and to recommend improvements.

External auditGrant Thornton is the external auditor of Vukile and its subsidiaries, including the Namibian subsidiaries. The independence of the external auditors is recognised and annually reviewed by the AR committee.

The external auditors attend all AR committee meetings and have unrestricted access to the chairman of the AR committee.

Risk management reviewOur approachThe group has documented its approach to risk management in a formal policy. The strategic intent of our risk management policy is to create an environment in which risk management is applied at a consistently high level across the group, enabling management to take informed decisions, achieve business objectives and maximise returns for shareholders.

Key risks

Risk type Risk description Risk action/treatment

Property vacancy risk Vacancy levels – oversupply especially in the office sector.

Ensuring that products stay abreast with the market and that asking rentals are market related

Strong relationship with third-party brokers Leasing incentives for tenants and brokers Property managers to stay close to tenants in order to understand changing needs

BEE certification.

Economic environment risk Slow economic growth (<1% GDP) impacting the consumer and resulting in retailer failures, business rescue, mergers etc.

High national tenant ratio.

Interest rate risk Increased interest rates – resulting in difficulty in accessing capital markets and the ability to find enhancing deals.

Funding diversification (quantum and tenure) Active strategy to reduce gearing levels to position balance sheet for tough times and build capacity.

Utility supply risk Inconsistent supply of critical services (electricity, water, municipal services, refuse, property transfer, legal services).

Diversification across nodes Installing generators for emergency power.

Social instability risk Political risk and social disturbances (labour unrest) linked to retail property development in areas where Vukile has properties.

SASRIA insurance cover of R1.5 billion Fostering good relationships with the communities.

Governance review

28

Vu


ort 2016

Property and investment committeeCurrent members�g HM Serebro (Chairman)�g HC Lopion�g PS Moyanga�g NG Payne�g LG Rapp�g H Ntene.

The property and investment committee is an important element of the board’s system to drive its growth strategy through acquisitions, redevelopments and refurbishments. The committee comprises two executive directors and four independent non-executive directors.

The committee’s terms of reference can be viewed at www.vukile.co.za/governance/termsofreference/property &investmentcommittee.

Social, ethics and human resources committee The report by the social, ethics and human resources committee (SEHR committee) is set out on pages 30 to 35 of this integrated annual report.

The committee’s terms of reference can be viewed at www.vukile.co.za/governance/termsofreference/sehrcommittee.


Governance review

29

Vu


ort 2016

SOCIAL, ETHICS AND HUMAN RESOURCES COMMITTEE REPORT

Report from the chairman of the social, ethics and human resources committee This report provides an account of the remuneration, people management and social and ethics matters for 2016. The report summarises the various actions undertaken during the year under review, our remuneration policy – which is subject to a non-binding advisory vote at the AGM, and various performance and reward elements. Given the dual mandate of the committee, important social and ethics matters are also reported on.

Committee responsibilities discharged in 2016 During the course of the year the committee has:�g Reviewed and approved the critical performance areas (CPAs) for the CEO and executive directors.�g Approved the individual remuneration for executive directors and staff.�g Assessed CEO and executive directors’ performance against their CPAs. �g Determined the overall quantum of the discretionary bonus pool and allocation thereof.�g Assessed corporate performance and vesting in respect of the Conditional Share Plan.�g Commissioned and oversaw an independent review and benchmarking process of executive remuneration by our independent advisers, PwC.�g Reviewed the long-term incentive schemes with the resulting changes to the Share Purchase Plan.�g Reviewed and approved the succession plan.�g Reviewed and monitored Vukile’s transformation strategy and B-BBEE rating process.�g Monitored various social and ethics matters in line with the requirements of the Companies Act.

In order for Vukile to remain competitive, the nurturing and retention of our human capital is extremely important. Although this is true for most businesses, it is particularly important for Vukile if one considers that due to the outsourcing of property management, the complete workforce comprises 32 people. We

continue to focus on top-quality asset management, innovation, creative deal making and the growth of our quality portfolio. Having the right organisation, culture and people development building blocks in place ensures that we are able to execute on our strategy.

AccomplishmentsThe Vukile team delivered on the following accomplishments in the year under review: �g Achieving a 7% growth in dividends in a very tough economic environment. This marks the 12th year of unbroken dividend growth. This brings the total return per annum since listing to 21.7%.�g Securing Vukile’s entry into the foreign investment market through the successful investment of R760 million in Atlantic Leaf Properties Limited. Vukile now owns a 26.1% stake in Atlantic Leaf, which will form the base from which Vukile will look to expand its international footprint.�g Integration of Synergy within Vukile’s operation and exploring various strategic alternatives for Synergy.�g Achieving an improved B-BBEE rating of level 3 from our previous rating of level 4.�g Successful refinance of R2 billion debt.�g Maintaining an A corporate credit rating and AA+ rating for the senior secured bonds.�g Successful capital raise of R1.1 billion. �g Acquisitions of R1.2 billion.�g Developments of R600 million.

Shareholder feedbackWe encourage and appreciate feedback from our shareholders to enable us to improve our practices and reporting. During the past year we received feedback on our remuneration policy which is summarised, along with our response, below:

Shareholder matter raised

Inadequate disclosure of short-term performance targets for annual bonuses.

Response/action

Additional disclosure has been added under the short-term incentive bonus section.

Remuneration disclosure Details of remuneration paid to directors during the year are set out in the directors’ report on page 76.

Focus areas 2017Looking ahead into 2017 and beyond, we will continue to effectively drive the attraction and retention of key talent and critical skills and ensure our key people are adequately rewarded for their performance. One of the specific focus areas for the coming year will be to continue to develop specific succession plans for the retirement of certain executive directors within the next three years.

SF Booysen24 May 2016

Human resource mattersOur philosophy Vukile’s remuneration philosophy has remained largely unchanged during the year under review. The philosophy aims to deliver a competitive, unique and flexible pay structure to attract, reward and retain high-quality individuals. We believe our remuneration practices must be driven by performance. It is a prerequisite that employees are aligned with the workplace culture of Vukile and our selection process is aimed at obtaining the optimum mix of competencies, abilities, experiences and skills needed to realise our strategic priorities.

Remuneration strategy and policyVukile’s remuneration strategy is designed to attract and retain the skills required to meet our strategic priorities. Although competitive financial rewards are key areas to attracting employees, we believe that our entrepreneurial orientation, strong ethics and open workplace culture sets us apart in retaining quality employees. Operating in a very dynamic industry demands that we strategically and significantly incentivise high performers, while balancing such payments with the expectation of shareholders.

Governance review

30

Vu


ort 2016

SOCIAL, ETHICS AND HUMAN RESOURCES COMMITTEE REPORT continued

Executive pay benchmarkingVukile has experienced a substantial transformation as a business over the past five years. In light of this transformation, the committee commissioned a review of the positions of executive management which included assigning new job grades for all four executive directors and other members of executive management. In order to ensure sound governance, PwC was appointed to drive this process and the resulting benchmarking.

PwC followed an approach of grading each job according to the Paterson grading system and then benchmarking the positions against the RemChannel survey. The positioning of total guaranteed packages (TGPs) around the median level has been retained from previous years. Following the benchmarking process, which is based on the national job description benchmark, executive remuneration has accordingly been aligned to market benchmarks.

Performance measuresA summary of high-level critical performance areas (CPAs) for executive directors is set out in the table below.

Executive CPAs

CEO Execution of growth strategy in line with board mandate Transformation – achieve at least level 4 BEE rating Improve customer and tenant focus through creation of AIM and energy management Staff management Leadership behaviour.

Financial director Execution of growth strategy in line with board mandate Implementation of portfolio acquisitions and corporate actions Sound debt management

– Diversification of funding – Maintaining the credit rating

Quality and reliability of financial reporting Sound management of the corporate administrative budget.

Executive director: asset management

Execution of growth strategy in line with board mandate Performance of the Vukile and Synergy property portfolios Energy and utilities management.

Executive director Execution of growth strategy in line with board mandate Management of investment strategy and execution thereof Management of the sovereign portfolio Management of the transformation strategy.

Governance review

31

Vu


ort 2016


Remuneration structureVukile’s remuneration policy applies common principles and practices to all employees, including executive directors and senior managers, although the exact structure and quantum of individual packages vary by role, seniority and retention criteria. Generally employees are remunerated on a TGP approach, which includes a combination of base remuneration and benefits, commonly referred to as fixed remuneration.

The table below broadly summarises the components of the remuneration paid to executive directors and management.

Fixed/variable Component Component description and intent Delivery mechanism

Fixed remuneration

Base salary This is the non-variable element of the employees’ package typically benchmarked and positioned at the market median.

The base salary reflects the scope and nature of the role.

TGPs.

Benefits Benefits include health cover, retirement cover and insurance products such as death and disability cover. (Included as part of TGP in terms of a total cost-to-company approach).

Variable remuneration

Short-term incentives (STIs)

Aligns individual and group performance with the short-term objectives of the group primarily through the annual budgeted growth in dividends.

Focuses employees on achieving their targets as per their critical performance areas (CPA).

Thereafter, once the pool is determined, allocation is based on achievement of CPAs.

Short-Term Incentive Bonus Scheme.

Long-term incentives (LTIs)

Long-term incentives promote a longer-term view of the business and ensure wealth creation for both shareholders and employees.

Conditional Share Plan Share Purchase Plan.

Governance review

32

Vu


ort 2016

Short-Term Incentive Bonus SchemeThe principles of the Short-Term Incentive Bonus Scheme (bonus scheme) are as follows:

Discretion The board has absolute discretion with regards to the rules of the bonus scheme, the amounts earned, the participants in the bonus scheme and annual amounts to be awarded. Although the performance criteria are largely driven by financial objectives, the committee can consider strategic achievements – which will yield results in future years – in the determination of bonus awards.

Participants in the scheme

Senior staff members on a Paterson Grade of D or higher. Staff members have a maximum potential cash bonus cap. Staff members on Paterson Grades of lower than D are paid an annual bonus equal to a maximum of 15% of TGP, subject to the achievement of CPA targets.

Principle of determination of bonus pool

Bonus pool comprises two components, an on-target component and an out-performance component.

On-target performance levels are determined annually in the range of 33.3% to 66.7% of the maximum potential bonus pool size, having taken into account the specific targets, strategies and issues relevant to the group at the time of setting the range.

Bonus pool threshold levels are set at 95% of the on-target group performance level. Group performance at that threshold level will yield a bonus pool equal to 25% of the maximum potential bonus pool. Achievement below this level will result in no short-term incentive being paid unless the committee recommends the payment of bonuses to a limited number of employees for exceptional performance.

Any group performance that falls above the threshold level, yet beneath the on-target level, will result in a bonus pool (other than the people on the 15% scheme) pro-rated on a straight-line basis to reflect the achieved performance.

Out-performance of the on-target benchmark will result in the staff sharing in a percentage of such excess profit, which will be determined by the committee, but which will not exceed 50% of such excess profit.

This will be paid out in cash but always limited to the individual’s maximum capped cash bonus level. Should the performance in any one year yield an amount that is in excess of the maximum cash cap, such excess will fall within the terms and conditions of the Conditional Share Plan.

Amount actually paid out For staff on the Paterson Grade D and above, any bonus payment will be split into two equal tranches, the first of which will be payable in May and the second six months later in November. All other staff will be paid their bonus in full in May.

Bonus-malus and claw-back

Short-term bonuses are paid subject to malus and claw-back provisions Malus means the adjustment of a bonus amount (typically the second tranche of the bonus amount) upon the discovery of deficient performance relative to the evaluation on which the payment was initially made. Claw-back means the recovery of a bonus amount which has already been paid, in the case of malice or mala fide error becoming apparent.


Governance review

33

Vu


ort 2016


Calculation of the short-term incentive bonuses for 2016The performance targets driving the allocation of short-term bonuses are a combination of the individual CPAs, as highlighted under the performance measures section, and the achievement of budgeted dividend per share. The bonus pool is self-funded i.e. the budget has to be achieved after incorporating the bonus pool, before the pool, can be generated. The budgeted dividend per share is set in line with market expectations and incorporates significant stretch targets.

A summary of the short-term bonuses are set out below:

Executive directors

Maximum bonus

potential R

Short-term bonus

allocated R

Maximum bonus

%

% of maximum

bonus% ofTGP

Current portion*

Deferred amount*

CEO 4 254 000 2 945 000 150 69.2 103.8 1 472 500 1 472 500Financial director 2 375 000 1 643 000 125 69.2 86.5 821 500 821 500Executive director (asset management) 2 127 500 1 473 000 125 69.2 86.5 736 500 736 500Executive director 1 597 500 1 105 000 125 69.2 86.5 552 500 552 500

* 50% of short-term bonuses are deferred for six months.

Conditional Share Plan (CSP)The principles of the Conditional Share Plan are as follows:

Plan type Forfeitable share plan: shares are delivered to the participants subject to achievement of predetermined performance criteria.

Plan limits Overall limit: 2.5% of issued capital. Individual limit: 0.5% of issued capital. Annual limit: 0.5% of issued capital. Current utilisation of the scheme is equal to 0.44% of issued capital or 17.54% of approved capacity.

Eligibility Senior staff members on a Paterson Grade of D or higher.

Allocation policy Regular annual awards as a percentage of TGP. Allocation percentages are reviewed annually. Allocation percentages for June 2015 allocation cycle:

– CEO: 100% – 120% – Executive management: 70% – 90% – Senior management: 40% – 60% – Other participants: 20% – 40%.

Dividend equivalents Paid to participants, subject to claw-back.

Mix between group and individual performance conditions

First portion of the award, up to one-third of TGP, is subject to personal performance of CPAs. Balance subject to group performance.

Performance conditions 30% vesting at threshold target. 100% vesting at stretch target (linear vesting in between). Personal performance portion (CPA score):

– Threshold: 70% – Stretch: 90%.

Company performance has two elements, one being an absolute measure of performance and the other a market relative measure of performance.

Company performance portion will, therefore, be split in two: – 50%: relative performance measure – Growth in Vukile’s dividends and share price vs peer group over a three-year period – Threshold: 100% index – Stretch: 110% index. – 50%: Absolute performance measure – Growth in Vukile’s dividends vs CPI plus a margin determined by the committee from time to time

after consideration of specific internal and external factors.

Governance review

34

Vu


ort 2016

Vesting under the CSP for 2016Amounts vested for the year under review are disclosed in the directors’ report set out on page 76.

Share Purchase Plan (SPP)The principles of the Share Purchase Plan are as follows:

Plan type Purchase plan: shares are acquired by the participant through a loan provided by the company.

Plan limits Overall limit: 1.5% of issued capital. Individual limit: 0.5% of issued capital.

Eligibility Executive directors and key senior management employees.

Awards Discretionary based on attraction, retention, and incentive criteria.

Plan debt 10-year loan. Interest-bearing at weighted average cost of debt or actual cost of funds raised for the allocation.

At the time of posting of the integrated annual report, the social, ethics and human resources committee was in the process of finalising amendments to the SPP in order to facilitate greater management share ownership. Amendments to the SPP, including the rationale therefore will be included in the notice of general meeting set down for 29 August 2016.

Social and ethics mattersThe committee performs an oversight and monitoring role in respect of issues detailed in the Companies Act.

The committee is responsible for, inter alia: �g Monitoring the group’s activities against global responsibility protocols, including the UN Global Compact Code and the principles of the Organisation for Economic Development Guidance (OEDG).�g Monitoring compliance with the Employment Equity Act and B-BBEE Act.�g Monitoring of corporate citizenship, consumer relations, and the group’s impact on the environment, health and public safety.

Social and ethics statement

Global responsibility protocols

The group supports and respects the principles as set out in the UN Global Compact Code, OEDG’s recommendation on the prevention of corruption and the International Labour Organisation’s directive on decent work and working conditions.

Work environment The group considers its workforce (a total of 32 employees as at 31 March 2016) to be its biggest and most important asset. Human rights and friendly labour practices are embedded in the company’s official values (refer to our value statement on page 44).

Employment equity, B-BBEE and transformation

The group has identified transformation as one of the group’s critical success factors. After a significant effort, the company achieved a level 3 B-BBEE rating during the year. This is significant development and improvement on our previous rating of level 4.

Our empowerment partner, Encha Properties’ shareholding stands at 7.9% at 31 March 2016, which represents a 26.6% effective shareholding under the property sector charter code.

Corporate citizenship, consumer relations, and the group’s impact on the environment, health and public safety

The group aims to be a good corporate citizen and to be active in uplifting the communities in which we operate. A report on our community involvement is presented on page 69. The group’s impact on the environment is detailed on page 68 of this integrated annual report.

Record of sponsorship, donations and humanitarian initiatives

A register of the sponsorships, donations and humanitarian initiatives is maintained by the company. For the year ended 31 March 2016, the total value of sponsorships, donations and humanitarian initiatives was approximately R1 271 000.


Governance review

35

Vu


ort 2016

Vu


ort 2016


36

Vu


ort 2016

VUKILE IAR_2016_FRONT_PROOF 1_15 JUNE 2016

Ongoing improvement in financial

and operating metrics.


37

Vu


ort 2016

FINANCIAL PERFORMANCE

Liquidity and share priceDuring the 12 months ended 31 March 2016, 224 million shares were traded, which equates to approximately 18.7 million shares per month. The total value of shares traded during the year amounted to R4.0 billion or 36.0% of the company’s market capitalisation at 31 March 2016.

CLOSING PRICE AND TRADING VOLUMES – 1 APRIL 2015 TO 31 MARCH 2016(Price Rand)

■ Volume traded ■ Closing price

April May June July August September

2015 2016

October November December January February March

20

19

18

17

16

15

14

30 000 000

25 000 000

20 000 000

15 000 000

10 000 000

5 000 000

0

(Volume)

The Vukile share price has decreased year-on-year by 9.1%, from R18.71 to R17.00, along with a general de-rating of the sector.

The graph alongside reflects the comparative liquidity of Vukile against a mix of property companies for the year ended 31 March 2016.

VALUE TRADED AS % OF MARKET CAPITALISATION

Market capitalisation (Rm) as at 31 March 2016

REB

EMISAC

VKE

IPF

HYP

RDFGRT

0 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000

140120100806040200

38

Vu


ort 2016

Results

Growth in dividendsVukile has delivered an uninterrupted pattern of growth in distribution since listing in June 2004 as evidenced in the graph below:

CENTS PER SHARE

■ Interim ■ Final ■ Normalised total ■ Non-recurring

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

30.0

31.5

61.5

32.5

36.0

68.5

35.8

41.0

76.8

40.3 48

.088

.3

44.1 53

.897

.9

47.0 60

.910

7.9

46.2 62

.810

9.0

47.6 63

.811

1.4

13.4

8.7 13

.8

11.2

52.2 68

.212

0.4

54.8 71

.712

6.5

59.1

77.7

136.

8

63.2

83.1

146.

3

FINANCIAL PERFORMANCE continued

Financial resultsThe group’s net profit available for distribution increased by R222.1 million (28.7%) to R996.3 million for the year ended 31 March 2016 (March 2015: R774.2 million).

Simplified income statementThis simplified income statement presented below does not fully comply with IFRS. In order to facilitate the comparison with the prior year, this income statement excludes the Synergy Income Fund Limited (Synergy) results on a consolidated basis and merely includes income generated from the investment in Synergy.

Calculation of distributable earnings

2016 March Group R000

2015 March Group R000

Variance Group

% Note

Net profit from property operations excluding straight-line income adjustment 1 103 392 961 542 14.8Income from asset management business 15 225 24 692 (38.3) (i)

Dividends received from Fairvest 7 626 26 115 26.5 (ii)

Dividends received from Synergy 33 189 33 144 99.2 (ii)

Interest and other income 90 083 24 851 >100 Corporate and administrative expenses (81 055) (69 742) (16.2)Cost of acquiring a business combination (Clidet) (1 230) (2 778) 55.7 Finance costs (309 618) (260 915) (18.7)Taxation (including deferred tax on timing differences) (9 419) (26) (>100)Non-IFRS related adjustmentsShares issued cum dividend 63 024 33 262 – Dividends receivable from Fairvest 25 408 – – (ii)

Dividends receivable from Synergy 32 847 – – (ii)

Dividends receivable from Atlantic Leaf 20 511 – – Costs of acquiring business combinations 1 230 2 778 – Pre-acquisition dividends – 1 293 – Project management fees receivable from Sanlam 8 000 – – (iii)

999 213 774 216 Less: non-controlling interest attributable to Clidet No 1011 (Pty) Ltd (Clidet) (2 901) –

Available for distribution to Vukile shareholders 996 312 774 216 28.7

Notes(i) The asset management fees and Vukile’s net

property management fees of R13.2 million earned on the management of Synergy’s portfolio had been reinstated in property expenses and as income from the asset management business – reversed previously on consolidation.

(ii) Combined with dividends receivable post 31 March 2016 in respect of the year ended 31 March 2016. Previously, interest on linked debentures was accrued at year-end and formed part of distributable income.

(iii) These fees represent cash receipts available for distribution, although in terms of IFRS requirements these fees were offset against the loss realised on the sale of the asset management business in the prior year.

39

Vu


ort 2016

Results


Property portfolio results Net profit from property operations increased by R142 million, from R962 million to R1.1 billion. During the past financial year the property portfolio performed very well in a difficult economic environment. Larger national and listed tenants continued to trade reasonably well, while smaller independent tenants in the retail and industrial sectors came under pressure, resulting in an increase in outstanding rentals and legal balances. Against this backdrop, the average escalation on expiry rentals on the total portfolio of 9.1% is exceptionally positive. The retail sector outperformed the other sectors with a tremendous escalation on expiry rentals of 12.3% versus industrial at 5.0% and offices at 4.4%. Vacancies measured as a percentage of gross lettable area of the total portfolio, including Synergy, reduced from 4.6% to 3.9%. Office vacancies were reduced considerably from 10.2% to 5.0%, retail vacancies increased marginally from 3.4% to 3.5% and industrial vacancies increased from 1.9% to 4.3%. The expiry profile improved substantially with approximately 33% of leases due to expire in 2020 and beyond, up from 18% in the prior year. Despite excessive increases in utilities and rates and taxes, the ratio of net recurring cost to property revenue was contained at 15.8% versus 15.5% in the prior year.

Gross rental receivables (tenant arrears)Tenant arrears amounted to R64.0 million at 31 March 2016 or 3.05% of the gross rental income, a reduction from the prior year where tenant arrears equated to 3.24% of gross rentals. The acquisition of four large shopping malls contributed to this increase. As indicated above, certain non-national tenants are being negatively affected by the difficult economic environment. Our property managers, JHI and Broll, report similar trends across the various portfolios they manage.

Impairment allowance – tenant receivablesThe allowance for the impairment of tenant receivables has increased from R27.4 million at 31 March 2015 to R28.0 million at 31 March 2016, which is considered adequate at this stage. The

impairment allowance represents 1.34% of gross property revenue (March 2015: 1.7%). A summary of the movement in the impairment allowance for trade receivables is set out below.

R000

Impairment allowance 1 April 2015 27 379 Allowance for receivable impairment for the year 13 507Receivables written off as uncollectible (12 924)

27 962 Clidet’s impairment allowance at acquisition 48

Impairment allowance 31 March 2016 28 010

Bad debt write-off included in profit or loss 13 086

Vukile Asset Management (VAM) businessVukile acquired 100% of the shares in Capital Land Asset Management (Pty) Ltd in May 2015. This company was renamed Vukile Asset Management (Pty) Ltd. This company holds the asset and property management contract with Synergy. Since the date of acquisition VAM earned fees from Synergy for an 11-month period amounting to R15.5 million. The asset management contract with Sanlam was disposed of in the prior year.

Fairvest Property Holdings Limited (Fairvest)Vukile held 31.2% in Fairvest at year-end, at a cost of R300 million (2015: R250 million). An additional 26.2 million shares were acquired for R50 million or R1.91 per share in April 2015. Fairvest is fair valued at 31 March 2016 at R328.3 million or R1.60 per share, representing a capital appreciation of 9.3% since the dates of the acquisitions.

The 26.5% increase in income from Fairvest arises from the additional shares acquired in April 2015 and an approximate 10% increase in dividends.

SynergyVukile sold 934 527 Synergy A shares at R11.77 per share and acquired an additional 1 554 089 Synergy B shares at R7.25 per share in December 2015. This

increased Vukile’s overall shareholding in Synergy from 64.61% to 65.02%.

The increase in income from Synergy arises mainly due to a full year’s dividend being attributable to Vukile for the year ended 31 March 2016.

Finance costsGroup finance costs have increased by R49 million, from R261 million to R310 million. The increase in finance costs is primarily due to additional interest of R62 million arising on additional debt of R1.15 billion raised to part finance the acquisitions of Moruleng Mall (80%), Soshanguve Batho Plaza, Silverton industrial warehouses, Tzaneen Maake Plaza (40%), Vereeniging Bedworth Centre and 26.1% of Atlantic Leaf during the year, and the impact of interest rate increases, offset by, inter alia, interest saved on debt repaid.

Investment and other income increased by R65 million to R90 million (March 2015: R25 million). This is mainly due to interest receivable of R46 million on the Absa zero deposit of R600 million which was concluded in May 2015.

The average cost of finance for the year ended 31 March 2016, based on the average of opening and closing interest-bearing debt, (excluding development debt), equates to 8.5% (March 2015: 8.4%), with 86.4% of interest-bearing term debt hedged (March 2015: 88.0%).

Group corporate administrative expenditure and asset managementGroup corporate administrative expenditure of R81.1 million is R11.1 million higher than the previous year’s expenditure of R70.0 million. The main contributing factor to this variance arises from a R3.8 million recoupment in respect of shares that were forfeited under the Conditional Share Plan in the prior year, which reduced the prior year costs from R73.8 million to R70.0 million.

DistributionThe distribution for the six months ended 31 March 2016 is 83.126 cents per share which represents a 7.0% increase over the comparable six-month period.

40

Vu


ort 2016

Results

The distribution for the full year ended 31 March 2016 increased by 7.0% to 146.35 cents per share (March 2015: 136.77 cents per share).

The group’s net profit available for distribution amounted to R996.3 million for the year ended 31 March 2016, which represents an increase of 28.7% over the comparable period.

The proposed total dividend is made up as follows:

Rm %Cents

per share

First 408.5 43.1 63.222Second(i) 538.4 56.9 83.126

Total 946.9 100.0 146.348(i) Based on shares in issue at 31 March 2016.

An additional dividend of R48.2 million was paid in June 2015 following the R1.1 billion share issuance in April 2015. The shareholders who participated in the issuance were entitled to receive the March 2015 second-half dividend.

Summary of group financial performance

2016 March

2015 March

% change

Earnings (Rm) 1 586 1 500 5.7Net asset value per share (cents) 1 842 1 716 7.3Loan-to-value ratio (%)(i) 31.9 29.0 10.0Loan-to-value ratio net of cash (%)(ii) 26.9 26.0 3.5Gearing ratio (%)(iii) 29.5 26.6 10.9

(i) Based on directors’ valuations of the group’s portfolio at 31 March 2016.(ii) Based on (i) above less cash (net of cash held on deposit from tenants).(iii) The gearing ratio is calculated by dividing total interest-bearing borrowings by total assets.

Cash flow and net asset valueThe group net cash flow, reflecting the composition of cash generated and utilised during the year under review, is also set out below:

Bal

ance

1 A

pril 2

015

473

889

99 3

37

1 28

2 44

6

327

356 1

347

944

1 28

0 90

1

(937

494

)

(1 5

78 7

46)

(389

522

)

Inve

stm

ent a

nd

othe

r inc

ome

Cas

h fro

m o

pera

ting

activ

ites

Pro

ceed

s on

sal

e of

in

vest

men

t pro

perti

es

Issu

e of

sha

res

Bor

row

ings

ad

vanc

es/d

erat

ives

Div

iden

ds

Acq

uisi

tions

/ im

prov

emen

ts to

in

vest

men

t pro

perti

es

and

�xed

ass

ets

Fina

nce

cost

s

Acq

uisi

tion

of

avai

labe

-for-

sale

�n

anci

al a

sset

s/

inve

stm

ents

/NC

I/su

bsid

iarie

s

932

459

Bal

ance

31

Mar

ch

2016

(973

652

)

Borrowings and the issue of equity amounting to R2.6 billion were utilised to acquire investment properties of R1.6 billion and investments/other of R1 billion.

FINANCIAL PERFORMANCE continued 41

Vu


ort 2016

Results


The net asset value of the group increased over the reporting period by 7.3%, from 1 716 cents per share to 1 842 cents per share at 31 March 2016. The change in net asset value per share, based on 647.7 million shares in issue at year-end, is set out in the NAV bridge graph below.

Ope

ning

NA

V (1

Apr

il 201

5)1

716 36

3

195

32

(199

)

(198

)

(61) (6)

1 84

2

Inve

stm

ent

prop

ertie

s pu

rcha

sed

Incr

ease

in n

on-c

urre

nt

asse

ts

Incr

ease

in c

urre

nt

asse

ts

Adj

uste

d fo

r add

ition

al

shar

es in

issu

e

Incr

ease

in c

urre

nt

liabi

litie

s

Incr

ease

in

non-

curre

nt lia

bilit

ies

Non

-con

trollin

g in

tere

st

Clo

sing

NA

V (3

1 M

arch

201

6)

BorrowingsThe group’s finance strategy is to minimise funding costs and refinance risk. The business objectives that are necessary to implement this strategy can be summarised as follows:

Strategy 2016 2015

Diversify funders to at least three providers Five funders Five fundersDiversify funding structures to incorporate, where appropriate: % of total % of total Bank debt(i) 69% 57% Secured bonds 19% 26% Commercial paper/unsecured bonds 12% 17%

100% 100%

Spread expiry terms of all interest-bearing debt to approximately 25% per annum Achieved AchievedHedge or fix more than 75% of interest-bearing debt 86.4% 88.0%

hedged(ii) hedged(ii)

Maximise interest income and limit negative carry Achieved through increase in access facilities repayable without break costs

(i) The increase in the use of bank debt has arisen due to the volatility experienced in the capital markets and the consequent higher margins becoming less competitive.(ii) Vukile and its subsidiaries – excluding development debt and commercial paper.

The Global Credit Rating Company (Pty) Ltd (GCR) has recently reaffirmed an A corporate rating and an AA+ (RSA) rating on Vukile’s senior secured bonds.

Debt refinancing during the year ended 31 March 2016Bond refinancing�g R580 million of corporate bonds were refinanced on 6 May 2015 as follows: – A three-year R380 million bond maturing 8 May 2018 at a 1.42% margin plus swap costs of 7.31%, totalling 8.73%.

– A five-year R200 million bond maturing 8 June 2020 at a 1.65% margin plus swap costs of 7.76%, totalling 9.41%.

�g R664 million of commercial paper was refinanced during the year under review (R332 million every six months).�g R200 million and R56 million of corporate bonds and commercial paper respectively were refinanced on 28 March 2016 as follows: – R6 million access facility utilised to part repay the R56 million commercial paper.

– R110 million three-year corporate bond maturing March 2019, at a margin of 1.80% plus a swap cost of 7.97%, totalling 9.77%.

– R140 million by way of six-month commercial paper, at a margin of 0.86% plus three-month JIBAR.

Bank refinancing�g R163.3 million bank/SCM debt was restructured in April 2015 as follows: – R81.67 million extended for a three-year period.

– R81.67 million repaid via cash resources.

�g R150 million RMB debt refinanced to 1 April 2018 at three-month JIBAR plus 1.8% margin.�g R150 million RMB revolving facility at prime less 1.9%, extended one year to 31 March 2017.

42

Vu


ort 2016

Results

Debt repayment profile The table below sets out the various tranches of debt payable by the group over the following five years:

Vukile groupDebt repayment profile March 2017 – March 2021

Nature of debt Repayment dateFacility

Rm

Current/future debt Rm Note

Financial years ending 31 March

2017 Rm

2018 Rm

2019 Rm

2020 Rm

2021 Rm

DMTN bonds May 2016 – 2020 1 230 1 230 1 200 340 380 – 310

Commercial paper – 472 472 2 302 – – – –

Bank debt April 2015 – 2018 3 518 2 816 1, 2 and 3 1 297 663 735 100 191

Synergy May 2017 – September 2019 996 977 – 500 200 277 –

Proposed repayment profile – 6 216 5 495 1 799 1 503 1 315 377 501

% 35.8 27.4 20.8 6.9 9.1

% Post-repayments in April/May 2016 100 1 and 2 27.5 29.5 25.8 7.4 9.8

Note 1: Bank debt of R200 million and a R200 million corporate bond was repaid in April and May 2016 respectively from the proceeds of an equity raise in April 2016.Note 2: On 1 April 2016 R170 million commercial paper was repaid utilising a new three-year bank facility.Note 3: Bank debt includes GBP18 million facility.

Interest rate hedgingAt year-end net debt, excluding development loans and commercial paper, amounted to R4.83 billion. Swaps totalling R4.17 billion have been concluded which equates to 86.4% of debt.

A number of new swaps have been concluded to hedge new debt which was raised to finance acquisitions and to maintain hedging above 75%, as follows:

Swaps

Nominal value (Rm) 289.4 100.0 73.7 99.6 50.0Swap period 2 years 1.5 years 3 years 1 year 1.5 yearsMaturity date November 2017 May 2017 October 2018 September 2016 March 2017Rate (NACQ) (%)(1) 8.95 8.74 7.36 6.66 6.93

Swaps Post year-end

Nominal value (Rm) 100.0 110.0 143.1 143.1 140.0 30.0(£6.75 million) (£6.75 million)

Swap period 4 years 5 years 3 years 5 years 5 years 3 yearsMaturity date June 2020 March 2021 February 2019 February 2021 April 2021 April 2019Rate (NACQ) (%)(1) 7.75 7.97 0.86 1.08 7.97 7.75

(1) Excludes margin and debt raising costs.

Post year-end, additional interest rate swaps were concluded to hedge interest on 25% of the £18 million debt. 100% of the interest on this Sterling debt is now hedged. A new bank debt facility of R170 million was utilised to repay commercial paper on 1 April 2016 and the above mentioned post year-end swaps were entered into to hedge this new bank facility.

The current swaps in place represent three years’ cover.

Swap expiry profile per calendar year (excluding Synergy)

2016 2017 2018 2019 2020 2021 Total

270 792 791 543 783 393 3 572 7.6% 22.2% 22.1% 15.2% 21.9% 11.0% 100%

Synergy has R647 million swaps and fixed debt in place expiring between June 2016 and September 2020.

FINANCIAL PERFORMANCE continued 43

Vu


ort 2016

Results


The company’s borrowing capacity is unlimited in terms of its Memorandum of Incorporation (MOI). The group’s loan-to- value ratio at 31 March 2016 based on the directors’ valuations of the property portfolio was 31.9% (March 2015: 29.0%) compared to the bank’s covenants of 50%, the DMTN covenants of 40% in respect of those properties mortgaged as security under the DMTN programme and 45% in respect of total group debt as a percentage of the value of total group investment properties. The group has unutilised bank facilities of R560 million at 31 March 2016.

Group’s value added statementA summary of the Group’s value added statement for the years ended 31 March 2016 and 31 March 2015 is set out below:

R27 3691%

R505 15827%

R42 4432%

R315 75417%

R996 31253%

■ Dividends to shareholders ■ Depreciation ■ Deferred taxation ■ Remuneration and bene�ts including directors’ fees ■ Net �nance costs paid ■ Company taxation, DWT, PAYE, SDL ■ Municipal charges

R1 4870%

R1 5640%

VALUE DISTRIBUTION (R000/%)

2016

R30 9862%

R7 1611%R197 229

14%

R23 5202%

R774 21656%

R1 7180%

2015

R346 32525%

Valuation of portfolioThe 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 group’s property portfolio at R15.6 billion(i) as at 31 March 2016. This is R2.3 billion or 16.9% higher than the valuation as at 31 March 2015 mainly due to the acquisition of Queenstown Nonesi Mall, Vereeniging Bedworth Centre, Moruleng Mall (80%), Soshanguve Batho Plaza, Tzaneen Maake Plaza (40%), the Pretoria Silverton Industrial portfolio of six properties, and the development of Cape Town Parow De Tijger Day Clinic.

Kokstad Game Centre, Johannesburg Parktown Oakhurst, Centurion 259 West Street, Johannesburg Rosettenville Village Main Industrial Park and Cape Town Pinelands Pinepark were sold during the year. The market value of the stable portfolio increased by 8.3%. The calculated recurring forward yield for the portfolio is 9.2%.

The external valuations by Quadrant Properties (Pty) Ltd and Knight Frank (Pty) Ltd at 31 March 2016 of 52.2% of the total portfolio are in line with the directors’ valuations of the same properties.

(i) 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, which owns Moruleng Mall.

44

Vu


ort 2016

Results

PORTFOLIO REVIEW

Adding value through active asset management

During the past five years Vukile’s active hands-on approach to asset management delivered continuous results on both qualitative and quantitative measures. The team, with over 230 years of combined experience, continuously improves the quality of the portfolio through:

Value adding initiatives on the existing portfolio

Disposal of smaller non-core assets

Acquisition of high-quality retail centres.

•›•›•›

The impact of this active asset management is evident in the graph below:

MARKET VALUE(R/m2)


6 6297 477

8 976 9 96610 926

■ Stable portfolio (excluding sales and acquisitions) ■ Acquisitions since 2012 ■ Property sold ■ Average (excluding undeveloped land)

Total disposals for the period 2012 to 2016 amounted to R2.9 billion while acquisitions over the same period amounted to R8.5 billion. Over the same period the average value per m² increased from R6 629/m² to R10 926/m² clearly indicating the improved quality of the portfolio due to this focused asset management approach.

45

Vu


ort 2016

Results

PORTFOLIO REVIEW continued

Group property portfolio overviewThe group property portfolio at 31 March 2016 consisted of 104 properties with a total market value of R15.6 billion (excluding the 20% non-controlling interest in Moruleng Mall) and gross lettable area of 1.43 million m², with an average value of R150 million per property.

The geographical and sectoral distribution of the group’s portfolio is indicated in the graphs below. The portfolio is well represented in most of the South African provinces and Namibia. Some 81% of the gross income is derived from Gauteng, KwaZulu-Natal, Western Cape and Namibia.

SECTORAL PROFILE (BASED ON MARKET VALUE %)

■ Motor related ■ Hospital ■ Sovereign ■ Industrial

2010 2011 2012 2013 2014 2015 2016

■ Of�ces ■ Retail

15

017

2453

1 40

1626

53

15

016

2553

2 40

1332

49

2 310 10

2253

1 37 9

1664

1 3 6 815

67

n Retail n Offices n Industrial n Sovereign n Hospital n Motor related

SECTORAL PROFILE (% OF GROSS INCOME)

17%

8%8%

2%

1%

64%

VUKILE PORTFOLIO (% OF GROSS INCOME)

20%

10%

10%

2%

1%

57%

SYNERGY PORTFOLIO (% OF GROSS INCOME)

100%

SECTORAL PROFILE(% OF GLA)

16%

19%

8%

2%

1%

54%

VUKILE PORTFOLIO (% OF GLA)

19%

22%

9%

3%

1%

46%

SYNERGY PORTFOLIO (% OF GLA)

100%

46

Vu


ort 2016

Results


GEOGRAPHICAL PROFILE (% OF GROSS INCOME)

17%

11%

6%5%

5%

3% 3%3% 3%

3%

47%

VUKILE PORTFOLIO (% OF GROSS INCOME)

16%

6%

7%5%

4%

54%

SYNERGY PORTFOLIO (% OF GROSS INCOME)

11%

2% 9%

24%

32%

5%

12%

7%

n Large national and listed tenants and major franchises n National and listed tenants, franchised and medium to large professional firms n Other (Category A) (Category B) (Category C)

n Large national and listed tenants and major franchises n National and listed tenants, franchised and medium to large professional firms n Other n Government

n Gauteng n KwaZulu-Natal n Western Cape n Namibia n North West n Free State n Limpopo n Mpumalanga n Eastern CapeTop four regions account for 81% of exposure

GEOGRAPHICAL PROFILE(% OF GLA)

14%

9%

5%5%

4%

53%


12%

7%5%

4%

4%

60%


12%

4% 3%

3% 3% 3%

2%

24%

26%

11%

6%

9%

12%

TENANT PROFILE(% OF GLA)

11%

9%

29%

51%


12%10%

31%

47%


74%

6%

20%

RETAIL PORTFOLIO(% OF GLA)

9%

19%

72%


10%

18%

72%


74%

6%

20%

47

Vu


ort 2016

Results


The retail portfolio’s exposure to national, listed and franchised tenants is 81% in total.

Vukile’s tenant concentration risk is considered to be low as the top 10 tenants account for 39.6% of total GLA. If the Synergy portfolio is excluded, the top 10 tenants account for 38.6% of total GLA. Local, provincial and national government is the single largest tenant, occupying 10.4% of total GLA with Shoprite the second largest at 5.8% of total GLA. If the Synergy portfolio is excluded, the exposure to government and Shoprite is 12.1% and 5.8% respectively. The Synergy portfolio’s exposure to the top 10 tenants is 45%, with Spar the largest at 19.1% and Massmart at 6.3%.

Top 10 properties by value

Property Location SectorRentable

area m²

Directors’ valuation at

31 March 2016

Rm%

of totalValuation

R/m²

Boksburg East Rand Mall* Boksburg Retail 34 754 1 220 7.8 35 104

Durban Phoenix Plaza Durban Retail 24 363 747 4.8 30 661

Gugulethu Square Gugulethu Retail 25 322 429 2.8 16 942

Pretoria Navarre Building Pretoria Sovereign 47 202 413 2.6 8 750

Soweto Dobsonville Shopping Centre Soweto Retail 23 177 398 2.6 17 172

Moruleng Mall (80%) Moruleng Retail 25 137 387 2.5 15 396

Cape Town Bellville Louis Leipoldt Cape Town Hospital 22 311 377 2.4 16 897

Pinetown Pine Crest* Pinetown Retail 20 056 375 2.4 18 698

Randburg Square Randburg Retail 40 874 359 2.3 8 783

Queenstown Nonesi Mall Queenstown Retail 28 147 350 2.2 12 435

Total top 10 291 343 5 055 32.4 17 351

* Represents an undivided 50% share in this property.

Eastern Cape

Western Cape

KwaZulu-Natal

Free State

Namibia4

2

13

10

75

3

45

Gauteng

6

48

Vu


ort 2016

Results


Top 10 properties by sector

SectorRentable

area m²


31 March 2016

Rm%

of totalValuation

R/m²

Retail 221 830 4 265 27.3 19 226

Sovereign 47 202 413 2.7 8 750

Hospital 22 311 377 2.4 16 897

Total top 10 291 343 5 055 32.4 17 351

The 10 largest retail centres (representing 32% of the total retail portfolio value) reflects 89% exposure to national, listed and franchised tenants.

Top 10 retail centres (based on value)

Property


31 March 2016

Rm

% of total retail

portfolio value

National,listed and

franchised tenants

%

Boksburg East Rand Mall* 1 220 7.8 92.1

Durban Phoenix Plaza 747 4.8 80.4

Gugulethu Square 429 2.8 89.8

Soweto Dobsonville Shopping Centre 398 2.6 83.3

Moruleng Mall (80%) 387 2.5 81.6

Pinetown Pine Crest* 375 2.4 92.8

Randburg Square 359 2.3 84.5

Queenstown Nonesi Mall 350 2.2 96.5

Oshakati Shopping Centre 341 2.2 93.8

Vereeniging Bedworth Centre 339 2.2 94.8

Total top 10 4 945 31.8 89.2

* Represents an undivided 50% share in this property.

Property portfolio performanceNew leases and renewals in excess of 306 000m² with a contract value of R1.68 billion were concluded during the year. Some 70% of leases to be renewed during the year ended 31 March 2016 were renewed or are in the process of being renewed.

Details of large contracts concluded

Tenant Property Sector

Contract value

Rm

Lease duration

years

ADT Security Midrand Ulwazi Building Office 180.2 11

Shoprite Checkers Germiston Meadowdale Mall Retail 128.8 11

Sanlam Pretoria Lynnwood Sanlynn Office 53.2 5

Protea Hotels Bloemfontein Plaza Retail 38.8 10

Pep Stores Cape Town Bellville Tijger Park Office 31.5 5

Pick n Pay Durban Workshop Retail 30.2 7

Department of Rural Development Pretoria Arcadia Suncardia Office 28.5 4

Just Gym Germiston Meadowdale Mall Retail 26.3 12

Cambridge Supermarkets Emalahleni Highland Mews Retail 25.3 10

Spar KwaMashu Shopping Centre Retail 20.3 5

49

Vu


ort 2016

Results

Top retail centres

PORTFOLIO REVIEW continued50

Vu


ort 2016

Results

Average foot count per month

1 010 401

197Number of stores

East Rand MallOR Tambo International Airport is a key gateway in the area, and as such has a very well supported road and transport system. Convenient access from major highways, and ample free parking, make shopping a pleasure. The centre forms part of South Africa’s largest Pick n Pay Hypermarket, and with its well-planned tenant combination, includes all major chain stores and a host of smaller, specialised stores.

With the recent refurbishment of the building, contemporary bulkheads and ceilings were designed to blend in with the existing structure. Four metre high shopfronts, frameless shopfronts and glass balustrading was introduced with new tiles throughout the centre.

1Value: R1 220m# (7.8%)

Region: Gauteng

Gross lettable area: 69 508m2

Monthly rental*: R248/m2

National tenant exposure: 92%Average annual trading density: 30 424

Major tenants

Edgars 8 140m2 12%

Woolworths 7 636m2 11%

Mr Price 6 874m2 10%

Ster Kinekor 3 190m2 5%

Truworths 2 996m2 4%

* Average base rental excluding recoveries.# Vukile portion of property value.

Strategically placed

Top retail centres


850 000

109Number of stores

Phoenix PlazaPhoenix Plaza was built in 1993 and is situated north of Durban in the beautiful diverse province of KwaZulu-Natal.

Phoenix Plaza offers a unique shopping experience with a wide variety of eastern, western and speciality stores, presenting itself as a one-stop shopping destination.

2Value: R747m (4.8%)

Region: KwaZulu-Natal




Major tenants

Shoprite Checkers 3 830m2 16%

The Hub 2 456m2 10%

Jet Stores 1 154m2 5%

First National Bank 901m2 4%

Clicks 823m2 3%

* Average base rental excluding recoveries.


PORTFOLIO REVIEW continued 51

Vu


ort 2016

Results


950 000

83Number of stores

Gugulethu SquareGugulethu Square was established in 2009, in partnership between West Side Trading and esteemed businessman, Mzoli Ngcawuzele. The centre was the first step towards establishment of a Gugulethu central business district, which accelerated the township’s integration into the formal economy.

The centre’s architecture includes energy-efficient finishes, extensive natural lighting, eco-friendly materials, efficient use of space with roof parking, efficient artificial lighting and air-conditioning. Landscaping integrates the centre into the surrounding environment.

3Value: R429m (2.8%)

Region: Western Cape




Major tenants


Spar 2 924m2 12%


Cashbuild 1 320m2 5%

First National Bank 883m2 3%





890 000

73Number of stores

Dobsonville CentreDobsonville Shopping Centre was the first shopping centre in Soweto, and started trading in 1994, with Shoprite as anchor tenant. The centre brought much needed services and is well accepted by the community. With over 73 stores and a taxi rank for easy access, the centre has retained its significant association with the community.

Currently, the centre services the areas of Jabulani, Fleurhof, Braamfischer, Kagiso, Meadowlands, Mofolo and Zondi.

4Value: R398m (2.5%)

Region: Gauteng




Major tenants



Fruit and Veg City 1 000m2 4%

Mr Price 711m2 3%

Joshua Doore 705m2 3%



52

Vu


ort 2016

Results


80Number of stores

Moruleng MallMoruleng Mall opened its doors in October 2013. As the first mall of its kind in the densely populated, rural area of Moruleng, the development brings a world class shopping centre to the heart of a region with significant economic potential. The mall provides residents with choice, quality and convenience in a state-of-the-art shopping environment.

5Value: R387m (2.5%)

Region: Northwest




Major tenants


Pick n Pay 2 645m2 8%

Edgars 2 000m2 6%

Truworths 1 400m2 4%

Lifestyle Furnishers 948m2 3%


225 000Strategically placed



974 835

119Number of stores

Pine Crest CentrePine Crest Centre (previously Sanlam Centre) was established in 1988 and has served shoppers from the business, industrial and community sectors for over 27 years. The primary catchment area for Pine Crest Centre stretches from Kwadabeka in the north to KwaDengezi in the south, and from Cowies Hill in the east to Kloof in the west.

The centre’s strong tenancy in financial services, cellular, food and fashion makes it the most dominant centre in Pinetown.

The centre is highly visible, and a convenient one-stop retail destination with ample parking.

6Value: R375m# (2.4%)

Region: KwaZulu-Natal



National tenant exposure: 93%Average annual trading density:

23 942

Major tenants

Game Stores 5 556m2 14%



The Hub 2 610m2 7%

Virgin Active 2 350m2 6%# Vukile portion of property value.* Average base rental excluding recoveries.


53

Vu


ort 2016

Results


Randburg SquareRandburg Square shopping centre is situated in Randburg CBD in close proximity to established residential suburbs and has been serving these areas for over 35 years.

The centre has a very big catchment area due to a taxi rank close to the centre that mainly services Diepsloot, Randburg, Soweto and Cosmo City.

7

70Number of stores


797 174Strategically placed

Value: R359m (2.3%)

Region: Gauteng




Major tenants

OK Bazaars 8 463m2 21%


Gym Company 2 723m2 7%

Edgars 1 685m2 4%



Nonesi MallQueenstown in the Eastern Cape was founded in 1853. Nonesi Mall is a U-shaped, single-level centre with open parking and strong anchor tenants.

As a ± 28 147m2 premier shopping destination, the centre accommodates thousands of customers on a day-to-day basis, with an offering of approximately 80 shops.

When the mall opened in October 2012, it boosted employment by providing job opportunities for locals.

8

80Number of stores


Value: R350m (2.2%)

Region: Eastern Cape



National tenant exposure: 97%Average annual trading density:

23 882

Major tenants

Game Stores 4 819m2 17%




Edgars 1 500m2 5%


54

Vu


ort 2016

Results


40Number of stores


147 297

Bedworth CentreThe Bedworth Centre better, known as the Furniture Hub of the Vaal, is centrally situated between Vereeniging and Vanderbijlpark.

Because the centre offers 40 top stores under one roof, including retail giants such as Pick n Pay and Builders Warehouse, it is fast becoming a cherished part in the heart of the Vaal.

9Value: R339m (2.2%)

Region: Gauteng



National tenant exposure:

95%

Average annual trading density:

n/a

Major tenants

Pick n Pay 17 521m2 52%

Builders Warehouse 7 121m2 21%

Rochester 1 196m2 4%

Outdoor Warehouse 792m2 2%

Coricraft 619m2 2%



55

Vu


ort 2016

Results


The group lease expiry profile graph reflects that 28% of the leases are due for renewal in 2017. Approximately 33% of leases are due to expire in 2020 and beyond (up from 18% in the prior year).

VacanciesOn 31 March 2016 the portfolio’s vacancy (measured as a percentage of gross lettable area) was 3.9% compared to 4.6% at 31 March 2015.

If the current development vacancy of 2 767m² at East Rand Mall and Cape Town Bellville Barons is included in the 31 March 2016 vacancy, the vacancy on area increases from 3.9% to 4.1%.

At 31 March 2016, the portfolio’s vacancy (measured as a percentage of gross rental) was 5.0% compared to 5.2% at 31 March 2015.

The vacancy per sector (measured as a percentage of gross lettable area) is indicated in the adjacent graphs.

Office vacancies decreased considerably compared to the previous period. Since September 2015 the industrial vacancy was reduced from 5.9% to 4.3%, but it is still higher than the 1.9% as at March 2015.

VACANCY PROFILE (% of GLA)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

4.9

3.7

2.9 3.0 3.1

3.9

5.3

6.1

6.8

6.5

4.6

3.9

VACANCY PROFILE (% of GLA)

Retail Of�ces Industrial Sovereign Total

■ 31 March 2015 ■ 30 September 2015 ■ 31 March 2016

3.4

3.4

3.5

10.2

6.8

5.0

1.9

5.9

4.3

5.9

7.2

4.2 4.

7

4.6

3.9

The hospital and motor-related sectors had no vacancies during the period under review.

% OF CONTRACTUAL RENT

Vacant March 2017

March 2018

March 2019

March 2020

March 2021

Beyond March 2021

■ Cumulative as at March 2016 ■ Cumulative as at March 2015■ % of contractual rent

GROUP LEASE EXPIRY (% of GLA)

Vacant March 2017

March 2018

March 2019

March 2020

March 2021

Beyond March 2021

■ GLA ■ Cumulative as at March 2016 ■ Cumulative as at March 2015

56

Vu


ort 2016

Results

The properties with the highest vacancies are reflected below.

Individual properties vacancy profile(% of GLA) (vacancy >1 000m²)

RETAIL: VUKILE (3.2%, up from 2.5%)

Randburg Square (6.6%)

Roodepoort Hillfox Power Centre (8.2%)

Bloemfontein Plazi (4.9%)

Letlhabile Mall (8.3%)

Mbombela Shoprite Centre (7.4%)

Hammanskraal Renbro Shopping Centre (11.1%)

Atlantis City Shopping Centre (6%)

Hartbeespoort Sediba Shopping Centre (11.1%)

0m2 2 000m2 4 000m2 6 000m2 8 000m2 10 000m2

■ Vacant area March 2015 ■ Vacant area March 2016

Emalahleni Highland Mews (7.4%)

Ermelo Game Centre (15.7%)

Roodepoort Ruimsig Shopping Centre (4.9%)

Pretoria Arcadia Suncardia (5.5%)

Johannesburg Isle of Houghton (7.6%)

Cape Town Bellville Tijger Park (1.8%)

Midrand Ulwazi Building (0%)

Midrand IBG (17.6%)

Sandton Bryanston St Andrews Complex (14.8)

Pretoria Hat�eld 1166 Francis Baard Street (38.2%)

Pretoria De Bruyn Park (4%)

Bloemfontein Fedsure House (17.9%)

Pretoria Navarre Building (1.4%)

Roodepoort Robertvill Industrial Park (10.9%)

Germiston Meadowdale R24 (8.9%)

Sandton Linbro 7 On Mastiff Business Park (17.9%)

Randburg Trevallyn Industrial Park (7.2%)

Germiston Meadowdale Mall (0%)

Boksburg East Rand Mall* (4.1%)

Cape Town Bellville Barons (20%)

3 5832 682

1 4373 125

2 3211 880

1 41171

1 041

1 2381 480

1 1281 326

2 2011 209

1 2251 264

1 1251 0401 085

545

8 7201 582

1 4502 136

1 817355

1 622

1 5791 4991 5401 5051 480

1 098

4 6711 638

5941 944

1 008663

3 6953 075

1 0163 120

2 695

2 307

4 741

1 3121 4081 3581 358

RETAIL: SYNERGY (4.5%, down from 5.6%)

OFFICES (5.0%, down from 10.2%)

SOVEREIGN (4.2%, down from 5.9%)

Industrial (4.3%, up from 1.9%)

DEVELOPMENT VACANCY (6.7%, down from 10%)


* 50% interest.

57

Vu


ort 2016

Results


The engagement in various initiatives to reduce portfolio vacancies (including broker focus groups, the publishing of vacancy information directly to brokers, utilising the Vukile vacancy website, leasing incentives on selected properties, incentives to property management companies and leasing brokers) delivered significant results during the 2016 financial year in reducing the vacancy to below 4%.

GLA summary GLA m²

Balance at 1 April 2015 1 339 090GLA adjustments (2 674)Disposals (38 153)Acquisitions and extensions 129 328

Balance at 31 March 2016 1 427 591

Vacancy summary Area m² %

Balance at 31 March 2015 61 354 4.6 Less: Properties sold since 31 March 2015 (3 391) (8.9)

Remaining portfolio balance at 31 March 2015 57 963 4.5

Leases expired or terminated early 135 898Renewal of expired leases (158 475)Contracts to be renewed (45 869)Tenants vacated (85 181)Development vacancy (2 767)New letting of vacant space 153 570

Balance at 31 March 2016 55 139 3.9

Financial performance for the stable portfolio (Rm) 2016 2015 % change

Property revenue 1 192 1 129 5.6 Recurring net property expenses 188 175 7.4

Recurring net property income 1 004 954 5.2 Non-recurring property expenses (refurbishment and leasing commission) 20 24 (15.7)

Net property income 984 930 5.8

Property expense ratios (%)* 15.8 15.5 1.8

* Net recurring cost-to-property revenue ratios (excluding asset management fee). Previously the cost-to-income ratio was calculated on a gross basis (recoveries included in income), which was changed to a net cost-to-income ratio (recoveries included in expenses) to align with industry best practice.

Base rentals(excluding recoveries)The weighted average monthly base rental rates per sector, between 31 March 2015 and 31 March 2016, are set out in the graph below.

WEIGHTED AVERAGE BASE RENTALS(Excluding recoveries) (R/m2)

■ March 2015 ■ March 2016

Retail Vukile Retail Synergy Of�ces Industrial Sovereign Hospital Motor related Total

110.

23

5.3% 7.1% 3.2% 6.5% 9.0% 11.3% 6.4%7.0%

116.

11

103.

07

110.

35

91.6

3

94.5

6

41.9

4

44.6

5

93.1

1

101.

50

95.7

7

106.

55

113.

93

121.

91

90.9

0

96.7

1

The percentages in the above graph represent the annual escalation.

58

Vu


ort 2016

Results

The weighted average base rentals per sector and per property are reflected in the following graphs.

WEIGHTED AVERAGE RENTALS – RETAIL VUKILE (Excluding recoveries) (R/m2)

Boksburg East Rand Mall (50%)

Durban Phoenix Plaza

Durban Workshop

Mbombela Truworths Centre

Windhoek 269 Independence Avenue

Oshakati Shopping Centre

Pietermaritzburg The Victoria Centre

Katutura Shoprite Centre

Soweto Dobsonville Shopping Centre

Sandton Bryanston Grosvenor Shopping Centre

Pinetown Pine Crest (50%)

Oshikango Spar Centre

Daveyton Shopping Centre

Ga-Kgapane Modjadji Plaza (30%)

Giyani Plaza

Queenstown Nonesi Mall

Ondangwa Shoprite Centre

Piet Retief Shopping Centre

Moruleng Mall (80%)

Hammarsdale Junction

Tzaneen Maake Plaza (70%)

Rustenburg Edgars Building

Monsterlus Moratiwa Crossing (94.50%)

Soshanguve Batho Plaza

Randburg Square

Letlhabile Mall

Vereeniging Bedworth Centre

Germiston Meadowdale Mall (67%)

Bloemfontein Plaza

Mbombela Shoprite Centre

Roodepoort Hillfox Power Centre

248.49

227.72

164.34

148.36

147.59

115.23

114.56

117.26

124.73

118.93

135.26

139.40

130.29

112.81

110.70

110.53

109.41

108.72

107.67

101.98

99.19

99.17

97.25

95.12

90.09

88.73

79.05

72.36

80.50

79.33

65.27

0 50 100 150 200 250

Weighted average R116.11

WEIGHTED AVERAGE RENTALS – RETAIL SYNERGY (Excluding recoveries) (R/m2)

Gugulethu Square

Atlantis City Shopping Centre

Hillcrest Richdens Shopping Centre

Phuthaditjhaba Setsing Crescent

Hammanskraal Renbro Shopping Centre

Welgedacht Van Riebeeckshof Shopping Centre

Newcastle Taxi City Shopping Centre

Hartbeespoort Sediba Shopping Centre

KwaMashu Shopping Centre

Ulundi King Senzangakona Shopping Centre

Emalahlenin Highland Mews

Makhado Nzhelele Valley Shopping Centre

Roodepoort Ruimsig Shopping Centre

Elim Hubyeni Shopping Centre

Ermelo Game Centre

0 30 60 12090 150

133.17

130.32

121.72

115.68

112.73

109.74

109.61

105.84

105.21

101.66

97.33

95.40

95.37

83.83

82.12 Weighted average R110.35

PORTFOLIO REVIEW continued 59

Vu


ort 2016

Results


WEIGHTED AVERAGE RENTALS – OFFICES (Excluding recoveries) (R/m2)

Pretoria Lynnwood SanlynnJohannesburg Houghton Estate Oxford Terrace

Johannesburg Houghton 1 West StreetCape Town Bellville Suntyger

Sandton Hyde Park 50 Sixth Road

Midrand IBGPretoria Lynnwood Sunwood Park

Sandton Rivonia Tuscany Section 10

Cape Town Bellville Tijger ParkSandton Rivonia Tuscany Section 8

Sandton Sunninghill Sunhill ParkEast London Vincent Of�ce Park

Cape Town Parow De Tijger Of�ce Park

Pretoria Arcadia SuncardiaPretoria Hat�eld Festival Street Of�ces

Johannesburg Isle of HoughtonJohannesburg Parktown 55 Empire Road

Pretoria Hat�eld 1166 Francis Baard StreetSandton Rivonia 36 Homestead Road

Sandton Sunninghill PlaceSandton Rivonia Tuscany Section 7

Sandton Bryanston St Andrews ComplexSandton Bryanston Ascot Of�ces

Sandton Rivonia Tuscany Section 6Sandton Rivonia Tuscany Section 5

Pretoria High Court ChambersMidrand Ulwazi Building

Sandton Rivonia Tuscany Section 9Pretoria Lynnwood Excel Park

139.44137.55

129.11121.70

119.74

95.4995.35

95.76

97.6997.44

100.13101.37

98.98

94.2291.8691.5590.4587.98

84.5384.4084.0782.84

80.0078.5677.48

74.4674.26

65.7771.91

0 30 60 90 120 150


WEIGHTED AVERAGE RENTALS – INDUSTRIAL (Excluding recoveries) (R/m2)

Sandton Linbro 7 On Mastiff Business Park

Midrand Sanitary City

Pretoria Silverton 22 Axle Street

Pinetown Richmond Industrial Park

Pretoria Silverton 301 Battery Street

Kempton Park Spartan Warehouse


Pretoria Silverton 34 Bearing Crescent

Germiston Meadowdale R24

Centurion Samrand N1

Randburg Tungsten Industrial Park

Midrand Allandale Industrial Park

Pinetown Westmead Kyalami Industrial Park

Pretoria Silverton 330 Alwyn Street

Randburg Trevallyn Industrial Park

Cape Town Parow Industrial Park

Roodepoort Robertville Industrial Park

Durban Valley View Industrial Park


Pretoria Rosslyn Warehouse

57.72

56.57

54.76

52.34

50.93

47.25

47.10

47.36

48.01

47.51

49.14

49.84

48.98

42.96

40.99

39.88

38.83

37.11

37.59

28.64

0 10 20 30 40 50 60


60

Vu


ort 2016

Results

WEIGHTED AVERAGE RENTALS OTHER (Excluding recoveries) (R/m2)

Pretoria Navarre BuildingPretoria Koedoe ArcadePretoria De Bruyn Park

Bloemfontein Fedsure House

Cape Town Parow De Tijger Day ClinicCape Town Bellville Louis Leipoldt

Cape Town Bellville Barons Motor related

Hospital

Sovereign

Sandton Linbro Galaxy Drive Showroom

0 50 100 150 200

112.3399.70

93.2180.21

102.95

77.32

148.18

177.78


RENTAL ESCALATION (Contracted rental escalation profile) (Average annual escalation) (%)

Retail Vukile

Retail Synergy

Offices Industrial Sovereign Hospital Motor related

Total

7.5

7.2 7.5 8.

1 8.9

7.5

7.0 7.

6

LEASING ACTIVITY(Lease renewals) (Escalation on expiry rentals) (%)

Retail Vukile

Retail Synergy

Of�ces Industrial Average

13.2

9.8

4.4 5.

0

9.1

LEASING ACTIVITY(New leases concluded) (Ratio of rental concluded against budget) (%)

Retail Vukile

Retail Synergy

Of�ces SovereignIndustrial Average

106.

2

106.

1

99.8

85.0 98

.6109.

0

Average contractual rental escalation of 7.6% is slightly lower than the previous year (7.8%).

The average escalation on expiry rentals on the total portfolio of 9.1% is very positive against the backdrop of a difficult trading environment. Positive reversions were achieved across all sectors with retail at 12.3%, offices at 4.4% and industrial at 5.0%.

The sovereign portfolio had a few smaller lease renewals which did not impact on the overall portfolio trends.

New leases were concluded above budget in the retail sector and the sovereign portfolio, on budget in the office sector and lower than budget in the industrial sector.

The low percentage reflected for the industrial sector is due to leasing incentives offered to tenants to reduce the vacancies.

61

Vu


ort 2016

Results


Expense categories and ratiosRecurring gross property expenses have increased year-on-year mostly due to excessive increases in electricity and water tariffs and rates and taxes.

The various cost components are reflected in the graph below:

% of recurring expenses Total portfolio Vukile Synergy

■ Goverment services 48 48 47 ■ Rates and taxes 18 18 17■ Cleaning and security 11 11 13■ Property management fee 7 7 8■ Maintenance contracts 6 6 4■ Sundry expenses 5 6 1■ Asset management fee 2 1 8■ Bad debt 2 2 1■ Insurance premiums 1 1 184% of costs from top four categories.

18%

11%

7%6%

5%

48%

2% 1%

2%

The group continuously evaluates methods of containing costs in the portfolio. The stable portfolio’s recurring net costs-to-income ratios have remained stable from 15.7% in March 2015 to 15.8% in March 2016 and hence have been well contained.

RATIO OF NET RECURRING COST TO PROPERTY REVENUE

March 2010 March 2011 March 2012 March 2013 March 2014 March 2015 March 2016

■ All recurring expenses

Stable portfolio excluding recent acquisitions and salesPreviously the cost-to-income ratio was calculated on a gross basis (recoveries included in income), which was changed to a net cost-to-income ratio (recoveries included in expenses) to align with industry best practice.

■ All recurring expenses excluding rates and taxes and electricity

15.7

12.4

15.5

11.5

17.2

12.9

18.7

15.0 16

.3

14.1 15

.5

14.5 15

.8

14.2

Portfolio growth, redevelopments and sales Upgrades/redevelopments – R654 millionAs part of the ongoing strategy to improve the quality of the existing portfolio, the following projects have been completed or are in progress.

East Rand MallEast Rand Mall (in which the company owns a 50% undivided share with Redefine Properties Limited) has been upgraded and extended at a total cost of R440 million, of which Vukile’s share is R220 million. The projected yield on the total capex is 5.3%. East Rand Mall, regarded as one of the top regional malls in South Africa, has a GLA of 63 460m², which has increased to about 70 000m². The main entrances, malls and toilets have been upgraded, while some areas have been reconfigured to allow better utilisation of the available space. New generators have been installed to provide full backup power to the centre during power outages, while a new PV cell solar installation on the roof of the parking deck will decrease the centre’s reliance on municipal power.

The extension of 6 540m² incorporates a relocated entrance four and a youth-oriented mall anchored by a Mr Price emporium, consisting of its apparel, sport and home outlets and comprising about 3 700m². Cotton-On (1 250m²) will trade in close proximity to Mr Price.

The major portion of the extensions and upgrades was completed in April 2016 with the reconfiguration of the premises for a high-profile international retailer scheduled for completion in March 2017.

Together with the adjacent East Point (previously East Rand Galleria), which is also being upgraded, shoppers will experience a dominant super-regional shopping centre with a GLA of about 120 000m². Parow De Tijger: Cure Day ClinicThe existing De Tijger office park consists of four separate blocks with a total GLA of 4 118m². The new Cure Day Clinic, with a GLA of 1 130m², has been completed at a capex of R24.7 million and a yield of 9.3%. A 10-year lease with an escalation of 8.0% per year has been concluded with the Pretoria-based Cure Day Clinic group.

Durban: The WorkshopThe Workshop in Durban has been upgraded at a cost of R75 million.

The following areas have already been completed:�g The upgrade of the various ablution facilities�g The reconfiguration and upgrade of the food court�g Replacement of the shop fronts and mall tiles�g Installation of new ceilings in selected areas�g Additional lighting in the mall areas and an increase of natural light�g The installation of a new glass-enclosed passenger lift.

62

Vu


ort 2016

Results


The total capex is R35.4 million. A 10-year lease has been concluded with a blue chip tenant. A yield of 15.1%, net of costs, is anticipated.

Bellville: Tijger Park 4 and 5 upgradeThe Tijger Park 4 office building has been let to a large blue-chip tenant. The lease period is five years with a gross rental of R103/m² per month escalating at 7% per year.

In terms of the lease agreement, the building’s façade, entrance foyer and toilet blocks will be upgraded in line with the recently completed upgrades to the Tijger Park buildings 1, 2 and 3. In addition, the roof at first-floor level over the atrium will be replaced by a new roof at the fourth- floor level. This will allow additional lease area of about 225m² to be created on the second and third floor.

Sections of the external façades, the entrance foyer, lift lobbies and toilet blocks of Tijger Park 5, which is the newest of the five office buildings, will be upgraded.

The total capex approved is R20.0 million and the project is scheduled for completion by August 2016.

Dobsonville Centre: extension and partial upgradeDobsonville Centre, with a GLA of 23 177m², is situated in northern Soweto. The centre, which was last upgraded in 2008, trades well and regular requests are received from prospective tenants wanting to lease premises.

An amount of R105.0 million was approved in October 2015 for the demolition of an existing office block on the site, the extension of the shopping centre and the upgrade of the entrances and the food court area. The proposed extension to the northern side of the centre will add about 6 000m² GLA, while the food court area will be extended by about 1 100m². The projected net yield is 9.5%.

The project approval is conditional upon finalising the proposed Pick n Pay lease plus further leases for at least 60% of the remainder of the additional GLA.

New tenants that have already commenced trading in the centre since the upgrade started include Pep Stores, Dunns, Ackermans, McDonald’s, KFC, Pie City, Ice Cream Express, Fish Corner, Edgars Connect, Spec Savers, Gingers International and FNB. Le Coq Sportif and Bidvest Bank will start trading soon.

Additional work to be completed by June 2016 includes the upgrade to the parking garage and the exterior of the building.

Pretoria: Sanlynn Office Park The Sanlynn Office Park consists of two office blocks with a total GLA of 8 624m², of which 6 162m² (71%) is let to Sanlam. The Sanlam lease expired in December 2015 but has been renewed for another five years. The external façades, toilet blocks and parking areas have been upgraded. The current upgrade will bring the aesthetics of the buildings in line with the latest new office developments on Lynnwood Road.

The total capex is R14 million and the project was completed by the end of November 2015.

Pretoria: Arcadia Suncardia The Arcadia Suncardia building is made up of a retail section on the first two floors, with an office block on top. The total GLA of the building is 28 937m², with retail comprising 37% of the total area. The upgrade to the external façades, entrances and the malls in the retail portion was completed in November 2015 at a total capex of R15 million. The upgrade is aimed at creating an inviting and pleasant environment for both tenants and visitors to Suncardia, thus improving its marketability.

Bellville: Barons VW buildingThe Bellville Barons VW building is situated at the Durban Road intersection with the N1 highway.

The first phase will be the installation of the workshop and services area in the current vacant areas and should be completed by June 2016. The second phase is scheduled for completion by the end of September 2017.

Germiston: Meadowdale MallIn pursuit of Vukile’s desire to cultivate mutually beneficial partnerships, it entered into a sale and development agreement with the Moolman group for the sale of a 33% interest in the centre, and the refurbishing and expansion of the centre by 9 400m². The extended centre measures 45 000m² of which Checkers and House and Home occupy 23 100m². The Checkers and House and Home lease expires at the end of May 2016 and has been renewed for a further 10-year period with the refurbishment and expansion project. The refurbishment project included the upgrading of the external façade, refurbishment of internal ceilings and bulkheads, retiling of the mall area and repairing the parking area and access roads. Checkers and House and Home also modernised their outlets. The capital expenditure and allowances paid on the refurbishment of the existing centre amounted to R65 million for Vukile’s 67% share. The extension of the centre by 9 400m² was completed and opened to the public at the end of October 2015. The new extension is anchored by Meat World (1 000m²), Apple Tree (1 840m²), Waltons (900m²), Crazy Plastics (1 000m²) and three fast food outlets, KFC, McDonald’s and Nandos. This expansion will attract shoppers from the strip centres located on Edendale Road, which have deteriorated significantly over the past few years. The capital expenditure for this extension amounted to R70 million for Vukile’s 67% share with an expected initial yield of 10% in the first year. Feedback from tenants and shoppers since the re-launch has been extremely positive.

63

Vu


ort 2016

Results


Current Vukile projectsA summary of major capex projects approved and incurred to 31 March 2016 is set out below:

Capex to date

PropertyApproved

R

To March 2015

R

April 2015 toMarch 2016

R

Outstandingbalance

R

Louis Leipoldt Medical Centre 22 000 000 – – 22 000 000 Tijger Park 1, 2 and 3 upgrade 52 300 000 50 906 382 975 558 418 060 Durban Workshop 75 000 000 21 841 857 44 336 353 8 821 790 East Rand Mall (50%) 220 000 000 14 079 327 123 969 690 81 950 983 Parow Cure Day Clinic 24 700 000 6 681 951 18 018 049 – Pretoria Sanlynn 14 000 000 – 13 778 222 221 778 Pretoria Suncardia 15 000 000 – 13 882 518 1 117 482 Tijger Park 4 and 5 upgrade 20 000 000 – 3 788 570 16 211 430 Meadowdale Mall 127 501 000 13 972 357 92 335 419 21 193 224 Randburg Square 83 419 489 – 20 023 764 63 395 725 Bellville Barons Ford 35 400 000 – 4 927 845 30 472 155 Dobsonville Centre 105 000 000 – 1 243 925 103 756 075 Springs Mall (25%)(i) 259 625 000 – 57 476 000 202 149 000 Thavhani Mall (33%)(i) 350 076 000 – – 350 076 000

1 404 021 489 107 481 874 394 755 913 901 783 702

(i) The financing for Springs Mall and Thavhani Mall has already been raised and is invested in a two-year deposit earning 8.4% per annum, pending completion of these two malls.

The above projects will be financed out of the proceeds from property sales and bank facilities.

Acquisitions – R1.95 billionMoruleng Mall and Batho PlazaVukile acquired two retail centres from New Africa Developments (Pty) Ltd. Moruleng Mall is a 31 421m² regional shopping centre located in the North West province with a national tenant mix of 88%. Anchor tenants include Shoprite, Pick n Pay, Edcon and the Truworths Group. A purchase price of R325.8 million was paid to acquire 80% of Moruleng at an initial yield of 8.68%. The remaining 20% is owned by the Bakgatla-Ba-Kgafela. Moruleng Mall was transferred in April 2015.

Batho Plaza is a 13 338m² centre located in Soshanguve, Gauteng, with a national tenant mix of 80%. Anchor tenants include Shoprite and Cashbuild. The property was purchased for R143.8 million at an initial yield of 9.52%. Batho Plaza was transferred in June 2015.

Nonesi Mall Nonesi Mall is a 28 147m² regional shopping centre located in Queenstown, Eastern Cape with a national tenant mix of 96%. Anchor tenants include Checkers, Pick n Pay, Woolworths, Edcon and Massmart. The property was purchased for R376.6 million at an initial yield of 8.25% and transfer was effected in June 2015.

Silverton industrial portfolio Vukile purchased a distribution warehousing portfolio from the HL Group for R100.8 million at an initial yield of 9.25%. The portfolio comprises six buildings located in close proximity to each other in the Silverton industrial area. Notable tenants include Massmart, Edcon and Topmed. Transfer took place in July 2015.

64

Vu


ort 2016

Results


Springs MallVukile has agreed to acquire a 25% stake in the 44 662m² Springs Mall for R259.6 million which is being developed and managed by Blue Crane Eco Mall (Pty) Ltd, in which Flanagan & Gerard is a shareholder, together with local partners Murinda Investments and the D’Arrigo family.

The mall is located just south of the Springs CBD, in a prime location at the R51 off-ramp of the N17. It is currently 85% let with confirmed anchor tenants including Pick n Pay, Checkers, Woolworths and Edgars. Springs Mall is currently under construction and is scheduled for completion in March 2017.

The funding for both the above mall developments is in place by way of the R600 million two-year deposit funded from the R1.1 billion equity raise in May 2015.

Once completed, and based on the cost at which the equity was raised for the developments, both malls will enter the portfolio on a yield accretive basis.

70% of Maake PlazaVukile owns a 30% undivided share in Maake Plaza, a 15 752m² community centre located in Tzaneen district, Limpopo, which was acquired during July 2014. The acquisition of a further 40% in the centre at a consideration of R61.6 million and an initial yield of 9.7% was finalised during February 2016.

Atlantic LeafVukile has entered into a strategic relationship with Atlantic Leaf. Atlantic Leaf is a Mauritius-domiciled real estate

Bedworth CentreBedworth Centre was transferred to Vukile during October 2015 for R335 million at an initial yield of 8.75%. The centre was jointly owned by Flanagan & Gerard Property Investment & Development and the Moolman group. The Bedworth Centre is a 33 937m² small regional shopping centre located in Bedworth Park in Vereeniging, Gauteng. The centre is anchored by a Pick n Pay Hyper and Builders Warehouse and has an exceptional lease expiry profile due to these two anchor tenants, which make up over 75% of the centre, expiring January 2024 and February 2020 respectively. The national tenant component of the centre is just under 90% of the total GLA.

Thavhani MallVukile secured a 33% stake in the 50 000m² Thavhani Mall at Thavhani City in Thohoyandou, Limpopo, for R350.1 million after concluding a deal with the developers, Thavhani Property Investments (Pty) Ltd.

Thavhani Property Investments is owned by the pre-eminent shopping centre developers, Flanagan & Gerard Property Investment & Development, together with local partners.

Thavhani Mall is currently under construction and is scheduled for completion in August 2017. It is being developed on a prime site in Thohoyandou, at the intersection of the R524 road to Louis Trichardt (Makhado) and the new Giyani Road to Sibasa. Thavhani Mall is now more than 75% let with confirmed anchor tenants including Pick n Pay, Super Spar, Woolworths and Edgars, while a broad range of other national retailers will be part of the tenant mix.

investment company, focusing on high- quality real estate assets in the United Kingdom. Atlantic Leaf has a primary listing on the Official List of the Stock Exchange of Mauritius Limited (the SEM) and a secondary listing on the Alternative Exchange of the JSE Limited. Atlantic Leaf has a market capitalisation at 31 March 2016 of approximately R2.9 billion.

Under the terms of the strategic relationship, Vukile subscribed for 16 139 668 new shares in Atlantic Leaf on the JSE Limited, at a price of R20.08 per share, to a value of R350 million on 1 October 2015 at a forward dividend yield of 8.8%. This equated to 20.5% of Atlantic Leaf’s total shares in issue. Laurence Rapp, CEO of Vukile, was appointed to the board of Atlantic Leaf as a non-executive director and is a member of the investment committee.

On 16 February 2016, Vukile further participated in a private placement of Atlantic Leaf shares by subscribing for an additional 16 071 428 new shares in Atlantic Leaf on the SEM, at a price of £1.12 (R22.70) per share, to a value of R408.5 million at a forward dividend yield of 7.9%. This transaction increased Vukile’s shareholding in Atlantic Leaf to 26.1%.

65

Vu


ort 2016

Results

PARTNERSHIPS

The proceeds from property sales will be utilised to acquire properties that conform to Vukile’s investment requirements and/or to fund expansions and revamps, thereby further enhancing the quality of the portfolio and also to repay debt.

Vukile adopted an internal asset management model in September 2009. Prior to this, the asset management function was outsourced to Sanlam Properties (Pty) Ltd.

Management modelThe group has adopted an outsourced property management model since its listing in 2004 and believes that it is still the best model given the current size of the portfolio. This model allows the asset managers to focus on strategic initiatives involving the property portfolio while the property managers focus more on the operational management of the properties. In other words, asset management provides the strategic direction, guidance and mandates in accordance with which the property managers need to operate the properties on a day-to-day basis.

Currently the property management for the Vukile and Synergy property portfolio is outsourced to Broll Property Group (Pty) Ltd (Broll) for the management of 55 properties with a market value of R6.6 billion, including Pine Crest in which

Vukile holds a 50% share, JHI Properties (Pty) Ltd (JHI) for the management of 43 properties with a market value of R7.9 billion, including East Rand Mall in which Vukile holds a 50% interest, and Encha Property Services (Pty) Ltd for the management of four properties with a market value of R1.0 billion. McCormick Property Development (Pty) Ltd manages two properties at a value of R0.1 billion.

The relationship between Vukile and the property managers is managed by service level agreements with specific performance clauses and formalised monthly meetings held with the property managers to monitor performance and operational issues. In addition to formalised meetings, our asset managers and the property managers interact frequently to discuss property specific issues. The property managers are mainly responsible for daily property operations such as leasing, invoicing of tenants, debt collection, maintenance, tenant interaction, financial administration and the management of relationships with third-party service providers and local government.

Property managersJHI has successfully managed the bulk of the Vukile property portfolio since the inception of the fund in 2004 and currently manages 51% of the fund based on value.

JHI is an expert in the field of property management with a proven track record in delivering comprehensive property service offerings to a wide client base, with property assets under management of R130 billion. This long-term relationship is based on a solid foundation of shared values and goals. JHI provides insights and expertise in order to add value to the Vukile property portfolio, while it is also beneficial to JHI by enhancing the quality and value of the assets under their management. The qualities that set JHI apart, and which initially attracted Vukile’s attention, continue to keep the relationship firmly grounded.

Broll Property Group, with total assets under property management of R112.4 billion in SA and R17.3 billion in the rest of Africa, continued to manage a portfolio of properties equal to 42% of the fund based on value as at 31 March 2016. This dedicated business unit within Broll has gained an intimate knowledge of the portfolio and shares the same vision as Vukile for these properties, extracting value with a common value system and working towards the same goals. We are confident that the relationship is growing from strength to strength.

Encha Property Services (EPS) is a predominantly black-owned, Tshwane-based property management company, with specialised knowledge of the Pretoria market. EPS manages a portfolio of approximately R3.5 billion. In 2017 EPS will celebrate 50 years of service to the industry. EPS prides itself in its policy of employing quality, experienced and knowledgeable property managers that are able to add value to the properties within their portfolios, thus ensuring that clients receive quality service and outstanding asset management. The sovereign-tenanted portfolio of Vukile (6% of the fund, based on value as at 31 March 2016) will be managed with an understanding of Vukile’s requirements as EPS develops the relationship with Vukile.

Atlantic Leaf holds a portfolio of 54 properties, valued at £264 million, with a total GLA of 335 000m2, a weighted average unexpired lease term of 12.9 years, and an average asset yield of 7.2%. The properties are predominantly high-quality industrial and logistics facilities let to blue-chip tenants and located across the United Kingdom.

Property sales concluded during the year – R271 millionIn line with the group’s winning strategy the following non-core properties were disposed of during the year:

Sales price R000

Yield % Dates of sale

Johannesburg Rosettenville Village Main 24 395 9.9 6 July 2015Centurion 259 West Street 30 215 10.4 20 August 2015Johannesburg Parktown Oakhurst 71 000 9.5 26 August 2015Kokstad Game Centre 133 000 9.1 1 December 2015Cape Town Pinelands Pinepark 12 350 Vacant 1 March 2016

270 960

66

Vu


ort 2016

Results

The acquisition of a 30% interest in Modjadji Plaza and 70% interest in Maake Plaza in which the McCormick group holds the balance, initiated the joint venture agreement between Vukile and the McCormick group with more acquisitions to follow in the short to medium term. As the majority shareholder, McCormick Property Development (MPD) will continue managing these properties. MPD pioneered retail development within the South African emerging market since 1983 and remains a leader in this field to this day.

The company regards the relationship with its appointed property managers as one of the most important, if not the most important partnership, and will endeavour to grow these partnerships as the portfolio grows.

Leasing brokersDuring the year under review, Vukile continued building relationships with brokers nationwide. Our monthly vacancy schedule is distributed via the Vukile website (www.vukile.co.za) where users can access the latest vacancies for both portfolios under management and download the updated vacancy schedules. Large vacancies are marketed directly to brokers by means of specific broker functions and one-on-one engagements.

Brokers also continue to receive the vacancy schedule directly via e-mail. Broker liaison is facilitated by dedicated staff members employed by our property managers and this personalised service ensures that brokers’ queries receive prompt attention.

Brokers and auctioneers play an important role, especially introducing new players in the property market. During the past financial year, brokers and auctioneers were involved in four registered sales transactions to the value of R200 million.

Developers Recent transactions concluded are:�g The redevelopment and extension of Vukile’s Meadowdale Mall by 9 000m²

with the Moolman group, who acquired a 33% interest in the centre.

�g The acquisition by Vukile of a 33% interest in Flanagan & Gerard’s Thavhani Mall, Thohoyandou (50 000m²/ R350 million) and 25% in their Springs Mall (47 000m²/R260 million) developments.

�g The extension and upgrade together with Flanagan & Gerard of a recently acquired Vukile shopping centre is also being investigated.

Vukile’s tenants and their customersVukile’s philosophy remains to offer its tenants best value for money in a specific area, by providing an enhanced shopping or business experience which is aligned with the aspirational needs of its tenants and clients. Our alternative income initiatives will further boost our understanding of consumers and how best to engage with shoppers at our centres.

The company understands that the success of its tenants’ businesses is closely linked to that of the company. Vukile continuously utilises its financing facilities and free cash from disposals to invest in the upgrade of its portfolio, thereby providing better facilities for its tenants. In time, improved facilities will attract customers and allow tenants to realise their full potential, thus improving their overall performance.

When Vukile acquires a property, be it retail, office or industrial, it does so after a rigorous process of internal risk assessment. In particular, the long-term demand for the premises, age, accessibility and suitability for tenants’ needs are considered. Vukile takes a long-term view of these properties and, as such, is committed to ensuring that they provide a solid platform from which its tenants can build their own businesses.

Due to the fact that a substantial portion of Vukile’s retail portfolio is situated in rural and township areas of South Africa, it was relatively protected from the impact of the recent global financial crisis. Further protection results from the 81% of national tenants in these centres selling staple goods with a strong brand loyalty.

A further consideration is the correct tenant mix. Vukile is mindful of the mix of line retailers to complement national tenants in order to provide more choice to its retail customers.

The executive and asset management teams will continue with their direct contact sessions with national tenants and larger commercial and industrial tenants in order to build relationships with these tenants and align our strategies.

PARTNERSHIPS continued 67

Vu


ort 2016

Results

HUMAN CAPITAL

Quality managementThe Vukile workforce consists of 32 people. The management team has over 250 years’ experience within the property sector.

Building competence and capacityLearning and developmentVukile is committed to creating a work environment where its employees are exposed to continuous learning to improve themselves and to secure the delivery of the long-term objectives of the organisation in a sustainable manner. During the year under review various staff members were engaged in formal tertiary studies funded by the group.

Managing and reducing the environmental footprint of our properties and having a safe and healthy workforce, are vital components of Vukile’s strategy.

Energy management For the past three years Vukile has continuously implemented electricity cost-savings projects and investigated opportunities to reduce Vukile’s carbon footprint. Vukile’s energy strategy is to continuously seek opportunities to reduce consumption on large electricity consuming systems and to ensure that energy efficiency is incorporated into new developments.

At the start of 2015 electricity cost-savings projects of 1.6 million kWh were identified. After a year, 2.14 million kWh was saved from the original and additional projects submitted. All the implemented projects had payback periods of less than 14 months. In parallel to the submitted projects the following highlights were achieved for the 2016 financial year:�g Over 200 new electricity meters were installed. �g More than 500 light fittings retrofitted with building upgrades.�g 1.3 MW of photo voltaic (PV) capacity to be added before August 2016. �g Total submitted electricity savings: R2.8 million recovery/tariff improvements. �g 900 kW demand controller implemented. �g Diesel generator back up of 9 MW approved.

Vukile has also started engaging with tenants highlighting opportunities for potential savings to the tenants and establishing potential green leases. For new developments, energy-efficient lighting and energy control with smart meters are standardised. Roofing sections of new shopping centres are also

strengthened to allow for potential PV plant installations in the near future.

In FY2017 Vukile will focus on continuously improving on electricity consumption and reducing their carbon footprint. Buildings have been identified with the potential to install PV plants with the capacity of 1.4 MWp. This will increase Vukile’s PV capacity to a potential 2.7 MWp. Vukile is continuously reviewing PV costs and electricity prices to ensure optimal installations.

Electricity cost-saving targets for 2017 are 2 million kWh. This will be obtained

through improved metering control and renewable energy sources. Water is also a strategic focus area for 2017. A smart water metering roll-out will be launched on the bulk supply of the major shopping centres. Vukile is also investigating leak detection to identify possible water losses.

Vukile is constantly monitoring municipal charges. This ensures that high peak periods are avoided. Vukile ensures the electricity sold to tenants is accurate. The final goal is that all electricity meters with a specific consumption threshold will be replaced with smart meters.

ENVIRONMENT, HEALTH AND SAFETY

01Investigations:

Start investigations on largest electricity

consuming elements in building.

03Design and simulate:Calculate and simulate savings with possible

control and equipment upgrade.

02Metering:

Install smart electricity on supplies of large electricity

consuming elements and monitor for

wastages.

04Implement control:Implement control to enable savings and to perform tests.

05Upgrade or install

equipment:Install equipment or

replace existing equipment according to payback period.

06Monitor and review:Review electricity cost savings and control

philosophy on a daily basis.

A summarised illustration of the energy savings approach taken by Vukile is shown above. As illustrated in the diagram, the first step is always to continually investigate possible opportunities to save electricity costs. This can be obtained by eliminating wastages with optimal control or other initiatives with energy-saving equipment.

Vukile has a strong focus on metering, making sure that all electricity cost savings are accounted for and that the savings are sustained. Tests are used when evaluating possible savings to ensure calculations are correct. When replacing equipment, Vukile ensures that equipment with payback period of not more than 18 months is installed.

68

Vu


ort 2016

Sustainability

TRANSFORMATION AND SOCIAL RESPONSIBILITY

This past year was characterised by a drive by the South African government to enforce more stringent legislation around BEE and transformation across all industries. The property sector charter has been at the forefront of the alignment process and representing the industry. These changes will have a significant impact on the compliance levels of most companies involved in the property sector.

TransformationVukile’s transformation strategy and implementation plan remained on track for the past 12 months, improvements in the following areas:�g Black ownership�g Enterprise development�g Developments/ acquisitions in PDI areas�g Preferential procurement,

have resulted in Vukile achieving a better B-BBEE rating for the year. This now means Vukile is a level 3 B-BBEE, 110% procurement recognition level entity. This also applies to all its subsidiaries.

Vukile’s commitment to continually improve our transformation credentials and to make a contribution to empowering the communities around our properties and the country as a whole remains a key pillar in our vision.

The relationship with the Encha Group remains a strong and successful element of Vukile’s transformation agenda.

The highly anticipated amended property sectors codes will be gazetted during the course of 2016. The amended codes will bring with them some new challenges and Vukile will be monitoring the impact thereof, with the aim of improving on our current B-BBEE rating.

The management and board of directors of Vukile are dedicated and remain focused on the transformation landscape of the property sector and the country.

Our goals and aim for the coming year is to maintain at least a level 4 B-BBEE rating and to comply with the amended property sector codes to be gazetted later in the coming year.

Vukile has representatives who serve on the SAPOA as well as the SA REIT transformation structures. This speaks to our dedication serving our industry and South Africa as a whole.

Social responsibilityVukile’s unique relationship with the communities in which it owns and operates its property portfolio, creates the platform upon which our social responsibility programmes run.

The Afrika Tikkun (www.afrikatikkun.org) partnership is now in its third year. Its transformation and empowerment of many lives are testament to how Vukile values the creation of a better future for our people by reducing inequalities and the poverty gap.

Our belief in the development of our communities and creating close working relationships with them has proven to be of great mutual benefit.

Our partnership with Afrika Tikkun resulted in a donation of R200 000 per annum to a programme named “adopt a classroom”. The programme addresses the need for a holistic approach to poverty alleviation through education from cradle to tertiary. We are proud of our relationship with Afrika Tikkun and hope to improve the lives of many children over the period.

The group continues to give support to the projects below:

Dobsonville Shopping CentreThe shopping centre focuses on education as a community service initiatives strategy. In the past financial year we awarded a full tuition bursary to Malinda Sorobi to assist her in her BCom Accounting studies at Wits. She graduated top of her class at Fort High School, which is located right next to the shopping centre. We spent some money upgrading the community library and we donated 200 school uniforms to the Moses Kotane Primary School. We also host pensioners for a hot meal at every grant collection day throughout the year at the centre.

Randburg SquareAt Randburg we focus on community club upliftment to aid in social cohesion. This year we donated a generous sum of money to the local soccer club to assist in the upgrade of their facilities. Hillfox Power Centre and Daveyton Mall As part of our drive to support education programmes with our CSI spend, we offered two university bursaries to top students from Daveyton Mall and we also sponsored one university bursary through Hillfox Power Centre.

Hammarsdale Young Poets CompetitionHammarsdale Junction focused this competition to the youth in the area; calling on youth to submit a poem entitled “Hammarsdale Ikhaya Lami” translating “Hammarsdale My Home”. This competition gave students an opportunity to represent their school and themselves and the winners earned cash prizes for their school and themselves. This campaign allowed the youth to focus their energy on the community and the treasures of their neighbourhood and brought the community together with the final event. Phoenix Plaza Talent CompetitionThe Phoenix Plaza provides a platform for talented youth of the community to showcase their performance at no cost to the community and as an avenue to flourish in this community. The participants are often groups or individuals that turn their attention and focus away from the social pressures and drive themselves to succeed. This campaign has been going on for a number of years and receives excellent feedback and partnerships which also result in the winners taking home a cash prize as well as signing up contracts with the film and music industries.

69

Vu


ort 2016

Sustainability


70

Vu


ort 2016


71

Vu


ort 2016

DIRECTORS’ RESPONSIBILITY STATEMENT

The audited annual financial statements set out on pages 80 to 155 of this integrated annual report and the directors’ report on pages 74 to 77, are the responsibility of the directors. The directors are responsible for selecting and adopting sound accounting practices, for maintaining an adequate and effective system of accounting records, for the safeguarding of assets, and for developing and maintaining a system of internal controls that, among other things, will ensure the preparation of financial statements that achieve fair presentation. After conducting appropriate procedures, the directors are satisfied that the group will be a going concern for the foreseeable future and have continued to adopt the going-concern basis in preparing the financial statements. The annual financial statements were approved by the directors and are signed on their behalf by:

Anton Botha Laurence RappChairman Chief executive

Melrose Estate24 May 2016

COMPANY SECRETARY’S CERTIFICATION

Declaration by the company secretary in respect of section 88 (2)(e) of the Companies Act

I declare that, to the best of my knowledge, the company has lodged with the Registrar of Companies all such returns as required of a public company in terms of the Companies Act and that all such returns are true, correct and up to date.

Johann NeethlingGroup company secretary


The group and separate annual financial statements have been audited by Grant Thornton. The financial director, Mr MJ Potts CA(SA), was responsible for the preparation of these audited annual financial statements. The complete integrated annual reports of the company and the group for the years ended 31 March 2015 and 31 March 2016 may be obtained from the company’s website www.vukile.co.za.


72

Vu


ort 2016

INDEPENDENT AUDITOR’S REPORT

To the shareholders of Vukile Property Fund LimitedWe have audited the consolidated and separate financial statements of Vukile Property Fund Limited set out on pages 80 to 155, which comprise the statements of financial position as at 31 March 2016, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Directors’ responsibility for the financial statementsThe company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Vukile Property Fund Limited as at 31 March 2016, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act of South Africa.

Other reports required by the Companies ActAs part of our audit of the consolidated and separate financial statements for the year ended 31 March 2016, we have read the directors’ report, audit committee’s report and company secretary’s certification for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated and separate financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

Report on other legal and regulatory requirements In terms of the IRBA Rule published in Government Gazette number 39475 dated 4 December 2015, we report that Grant Thornton Johannesburg Partnership has been the auditor of Vukile Property Fund Limited for 12 years.

Grant Thornton Johannesburg PartnershipRegistered auditors

VR de VilliersPartnerRegistered AuditorChartered Accountant (SA)

24 May 2016

@Grant ThorntonWanderers Office Park 52 Corlett DriveIllovo2196


73

Vu


ort 2016

DIRECTORS’ REPORT

The directors have pleasure in submitting the 12th directors’ report, which forms part of the annual financial statements of the group and company for the year ended 31 March 2016.

The earnings for the year attributable to Vukile’s shareholders increased from R1.5 billion to R1.59 billion.

Vukile was listed on 24 June 2004 with a market capitalisation of approximately R1.03 billion. The company’s market capitalisation has increased to R11.01 billion.

It is pleasing to announce that the group has performed well over the review period and that profit available for distribution has increased by 28.7% from R774.2 million to R996.3 million for the year ended 31 March 2016.

Summary of financial performance and dividendsThe information presented for the year ended 31 March 2016 has been prepared in accordance with International Financial Reporting Standards (IFRS) and the group’s accounting policies. The presentation of the results also complies with the relevant section of the Companies Act, 71 of 2008 as amended, and the JSE Listings Requirements. The annual financial statements have been audited by Grant Thornton.

The board approved a final dividend on 24 May 2016 of 83.126 cents per share for the six months ended 31 March 2016. This brings the dividend for the year ended 31 March 2016 to 146.348 cents per share (March 2015: 136.77 cents), an increase of 7.0% for the year. The increase in dividend is in line with the forecast of 7% to 8% provided to the market at the interim reporting stage in November 2015.

The company’s use of dividend per share as a relevant measure of results for trading statement purposes remains unchanged from prior periods.

Nature of businessVukile is a property holding and investment company through the direct and indirect ownership of immovable property. The group holds a portfolio of direct property assets as well as strategic shareholdings in listed REITs. The company is listed on the JSE Limited and the NSX in Namibia under the Retail REITs sector.

Capital structureThe authorised capital comprises 800 000 000 ordinary shares with no par value. There were 647 667 287 shares in issue at 31 March 2016. The company issued the following shares during the year under review:

Date of issue Purpose

Number of sharesissued

Issue pricecents

per share

14 April 2015 Vendor placement 2 742 209 17.614 May 2015 Accelerated book build – specific issue for cash 13 586 956 18.404 May 2015 Accelerated book build – specific issue for cash 13 586 956 19.004 May 2015 Accelerated book build – vendor placing 21 368 421 19.004 May 2015 Accelerated book build – general issue for cash 9 781 465 19.0015 June 2015 Vendor placement 961 137 17.7830 June 2015 Vendor placement 3 380 424 17.999 October 2015 Issue for cash 3 000 000 18.206 November 2015 Vendor placement 4 978 696 18.8428 December 2015 Dividend for shares reinvestment plan 1 533 279 17.51

The group has no unlisted securities in issue. Compliance with SA REIT best practice recommendations (BPR) publicationThe South African REIT sector has recently published a BPR document that is intended to make financial reporting of South African REITs clearer and more comparable, and afford easier analysis and comparison of different SA REIT counters. Vukile subscribes to this BPR document and the financial reporting provided is in compliance with the recommendations therein.


74

Vu


ort 2016

Management and administrationThe management of Vukile is responsible for the property asset management functions of the group.

Vukile has contracted the following property managers to undertake the day-to-day management of the group’s property portfolio:�g JHI Properties (Pty) Ltd�g Broll Property Group (Pty) Ltd�g Encha Property Services (Pty) Ltd�g McCormick Property Development (Pty) Ltd.

DirectorsDetails of the directors, providing their full names, ages, qualifications and a brief curriculum vitae, are set out on pages 22 to 25 of this integrated annual report.

In terms of the Memorandum of Incorporation (MOI) of the company, one third of the non-executive and executive directors has to retire annually by rotation. Any new directors that have been appointed during a year also have to retire at the next annual general meeting. All retiring directors will subsequently be eligible for re-election. The composition of the board of directors and its sub-committees is detailed below and on the next page. There have been no changes to directors’ interests between the end of the financial year and 24 May 2016, other than as disclosed.

Board of directors

Composition of board

Date of appointment

Audit and risk committee

Social, ethics and human

resources committee

Nomination committee

Property and investment committee

Independent non- executive directorsAD Botha (Chairman) 17 May 2004 Member ChairmanH Ntene 25 October 2013 MemberPS Moyanga 17 May 2004 Member MemberHM Serebro 17 May 2004 ChairmanRD Mokate 11 December 2013 Member Member MemberNG Payne 20 March 2012 Chairman MemberSF Booysen 20 March 2012 Member Chairman Member

Executive directorsLG Rapp (CEO) 1 August 2011 MemberMJ Potts (FD) 17 May 2004HC Lopion 1 January 2010 MemberGS Moseneke 1 August 2013

Sonja de Bruyn Sebotsa resigned as a non-executive director on 23 November 2015.

Directors’ interest in material contractsThe directors have no interest in material contracts or transactions, other than those directors involved in the operation of the company as set out in this report. There have been no bankruptcies or voluntary arrangements of the above-named persons.

The directors of Vukile have not been the subject of public criticisms by statutory or regulatory authorities (including professional bodies) and have not been disqualified by a court from acting as directors of a company or from acting in the management or conduct of the affairs of any company. There have been no offences involving dishonesty by the directors of Vukile.

DIRECTORS’ REPORT continued


75

Vu


ort 2016


Executive directors’ service contractsThe executive directors do not have fixed-term contracts with the company. A three and six-month notice period is required of the executive directors and the CEO respectively for the termination of services. Details of remuneration and incentive bonuses are set out in the following tables.

Non-executive directors’ remuneration

RandDirectors’

fees

2016 Total

remuneration

2015 Total

remuneration

AD Botha 628 844 628 844 600 700PS Moyanga 368 225 368 225 370 150HM Serebro 385 620 385 620 377 125RD Mokate 353 580 353 580 260 600H Ntene 293 075 293 075 288 725SEN Sebotsa 213 963 213 963 260 600NG Payne 537 777 537 777 508 327SF Booysen 437 232 437 232 458 550

Total 3 218 316 3 218 316 3 124 777

Executive directors’ remuneration

Rand SalaryShort-term

bonusDistributionequivalents#

Value of LTIscheme vested

2016Total

remuneration

2015Total

remuneration

Executive directorsLG Rapp 3 067 937 2 945 000 922 363 3 818 593 10 753 893 9 172 746MJ Potts 2 048 687 1 643 000 468 254 – 4 159 941 3 444 225HC Lopion 1 535 362 1 473 000 418 811 1 006 395 4 433 568 4 097 663GS Moseneke 1 419 562 1 105 000 230 090 – 2 754 652 1 946 972

Total 8 071 548 7 166 000 2 039 518 4 824 988 22 102 054 18 661 606# Amount earned in respect of dividend paid as a bonus in respect of the Conditional Unit Plan.

Directors’ interests in shares

SharesDirect

beneficialIndirect

beneficial2016Total

Non-executive directors – 23 357 23 357

HM Serebro – 23 357 23 357

Executive directors 2 818 295 9 485 606 12 303 901

LG Rapp 1 192 485 185 000 1 377 485MJ Potts 787 186 – 787 186HC Lopion 234 272 – 234 272GS Moseneke 604 352 9 300 606 9 904 958

Total 2 818 295 9 508 963 12 327 258


76

Vu


ort 2016

Movement of directors’ interests in shares

Shares

Held at 1 April 2015

Acquiredduring the

period

Disposedof during

the period

Held at31 March

2016

Non-executive directors 22 543 814 – 23 357

HM Serebro 22 543 814 – 23 357

Executive directors 9 725 667 2 604 234 (26 000) 12 303 901

LG Rapp 1 251 754 125 731 – 1 377 485MJ Potts 813 186 – (26 000) 787 186HC Lopion 201 421 32 851 – 234 272GS Moseneke 7 459 306 2 445 652 – 9 904 958

Total 9 748 210 2 605 048 (26 000) 12 327 258

Financial assistanceSince the approval by shareholders of the SPP, the board of directors, after considering the provisions of sections 44 and 45 of the Companies Act, 71 of 2008, has provided financial assistance in the form of loans to executive directors and other members of the executive committee eligible for participation under the scheme. The loans awarded to date, as well as the shares that have been ceded and pledged as security for the repayment of the loan, are set out below.

SPP participant

Amount of financial

assistance obtained

R

Number ofshares held

under the SPP*

Market value of shares held as at 31 March

2016R

LG Rapp 17 844 000 1 066 754 18 134 818MJ Potts 5 500 000 335 530 5 704 010HC Lopion 3 000 000 185 186 3 148 162GS Moseneke 10 000 000 604 352 10 273 984J Neethling 1 750 000 102 941 1 749 997

Total 38 094 000 2 294 763 39 010 971

*Shares shown in the table above are included in the table of holdings and movement in shares set out on page 76 and above.

Directors’ beneficial interests under the current long-term incentive (LTI) schemeThe following table sets out the directors’ interests in shares through the long-term incentive scheme as at 31 March 2016. The vesting of such units remain subject to the fulfilment of performance conditions.

Vukile shares GS Moseneke MJ Potts HC Lopion LG Rapp

Balance at 1 April 2015 67 659 352 681 357 894 964 935Vested during the year – – (55 787) (212 735)Shares forfeited – – (20 949) –Allocated during the year 95 630 138 251 123 313 268 190Dividends reinvested during the year – March – 6 905 8 007 25 180Dividends reinvested during the year – September – 6 502 4 527 15 357

Balance at 31 March 2016 163 289 504 339 417 005 1 060 927

Market value of units at 31 March 2016 (R) 2 775 913 8 573 763 7 089 085 18 035 759

No changes in directors’ interests occurred between 31 March 2016 and 24 May 2016 other than as disclosed above.



77

Vu


ort 2016

REPORT OF THE AUDIT AND RISK COMMITTEEfor the year ended 31 March 2016

The audit and risk committee (AR committee) presents its report in terms of section 94 (7)(f) of the Companies Act and as recommended by King III for the financial year ended 31 March 2016.

Terms of referenceThe AR committee has adopted comprehensive and formal terms of reference which have been approved by the board and which are reviewed on a periodic basis.

Membership, meeting attendance and evaluationThe committee consists of four non-executive directors, all of whom are independent. At 31 March 2016, the AR committee comprised the following members:

Director Period served

NG Payne (Chairman) 20 March 2012 – current (Chairman since 1 September 2012)

SF Booysen 20 March 2012 – currentPS Moyanga 24 May 2007 – currentRD Mokate 1 July 2015 – current

The curricula vitae of the members of the AR committee are set out on pages 22 to 25.

The chief executive officer, the financial director, other members of senior management and representatives from the external and internal auditors attend the AR committee meetings by invitation only. The internal and external auditors have unrestricted access to the chairman and other members of the AR committee.

The effectiveness of the AR committee as a whole and its individual members are assessed on an annual basis.

The AR committee attendance is set out on page 27.

Execution of dutiesThe AR committee executed its duties in accordance with its terms of reference, the Companies Act, and King III. The group provides a schedule of its application of King III, and explanation of areas not applied, on its website at www.vukile.co.za/governance/king3.

For the year under review the AR committee discharged the following responsibilities:

External auditors�g Considered the independence and objectivity of the external auditors.�g Approved and monitored the non-audit services rendered by the external auditors in accordance with approved non-audit services policy.�g Determined the external auditors’ terms of engagement and fees for 2016.�g Satisfied itself that the external auditors and designated auditor are accredited on the JSE list of auditors and advisers. The AR committee recommends the reappointment of the external auditors and designated auditor at the next annual general meeting (AGM).

Financial statements and accounting practices�g Reviewed the accounting policies and the annual financial statements of the group for the year ended 31 March 2016 and based on the information provided to it, the AR committee considers that, in all material aspects, both the accounting policies and the annual financial statements are appropriate and comply with the provisions of the Companies Act, International Financial Reporting Standards (IFRS) and the JSE Listings Requirements.�g Reviewed and considered any complaints relating to reporting and accounting practices, internal audit, contents of the group’s financial statements, internal financial controls or any other related matters. The AR committee can confirm that no such complaints have been brought to its attention during the year under review.


78

Vu


ort 2016

Internal financial controls and internal audit �g Reviewed the reports of both the internal and external auditors detailing their findings arising from their audits and the appropriate responses from management. The AR committee can confirm that no material findings in regard to internal financial controls have been brought to its attention during the year under review.�g Monitored adherence to the annual internal audit plan.

Integrated reporting �g At its meeting held on 24 May 2016, considered and recommended the integrated annual report for approval by the board.

Going-concern status�g Considered the going-concern status of the company and the group on the basis of review of the annual financial statements and the information available to the AR committee and recommended such going-concern status for adoption by the board. The board statement on the going-concern status of the group and company is contained on page 72.

Financial director and finance function�g Reviewed the performance of the financial director, Mr MJ Potts, and was satisfied that he has the necessary expertise and experience to meet the responsibilities required by the JSE Limited.�g Considered, and has satisfied itself of the expertise and adequacy of resources of the finance function and experience of the senior members of the finance function.

Solvency and liquidity �g The AR committee is satisfied that the board has performed a solvency and liquidity test on the company in terms of sections 4 and 46 of the Companies Act and has concluded that the company will satisfy the test after payment of final distribution. The AR committee can also confirm that the test was performed at the interim distribution stage.

Risk management and combined assurance�g Reviewed the risk management reports presented by management during the course of the year.�g Overseeing the development of the combined assurance model for the group.�g Overseeing compliance with the risk management requirements in accordance with the JSE Listings Requirements in respect of REITs. The AR committee confirms that the risk management policy has been complied with.

NG Payne Chairman


REPORT OF THE AUDIT AND RISK COMMITTEE continuedfor the year ended 31 March 2016


79

Vu


ort 2016

STATEMENTS OF FINANCIAL POSITIONas at 31 March 2016

GROUP Note2016R000

2015R000

ASSETSNon-current assets 15 525 681 13 629 857Investment properties 13 302 386 12 824 122

Investment properties 3 13 737 892 13 105 328 Straight-line rental income adjustment 4 (435 506) (281 206)

Other non-current assets 2 223 295 805 735Straight-line rental income asset 4 435 506 281 206Equity investments 5 328 247 384 800Investment in associate 6 760 049 –Investment property under development 87 033 15 849Goodwill 7 158 372 57 058Furniture, fittings, computer equipment and other 8 2 127 3 248Available-for-sale financial asset 10 19 842 21 576Derivative financial instruments 19 41 230 –Long-term cash deposit 32.5 350 000 –Long-term loans granted 11 38 110 38 110Deferred taxation assets 20 2 779 3 888Current assets 831 794 621 451Trade and other receivables 12 246 873 147 429Derivative financial instruments 19 1 245 –Current taxation assets 1 217 133Cash and cash equivalents 32.5 582 459 473 889Non-current assets held for sale 1 997 744 280 019Investment properties 1 888 572 277 359

Investment properties 3 1 997 744 280 019Straight-line rental income adjustment 4 (109 172) (2 660)

Straight-line rental income asset 4 109 172 2 660

Total assets 18 355 219 14 531 327

EQUITY AND LIABILITIESEquity attributable to owners of the parent 11 932 574 9 830 646Stated capital 15 7 068 563 5 672 340Other components of equity 16 4 387 231 3 683 386Retained earnings 476 780 474 920Non-controlling interest 17 556 681 516 317Non-current liabilities 4 114 331 2 830 180Other interest-bearing borrowings 18 4 098 319 2 816 088Derivative financial instruments 19 5 269 12 919Deferred taxation liabilities 20 10 743 1 173Current liabilities 1 751 633 1 354 184Trade and other payables 21 439 937 300 880Borrowings 18 1 309 687 1 051 657Current taxation liabilities 2 009 1 647

Total equity and liabilities 18 355 219 14 531 327


80

Vu


ort 2016

COMPANY Note2016R000

2015R000

ASSETSNon-current assets 11 983 624 10 354 298Investment properties 8 902 267 8 730 125

Investment properties 3 9 176 506 8 989 553Straight-line rental income adjustment 4 (274 239) (259 428)

Other non-current assets 3 081 357 1 624 173Straight-line rental income asset 4 274 239 259 428Equity investments 5 120 236 105 285Investment in associate 6 760 049 –Investment property under development 87 034 15 850Furniture, fittings, computer equipment and other 8 127 77Investment in subsidiaries 9 1 402 048 1 194 081Available-for-sale financial asset 10 10 654 11 342Derivative financial instruments 19 38 860 –Long-term cash deposit 350 000 –Long-term loans granted 11 38 110 38 110Current assets 1 069 392 1 139 309Trade and other receivables 12 173 050 112 482Derivative financial instruments 19 638 –Loan to subsidiaries 14 281 941 448 756Taxation – 133Debenture interest receivable 113 153 140 479Cash and cash equivalents 32.5 500 610 437 459Non-current assets held for sale 1 743 304 147 019Investment properties 1 633 663 145 686

Investment properties 3 1 743 304 147 019Straight-line rental income adjustment 4 (109 641) (1 333)

Straight-line rental income asset 4 109 641 1 333

Total assets 14 796 320 11 640 626

EQUITY AND LIABILITIESEquity attributable to owners of the parent 10 372 211 8 438 870Stated capital 15 7 068 563 5 672 340Other components of equity 16 2 901 579 2 311 840Retained earnings 402 069 454 690Non-current liabilities 2 738 651 1 860 513Other interest-bearing borrowings 18 2 722 813 1 847 431Derivative financial instruments 19 5 095 11 909Deferred taxation liabilities 20 10 743 1 173Current liabilities 1 685 458 1 341 243Trade and other payables 21 297 950 212 587Borrowings 18 1 386 687 1 128 656Taxation 821 –


Total number of shares in issue at 31 March 647 667 287 572 747 744Weighted average number of shares in issue 635 569 998 539 547 572

Net asset value (cents per linked share) 1 842 1 716

STATEMENTS OF FINANCIAL POSITION continuedas at 31 March 2016


81

Vu


ort 2016

STATEMENTS OF PROFIT AND LOSSfor the year ended 31 March 2016

GROUP Note2016R000

2015R000

Property revenue 23 2 096 400 1 579 099Straight-line rental income accrual 4 243 221 97 315

Gross property revenue 2 339 621 1 676 414Property expenses 24 (780 584) (585 372)

Net profit from property operations 1 559 037 1 091 042 Income − asset management business 25 2 074 24 694Expenditure − asset management business 25 – (34 388)Corporate and administrative expenses 26 (84 288) (36 992)Investment and other income 28 99 337 76 269

Operating profit before finance costs 1 576 160 1 120 625Finance costs 29 (394 301) (273 498)

Profit before capital items 1 181 859 847 127Loss on sale of investment properties (31 883) (23 562)Profit on sale of furniture and equipment – 6Fair value (loss)/gain on listed property securities 5 (98 425) 172 180Fair value movement of derivative financial instruments (1 342) 1 527Amortisation of debenture premium – 19 227Foreign exchange profit 26 825 –Profit on sale of listed property securities 547 –Other capital items – (168)Fair value of fixed loan at date of acquiring control remeasured – (290)Gain on bargain purchase 9 1 053 178 997Goodwill written off on sale of properties by a subsidiary 7 (4 951) –Costs of acquisition of business combination (1 230) (2 778)Loss on sale of intangible asset – (61 595)

Profit before fair value adjustments 1 072 453 1 130 671Fair value adjustments 560 049 379 017Gross change in fair value of investment properties 3 803 270 476 332Straight-line rental income adjustment (243 221) (97 315)

Profit before equity-accounted investment 1 632 502 1 509 688Share of income from associate 6 19 423 –

Profit before taxation 1 651 925 1 509 688Taxation 30 (9 076) (26)

Profit for the year 1 642 849 1 509 662

Attributable to owners of the parent 1 586 079 1 499 995Attributable to non-controlling interest 56 770 9 667

Basic and diluted earnings per share (cents) 31 249.55 278.01


82

Vu


ort 2016

COMPANY Note2016R000

2015R000

Property revenue 23 1 435 474 1 276 943Straight-line rental income accrual 4 123 119 87 659

Gross property revenue 1 558 593 1 364 602Property expenses 24 (568 571) (497 819)

Net profit from property operations 990 022 866 783Income − asset management business 25 – 24 694Expenditure − asset management business 25 – (11 600)Corporate and administrative expenses 26 (38 807) (34 915)Investment and other income 28 281 215 224 251

Operating profit before finance costs 1 232 430 1 069 213Finance costs 29 (277 203) (250 072)

Profit before capital items 955 227 819 141Loss on sale of investment properties (10 074) (22 362)Fair value (loss)/gain on listed property securities 5 (31 905) 63 554Fair value movement of derivative financial instruments (1 342) –Amortisation of debenture premium – 19 227Foreign exchange profit 26 825 –Profit on sale of listed property securities 547 –Costs of acquisition of business combination (1 230) (2 778)Loss on sale of intangible asset – (61 595)

Profit before fair value adjustments 938 048 815 187Fair value adjustments 464 330 184 159Gross change in fair value of investment properties 3 587 449 271 818Straight-line rental income adjustment (123 119) (87 659)

Profit before equity-accounted investment 1 402 378 999 346Share of income from associate 6 19 423 –

Profit before taxation 1 421 801 999 346Taxation 30 63 6 697

Profit for the year 1 421 864 1 006 043

STATEMENTS OF PROFIT AND LOSS continuedfor the year ended 31 March 2016


83

Vu


ort 2016

STATEMENTS OF COMPREHENSIVE INCOMEfor the year ended 31 March 2016

GROUP Note2016R000

2015R000

Profit for the year 1 642 849 1 509 662 Other comprehensive incomeItems that will be reclassified subsequently to profit or lossCurrency loss on translation of investment in associate 6 (7 377) –Cash flow hedges – current period gains/(losses) 40 673 (30 667)Available-for-sale financial assets – current period losses (21 498) (12 169)

Other comprehensive income/(loss) for the year 11 798 (42 836)

Total comprehensive income for the year 1 654 647 1 466 826

Attributable to owners of the parent 1 597 664 1 457 159Attributable to non-controlling interest 56 983 9 667

COMPANYProfit for the year 1 421 864 1 006 043 Other comprehensive incomeItems that will be reclassified subsequently to profit or lossCurrency loss on translation of investment in associate 6 (7 377) –Cash flow hedges – current period gains/(losses) 37 087 (30 667)Available-for-sale financial assets – current period losses (11 571) (5 581)

Other comprehensive income/(loss) for the year 18 139 (36 248)

Total comprehensive income for the year 1 440 003 969 795


84

Vu


ort 2016

STATEMENTS OF CHANGES IN EQUITYfor the year ended 31 March 2016

Attributable to owners of the parent

R000Stated capital

Share premium

Other components

of equityRetained earnings

Share- holders’ interest

Total

Non- controlling

interest (NCI) Total

GROUPBalance at 31 March 2014 5 096 76 767 2 979 338 47 488 3 108 689 – 3 108 689Issue of share capital 632 21 048 – – 21 680 – 21 680Dividend distribution – – – (329 260) (329 260) – (329 260)

5 728 97 815 2 979 338 (281 772) 2 801 109 – 2 801 109Profit for the year – – – 1 499 995 1 499 995 9 667 1 509 662Change in fair value of investment properties – – 468 235 (476 332) (8 097) 8 097 –Share-based remuneration – – 11 678 – 11 678 – 11 678Conversion of debentures to ordinary share capital 5 666 612 (97 815) – – 5 568 797 – 5 568 797Non-controlling interest recognised in respect of Synergy – – – – – 498 553 498 553Revaluation of investments – – 172 180 (172 180) – – –Transfer to non-distributable reserves – – 94 791 (94 791) – – –Other comprehensive lossRevaluation of available-for-sale financial asset – – (12 169) – (12 169) – (12 169)Revaluation of cash flow hedges – – (30 667) – (30 667) – (30 667)

Balance at 31 March 2015 5 672 340 – 3 683 386 474 920 9 830 646 516 317 10 346 963Issue of share capital 1 396 223 – – – 1 396 223 – 1 396 223Dividend distribution – – – (901 643) (901 643) (35 851) (937 494)

7 068 563 – 3 683 386 (426 723) 10 325 226 480 466 10 805 692Profit for the year – – – 1 586 079 1 586 079 56 770 1 642 849Change in fair value of investment properties – – 803 270 (803 270) – – –Change in fair value of investments attributable to non-controlling interest – – (13 860) 13 860 – – –Share-based remuneration – – 15 770 – 15 770 – 15 770Deferred taxation on change in fair value of derivatives – – (10 417) – (10 417) – (10 417)Transfer from non-distributable reserves – – (8 409) 8 409 – – –Cost of conversion of debentures to stated capital by subsidiary – – (710) – (710) (389) (1 099)Gain from change in shareholding in subsidiary – – 5 041 – 5 041 (5 863) (822)Non-controlling interest arising on business combination acquired – – – – – 25 484 25 484Revaluation of investments – – (98 425) 98 425 – – –Other comprehensive incomeCurrency loss on translation of investment in associate – – (7 377) – (7 377) – (7 377)Revaluation of available-for-sale financial asset – – (21 498) – (21 498) – (21 498)Revaluation of cash flow hedges – – 40 460 – 40 460 213 40 673

Balance at 31 March 2016 7 068 563 – 4 387 231 476 780 11 932 574 556 681 12 489 255


85

Vu


ort 2016

STATEMENTS OF CHANGES IN EQUITY continuedfor the year ended 31 March 2016

R000Stated capital

Sharepremium

Other components

of equityRetainedearnings Total

COMPANYBalance at 31 March 2014 5 096 76 767 2 090 570 29 322 2 201 755Issue of share capital 632 21 048 – – 21 680Dividend distribution – – – (329 260) (329 260)

5 728 97 815 2 090 570 (299 938) 1 894 175Profit for the year – – – 1 006 043 1 006 043Change in fair value of investment properties – – 271 818 (271 818) –Share-based remuneration – – 6 103 – 6 103Transfer from non-distributable reserves – – (83 957) 83 957 –Conversion of debentures to ordinary share capital 5 666 612 (97 815) – – 5 568 797Revaluation of investments – – 63 554 (63 554) –Other comprehensive lossRevaluation of cash flow hedges – – (5 581) – (5 581)Revaluation of available-for-sale financial asset – – (30 667) – (30 667)

Balance at 31 March 2015 5 672 340 – 2 311 840 454 690 8 438 870Issue of share capital 1 396 223 – – – 1 396 223Dividend distribution – – – (901 643) (901 643)

7 068 563 – 2 311 840 (446 953) 8 933 450Profit for the year – – – 1 421 864 1 421 864Change in fair value of investment properties – – 587 449 (587 449) –Deferred taxation on change in fair value of derivatives – – (9 633) – (9 633)Share-based remuneration – – 8 391 – 8 391Transfer to non-distributable reserves – – 17 298 (17 298) –Revaluation of investments – – (31 905) 31 905 –Other comprehensive incomeCurrency loss on translation of investment in associate – – (7 377) – (7 377)Revaluation of cash flow hedges – – 37 087 – 37 087Revaluation of available-for-sale financial asset – – (11 571) – (11 571)

Balance at 31 March 2016 7 068 563 – 2 901 579 402 069 10 372 211


86

Vu


ort 2016

2016 2015

NoteGroupR000

CompanyR000

GroupR000

CompanyR000

Cash flow from operating activities 1 282 446 888 368 929 939 722 273

Profit before taxation 1 651 925 1 421 801 1 509 688 999 346Adjustments 32.1 (402 521) (586 508) (545 392) (232 402)Net changes in working capital 32.2 40 525 52 121 (24 422) (41 646)Taxation (paid)/refunded 32.3 (7 483) 954 (9 935) (3 025)

Cash flow from investing activities (2 124 331) (1 971 094) 17 302 220 274

Acquisition of Synergy – – 11 488 –Acquisition of associate (758 570) (758 570) – –Acquisition of investment properties (1 578 544) (1 413 969) (358 361) (301 919)

Improvements to existing properties (1 507 360) (1 342 785) (372 244) (315 801)Investment property under development (71 184) (71 184) 13 883 13 882

Acquisition of furniture, fittings, computer equipment and other (202) (86) (317) (21)Cash utilised to acquire 80% of Clidet No 1011 (Pty) Ltd (net of cash acquired) 9 (45 807) – – –Acquisition of subsidiaries – (158 867) – –Acquisition of Vukile Asset Management (Pty) Ltd (goodwill) (106 265) – – –Purchase of available-for-sale financial asset (19 764) (10 883) (13 432) (6 758)Purchase of investments (41 872) (46 856) (14 228) (12 348)Proceeds on sale of intangible asset – – 166 267 166 267Proceeds on sale of investment properties 327 356 136 922 149 599 150 799Proceeds on sale of furniture, fittings and computer equipment – – 17 3Investment and other income 28 99 337 281 215 76 269 224 251

Cash flow from financing activities 1 300 455 1 495 877 (771 527) (778 400)

Interest-bearing borrowings advanced/(repaid) 1 280 901 1 156 438 (465 994) (22 024)Acquisition of additional shareholding in Synergy Income Fund Limited (1 374) (274) – –Proceeds from issue of share capital 1 347 944 1 347 944 728 596 728 596Finance costs (389 522) (273 403) (273 498) (250 072)Dividends paid 29.4 (937 494) (901 643) (745 521) (694 496)Loan advanced to subsidiaries – (281 406) – (525 294)Loans from subsidiaries repaid – 448 221 – –Long-term loans granted – – (15 110) (15 110)

Net increase in cash and cash equivalents 458 570 413 151 175 714 164 147Cash and cash equivalents at the beginning of the year 473 889 437 459 298 175 273 312

Cash and cash equivalents at the end of the year 32.5 932 459 850 610 473 889 437 459

STATEMENTS OF CASH FLOWfor the year ended 31 March 2016


87

Vu


ort 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2016

1 Accounting policies The annual financial statements have been prepared in accordance with International Financial Reporting Standards, the SAICA

Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements and the Companies Act of South Africa, 2008, as amended.

1.1 Basis of preparation The annual financial statements have been prepared on the historical cost basis except for the measurement of

investment properties and certain financial instruments at fair value and incorporated the principal accounting policies set out below.

Except for the amendments adopted as set out below, all accounting policies applied by the group in the preparation of these consolidated financial statements are consistent with those applied by the group in its consolidated financial statements as at and for the year ended 31 March 2015. The group has adopted the following amendments to standards which were effective for the first time for the financial period commencing 1 April 2015:�g Amendments to IFRS 2 – Share-based Payments;�g Amendments to IFRS 3 – Business Combinations;�g Amendments to IFRS 8 – Operating Segments;�g Amendments to IFRS 13 – Fair Value Measurement;�g Amendments to IAS 16 – Property, Plant, and Equipment; �g Amendments to IAS 19 – Employee Benefits;�g Amendments to IAS 24 – Related Party Disclosure;�g Amendments to IAS 38 – Intangible Assets; and�g Amendments to IAS 40 – Investment Properties.

There was no material impact on the financial statements based on management’s assessment of these amendments.

The company has elected to early adopt an amendment to IAS 27 whereby it equity accounts its investment in an associate in its separate financial statements.

1.2 Investment properties Investment properties, which are stated at fair market value, constitute land and buildings held by the group for rental

producing purposes until or unless a property is no longer considered a core property and does not meet strategic requirements. At that stage a sale of the property will be approved and the property will be transferred to non-current assets held for sale. Investment property is initially recorded at cost, which includes transaction costs directly attributable to the acquisition thereof. The directors value all the properties bi-annually to fair market value. Approximately 50% of all properties are valued every six months on a rotational basis by qualified independent external property valuers and any differences between the respective valuations are reported in the notes to the financial statements.

Costs include costs incurred initially and costs incurred subsequently to add to, or to replace, a part of a property. Tenant installation costs are capitalised to the cost of a building. All these items are included in the fair value of investment properties. If a replacement part is recognised in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised.

Investment property is maintained, upgraded and refurbished, where necessary, in order to preserve or improve the capital value as far as it is possible to do so. Maintenance and repairs which neither materially add to the value of the properties nor prolong their useful lives are charged against profit or loss.

Fair market value is the open market value, which, in the opinion of the directors, is the fair market price at which the property would have been sold unconditionally on a willing buyer/willing seller basis for a cash consideration on the date of the valuation. Gains and losses arising from changes in the fair value of investment properties are recognised in net profit or loss for the period in which they arise. Such gains or losses are transferred to a non-distributable reserve in the statement of changes in equity and excluded from the calculation of distributable earnings.

The straight lining of lease income is deducted from investment properties as the discounted value of future rental cash flows forms part of the valuation methodology of investment properties.


88

Vu


ort 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS continuedfor the year ended 31 March 2016

1 Accounting policies continued 1.2 Investment properties continued Gains or losses on the disposal of investment properties are recognised in net profit or loss, and are calculated as the

difference between the net selling price and the fair value of the property as valued in the most recent annual financial statements. Such gains or losses are excluded from the calculation of distributable earnings.

Investment property held under an operating lease relates to long-term land leases and is recognised in the group’s statement of financial position at its fair value. This accounting treatment is consistently applied for all such long-term land leases.

1.3 Investment properties under development Property that is being constructed or developed for future use as investment property is classified as investment

property under development until construction or development is complete, at which time it is reclassified and subsequently accounted for as investment property.

Expenditure incurred on a “grassroots” property development is measured initially at cost. Once the development is completed the property is stated at fair market value. If a decision is taken not to proceed with the development, the costs incurred to the date of that decision are expensed through profit or loss.

1.4 Taxation The charge for current taxation is based on the results for the year as adjusted for items which are non-taxable or

disallowable and any adjustment for tax payable or receivable for previous years.

Current tax liabilities or assets for the current and prior periods are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the reporting date.

Temporary differences are differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax base. The amount of deferred tax provided is based on the tax rates and tax laws in the expected manner of realisation or settlement of the carrying amount of assets and liabilities that have been enacted by the reporting date.

A deferred tax liability is recognised for all taxable temporary differences except to the extent that the deferred tax liability arises from:

(a) The initial recognition of goodwill, or (b) The initial recognition of an asset or liability in a transaction which: (i) Is not a business combination; and (ii) At the time of the transaction affects neither accounting profit nor taxable profit/(tax loss).

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised, unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that:

(a) Is not a business combination (b) At the time of the transaction, affects neither accounting profit nor taxable profit/(tax loss).

The effect on deferred tax of any changes in tax rates is recognised in the profit or loss for the period, except to the extent that it relates to items previously charged or credited directly to other comprehensive income or equity. Where permissible, deferred tax assets are offset against deferred tax liabilities.

Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.


89

Vu


ort 2016


1 Accounting policies continued 1.5 Financial instruments Recognition, initial measurement and de-recognition Financial assets and financial liabilities are recognised when the group becomes a party to the contractual provisions of

the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Classification and subsequent measurement of financial assets For the purpose of subsequent measurement of financial assets, other than those designated and are effective as

hedging instruments, are classified into the following categories upon initial recognition:�g Loans and receivables�g Financial assets at fair value through profit or loss (FVTPL)�g Available-for-sale (AFS) financial assets.

All financial assets except for those at FVTPL are reviewed for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired.

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within property expenses.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an

active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The group’s cash and cash equivalents, trade and other receivables as well as the long-term loans granted fall into this category of financial instruments.

Financial assets at FVTPL Financial assets at FVTPL include investments in listed property securities and derivative financial assets, except for

those designated and are effective as hedging instruments, for which the hedge accounting requirements apply. These financial assets are designated at FVTPL upon initial recognition.

Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

AFS financial assets AFS financial assets are non-derivative financial assets that are designated to this category. The group’s AFS financial

asset relates to a reimbursement right and is measured at fair value after deduction of executive and management rights. Gains and losses are recognised in other comprehensive income and reported within the AFS reserve within equity. When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss.

Classification and subsequent measurement of financial liabilities The group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.

Financial liabilities are measured subsequently at amortised cost using the effective interest method, except for financial liabilities designated at FVTPL, that are carried subsequently at fair value with gains or losses recognised in profit or loss.


90

Vu


ort 2016


1 Accounting policies continued 1.5 Financial instruments continued Derivative financial instruments and hedge accounting The group uses derivative financial instruments including interest rate swaps, swaptions, forward rate agreements and

interest rate caps to hedge its exposure to interest rates. It is the policy of the group not to trade in derivative financial instruments for speculative purposes. Derivative financial instruments are initially and subsequently recognised at fair value.

In terms of hedge accounting, the group’s hedges are cash flow hedges, which hedge exposure to variability in cash flows.

Gains or losses on the effective portion of cash flow hedging instruments in respect of forecast transactions are recognised directly in other comprehensive income. Any ineffective portion of a cash flow hedge is recognised in profit or loss for the period.

1.6 Offset Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position

when the group has a legally enforceable right to offset the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

1.7 Stated capital and reserves Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are

recognised as a deduction from equity.

The non-distributable reserves within equity comprises gains and losses due to the revaluation of investment property, foreign exchange gains and losses, and other capital items. Gains and losses on certain financial instruments are included in reserves for available-for-sale financial assets and cash flow hedges respectively.

Share-based payments comprising the payments made by the group in respect of long-term incentive and retention scheme awards, which payments are amortised over the award period, are included in reserves.

Retained earnings include all current and prior period retained profits and losses.

1.8 Revenue recognition Revenue comprises dividends, interest, operating lease income and expense recoveries charged to tenants, contingent

rents (turnover rental), asset management fees and sales commission.

Dividends are recognised when the group’s right to receive payment is established.

Interest earned on cash invested with financial institutions is recognised on an accrual basis using the effective interest method.

Operating lease income and recoveries are recognised as income on a straight-line basis over the lease term.

Contingent rents (turnover rental) are included in revenue when the amounts can be reliably measured.

The asset management business generates revenue from the rendering of services, namely asset management income, sales commission earned on the sales of properties on behalf of third parties and other service-related income.

Asset management fees are measured by reference to the fair value of consideration received for services rendered.

Sales commission is recognised when all the suspensive conditions pertaining to a property sale agreement have been fulfilled.

1.9 Letting commissions Letting commissions are capitalised and amortised over the lease period. The carrying value of letting commissions is

included with investment properties.


91

Vu


ort 2016


1 Accounting policies continued 1.10 Cash and cash equivalents For the purpose of the statement of cash flows, cash and cash equivalents comprise cash on hand, deposits held at

call with banks and investments in money market instruments, net of bank overdrafts, all of which are available for use by the group.

1.11 Basis of consolidation Control is achieved when the company:

�g Has power over the investee;�g Is exposed or has a right to variable returns from its involvement with the investee; and�g Has the ability to use its power to affect its returns.

The company reassesses whether or not it controls an investee if the facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.

The company considers all relevant facts and circumstances in assessing whether or not the company’s voting rights in an investee are sufficient to give it power, including:�g The size of the company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders.�g Potential voting rights held by the company, other vote holders or other parties.�g Rights arising from other contractual arrangements.�g Any additional facts and circumstances that indicate that the company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

The group annual financial statements include the financial statements of the company and its subsidiaries, including any entities over which the group has control. The operating results of the subsidiaries are included from the effective dates of acquisition up to the effective dates of disposal.

Intra-company balances and transactions are eliminated.

Subsidiaries apply the same accounting policies as those used by the company.

Investment in subsidiaries is carried at cost in the company’s financial statements, less any accumulated impairment.

Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.

The group attributes total comprehensive income or loss of subsidiaries between the owners of the parents and the non-controlling interests based on their respective ownership interests.

1.12 Goodwill Goodwill represents the future economic benefits arising from a business combination that are not individually identified

and separately recognised. Goodwill is carried at cost less accumulated impairment losses.

1.13 Business combinations The group applies the acquisition method in accounting for business combinations. The consideration transferred by

the group to obtain control of a business is calculated as the sum of the acquisition date fair values of assets transferred, liabilities incurred and the equity interests issued by the group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement.

Acquisition costs are expensed as incurred.

Assets acquired and liabilities assumed are generally measured at their acquisition date fair values.

Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of (a) the fair value of consideration transferred, (b) the recognised amount of any non-controlling interest in the acquiree and (c) the acquisition date fair value of any existing equity interest in the acquiree, over the acquisition date fair values of identifiable net assets.


92

Vu


ort 2016


1 Accounting policies continued 1.13 Business combinations continued If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (ie gain on bargain

purchase) is recognised in profit or loss immediately.

Acquisitions of non-controlling interests that do not result in a loss of control, are accounted for as transactions with equity holders in their capacity as equity holders and therefore, no goodwill is recognised as a result of such transactions.

1.14 INVESTMENT IN ASSOCIATES An associate is an entity over which the group or company has significant influence. Significant influence is the power

to participate in the financial and operating policy decisions of the investee but is not control or joint control over these policies.

On acquisition of the investment in an associate, any excess of the cost of the investment over the investor’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the investor’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

The results and assets and liabilities of associates are incorporated into these consolidated and separate financial statements using the equity method of accounting from the date on which the investee becomes an associate. Under the equity method, an investment in an associate is initially recognised in the statement of financial position at cost and adjusted thereafter to recognise the investor’s share of the profit or loss and other comprehensive income of the associate. When the investor’s share of losses of an associate exceeds the investor’s interest in that associate, the investor discontinues recognising its share of further losses.

The group and company discontinues the use of the equity method from the date when the investment ceases to be an associate, or when the investment is classified as held for sale.

1.15 Interests in joint operations A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to

their assets and obligations for the liabilities relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement which exists when decisions about the relevant activities require unanimous consent of the parties sharing control.

When a group entity transacts with its joint operation, profits and losses resulting from the transactions with the joint operation are recognised in the group’s consolidated annual financial statements only to the extent of interests in the joint operation entity that are not related to the group.

When a group entity undertakes its activities under joint operations, the group, as a joint operator, recognises in relation to its interest in a joint operation:�g Its assets, including its share of any assets held jointly.�g Its liabilities, including its share of any liabilities incurred jointly.�g Its share of the revenue from the sale of the output by the joint operation.�g Its expenses, including its share of any expenses incurred jointly.

The group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRS applicable to the particular assets, liabilities, revenues and expenses.

In the separate annual financial statements of the company, interests in joint operations are accounted for in the same manner.


93

Vu


ort 2016


1 Accounting policies continued 1.16 Impairment losses At each reporting date the carrying amounts of the tangible assets are assessed to determine whether there is any

indication that those assets may have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Irrespective of whether there is an indication of impairment, the group also:�g Tests goodwill acquired in a business combination for impairment annually by comparing its carrying amount with its recoverable amount.

Where it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is estimated. Value in use, included in the calculation of the recoverable amount, is estimated taking into account future cash flows, forecast market conditions and the expected lives of the assets.

If the recoverable amount of the asset (or cash-generating unit), is estimated to be less than its carrying amount, its carrying amount is reduced to the recoverable amount. The impairment loss is firstly allocated to goodwill. For the purpose of impairment testing, goodwill is also allocated to each of the cash-generating units (properties) expected to benefit from the synergies of the business combination. Subsequent to the recognition of an impairment loss, the depreciation or amortisation charge for assets is adjusted to allocate the remaining carrying value, less any residential value, over the remaining useful life. Impairment losses are recognised in profit or loss.

If any impairment loss subsequently reverses due to an indication that the impairment no longer exists and the recoverable amount increases as a result of a change in estimates used to determine the recoverable amount, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount but limited to the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised in profit or loss.

No goodwill impairment losses are subsequently reversed. The attributable amount of goodwill is included in the profit or loss on disposal when the relevant cash-generating unit is sold.

1.17 Furniture, fittings, computer equipment and other Furniture, fittings, computer equipment and other tangible assets are stated at cost less accumulated depreciation and

any impairment losses.

Depreciation is charged so as to write off the cost less residual value of assets over their estimated useful lives, using the straight-line basis.

The principal useful lives used for this purpose are:

Computer equipment 3 yearsComputer software 2 yearsFurniture and equipment 6 yearsMotor vehicles 5 years

The residual value and useful life of an asset are reviewed at each financial year-end.

1.18 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets

that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets.

Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. Other borrowing costs are expensed in the period in which they are incurred.


94

Vu


ort 2016


1 Accounting policies continued 1.19 Share-based payments Services received or acquired in a share-based payment transaction are recognised as the services are received. A

corresponding increase in equity is recognised if the services were received in an equity-settled, share-based payment transaction or a liability if the services were acquired in a cash-settled, share-based payment transaction.

For equity-settled, share-based payment transactions, the goods or services received, and the corresponding increase in equity, are measured directly at the fair value of the goods or services received, unless that fair value cannot be estimated reliably.

If the fair value of the goods or services received cannot be estimated reliably, their value and the corresponding increase in equity are measured indirectly by reference to the fair value, at grant date, of the equity instruments granted.

When the services received or acquired in a share-based payment transaction do not qualify for recognition as assets, they are recognised as expenses.

If the share-based payments granted do not vest until the counterparty completes a specified period of service, the group accounts for those services on a straight-line basis over the vesting period.

If the share-based payments vest immediately, the services received are recognised immediately in full. 1.20 Leases Group as lessee Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases.

Payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.

Group as a lessor Properties leased to third parties under operating leases are included in investment property in the statement of financial

position. Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term. This does not affect distributable earnings.

1.21 Employee benefits The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid

vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in profit or loss in the period in which the service is rendered and are not discounted.

1.22 Investment property held for sale Investment properties held for sale are properties that will be recovered principally through a sale transaction. These

properties are measured at their fair values.

1.23 Operating segments The group identifies and presents operating segments based on the information that is provided internally to the

executive management committee (Exco), the group’s operating decision-making forum. This forum reviews the performance of its asset management business and its investment properties held by the group on an individual basis.

The measurement policies 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:�g Corporate administrative expenditure�g Investment and other income.

1.24 Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of group entities at exchange

rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date.


95

Vu


ort 2016


1 Accounting policies continued 1.24 Foreign currency transactions continued The foreign currency gain or loss on monetary items is the difference between the amortised cost in the functional

currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the reporting period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are

translated to the group’s presentation currency (Rand) at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Rand at exchange rates at the dates of the transactions (an average rate per month is used).

1.25 New and revised International Financial Reporting Standards not yet adopted At the date of approval of these annual financial statements, certain new accounting standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by

the group.

Management anticipates that all of the pronouncements will be adopted in the group’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the group financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the group financial statements.

Standard Details of amendmentsAnnual periods beginning on or after

IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations

�g Annual improvements 2012 – 2014 cycle: amends IFRS 5 to clarify that when an entity reclassifies an asset (or disposal group) directly from being held for sale to being held for distribution (or vice versa), the accounting guidance in paragraphs 27 to 29 of IFRS 5 does not apply. The amendments also state that when an entity determines that the asset (or disposal group) is no longer available for immediate distribution or that the distribution is no longer highly probable, it should cease held-for-distribution accounting and apply the guidance in paragraphs 27 to 29.

1 July 2016

IFRS 7 – Financial Instruments: Disclosures

�g Annual improvements 2012 – 2014 cycle: the amendments provide additional guidance to help entities identify the circumstances under which a servicing contract is considered to be “continuing involvement” for the purposes of applying the disclosure requirements in paragraphs 42E to 42H of IFRS 7. Such circumstances commonly arise when, for example, the servicing fee is dependent on the amount or turning of the cash flows collected from the transferred financial asset or when a fixed fee is not paid in full due to non-performance of that asset.

1 July 2016

�g Annual improvements 2012 – 2014 cycle: these amendments clarify that the additional disclosure required by the recent amendments to IFRS 7 – Disclosure – Offsetting Financial Assets and Financial Liabilities is not specifically required for all interim periods. However, the additional disclosure is required to be given in condensed interim financial statements that are prepared in accordance with lAS 34 – Interim Financial Reporting when its inclusion would be necessary in order to meet the general principles of lAS 34.

1 July 2016


96

Vu


ort 2016


1 Accounting policies continued 1.25 New And Revised International Financial Reporting Standards Not Yet Adopted continued


IFRS 9 – Financial Instruments

�g IFRS 9 – Financial Instruments (2014) replaces IAS 39 – Financial Instruments: Recognition and Measurement.

1 January 2018

IFRS 10 –Consolidated Financial Statements

�g Amendments to address an acknowledged inconsistency between the requirements in IFRS 10 – Consolidated Financial Statements and those in IAS 28 (2011) – Investments in Associates in dealing with the sale or contribution of a subsidiary.

1 January 2016

�g Amendments confirming that the IFRS 10.4(a) consolidation exemption is also available to parent entities which are subsidiaries of investment entities where the investment entity measures its investments at fair value in terms of IFRS 10.31.

1 January 2016

�g Amendments modifying IFRS 10.32 to state that the consolidation requirement only applies to subsidiaries who are not themselves investment entities and whose main purpose is to provide services which relate to the investment entity’s investment activities.

1 January 2016

�g Amendments providing relief to non-investment entity investors in associates or joint ventures that are investment entities by allowing the non-investment entity investor to retain, when applying the equity method, the fair value measurement applied by the investment entity associates or joint ventures to their interests in subsidiaries.

1 January 2016

IFRS 11 – Joint Arrangements

�g Amendments to provide guidance on the accounting for the acquisition of an interest in a joint operation in which the activity of the joint operation constitutes a business.

1 January 2016

IFRS 15 – Revenue from Contracts with Customers

�g New guidance on recognition of revenue that requires recognition of revenue in a manner that depicts the transfer of goods or services to customers at an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.

1 January 2018

IFRS 16 – Leases �g IFRS 16 will require lessees to account for leases “on-balance sheet” by recognising a “right-of-use” asset and a lease liability. IFRS 16 also:

1 January 2019

–�Changes the definition of a lease.–�Sets requirements on how to account for the asset and

liability, including complexities such as non-lease elements, variable lease payments and option periods.

–�Provides exemptions for short-term leases and leases of low value assets.

–�Changes the accounting for sale and leaseback arrangements.

–�Largely retains IAS 17’s approach to lessor accounting.–�Introduces new disclosure requirements.

IAS 1 – Presentation of Financial Statements

�g Amendments clarifying IAS 1’s specified line items on the statements of profit and loss and other comprehensive income and the statement of financial position can be disaggregated.

1 January 2016

�g Additional requirements of how entities should present sub-totals in the statements of profit or loss and other comprehensive income and the statement of financial position.

1 January 2016

�g Clarification that entities have flexibility as to the order in which they present their notes to the financial statements, but also emphasising the need to consider fundamental principles of comparability and understandability in determining the order.

1 January 2016


97

Vu


ort 2016


1 Accounting policies continued 1.25 New And Revised International Financial Reporting Standards Not Yet Adopted continued


IAS 16 – Property, Plant and Equipment

�g Amendments to prohibit the use of a revenue-based depreciation method for property, plant and equipment, as well as guidance in the application of the diminishing balance method for property, plant and equipment.

1 January 2016

�g Amendments specifying that because the operation of bearer plants is similar in nature to manufacturing, they should be accounted for under IAS 16 rather than IAS 41. The produce growing on the bearer plants will continue to be within the scope of IAS 41.

1 January 2016

IAS 19 – Employee Benefits

�g Annual improvements 2012 – 2014 cycle: lAS 19.83 requires that the currency and term of the corporate or government bonds used to determine the discount rate for post- employment benefit obligations must be consistent with the currency and estimated term of the obligations. The amendments clarify that the assessment of the depth of the corporate bond market shall be made at the currency level rather than the country level.

1 July 2016

IAS 28 – Investments in Associates

�g Amendments to address an acknowledged inconsistency between the requirements in IFRS 10 – Consolidated Financial Statements and those in IAS 28 (2011) – Investments in Associates in dealing with the sale or contribution of a subsidiary. In addition IAS 28 (2011) has been amended to clarify that when determining whether assets that are sold or contributed constitute a business, an entity shall consider whether the sale or contribution of those assets is part of multiple arrangements that should be accounted for as a single transaction.

1 January 2016

IAS 34 – Interim Financial Reporting

�g Annual improvements 2012 – 2014 cycle: the amendments clarify the meaning of disclosure of information elsewhere in the interim financial report and require the inclusion of a cross-reference from the interim financial statements to the location of this information. The amendments specify that this information must be available to users of the interim financial statements on the same terms as the interim financial statements and at the same time, or the interim financial statements will be incomplete.

1 July 2016

IAS 38 – Intangible Assets

�g Amendments present a rebuttable presumption that a revenue-based amortisation method for intangible assets is inappropriate except in two limited circumstances, as well as provide guidance in the application of the diminishing balance method for intangible assets.

1 January 2016

Management does not expect that any of the above amendments will, at this stage, have any material impact on the financial statements.

The following revisions to International Accounting Standards, relevant to the group, have been adopted early:


IAS 27 – Consolidated and Separate Financial Statements

�g Amendments to introducing a third option which allows entities to account for investments in subsidiaries, joint ventures and associates under the equity method in their separate financial statements.

1 January 2016


98

Vu


ort 2016


2 Accounting estimates and judgements Estimates and assumptions are an integral part of financial reporting and as such have an impact on the amounts reported in the

group’s income, expenses, assets and liabilities. Judgement in these areas is based on historical experience and reasonable expectations relating to future events. Actual results may differ from these estimates. Management discusses with the audit committee the development, selection and disclosure of the group’s critical accounting policies and estimates and the application of these policies and estimates.

Information on the key estimations and uncertainties that have had the most significant effect on the amounts recognised in the financial statements are set out in the following notes in the financial statements:�g Accounting policies – notes 1.2, 1.4, 1.5, 1.8, 1.12, 1.16, 1.17, 1.18 and 1.19.�g Investment property valuation – notes 3 and 13.2.�g Investments – note 5, 6 and 13.�g Deferred taxation – note 20.�g Trade and other receivables – note 12.�g Goodwill – notes 1.12 and 7.�g Available-for-sale financial asset – note 10 and 13.

Investment properties The revaluation of investment property requires judgement in the determination of future cash flows from leases and an

appropriate reversionary capitalisation rate. Note 13.2 sets out further details of the fair measurement of investment properties. Deferred tax and taxation Deferred tax assets are raised to the extent that it is probable that future taxable profit will be available against which the unused

tax losses and unused tax credits can be utilised. Assessment of future taxable profit is performed at every reporting date, in the form of future cash flows using a suitable growth rate.

As the group has obtained REIT status effective 1 April 2013, the group is not liable for capital gains tax on the disposal of directly held properties and local REIT securities. In addition, deferred tax is not calculated on the straight-line rental income accrual as the rental income accrual forms part of the group’s dividends. Given the REIT status, such dividends are fully deductible for tax purposes and hence no tax liability arises on rental income accruals.

Investments Note 5 sets out the rationale behind management’s opinion that the company does not have significant influence over the

investments listed therein and that these investments are not associates in terms of IAS 28.

Impairment of assets and goodwill The group tests whether assets have suffered any impairment in accordance with the accounting policy stated in notes 1.12

and 1.16. The recoverable amounts of cash-generating units, intangible assets and tangible assets have been determined based on future cash flows discounted to their present value using appropriate rates. Estimates are based on interpretation of generally accepted industry-based market forecasts.

Trade receivables Management identifies impairment of trade receivables on an ongoing basis. Impairment adjustments are raised against trade

receivables when the collectability is considered to be doubtful. Management believes that the impairment write off is conservative and that there are no significant trade receivables that are doubtful and have not been written off. In determining whether a particular receivable could be doubtful, the following factors are taken into consideration:�g Age; �g Customer current financial status; �g Security held; and �g Disputes with customer.

Business combination versus asset acquisition Management has assessed properties acquired and has concluded in its view that, except for Moruleng Mall (acquired via

an acquisition of 80% of the issued shares in Clidet 1011 (Pty) Ltd), these acquisitions are property acquisitions in terms of IAS 40 – Investment Property and are therefore accounted for in terms of that standard. Apart from Clidet 1011 (Pty) Ltd, in the opinion of management, these properties did not constitute a business as defined in terms of IFRS 3 – Business Combinations, as there were not adequate processes identified within these properties to warrant classification as businesses. The acquisition of Clidet 1011 (Pty) Ltd is dealt with in note 9 – investment in subsidiaries.


99

Vu


ort 2016


2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

3 Investment propertiesStated at fair valueProperty acquisitions and development costs 10 500 702 7 349 075 9 327 752 6 257 776Capital expenditure and tenant installations 1 293 394 742 116 725 314 583 856Net gain from fair value adjustment of investment properties 3 899 922 2 798 705 3 292 641 2 270 803

Fair value 15 694 018 10 889 896 13 345 707 9 112 435Lease commissions 41 618 29 914 39 640 24 137

At end of year 15 735 636 10 919 810 13 385 347 9 136 572Less: Fair value of investment properties held for sale (1 997 744) (1 743 304) (280 019) (147 019)

13 737 892 9 176 506 13 105 328 8 989 553

3.1 Details of investment propertiesInvestment properties include commercial properties in South Africa and Namibia which are owned to earn rentals and for capital appreciation.

Note 13.2 sets out how the fair value of investment properties has been determined.

The group’s properties are mortgaged to the value of R9.8 billion as security for the DMTN debt and bank loans (2015: R9.3 billion) – refer note 18.

3.2 Movement for the year

2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

Investment properties at 1 April 13 385 347 9 136 572 10 302 561 8 722 114Capital expenditure and tenant installations 594 804 174 607 145 030 92 674Acquisitions and development costs 910 576 1 162 401 221 688 221 688Acquisitions through business combination 398 900 – 2 399 915 –Change in fair value of investment properties 803 270 587 449 476 332 271 818Disposal of investment properties (359 239) (146 996) (173 161) (173 161)Movement in lease commissions 1 978 5 777 12 982 1 439

Investment properties at 31 March 15 735 636 10 919 810 13 385 347 9 136 572

Reflected on the statement of financial position under:

Non-current assets 13 737 892 9 176 506 13 105 328 8 989 553Non-current assets held for sale 1 997 744 1 743 304 280 019 147 019

15 735 636 10 919 810 13 385 347 9 136 572

4 Straight-line rental income adjustmentBalance at 1 April 283 866 260 761 204 748 173 102Balances acquired (Clidet/Synergy) 17 591 – (18 197) –Current year movement 243 221 123 119 97 315 87 659

Balance at 31 March 544 678 383 880 283 866 260 761

Reflected on the statement of financial position under:Non-current assets 435 506 274 239 281 206 259 428Non-current assets held for sale 109 172 109 641 2 660 1 333

544 678 383 880 283 866 260 761


100

Vu


ort 2016


GROUP2016

Fairvest2015

Fairvest

5 Equity investmentsInvestment in Fairvest Property Holdings Limited (Fairvest)Number of shares held 205 154 540 178 976 540% holding 31.2% 33.9%Price at year-end (cents per share) 160 215

R000 R000

Opening balance at fair value 384 800 220 970Less: Accrued distribution from prior year (6 862) (4 444)Shares acquired 50 000 12 420Less: Pre-acquisition portion of accrued distribution (1 266) (610)Fair value adjustment (98 425) 149 602Accrued distribution at year-end – 6 862

Closing balance at fair value 328 247 384 800

Fair value (loss)/gain on investments (98 425) 172 180

Fairvest (98 425) 149 602

Synergy (prior to obtaining control) – 22 578

COMPANY2016

Fairvest2015

Fairvest

Number of shares held 75 147 659 48 969 659 % shares held 11.4% 9.3%Price at year-end (cents per share) 160 215

R000 R000

Opening balance at fair value 105 285 51 961 Less: Accrued distribution from prior year (1 878) (1 340)Shares acquired 50 000 12 420 Less: Pre-acquisition portion of accrued distribution (1 266) (610)Fair value adjustment (31 905) 40 976 Accrued distribution at year-end – 1 878

Closing balance at fair value 120 236 105 285

Fair value (loss)/gain on investments (31 905) 63 554Fairvest (31 905) 40 976Synergy (Prior to obtaining control) – 22 578

Assessment of whether the Fairvest investment constitutes an associate as defined in IAS 28

Vukile’s shareholding in Fairvest amounts to 31.2%. Fairvest is a listed company with a diverse shareholding base. Vukile does not have the power to participate in Fairvest’s financial and operating policy decisions. The only power Vukile has is the ability to block special resolutions. Vukile does not have board representation in Fairvest nor has there been an exchange of managerial personnel. Vukile does not have any influence on dividend policies in respect of Fairvest. Vukile has not provided any guarantees of indebtedness or extended any credit to the above companies. On the basis of the above Fairvest is not considered to fall within the definition of an associate in terms of IAS 28.


101

Vu


ort 2016


6 Investment in associate – Atlantic Leaf Properties Limited (Atlantic Leaf)

Name of associatePrincipal

activity

Place of incorporation

and operation

Proportion of ownership and voting power held

by the company

31 March 2016

31 March 2015

Atlantic Leaf Properties Limited Investment in commercial

property

Mauritius and operating in

United Kingdom

26.1% –

GROUP AND COMPANY

March 2016R000

March 2015R000

Cost of investment 758 570 –Equity accounted share of profits 19 423 –Share of fair value movement on cash flow hedge (10 567) –Foreign currency translation loss (7 377) –

Carrying value of investment 760 049 –

Atlantic Leaf Properties Limited is a Mauritian-incorporated real estate company, listed on the official list of the Stock Exchange of Mauritius (SEM) and the alternative exchange of the Johannesburg Stock Exchange (JSE). The company was incorporated on 11 November 2013 in Mauritius, and holds a Category 1 Global Business Licence in accordance with the Mauritian Companies Act 2001 and the Financial Services Act 2007 of Mauritius.

The company has been established with the objective of investing in high-quality, investment grade real estate assets and companies which deliver solid returns for investors through both income and capital growth. The company focuses on investments in Western Europe, and in particular the United Kingdom.

Through a series of transactions, Vukile acquired a 26.1% (2015: 0%) interest in Atlantic Leaf during the year and exercises significant influence over it by virtue of its 26.1% (2015:0%) voting rights held, and a seat on the board and investment committee of the company.

The market value of the investment was R785 million at year-end (2015: Rnil).

The shares held by the company in Atlantic Leaf have been pledged to Absa Bank as security for a £18 million loan advanced to part fund this acquisition.


102

Vu


ort 2016


6 Investment in associate – Atlantic Leaf Properties Limited (Atlantic Leaf) continuedThe summarised financial information of Atlantic Leaf is set out below:

Statement of comprehensive income

12 months Audited as at

29 February 2016£000

Rental revenue 8 490 Straight-line lease income adjustment 684 Revenue 9 174 Property operating expenses (513)

Net property income 8 661 Other operating expenditure (2 018)

Net property income 6 643 Investment income 223 Profit on disposal of listed investments 73 Loss on foreign exchange (216) Fair value adjustments 1 769 Finance costs (2 528)

Profit before taxation 5 964 Taxation (521)

Profit for the year ended 29 February 2016 5 443 Other comprehensive income –Fair value movement on cash flow hedge (1 784)

Total comprehensive income for the year 29 February 2016 3 659

March2016£000

Vukile’s share of net profit from Atlantic Leaf 875

Vukile’s share of other comprehensive loss from Atlantic Leaf (465)


103

Vu


ort 2016


6 Investment in associate – Atlantic Leaf Properties Limited (Atlantic Leaf) continued

Statements of financial position

31 March 2016

pro forma£000

Audited29 February

2016£000

AssetsNon-current assets 271 067 208 797 Investment properties 263 619 195 349 Other non-current assets 7 448 13 448 Current assets 6 277 8 475

Total assets 277 344 217 272

Equity 136 773 136 030 Liabilities 140 571 81 242Long-term borrowings 133 425 74 097 Current liabilities 7 146 7 145

Total equity and liabilities 277 344 217 272

Vukile’s share of net assets R’000 £000Share of equity acquired 754 746 35 290 Goodwill 2 986 141 Foreign currency translation reserve 838 –

Cost of investment in Atlantic Leaf 758 570 35 431 Equity-accounted share of profits 19 423 875 Share of other comprehensive income (10 567) – Foreign currency translation reserve through other comprehensive income (7 377) (465)

760 049 35 841

Rand/GBP exchange rate at 31 March 2016 21.21

The information was extracted from Atlantic Leaf’s summarised audited financial statements for the year ended 29 February 2016, being the latest available audited results and the unaudited six-month results from 1 September 2015 to 29 February 2016, and updated for one month to 31 March 2016.

No comparative figures are shown in the financial information of Atlantic Leaf as Vukile’s initial investment was made on 1 October 2015.


104

Vu


ort 2016


GROUP2016R000

2015R000

7 GoodwillBalance at 1 April 57 058 57 058Less: Goodwill written off on properties sold by a subsidiary during the year (4 951) –

Goodwill relating to acquisition of MICC Income Fund Limited (“MICC”) 52 107 57 058Goodwill relating to acquisition of Vukile Asset Management (Pty) Ltd (“VAM”) 106 265 –

Balance at 31 March 158 372 57 058

Goodwill relating to the acquisition of MICCGoodwill arose on the acquisition of 100% of MICC and represents a premium paid on the net assets and liabilities on each property purchased. Each operating segment relative to the acquisition is defined as a cash-generating unit. Refer note 34.

Goodwill was tested for impairment by comparing both the estimated combined recoverable amount attributable to MICC and the valuation per investment property with the respective carrying values.

The recoverable amount attributable to MICC, which is based on forecast net income over a 20-year period, was calculated using the discounted cash flow method. The recoverable amount calculated exceeds R1 billion. The discount rate used was based on the government R208 rate at 31 March 2016 plus an appropriate risk premium. Details of the judgements and assumptions used to determine the valuation of the relevant investment properties are set out in note 13.2. Goodwill written off comprises the goodwill allocated to the cash-generating units (investment properties) arising on the acquisition of MICC in 2006 which have been sold. In the current year the following property was sold:

2016R000

2015R000

Kokstad 4 951 –

Total 4 951 –

Goodwill of R52.11 million is, therefore, not impaired.

Goodwill in respect of the acquisition of VAM (refer note 9)Goodwill arose on the acquisition of 100% shareholding in Capital Land Asset Management (Pty) Ltd, now renamed Vukile Asset Management (VAM). VAM was acquired in May 2015 for R106.265 million. VAM has only one asset, namely the asset and property management contract (contract) with Synergy. The value of the goodwill arising on consolidation was tested for impairment by valuing the contract with Synergy.

The recoverable amount was based on forecast net income to the date the contract is due for renewal by the shareholders of Synergy, namely November 2021, and the value of the deemed internationalisation of the asset management business at that date, based on the terms of the contract between Synergy and VAM, calculated using the discounted cash flow method. The discount rate used was the R208 risk-free rate plus a market risk premium of 4%, amounting to 12.6851%.

The assumptions used are as follows:�g The budget for the year ending 31 March 2017 of the asset management business has been used and thereafter asset management fees of 0.05% of enterprise value were calculated based on an increase in enterprise value of between 5% and 5.5% over the period plus the impact of property purchases referred to below.�– Property fees were calculated at 4% and escalated at an assumed 5.5% per annum.�– Property management costs charged by the outsourced providers were also escalated at 5.5% per annum over the period.�– Property purchases of R100 million have been conservatively assumed from March 2019 to November 2021, funded via

equity.�g Salary and other office costs incurred on the Synergy portfolio by various MICC and Vukile employees, have been appropriately accounted for.�g Shareholders (excluding Vukile) can vote on extending the asset management contract at the end of 10 years, i.e. in November 2021. Although it is considered highly probable that the shareholders would extend the asset management contract, it has been assumed for purposes of the discounted cash flow that the contract would be internalised in November 2021.

On the internalisation of the asset management contract the gross income forecast for 12 months forward is capitalised using Synergy’s forward yield at that time. The future forward yield is assumed to be similar to Synergy’s current forward yield.The recoverable amount exceeds R106.265 million.

Goodwill of R106.265 million is, therefore, not impaired.


105

Vu


ort 2016


2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

8 Furniture, fittings, computer equipment and otherCost 7 798 265 7 432 179Accumulated depreciation (5 671) (138) (4 184) (102)

Carrying value 2 127 127 3 248 77

8.1 Movement for the yearNet carrying value at 1 April 3 248 77 4 660 95Acquisition of Clidet No. 1011 (Pty) Ltd 164 – – –Additions 202 86 317 21Disposals/assets scrapped – – (11) (3)Depreciation (1 487) (36) (1 718) (36)

Net carrying value at 31 March 2 127 127 3 248 77

COMPANY2016R000

2015R000

9 Investment in subsidiariesDirect holdingShares at cost100% holding in MICC Property Income Fund Limited (2015: 100%)(1) 462 780 462 780100% holding in Vukile Real Estate Sales and Leasing (Pty) Ltd (2015: 100%)(1) * *65.02% holding in Synergy Income Fund Limited (2015: 64.61%) 732 122 731 30180% in Clidet No 1011 (Pty) Ltd (Clidet) 100 881 –100% in Vukile Asset Management (Pty) Ltd (VAM) 106 265 –

Indirect holdingMICC Properties (Pty) Ltd(1)

MICC Properties Namibia (Pty) Ltd(2)

Katutura Properties (Pty) Ltd(2)

Oluno Properties (Pty) Ltd(2)

Oshikango Properties (Pty) Ltd(2)

Super Deca Properties (Pty) Ltd(2)

MICC House Namibia (Pty) Ltd(2)

All the companies are 100% held within the MICC group

Special purpose entity Vukile Investment Property Securitisation (Pty) Ltd (VIPS)(1)

Total investment in subsidiaries 1 402 048 1 194 081(1) Incorporated in the Republic of South Africa.(2) Incorporated in Namibia.* Amount below R1 000.


106

Vu


ort 2016


9 Investment in subsidiaries continuedAcquisition of subsidiary – ClidetVukile acquired control of Clidet effective 2 April 2015, through the acquisition of 80% of the shares in the company. The total investment in Clidet comprises 400 shares and purchase price was settled by way of cash, issue of shares and the assumption of the borrowing obligations of Clidet.

The acquisition was made to acquire Moruleng Mall, a property owned by Clidet, that complements Vukile’s existing retail portfolio and is an excellent strategic fit to the portfolio.

The details of the business combination are as follows:

R000

Cost of investment in Clidet 100 881

100 881

Recognised amounts of identifiable net assets (80%) 101 934 Gain on bargain purchase (1 053)

100 881

The gain on bargain purchase arose as a result of a negotiated transaction with the seller. Additional disclosures as required by IFRS 3 are included in note 17.

Statement of financial position of Clidet at 2 April 2015

2015R000

AssetsNon-current assets 400 023Investment properties 381 309Straight-line rental income accrual 17 591Furniture, fittings, office and security equipment 164Deferred taxation asset 959Current assets 14 995Trade and other receivables 7 106Taxation refundable 1 094Cash and cash equivalents 6 795

Total assets 415 018

Equity and reservesShareholders’ interest 127 418Non-current liabilities 281 406Borrowings 281 406Current liabilities 6 194

Total equity and liabilities 415 018

Cash outflow on date of acquisitionCost of investment 100 881Cash acquired (6 795)

94 086Consideration settled through the issue of shares (48 279)

Paid in cash 45 807

Acquisition of VAMVukile acquired control of VAM effective 7 May 2015 through the acquisition of 100% of the shares in VAM at a total purchase price of R106.265 million.

VAM reflected no assets or liabilities in its financial statements at 7 May 2015. The only asset owned by VAM is the asset and property management contract with Synergy. The income earned in VAM from date of acquisition is eliminated on consolidation. Had the company been acquired on 1 April 2015, that income would too have been eliminated.

R000

Value of the investment in VAM at date control was acquired 106 265


107

Vu


ort 2016


10 Available-for-sale financial assetThe available-for-sale financial asset comprises the long-term incentive reimbursement right, which is legally offset by the long-term employee benefit liability in the statement of financial position. The reimbursement asset of R33.8 million is based on the number of units held by SCM, valued at the closing share price at year-end (level 1 financial instrument). The liability portion of R14.0 million is determined by the number of units vesting in future, valued at the year-end share price, weighted for the expected performance achievement and based on the number of days to vesting (level 2 financial instrument).

2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

Reimbursement rightBalance at 1 April 21 576 11 342 20 313 10 165Performance and retention long-term incentive scheme awards 19 764 10 883 13 442 6 758Fair value adjustment of reimbursement right (7 519) (4 505) (2 899) (95)

33 821 17 720 30 856 16 828Movements of executive rights (13 979) (7 066) (9 280) (5 486)

Total reimbursement right 19 842 10 654 21 576 11 342

The terms and conditions of the Conditional Unit Plan were approved by shareholders at a general meeting held on 25 April 2013, the financial assistance authority confirmed at the AGM held on 26 August 2014.

Sanlam Capital Markets (SCM) has assumed the obligation to discharge Vukile’s conditional financial obligations towards its executives and management as follows:

Rm Vesting dates

A Based on 33.33% to 100% CPA target and 66.667% to 0% group performance 1.8 July 2016B Special award – retention based 3.0 July 2016C Based on 33.33% CPA targets and 66.667% group performance 6.5 August 2014 – 2016E Based on 40% to 100% CPA targets and 60% – 0% of group performance 4.1 July 2016F Special award – retention based 0.4 July 2016G Based on retention criteria 0.4 July 2011 – 2016H Based on 27.5% to 100% CPA targets and 72.5% to 0% of group performance 12.8 June 2016I Special award – retention based 1.3 April 2017J Based on 27.8% to 100% CPA targets and 72.2% to 0% of group performance 13.4 June 2017K Based on 25.8% to 100% CPA targets and 74.2% to 0% of group performance 19.8 June 2018

The executive directors have been allocated the following percentages of the schemes:

Scheme LG Rapp MJ Potts HC Lopion GS Moseneke

A 5.79% 70.43% B 73.0% 27.0% C 100.0% E 26.00%F 26.00%G 100.00%H 24.92% 12.51% 11.22%J 26.45% 13.29% 11.91% 8.94%K 25.72% 13.26% 11.83% 9.17%

Further details of the existing long-term retention and incentive share scheme are set out on pages 34 and 35 of the integrated annual report.


108

Vu


ort 2016


2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

11 Long-term loans grantedLoans to executive directors to acquire Vukile shares 38 110 38 110 38 110 38 110

Balance at 31 March 38 110 38 110 38 110 38 110

The loans bear interest at the weighted average cost of funding of the group, being 8.4% (2015: 8.4%) at period end. The loans are secured by 2 294 763 Vukile shares (2015: 2 294 763) with a fair value of R39.0 million (2015: R44.2 million). The value of security held for each individual loan exceeds the amount of the related loan. The loans are repayable on the 10th anniversary of the loans being granted or date of retirement, death or resignation, if earlier. Refer to the table on page 77 in the directors’ report for further details.

2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

12 Trade and other receivablesGross rental receivables 57 063 32 484 51 091 32 388Impairment of receivables (28 010) (18 960) (27 379) (18 110)Prepaid expenses 27 560 25 930 14 517 13 620Interest receivable 50 320 45 864 – –Sundry debtors 139 940 87 732 109 200 84 584

Total 246 873 173 050 147 429 112 482

Further information on receivables is set out in note 22.2.

All amounts are short-term. The net carrying value of trade and other receivables is considered a reasonable approximation of fair value.

13 Fair value measurement13.1 Fair value measurement of financial instruments

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.Level 3: unobservable inputs for the asset or liability.


109

Vu


ort 2016


13 Fair value measurement continued13.2 Fair value hierarchy

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 measured.

The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows:

2016 2015

GROUPLevel 1

R000Level 2

R000TotalR000

Level 1R000

Level 2R000

TotalR000

AssetsEquity investments 328 247 – 328 247 384 800 – 384 800Available-for-sale financial assets 57 324 – 57 324 51 539 – 51 539Derivative financial instruments – 42 475 42 475 – – –

Total 385 571 42 475 428 046 436 339 – 436 339

LiabilitiesAvailable-for-sale financial liabilities – (37 482) (37 482) – (29 963) (29 963)Derivative financial instruments – (5 269) (5 269) – (12 919) (12 919)

Total – (42 751) (42 751) – (42 882) (42 882)

Net fair value 385 571 (276) 385 295 436 339 (42 882) 393 457

COMPANY

AssetsEquity investments 120 236 – 120 236 105 285 – 105 285Available-for-sale financial assets 31 685 – 31 685 27 868 – 27 868Derivative financial instruments – 39 498 39 498 – – –

Total 151 921 39 498 191 419 133 153 – 133 153

LiabilitiesAvailable-for-sale financial liabilities – (21 031) (21 031) – (16 526) (16 526)Derivative financial instruments – (5 095) (5 095) – (11 909) (11 909)

Total – (26 126) (26 126) – (28 435) (28 435)

Net fair value 151 921 13 372 165 293 133 153 (28 435) 104 718

There have been no significant transfers between levels 1 and 2 in the reporting period under review. There were no transfers in or out of level 3 in the reporting period under review.

Measurement of fair valueThe methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.

InvestmentsThis comprises shares held in listed property companies at fair value which is determined by reference to quoted closing prices at the reporting date.


110

Vu


ort 2016


13 Fair value measurement continued13.2 Fair value hierarchy continued

Available-for-sale financial assetsThis comprises equity-settled share-based long-term incentive reimbursement rights stated at fair value. Note 10 sets out further details of the relevant inputs utilised.

Derivative financial instrumentsThe fair values of these swap contracts are determined by Absa Capital, Rand Merchant Bank, Standard Bank and Investec Bank Limited 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.

13.3 Financial instruments by category – groupNote 1.5 provides a description of each category of financial asset and financial liability and the related accounting policies. The carrying amounts of financial assets and financial liabilities in each category are as follows:

31 March 2016

Loans and receivables

R000

Available-for-sale

financialassetR000

Designatedat fairvalueR000

Assets per statement of financial positionCash and cash equivalents 582 459 – –Equity investments – – 328 247Available-for-sale financial asset – 19 842 –Long-term cash deposit 350 000 – –Derivative financial instruments – – 42 475Long-term loans granted 38 110 – –Trade and other receivables (excluding prepayments) 219 313 – –

31 March 2016

Financialliabilities

at amortisedcost

R000


Liabilities per statement of financial positionOther interest-bearing borrowings 4 098 319 –Derivative financial instrument – 5 269Trade and other payables (excluding non-IAS 39 liabilities) 361 022 –Short-term borrowings 1 309 687 –


111

Vu


ort 2016


13 Fair value measurement continued13.3 Financial instruments by category – group continued

31 March 2015


R000

Available-for-sale

financialassetR000


Assets per statement of financial positionCash and cash equivalents 473 889 – –Equity investments – – 384 800Available-for-sale financial asset – 21 576 –Long-term loans granted 38 110 – –Trade and other receivables (excluding prepayments) 132 912 – –

31 March 2015

Financialliabilities

at amortisedcost

R000



13.4 Financial instruments by category – companyNote 1.5 provides a description of each category of financial asset and financial liability and the related accounting policies. The carrying amounts of financial assets and financial liabilities in each category are as follows:

31 March 2016


R000

Available-for-sale

financialassetR000


Assets per statement of financial positionCash and cash equivalents 500 610 – –Equity investments – – 120 236Available-for-sale financial asset – 10 654 –Derivative financial instruments – – 39 498Long-term cash deposit 350 000 – –Long-term loans granted 38 110 – –Trade and other receivables (excluding prepayments) 147 120 – –


112

Vu


ort 2016


13 Fair value measurement continued13.4 Financial instruments by category – company continued

31 March 2016

Otherfinancial

liabilities atamortised

costR000



31 March 2015


R000

Available-for-sale

financialassetR000


Assets per statement of financial positionCash and cash equivalents 437 459 – –Equity investments – – 105 285Available-for-sale financial asset – 11 342 –Long-term loans granted 38 110 – –Trade and other receivables (excluding prepayments) 98 862 – –

31 March 2015

Otherfinancial

liabilities atamortised

costR000




113

Vu


ort 2016


13 Fair value measurement continued 13.5 Fair value measurement of non-financial assets (investment properties) The directors have valued the group’s and company’s property portfolio at R15.7 billion and R10.9 billion respectively

as at 31 March 2016 (2015: R13.3 billion and R9.2 billion respectively).

This is R2.4 billion or 17.6% higher than the group’s valuation as at 31 March 2015.

The external valuations performed by Quadrant Properties (Pty) Ltd and Knight Frank Gauteng (Pty) Ltd at 31 March 2016 on 52.2% of the group’s portfolio are in line with the directors’ valuations of the same properties.

The fair values of commercial buildings are 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 estimated rental value, assumptions regarding vacancy levels, the discount rate and the reversionary capitalisation rate. The estimated fair value increases if the estimated rental increases, vacancy levels decline or if discount rates (market yields) and reversionary capitalisation rates decline. The overall valuations are sensitive to all four assumptions. Management considers the range of reasonable possible alternative assumptions is greatest for reversionary capitalisation rate rental values and vacancy levels and that there is also an inter-relationship between these inputs. The inputs used in the valuations at 31 March 2016 were:

Group�g The range of the reversionary capitalisation rates applied to the portfolio are between 7.8% and 16.5% (March 2015: between 8.2% and 17.0%) with the weighted average being 9.7% (March 2015: 9.8%). �g The discount rates applied range between 12.8% and 19.6% (March 2015: between 12.7% and 19.5%) with the weighted average being 14.2% (March 2015: 14.3%).

Company�g The range of the reversionary capitalisation rates applied to the portfolio are between 8.0% and 16.5% (March 2015: between 8.2% and 17.0%) with the weighted average being 9.7%. (March 2015: 10.0%). �g The discount rates applied range between 12.8% and 19.6% (March 2015: between 12.7% and 19.5%) with the weighted average being 14.2%. (March 2015: 14.3%).

Sensitivity analysis Group The effect on the fair value of the portfolio of a 0.25% increase in the discount rate would result in a decrease in the fair

value of R420 million (2.7%) (March 2015: R350 million (2.6%)). The average discount rate on the portfolio would increase from 14.2% to 14.5% (March 2015: 14.6%) and the average exit capitalisation rate would increase from 9.7% to 9.9% (March 2015: 10.1%) due to the interlinked nature of the rates. The analysis has been prepared on the assumption that all other variables remain constant.

Company The effect on the fair value of the portfolio of a 0.25% increase in the discount rate would result in a decrease in the fair

value of R292 million (2.8%) (March 2015: R238 million (2.6%)). The average discount rate on the portfolio would increase from 14.2% to 14.5% (March 2015: 14.6%) and the average exit capitalisation rate would increase from 9.7% to 10.0% (March 2015: 10.3%) due to the interlinked nature of the rates. The analysis has been prepared on the assumption that all other variables remain constant.

In determining future cash flows for valuation purposes, vacancies are forecast for each property based on estimated demand.

The following table reflects the levels within the hierarchy of non-financial assets measured at fair value at 31 March 2016:

GROUP

2016Recurring fair value

measurements level 3

R000

2015Recurring fair value

measurementslevel 3R000

Investment properties 13 737 892 13 105 328Investment properties held for sale 1 997 744 280 019

COMPANYInvestment properties 9 176 506 8 989 553Investment properties held for sale 1 743 304 147 019


114

Vu


ort 2016


COMPANY2016R000

2015R000

14 Loan to subsidiariesVukile Investment Property Securitisation (Pty) Ltd (VIPS) 535 535Clidet No 1011 (Pty) Ltd 281 406 –MICC Property Income Fund Limited – 5 759MICC Properties (Pty) Ltd – 442 462

Total 281 941 448 756

The loan to VIPS comprises certain proceeds on the sale of securitised properties. The loan earns interest at market-related deposit rates and is repayable once VIPS is liquidated.

The loan to Clidet No 1011 (Pty) Ltd earns interest at prime plus 1.5% and is payable on 11 November 2017.

2016 2015

Group Company Group Company

15 Stated capitalAuthorised ordinary shares of no par value (000) 800 000 800 000 800 000 800 000Issued ordinary shares of no par value (000) 647 667 647 667 572 758 572 758

Reconciliation of movement of issued shares

R000 R000 R000 R000

In issue at the beginning of the year – 572 747 744 (2015: 509 573 007) ordinary shares of no par value 5 672 340 5 672 340 5 096 5 09674 919 543 shares issued during the year net of costs (2015: 63 174 737) 1 396 223 1 396 223 632 632REIT conversion – – 5 666 612 5 666 612

Stated capital at end of year 7 068 563 7 068 563 5 672 340 5 672 340

Shares under control of the directors

At the AGM held on 25 August 2015, linked shareholders approved a resolution whereby 63 381 375 shares of the unauthorised shares of the company were placed under the control of the directors. As at 24 May 2016, 52.4% of this authority has been utilised through a combination of an issue for cash and vendor placement. In addition to this facility, another R1.0 billion worth of capital is under the control of the directors as a result of resolutions passed by linked shareholders approving the Encha equity funding platform and matching placement facility.


115

Vu


ort 2016


Non-distributable

reservesR000

Revaluationreserves

available-for-saleassets

R000

Foreigncurrency

translationreserve

R000

Cash flowhedge

R000TotalR000

16 Other components of equityGROUPBalance at 31 March 2014 3 008 246 (46 669) – 17 761 2 979 338Change in fair value of investment properties 468 235 – – – 468 235Share-based remuneration 11 678 – – – 11 678Transfer to non-distributable reserves 94 791 – – – 94 791Revaluation of investments 172 180 – – – 172 180Other comprehensive lossRevaluation of available-for-sale financial asset – (12 169) – – (12 169)Revaluation of cash flow hedges – – – (30 667) (30 667)

Balance at 31 March 2015 3 755 130 (58 838) – (12 906) 3 683 386

Change in fair value of investment properties 803 270 – – – 803 270Change in fair value of investments attributable to non-controlling interest (13 860) – – – (13 860)Share-based remuneration 15 770 – – – 15 770Deferred taxation on change in fair value of derivatives (10 417) – – – (10 417)Cost of conversion of debentures to stated capital by subsidiary (710) – – – (710)Gain from change in shareholding in subsidiary 5 041 – – – 5 041Revaluation of investments (98 425) – – – (98 425)Transfer from non-distributable reserves (8 409) – – – (8 409)Other comprehensive income/(loss)Currency loss on translation of investment in associate – – (7 377) – (7 377)Revaluation of available-for-sale financial asset – (21 498) – – (21 498)Revaluation of cash flow hedges – – – 40 460 40 460

Balance at 31 March 2016 4 447 390 (80 336) (7 377) 27 554 4 387 231


116

Vu


ort 2016


Non-distributable

reservesR000

Revaluationreserves

available-for-saleassets

R000

Foreigncurrency

translationreserve

R000

Cash flowhedge

R000TotalR000

16 Other components of equity continuedCOMPANYBalance at 31 March 2014 2 108 157 (35 983) – 18 396 2 090 570Change in fair value of investment properties 271 818 – – – 271 818Share-based remuneration 6 103 – – – 6 103Transfer from non-distributable reserves (83 957) – – – (83 957)Revaluation of investments 63 554 – – – 63 554Other comprehensive lossRevaluation of available-for-sale financial asset – (5 581) – – (5 581)Revaluation of cash flow hedges – – – (30 667) (30 667)

Balance at 31 March 2015 2 365 675 (41 564) – (12 271) 2 311 840

Change in fair value of investment properties 587 449 – – – 587 449Deferred taxation on change in fair value of derivatives (9 633) – – – (9 633)Share-based remuneration 8 391 – – – 8 391Transfer to non-distributable reserves 17 298 – – – 17 298Revaluation of investments (31 905) – – – (31 905)Other comprehensive income/(loss)Currency loss on translation of investment in associate – – (7 377) – (7 377)Revaluation of available-for-sale financial asset – (11 571) – – (11 571)Revaluation of cash flow hedges – – – 37 087 37 087

Balance at 31 March 2016 2 937 275 (53 135) (7 377) 24 816 2 901 579

In line with Vukile’s objective not to distribute capital profits, all non-distributable items accounted for in profit or loss, such as the fair value adjustments (excluding the non-controlling interest’s portion of the fair value adjustments), straight-line lease income adjustments, non-cash charges, capital items and deferred taxation on the change in fair value of derivatives were transferred to the non-distributable reserve in the current year.


117

Vu


ort 2016


17 Non-controlling interest2016The non-controlling interest of R556.7 million represents 34.98% (2015: R516.3 million represented 35.39%) of the net asset value of Synergy at 31 March 2016, and 20% of the net asset value of Clidet at 31 March 2016. The following is summarised financial information for Synergy and Clidet, prepared in accordance with IFRS, adjusted for fair value adjustments on acquisition and differences in group accounting policies. The information is before intercompany eliminations with other companies in the group.

SynergyR000

ClidetR000

March 2016R000

Extracts from statement of profit or loss and other comprehensive income Revenue, excluding straight-line lease income adjustment 347 654 53 905 401 559Profit/(loss) after taxation 104 588 99 136 203 724Attributable to owners of the parent 67 645 79 309 146 954Attributable to non-controlling interest 36 943 19 827 56 770Total comprehensive income 105 197 99 136 204 333Attributable to owners of the parent 68 041 79 307 147 348Attributable to non-controlling interest 37 156 19 829 56 985Dividends paid to non-controlling interest during the year 23 743 – 23 743Extracts from statement of financial positionNon-current assets 2 441 918 483 954 2 925 872Current assets 52 914 30 050 82 964Non-current liabilities (976 191) (279 035) (1 255 226)Current liabilities (55 284) (8 416) (63 700)

Net assets 1 463 357 226 553 1 689 910

Net assets attributable to non-controlling interests 511 370 45 311 556 681

Extracts from statement of cash flowsCash flows from operating activities 39 701 4 282 43 983Cash flows from investing activities (25 528) 2 268 (23 260)Cash flows from financing activities 5 423 (2 868) 2 555

Net increase in cash and cash equivalents 19 596 3 682 23 278


118

Vu


ort 2016


17 Non-controlling interest continued2015The non-controlling interest of R516.3 million represents 35.39% of the net asset value of Synergy at 31 March 2015.

The following is summarised financial information for Synergy, prepared in accordance with IFRS, adjusted for fair value adjustments on acquisition. The information is before inter-company eliminations with other companies in the group.

March 2015R000

Extracts from statement of profit or loss and other comprehensive income for the two months ended 31 March 2015Revenue, excluding straight-line lease income adjustment 53 867Profit after taxation 211 547Attributable to owners of the parent 201 880Attributable to non-controlling interest 9 667Other comprehensive income –Total comprehensive income –Attributable to owners of the parent –Attributable to non-controlling interest –Dividends paid to non-controlling interest during the year 9 667

Extracts from statement of financial positionNon-current assets 2 433 456Current assets 18 899Non-current liabilities (969 666)Current liabilities (41 288)

Net assets 1 441 401

Net assets attributable to non-controlling interests 516 317

Extracts from statement of cash flowsCash flows from operating activities (23 078)Cash flows from investing activities (34 183)Cash flows from financing activities 59 058

Net increase in cash and cash equivalents 1 797


119

Vu


ort 2016


18 BorrowingsDetails of borrowings

2016

Secured and unsecured variable fixed rate loans

GroupTotal

facilitiesavailable

R000

Groupissuances/

drawdowns

R000

Companyissuances/

drawdowns

R000Termyears

Interestrates(1)

%Repayment

dates

Interest-bearing borrowings 5 408 006 4 109 500

Interest-bearing borrowings non-current 4 098 319 2 722 813Interest-bearing borrowings – current 1 309 687 1 386 687

Secured and unsecured variable rate loans 5 171 301 4 109 500

DMTN programme 5 000 000Corporate bonds and commercial paper issuances

SecuredCorporate bonds 380 000 380 000 2 8.73 May 2018Corporate bonds 200 000 200 000 5 9.41 Jun 2020Corporate bonds 200 000 200 000 4 8.48 May 2016Corporate bonds 240 000 240 000 5 8.86 May 2017

Total 1 020 000 1 020 000

Less: Net debt raising fees offset against borrowings (770) (770)

1 019 230 1 019 230

UnsecuredCommercial paper 85 000 85 000 0.5 7.99 Aug 2016Commercial paper –(2) 77 000 0.5 7.99 Sept 2016Commercial paper 86 000 86 000 2 8.98 April 2016Commercial paper 84 000 84 000 2 8.98 April 2016Commercial paper 140 000 140 000 0.5 8.09 Sept 2016Corporate bonds 110 000 110 000 3 9.03 Mar 2019Corporate bonds 100 000 100 000 2 7.30 Mar 2018

Total issuance 605 000 682 000Less: Net debt raising fees offset against borrowings (614) (614)

604 386 681 386

Total DMTN debt 1 623 616 1 700 616

Secured bank loansAbsa BankAccess 500 000 470 224 470 224 1 8.68 Mar 2017Term 200 000 100 000 100 000 3 9.67 Mar 2018Term 150 000 47 500 47 500 3 8.68 Mar 2017Term 200 000 200 000 200 000 5 8.85 Mar 2017Term 100 000 100 000 100 000 2 8.58 Sept 2016Term 150 000 – –Term 140 000 – –

Atlantic Leaf – Mauritius – 381 713 381 713(3) 3 – 5 3.25Feb 2019

– 2021

1 440 000 1 299 437 1 299 437

Less: Net debt raising fees offset against borrowings (5 218) (5 218)

1 294 219 1 294 219(1) Interest rates incorporate swap rates, where applicable and margins.(2) Issued to Namibian subsidiaries and eliminated on consolidation.(3) £18 million loan. 50% hedged to February 2019 and the balance to February 2021 at an average rate of 3.25%.


120

Vu


ort 2016


18 Borrowings continuedDetails of borrowings continued

2016

Secured and unsecured variable rate loans

GroupTotal

facilitiesavailable

R000

Groupissuances/

drawdowns

R000

Companyissuances/

drawdowns

R000Termyears

Interestrates(1)

%Repayment

dates

RMB/SCM (A)Access 25 000 – – 5 7.04 Apr 2017Term 81 667 81 667 81 667 2 9.39 July 2018Term 81 667 81 667 81 667 4 8.53 Apr 2016Term 81 666 81 666 81 666 4 8.53 Apr 2016Term 81 667 81 667 81 667 5 9.34 Apr 2017Term 81 666 81 666 81 666 5 8.96 Apr 2017

433 333 408 333 408 333Less: Net debt raising fees offset against borrowings (344) (344)

433 333 407 989 407 989

NedbankTerm facility 100 000 100 000 100 000 5 9.40 Jan 2020Term facility 290 000 290 000 – 3 8.95 Nov 2017Term facility 10 000 10 000 – 3 9.00 Nov 2017Term facility 100 000 100 000 – 3 8.74 May 2017Less: Net debt raising fees offset against borrowings (703) (193)

500 000 499 297 99 807

Standard BankTerm 160 000 160 000 160 000 3 8.38 Sept 2016Access 40 000 25 354 25 354 3 8.85 Sept 2018Term 24 550 24 550 24 550 5 9.05 Sept 2018Term 100 000 18 495 18 495 3 8.78 Oct 2018Term 100 000 73 683 73 683 5 9.14 Oct 2020

424 550 302 082 302 082Less: Net debt raising fees offset against borrowings (1 213) (1 213)

424 550 300 869 300 869

RMBTerm 150 000 150 000 150 000 3 9.42 Apr 2018Term 150 000 150 000 150 000 5 9.03 Apr 2018Access 150 000 6 000 6 000 1 8.28 Mar 2017

450 000 306 000 306 000Less: Net debt raising fees offset against borrowings – –

450 000 306 000 306 000

1 807 883 1 514 155 1 114 665

(1) Interest rates incorporate swap rates, where applicable.


121

Vu


ort 2016



2016

Secured variable rate loans

GroupTotal

facilitiesavailable

R000

Groupissuances/

drawdowns

R000

Companyissuances/

drawdowns

R000Termyears

Interestrates(1)

%Repayment

dates

Synergy

NedbankTerm – Facility A(4) 235 008 235 008 – 5 9.00 Jun 2017Term – Facility B(5) 201 006 200 682 – 5 9.00 Oct 2018

Standard BankAccess – Facility A(6) 245 000 226 500 – 5 9.40 Sept 2019Term – Facility B(7) 50 000 50 000 – 5 9.58 Sept 2019

RMBTerm 28 295 28 295 – 5 9.33 May 2017Less: Net debt raising fees offset against borrowings (1 174) –

759 309 739 311 –

Secured fixed rate loansSynergy

RMBFixed loan 90 000 90 000 – 5 9.14 May 2017Fixed loan 146 705 146 705 – 5 8.36 May 2017

Total secured fixed rate loan 236 705 236 705 –(1) Interest rates incorporate swap rates, where applicable.(4) 30% access limit at prime less 3%.(5) Access available at prime less 1.5%.(6) Access of R106 million.(7) 20% access available.


122

Vu


ort 2016



2015

Secured and unsecured variable and fixed rate loans

GroupTotal

facilitiesavailable

R000

Groupissuances/

drawdownsR000

Companyissuances/

drawdownsR000

Termyears

Interestrates(1)

%Repayment

dates

Interest-bearing borrowings 3 867 745 2 976 087Interest-bearing borrowings non-current 2 816 088 1 847 431

Interest-bearing borrowings – current 1 051 657 1 128 656

Secured and unsecured variable rate loans 3 401 040 2 976 087

DMTN programme 5 000 000

Corporate bonds and commercial paper issuancesSecuredCorporate bonds 580 000 580 000 3 8.58 May 2015Corporate bonds 200 000 200 000 4 8.51 May 2016Corporate bonds 240 000 240 000 5 8.83 May 2017

Total 1 020 000 1 020 000Less: Net debt raising fees offset against borrowings (1 852) (1 852)

1 018 148 1 018 148

UnsecuredCommercial paper 85 000 85 000 0.5 6.38 Jul 2015Commercial paper 56 000 56 000 1 7.31 Mar 2016Commercial paper 169 000 169 000 0.5 7.23 Sept 2015Commercial paper –(2) 77 000 0.5 7.23 Sept 2015Corporate bonds 200 000 200 000 3 6.82 Mar 2016Corporate bonds 100 000 100 000 5 7.36 Mar 2018

Total issuance 610 000 687 000Less: Net debt raising fees offset against borrowings (1 203) (1 203)

608 797 685 797

Total DMTN debt 1 626 945 1 703 945(1) Interest rates incorporate swap rates, where applicable. (2) Issued to Namibian subsidiaries and eliminated on consolidation.


123

Vu


ort 2016



2015

Secured and unsecured variable and fixed rate loans

GroupTotal

facilitiesavailable

R000

Groupissuances/

drawdownsR000

Companyissuances/

drawdownsR000

Termyears

Interestrates(1)

%Repayment

dates

Secured bank loansAbsa BankAccess 200 000 – – 1 7.56 Dec 2016Term 100 000 100 000 100 000 3 9.67 Mar 2018Term 200 000 200 000 200 000 2 8.85 Mar 2017


299 546 299 546

RMB/SCM (A)Access 25 000 – – 5 7.04 Apr 2017Term 163 333 163 333 163 333 3 8.03 Apr 2015Term 163 333 163 333 163 333 4 8.60 Apr 2016Term 163 334 163 334 163 334 5 9.07 Apr 2017


489 605 489 605

NedbankTerm facility 100 000 100 000 100 000 5 8.31 Jan 2020Less: Net debt raising fees offset against borrowings (242) (242)

99 758 99 758

Standard BankTerm 160 000 160 000 160 000 3 8.31 Sept 2016 Access 40 000 – – 3 7.55 Sept 2016Term 160 000 24 550 24 550 5 9.13 Sept 2018Access 40 000 – – 5 7.75 Sept 2018

400 000 184 550 184 550Less: Net debt raising fees offset against borrowings (1 317) (1 317)

183 233 183 233

RMBTerm 150 000 150 000 150 000 3 8.99 Apr 2016Term 150 000 50 000 50 000 5 7.91 Apr 2018Access 150 000 – – 1 8.23 Mar 2016

450 000 200 000 200 000Less: Net debt raising fees offset against borrowings – –

200 000 200 000(1) Interest rates incorporate swap rates, where applicable.


124

Vu


ort 2016



2015

Secured variable rate loans

GroupTotal

facilitiesavailable

R000

Groupissuances/

drawdownsR000

Companyissuances/

drawdownsR000

Termyears

Interestrates(1)

%Repayment

dates

SynergyNedbankTerm – Facility A(3) 126 514 126 514 – 5 9.00 Jun 2017Term – Facility B(4) 201 963 201 963 – 5 9.00 Oct 2018

Standard BankAccess – Facility A(5) 122 000 95 163 – 5 9.40 Sept 2019Term – Facility B(6) 50 000 50 000 – 5 8.46 Sept 2019

RMBTerm 30 233 30 233 – 5 8.25 May 2017Less: Net debt raising fees offset against borrowings (1 920) –

533 710 501 953 –

Secured and unsecured variable rate loans

Total secured and unsecured variable rate loans 3 401 040 2 976 087

Secured variable rate loans 2 792 243 2 290 290Unsecured variable rate loans 608 797 685 797

Secured fixed rate loansSynergyNedbankFixed – Facility A 110 000 60 000 – 5 7.60 Jun 2017Fixed – Facility A 50 000 – 5 7.97 Jul 2017Standard BankAccess – Facility A 123 000 80 000 – 5 9.50 Jun 2017

40 000 – 5 8.88 Jun 2015RMBFixed loan 90 000 90 000 – 5 9.14 May 2017Fixed loan 146 705 146 705 – 5 8.36 May 2017

Total secured fixed rate loan 466 705 466 705 –(1) Interest rates incorporate swap rates, where applicable.(3) 30% access limit at prime less 3%.(4) Access available at prime less 1.5%.(5) Access of R106 million.(6) 20% access available.

LTV and ICR Covenants – March 2016

The company and its subsidiaries have complied with all DMTN and bank lender covenants during the year ended 31 March 2016.

Borrowing powers

The borrowing capacity of the company and its subsidiaries is unlimited in terms of their Memorandum of Incorporation but is subject to various bank and bond covenants (refer note 22.4).


125

Vu


ort 2016


19 Derivative financial instruments2016 2015

Groupassets/

(liabilities)R000

Companyassets/

(liabilities)R000

Groupassets/

(liabilities)R000

Companyassets/

(liabilities)R000

Interest rate swap assets are disclosed as follows:Non-current portion 41 230 38 860 – –Current portion 1 245 638 – –

42 475 39 498 – –Interest rate swap liabilities (5 269) (5 095) (12 919) (11 909)

Interest rate swaps – cash flow hedges 37 206 34 403 (12 919) (11 909)

Interest rate swapsThe group has entered into interest rate swaps whereby the variable rate loans have been converted to fixed rate debt as follows:

Swap 1 Swap 2 Swap 3 Swap 4 Swap 5 Swap 6 Swap 7 Swap 8

�– Nominal value (Rm) 179.0 89.0 240.0 50.0 151.0 111.0 200.0 100.0�– Swap period 3 years 3 years 5 years 3 years 4 years 3 years 5 years 6 years�– Maturity date May 2018 May 2019 Nov 2019 May 2018 May 2020 Nov 2017 Apr 2020 Sept 2020�– Rate (NACQ)(¹) 6.96% 8.0% 7.31% 7.31% 7.78% 7.18% 7.76% 7.82%

Swap 9 Swap 10 Swap11 Swap 12 Swap 13 Swap 14 Swap 15 Swap 16

�– Nominal value (Rm) 200.0 81.67 81.67 81.67 81.67 81.67 81.67 110.0�– Swap period 4 years 6 years 7 years 5.5 years 5 years 5 years 2.5 years 5 years�– Maturity date Sept 2018 Oct 2017 Oct 2018 Oct 2020 Apr 2016 Apr 2019 Aug 2018 Mar 2021�– Rate (NACQ) 7.20% 6.73% 7.06% 7.39% 6.78% 7.79% 7.62% 7.97%

Swap 17 Swap 18 Swap 19 Swap 20 Swap 21 Swap 22 Swap 23 Swap 24

�– Nominal value (Rm) 100.0 160.0 24.55 150.0 100.0 73.7 289.4 100.0�– Swap period 5 years 3 years 4 years 6 years 4 years 3 years 2.5 years 2 years�– Maturity date Mar 2018 Sept 2017 Sept 2018 Sept 2020 Jan 2020 Oct 2018 Nov 2017 May 2017�– Rate (NACQ)(¹) 5.81% 6.68% 7.10% 7.62% 7.75% 7.36% 8.95% 8.74%

Swap 25 Swap 26 Swap 27 Swap 28

�– Nominal value (Rm) 99.6 50.0 143.1 143.1(£6.75 million)

(£6.75 million)

�– Effective 1 April Swap period 1 year 1.5 years 3 years 5 years

�– Maturity date Sept 2016 Mar 2017 Feb 2019 Feb 2021�– Rate (NACQ)(¹) 6.66% 6.93% 0.86% 1.08%

Synergy interest rate swaps

Swap 1 Swap 2 Swap 3 Swap 4 Swap 5

�– Nominal value (Rm) 40.0 40.0 80.0 50.0 60.0�– Swap period 1 year 3.25 years 3.5 years 4.5 years 2 years�– Maturity date Jun 2016 Jul 2019 Sept 2019 Sept 2020 Jun 2017�– Rate (NACQ)(¹) 8.88% 10.76% 10.20% 10.99% 7.08%

Swap 6 Swap 7 Swap 8 Swap 9

�– Nominal value (Rm) 50.0 50.0 40.0 50.0�– Swap period 3 years 1 year 3 years 3 years�– Maturity date Jun 2016 Jun 2017 Feb 2019 Feb 2019�– Rate (NACQ)(¹) 6.59% 7.65% 10.49% 9.92%

(1) Swap rates exclude note margins and amortised transaction costs.


126

Vu


ort 2016


2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

20 Deferred taxationDeferred taxation assets and liabilities comprise the following:Amounts received in advance (11 643) (8 476) (7 902) (6 269)Allowance for bad debt (7 239) (5 309) (6 029) (5 071)Wear and tear on developments 11 459 11 459 11 458 11 458Allowance for future expenditure 4 545 3 357 1 459 1 044Prepayments 3 422 – 791 –Fair value of derivatives 10 417 9 633 – –Tax loss (1 918) – (2 228) –Leave pay and other accruals (1079) 79 (264) 11

7 964 10 743 (2 715) 1 173

MovementBalance at 1 April (2 715) 1 173 4 446 7 870Tax assets acquired (959) – – –Tax on fair value adjustment of cash flow hedges 10 417 9 633 – –Tax loss utilised (98) – – –Other temporary differences 1 745 (63) (6 697) (6 697)Under provision of other temporary differences in prior year (426) – (464) –

Balance at 31 March 7 964 10 743 (2 715) 1 173

Reflected on the statement of financial position under:Deferred taxation assets (2 779) – (3 888) –Deferred taxation liabilities 10 743 10 743 1 173 1 173

7 964 10 743 (2 715) 1 173

21 Trade and other payablesTrade creditors 89 623 43 452 74 561 43 769Accrued expenses 271 955 199 876 151 929 117 356Tenant deposits 78 359 54 622 74 390 51 462

439 937 297 950 300 880 212 587

All amounts are short-term. The carrying value of trade and other payables is considered to be a reasonable approximation of fair value.


127

Vu


ort 2016


22. Financial instruments risk 22.1 Financial risk management objectives and policies The board of directors has overall responsibility for the establishment and oversight of the group’s risk management

framework. The audit and risk committee is responsible for developing and monitoring the group’s risk management policies. The audit and risk committee reports regularly to the board of directors on its activities.

The group’s risk management policies are established to identify and analyse the risks faced by the group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the group’s activities.

The audit and risk committee oversees how management monitors compliance with the group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the group. The group operates an outsourced internal audit model. For the period under review Deloitte fulfilled the function of outsourced internal audit service provider. Internal audit is responsible for assisting the board and management in maintaining an effective internal control environment by evaluating those controls continuously to determine whether they are adequately designed and operating efficiently and effectively and to recommend improvements.

The group’s financial instruments consist mainly of interest rate swaps, financial assets, loan receivables, deposits with banks, accounts receivable and payable, long-term borrowings, and loans to and from subsidiaries. In respect of financial instruments listed above, the book value approximates fair value. The group purchases or issues financial instruments to finance operations and to manage interest rate risks that may arise from time to time. The group does not engage in the trading of financial assets for speculative purposes.

22.2 Credit risk analysis Potential areas of credit risk comprise mainly cash, money market funds, trade receivables and long-term loans granted.

In order to minimise any possible risks relating to cash and money market funds, surplus funds can only be invested in the “big four” banks and AAA rated money market funds up to pre-determined levels.

Trade receivables consist of a large, widespread tenant base. Management has established a credit policy in terms of which each new tenant is analysed individually for credit worthiness before the group’s standard payment terms and conditions are offered which include, in the majority of cases, the provision of a deposit of at least one month’s rental. When available, the group’s credit review includes external ratings. The group monitors the financial position of its tenants on an ongoing basis. Adjustment is made for impairment of specific bad debts, and at year-end management did not consider there to be any material credit risk exposure not covered by an allowance for doubtful debts. The group impairment allowance for doubtful debts amounted to approximately R28.0 million (2015: R27.4 million) net of tenant deposits held as security.

The group held tenant cash deposits amounting to R78.4 million at 31 March 2016 (2015: R74.4 million) as collateral for the rental commitments of tenants.

The individually impaired receivables relate mainly to non-national tenants which have been summonsed for non-payment of rentals, or who have vacated the premises due to difficult economic conditions. A portion of the impaired receivables is expected to be recovered. The ageing of the allowance for bad debts in respect of the impaired receivables is as follows:

2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

Not more than 30 days 3 025 2 084 7 183 2 697More than 30 days but not more than 60 days 2 675 1 847 1 857 1 455More than 60 days but not more than 90 days 2 261 1 497 1 526 1 245More than 90 days 20 049 13 532 16 813 12 713

At 31 March 28 010 18 960 27 379 18 110


128

Vu


ort 2016


22. Financial instruments risk continued 22.2 Credit risk analysis continued At reporting date there were no specific concentrations of credit risk.

Disclosure of receivables – past due but not impaired Past due – Amounts uncollected one day or more beyond their contractual due date are “past due”.

Trade receivables that are due and that are subject to a dispute are not considered impaired until the resolution of the dispute. As of 31 March 2016 group trade receivables of R29.1 million (2015: R23.7 million) were past due but not impaired. Company trade receivables of R13.5 million (2015: R14.3 million) were past due but not impaired at 31 March 2016. These related to a number of independent customers for whom there is no recent history of default.

2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

The age analysis of these trade receivables is as follows:Not more than 30 days 14 201 7 973 12 193 6 234More than 30 days but not more than 60 days 4 166 1 175 3 637 3 018More than 60 days but not more than 90 days 3 034 1 261 2 172 1 657More than 90 days 7 652 3 115 5 710 3 369

29 053 13 524 23 712 14 278

Movements on the group allowance for impairment of trade receivables are as follows:At 1 April 27 379 18 110 11 344 8 702Allowance for receivables impairment 13 507 11 064 15 834 12 827Receivables written off during the year as uncollectible (12 924) (10 214) (3 562) (3 419)

27 962 18 960 23 616 18 110

Clidet’s (Synergy’s) impairment allowance at acquisition 48 – 3 763 –

At 31 March 28 010 18 960 27 379 18 110

Rental written off 13 086 10 052 3 811 3 670

Allowance for impaired receivables and receivables written off has been included in “operating costs” in note 26 to the annual financial statements. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

The risks regarding long-term loans granted to directors are minimised by a cession of Vukile-listed shares held by directors in favour of the company.

22.3 Market riskInterest rate risk management The group is exposed to market risk through its use of financial instruments, specifically to interest rate risk. The group’s policy is to minimise interest rate cash flow risk exposures on long-term debt by hedging at least 75% of long-term debt through fixed-rate loans or by way of interest rate swaps.

At 31 March 2016 the group had interest-bearing borrowings of R5.5 billion (March 2015: R3.9 billion). 86.4% (2015: 88.0%) of term interest-bearing debt, excluding development loans and commercial paper, has been fixed or hedged.


129

Vu


ort 2016


22. Financial instruments risk continued 22.3 Market risk continued The group’s interest rate risk management position and maturity analysis of other interest-bearing borrowings are

summarised below:

DebtAmount

Rm Maturity date Interest rate

DMTNVariable 380.0 May 2018 HedgedVariable 200.0 Jun 2020 HedgedVariable 200.0 May 2016 HedgedVariable 240.0 May 2017 HedgedVariable(1) 85.0 Dec 2016 –Variable(1) 86.0 Apr 2016 –Variable(1) 84.0 Apr 2016 –Variable(1) 140.0 Sept 2016 –Variable 110.0 Mar 2019 –Variable 100.0 Mar 2018 Hedged

RMB/SCMVariable 81.7 Jul 2018 HedgedVariable 163.3 Apr 2016 HedgedVariable 81.6 Apr 2017 HedgedVariable 81.7 Apr 2017 Hedged

Absa

Variable 517.7 Mar 2017 Partially hedged (R50 million)

Variable 190.8 Feb 2019 75% hedgedVariable 190.9 Feb 2021 75% hedgedVariable 100.0 Sept 2016 HedgedVariable 200.0 Mar 2017 HedgedVariable 100.0 Mar 2018 Hedged

NedbankVariable 290.0 Nov 2017 HedgedVariable 100.0 Jan 2020 HedgedVariable 10.0 Nov 2017 –Variable 100.0 May 2017 Hedged

RMBVariable 150.0 Apr 2018 HedgedVariable(1) 150.0 Apr 2018 –Variable 6.0 Mar 2017 –

Standard BankVariable 160.0 Sept 2016 HedgedVariable 25.4 Sept 2016 HedgedVariable(1) 18.5 Oct 2018 –Variable(1) 24.6 Sept 2018 –Variable 73.7 Oct 2020 Hedged

SynergyRMBFixed 236.7 May 2017 FixedVariable 28.3 May 2017 VariableNedbankVariable 235.0 June 2017 Partially hedgedVariable 200.7 Oct 2018 Partially hedgedStandard BankVariable 226.5 Sept 2019 Partially hedgedVariable 50.0 Sept 2019 Partially hedged

Total 5 418.1(1) Development debt/commercial paper.


130

Vu


ort 2016


22. Financial instruments risk continued 22.3 Market risk continued Interest rate sensitivity Debt amounting to R395 million comprising commercial paper is not hedged. Debt raised to fund developments of

R193.1 million is unhedged in terms of the group’s hedging strategy.

It is estimated that for the year ended 31 March 2016 a 1% change in interest rates would have affected the group’s profit before taxation by approximately R10.53 million (March 2015: R5.78 million).

Details of the group’s interest rate swap contracts are set out in note 19 of these annual financial statements.

The exposure to interest rates for the group’s money market funds on deposit is considered immaterial.

Other price sensitivity The group is exposed to other price risk in respect of its listed equity securities. The group limits its exposure to equity

price risk by only investing in securities that are listed on a recognised stock exchange and where the directors are satisfied with the overall strategies implemented by such companies.

The investments in listed equity securities are considered long-term, strategic investments. The investments are continuously monitored and voting rights arising from these equity instruments are utilised in the group’s favour.

22.4 Liquidity risk management Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s

policy is to optimise its exposure to liquidity risk by balancing its exposure to interest rate risk and to refinancing risk.

In effect the group seeks to borrow for as long as possible at the lowest acceptable cost. The group regularly reviews the maturity profile of its financial liabilities and seeks to avoid concentration of maturities through the regular replacement of facilities and by using a selection of maturity dates. The group’s strategy in this regard is to ensure that no more than 25% of debt matures in any one year. The group’s objective in managing liquidity risk is to ensure that it has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions. Forecast cash flows based on anticipated rentals net of operating expenses, finance costs, other income corporate expenditure and capital expenditure are reviewed on a regular basis.

The tables below set out the maturity analysis of the group’s non-derivative financial liabilities based on the undiscounted contractual cash flows.

Current 12 months

maturityanalysis

R000

Non-current1 – 5 years

R000

Non-current5 years

R000

Maturity analysisOther interest-bearing borrowings 1 309 687 4 098 319 –Trade and other payables 439 937 – –

New long-term loans will be entered into with relevant banks on the expiry of existing bank debt facilities. Cash flows are monitored on a monthly basis to ensure that cash resources are adequate to meet funding requirements.

In terms of covenants with Nedbank, RMB and SCM, the nominal value of long-term interest-bearing bank debt may not exceed 50% of the external value of investment properties. The DMTN loan-to-value covenant is 40% of the external values of specific property assets mortgaged as security under the DMTN programme and a 45% corporate loan-to-value ratio (ratio of total debt to total external value of investment properties). Based on the DMTN and total loan covenant of 40% and 45% respectively, the company has the following borrowing capacity:

2016GroupR000

2015GroupR000

External value of property assets and R600 million cash deposit(1) 15 784 319 13 345 707

40%/45% thereof 6 913 165 5 822 080Nominal value of borrowings utilised at year-end (5 408 006) (3 867 745)

Potential borrowing capacity 1 505 159 1 954 335(1) Cash deposit of R600 million was effected during the current year and ceded as part security for a bank facility.


131

Vu


ort 2016


2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

23 RevenueProperty revenue 2 096 400 1 435 474 1 579 099 1 276 943Income from asset management business 2 074 – 24 694 47 482

Total revenue 2 098 474 1 435 474 1 603 793 1 324 425

Included in property revenue: Turnover rental 17 387 8 170 14 242 8 797

24 Property expensesMunicipal fixed charges 137 244 98 927 112 920 96 157Municipal consumption costs 370 212 239 429 233 405 180 474Operating costs 117 033 123 788 162 303 134 713Repairs and maintenance 46 963 35 657 32 836 27 668Asset management fees 49 771 31 612 5 112 26 945Property management fees 59 361 39 158 38 796 31 862

780 584 568 571 585 372 497 819

25 Profit from asset management businessIncome 2 074 – 24 694 24 694

Income asset management fees(1) – – 22 382 22 382Sales commission – – 2 305 2 305Management and other fees 2 074 – 7 7

Expenditure(2) – – (34 388) (11 600)

Administration costs – – (6 308) (11 600)Depreciation – – (1 718) –Staff costs – – (23 947) –Rent paid – – (2 415) –

Profit/(loss) from asset management business 2 074 – (9 694) 13 094

26 Corporate and administrative expensesAdministration expenses include:Administration costs 14 463 7 662 9 456 8 037Depreciation of furniture, fittings and computer equipment 1 487 36 1 718 36Operating lease: premises 2 578 – 2 415 717Share-based remuneration 15 770 8 391 11 678 6 103Corporate staff and related costs (including directors’ remuneration) 42 712 16 819 16 032 16 032Internal audit fee 677 677 886 886(1) This excludes R26.1 million asset management fees charged to the group portfolio for the year ended 31 March 2015, which has been eliminated on

consolidation.(2) Incorporated into corporate and asset management expenditure for the year ended 31 March 2016.


132

Vu


ort 2016


26 Corporate and administrative expenses continuedShare-based remunerationAs reported previously, the shareholders have approved a long-term retention and incentive scheme which is based on individual performance relative to personal critical performance area targets and group’s performance relative to industry benchmarks. Refer to note 10 in this regard together with page 34 of this integrated annual report.The charges to the company profit and loss for the year ended 31 March 2016 amounted to R8.4 million (March 2015: R6.1 million) and to a subsidiary’s profit and loss R7.4 million (March 2015: R5.6 million).

As the above are equity-settled share-based payments, the accounting treatment is to recognise the share-based payments on a straight-line basis over the vesting periods.

2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

27 Auditors’ remunerationExternal audit feesCurrent year 1 513 895 1 459 887Non-audit services 87 86 176 –

1 600 981 1 635 887

28 Investment and other incomeDividends received from subsidiaries – 158 375 – 140 479Interest and dividends receivable from listed property investments 7 627 2 628 51 098 40 602Interest on deposits and receivables 78 547 97 827 25 149 40 538Management fees received 2 197 11 419 – 2 610Other income 10 966 10 966 22 22

99 337 281 215 76 269 224 251

29 Finance costsSecured loans 397 963 282 044 240 290 212 664Less: Capitalised interest on developments (8 735) (8 735) (1 982) (1 982)Unsecured loans 294 94 28 714 33 110Amortisation of debt raising fees 4 779 3 800 6 476 6 280

394 301 277 203 273 498 250 072

30 TaxationNormal taxation 6 890 – 6 733 –Normal taxation over provision in prior year – – (463) –Non-resident shareholders’ tax (NRST) 965 – 917 –

Total normal taxation 7 855 – 7 187 –Deferred taxation over provision in prior year (524) – – –Deferred taxation asset – tax losses arising – – (464) –Deferred taxation on other temporary differences 1 745 (63) (6 697) (6 697)

9 076 (63) 26 (6 697)

Reconciliation of tax rateStandard tax rate 28.00 28.00 28.00 28.00Permanent differences (9.06) (11.06) (16.30) (11.25)NRST 0.06 – 0.07 –Assessed loss (utilised)/created 0.09 – (0.08) 0.72Prior year adjustment (0.03) – (0.04) –Namibia rate differential 0.06 – 0.10 –Deferred tax asset not recognised – – 0.44 –Other differences (0.07) –REIT distribution (18.50) (16.94) (12.19) (18.47)

Effective tax rate 0.55 0.00 0.00 (1.00)


133

Vu


ort 2016


2016 2015

GroupR000

Centsper share

GroupR000

Centsper share

31 Reconciliation of earnings to headline earnings and to profit available for distributionAttributable profit to owners of the parent 1 586 079 249.55 1 499 995 278.01

Earnings per share 1 586 079 249.55 1 499 995 278.01Change in fair value of investment properties (net of allocation to non-controlling interest) (546 188) (85.94) (379 017) (70.25)Gain on bargain purchase (1 053) (0.17) (178 997) (33.18)Write-off of goodwill on sale of properties sold by a subsidiary 4 951 0.78 – –Loss on sale of investment properties 31 883 5.02 23 562 4.37Profit on sale of furniture, fittings and computer equipment – – (6) –Profit on sale of listed securities (547) (0.08) – –Loss on sale of intangible asset – – 61 595 11.42Fair value earnings of associate – Adjusted headline earnings (7 353) (1.16) – –Amortisation of debenture premium – – (19 227) (3.56)

Headline earnings of shares 1 067 772 168.00 1 007 905 186.81Cost of acquisition of business combination 1 230 0.19 2 778 0.51Revaluation loss/(surplus) on listed securities 98 425 15.49 (149 602) (27.73)Foreign exchange profit (26 825) (4.22) – –Gain on deemed disposal of Synergy previously accounted for under IAS 39 – – (22 578) (4.19)Pre-acquisition dividends – – 1 293 0.24Project management fees from Sanlam 8 000 1.26 – –Shares issued cum dividend 63 024 9.92 33 262 6.16Dividends receivable from listed securities 19 212 3.02 – –Fair value movement of derivative financial instruments 1 342 0.21 (1 527) (0.28)Fair value earnings of associate – Adjusted headline earnings 7 353 1.16 – –Straight-line rental accrual (243 221) (38.27) (97 315) (18.04)

Available for distribution 996 312 156.76 774 216 143.48


134

Vu


ort 2016


2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

32 Statements of cash flowThe following convention applies to figures under ‘adjustments’ below. Inflows of cash are represented by figures in brackets while outflows of cash are represented by figures without brackets.32.1 Adjustments

Gross change in fair value of investment properties (803 270) (587 449) (476 332) (271 818)Finance costs 394 301 277 203 273 498 250 072Investment and other income (99 337) (281 215) (76 269) (224 251)Share-based remuneration 15 770 8 391 11 678 6 103Amortised debt raising costs – – 6 805 6 280Profit on sale of shares (547) (547) – –Write-off goodwill on sale of properties sold by a subsidiary 4 951 – – –Fair value of fixed loan reversed – – 290 –Fair value loss/(gain) on investments 98 425 31 905 (172 180) (63 554)Fair value movement of derivative financial instruments 1 342 1 342 (1 527) –Fair value movement of Synergy derivative financial instruments (225) – – –Gain on bargain purchase (1 053) – (178 997) –Share of income from associate (19 423) (19 423) – –Foreign currency translation (26 825) (26 825) – –Loss on sale of investment properties 31 883 10 074 23 562 22 362(Profit)/loss on sale of furniture, fittings and computer equipment – – (6) –Loss on sale of intangible asset – – 61 595 61 595Depreciation on furniture, fittings and equipment 1 487 36 1 718 36Amortisation of debenture premium – – (19 227) (19 227)

(402 521) (586 508) (545 392) (232 402)

32.2 Net changes in working capitalMovement in working capitalIncrease in trade and other receivables (99 444) (33 242) (30 167) (26 227)Increase in trade and other payables 139 057 85 363 25 954 (15 419)Acquisition of working capital (Clidet/Synergy) 912 – (20 209) –

40 525 52 121 (24 422) (41 646)

32.3 Taxation paidAmount owing/(refundable) at beginning of year 1 514 (133) 4 262 2 892Current taxation 6 890 – 6 270 –Non-resident shareholders’ tax 965 – 917 –

9 369 (133) 11 449 2 892Acquisition of Clidet tax balance (1 094) – – –Net amount (owing)/refundable at end of year (792) (821) (1 514) 133

Tax paid/(refunded) during year 7 483 (954) 9 935 3 025


135

Vu


ort 2016


2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

32 Statements of cash flow continued32.4 Distribution to shareholders

Distribution to shareholders owing at beginning of year – – 365 236 365 236Dividends declared 901 643 901 643 338 927 329 260NCI portion of distribution 35 851 – (9 667) –NCI dividend payable acquired – – 51 025 –

Distribution paid during the year 937 494 901 643 745 521 694 496

32.5 Cash and cash equivalentsHeld on deposit for tenants 76 453 52 791 60 152 49 914Held on short-term interest-bearing deposits 259 279 250 000 182 607 177 000Cash on hand 246 727 197 819 231 130 210 545

582 459 500 610 473 889 437 459Held on long-term interest-bearing deposits 350 000 350 000 – –

932 459 850 610 473 889 437 459


136

Vu


ort 2016


33 Related party transactions

2016 2015

Type of transaction

Amount paid/

(received) by Vukile

R000

Amountsowed to/(by)

relatedparties

R000

Amount paid/

(received) by Vukile

R000

Amountsowed to/(by)

relatedpartiesR000

Intergroup transactionsMICC Property Income Fund (MICC IF)

Asset management fees(1)

(31 613) – (38 214) –MICC Property Income Fund (MICC IF) Dividends (28) – (31) –MICC Property Income Fund (MICC IF) Debenture interest (125 158) – (140 448) –MICC Property Income Fund (MICC IF)

Corporate administration recovery(2) (311) – – –

MICC Properties Corporate administration recovery(2) (1 205) – (2 610) –

MICC Properties Interest 4 540 – 15 464 Vukile Asset Management (Pty) Ltd

Corporate administration recovery(2) (7 706) – – –

MICC Namibian subsidiaries Interest paid(3) 4 630 77 000 4 529 77 000Synergy Property Income Fund Limited

Dividends received(33 189) – (33 726) –

Other related parties

Directors and other officers Interest received (2 872) – (2 228) –

Key management (excluding directors) Remuneration 17 630 – 12 459 –(1) Fees paid by Vukile for the management of the group’s property portfolios by MICC IF.(2) Allocation of corporate and administration costs paid to Vukile.(3) Market-related interest paid by Vukile on loans advanced by its Namibian subsidiaries.

Related parties comprise the company’s subsidiaries, associates and key management. Refer to note 6 for information on associates.

Details of directors emoluments and related share incentive schemes are set out in the directors report. Refer to pages 76 and 77.


137

Vu


ort 2016


34 Operating segment report

Properties owned by the groupat 31 March 2016 Region Town

Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition

Directors’ valuation

at 31 March

2016R000

Property revenue

R000

Property expenditure

(net ofrecoveries)

R000Goodwill

R000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

RetailRetail – Vukile, MICC and Clidet 1011 portfolios 540 214 4 219 566 7 914 474 718 843 123 595 399 759 3 564 664 2 727 248 119.53 2.8

Bloemfontein Plaza Free State Bloemfontein 38 400 45 726 Apr 2004 309 016 36 349 11 602 139 180 106 484 80.50 4.9

Boksburg East Rand Mall (50%) Gauteng Boksburg 34 754 1 111 816 Apr 2013 1 219 631 94 835 14 420 549 315 420 270 248.49 –

Daveyton Shopping Centre Gauteng Daveyton 17 795 49 883 Apr 2004 327 518 25 656 3 679 147 514 112 860 130.29 4.1

Durban Phoenix Plaza KwaZulu-Natal Durban, Phoenix 24 363 189 140 Apr 2004 746 998 64 667 8 155 336 447 257 408 227.72 0.7

Durban The Workshop** KwaZulu-Natal Durban 19 961 133 400 Apr 2012 307 074 42 703 20 384 138 306 105 815 164.34 3.0

Ga-Kgapane Modjadji Plaza (30%) Limpopo Ga-Kgapane 2 953 29 713 Mar 2014 37 244 3 958 731 16 775 12 834 112.81 0.3

Germiston Meadowdale Mall (67%) Gauteng Germiston, Meadowdale 30 788 66 170 Oct 2003 294 627 17 951 (1 140) 8 716 132 700 101 526 72.36 –

Germiston Meadowdale Land Gauteng Germiston, Meadowdale – – Oct 2003 7 000 0 0 3 153 2 412 – –

Giyani Plaza Limpopo Giyani 9 487 68 250 Jul 2011 130 637 11 789 414 58 839 45 016 110.70 –

Hammarsdale Junction** KwaZulu-Natal Hammarsdale 19 406 194 194 Jul 2013 215 593 22 778 4 349 97 103 74 291 101.98 2.5

Katutura Shoprite Centre** Namibia Katutura 10 620 41 157 Oct 2003 132 700 15 875 2 899 5 613 59 768 45 727 117.26 –

Letlhabile Mall North West Letlhabile 17 000 192 878 Mar 2014 144 828 22 880 3 304 65 230 49 906 88.73 8.3

Mbombela Shoprite Centre Mpumalanga Mbombela 14 015 39 963 Sept 2010 95 636 12 754 4 420 43 074 32 955 79.33 7.4

Mbombela Truworths Centre Mpumalanga Mbombela 1 920 7 336 Apr 2004 45 971 3 284 300 20 705 15 841 148.36 –

Monsterlus Moratiwa Crossing (94.50%) Limpopo Monsterlus 12 058 61 540 Nov 2007 126 792 13 567 2 261 57 107 43 691 97.25 3.5

Moruleng Mall (stated at 100%) North West Moruleng 31 421 400 000 Apr 2015 483 911 38 180 1 774 217 953 166 751 107.67 2.9

Ondangwa Shoprite Centre Namibia Ondangwa 5 908 17 959 Oct 2003 61 551 7 551 787 2 390 27 722 21 210 109.41 2.7

Oshakati Shopping Centre Namibia Oshakati 24 632 76 929 Oct 2003 341 272 34 185 4 318 10 425 153 708 117 599 115.23 –

Oshikango Spar Centre Namibia Oshikango 9 163 19 542 Oct 2003 169 805 15 134 1 798 2 751 76 480 58 513 139.40 1.1

Piet Retief Shopping Centre Mpumalanga Piet Retief 7 541 20 818 Oct 2003 120 490 11 360 1 091 2 726 54 269 41 520 108.72 –

Pietermaritzburg The Victoria Centre KwaZulu-Natal Pietermaritzburg 10 277 55 685 Oct 2003 130 599 13 893 1 921 7 358 58 822 45 003 114.56 5.3

Pinetown Pine Crest (50%) KwaZulu-Natal Pinetown 20 056 99 338 Apr 2004 374 760 33 590 3 177 168 791 129 139 135.26 2.7

Queenstown Nonesi Mall Eastern Cape Queenstown 28 147 376 594 Jul 2015 349 783 27 975 2 777 157 542 120 532 110.53 1.8

Randburg Square Gauteng Randburg 40 874 66 343 Apr 2004 359 075 40 859 14 045 161 727 123 734 90.09 6.6

Rustenburg Edgars Building North West Rustenburg 9 784 83 750 Sept 2010 154 839 13 891 161 69 739 53 356 99.17 – Sandton Bryanston Grosvenor Shopping Centre Gauteng Sandton, Bryanston 4 585 31 381 Apr 2004 59 881 6 930 3 609 26 970 20 634 118.93 8.1

Soshanguve Batho Plaza Gauteng Soshanguve 13 338 143 825 Jun 2015 163 076 11 960 389 73 449 56 194 95.12 3.5

Soweto Dobsonville Shopping Centre Gauteng Soweto, Dobsonville 23 177 56 118 Apr 2004 397 515 31 658 5 277 179 040 136 980 124.73 3.4

Tzaneen Maake Plaza (70%) Limpopo Tzaneen 11 026 94 010 Aug 2014 95 097 6 026 940 42 832 32 770 99.19 2.2

Vereeniging Bedworth Centre Gauteng Vereeniging 33 937 335 305 Nov 2015 338 484 13 355 1 623 152 453 116 638 79.05 2.6

Windhoek 269 Independence Avenue Namibia Windhoek 12 828 110 803 Jul 2007 173 071 23 250 4 130 77 951 59 639 147.59 4.0

199 964 2 381 858 2 441 575 250 024 50 749 – 1 099 682 841 343 110.35 4.5

** Leasehold property.


138

Vu


ort 2016


34 Operating segment report


Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2016R000

Property revenue

R000


(net ofrecoveries)

R000Goodwill

R000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

RetailRetail – Vukile, MICC and Clidet 1011 portfolios 540 214 4 219 566 7 914 474 718 843 123 595 399 759 3 564 664 2 727 248 119.53 2.8


Boksburg East Rand Mall (50%) Gauteng Boksburg 34 754 1 111 816 Apr 2013 1 219 631 94 835 14 420 549 315 420 270 248.49 –


Durban Phoenix Plaza KwaZulu-Natal Durban, Phoenix 24 363 189 140 Apr 2004 746 998 64 667 8 155 336 447 257 408 227.72 0.7


Ga-Kgapane Modjadji Plaza (30%) Limpopo Ga-Kgapane 2 953 29 713 Mar 2014 37 244 3 958 731 16 775 12 834 112.81 0.3

Germiston Meadowdale Mall (67%) Gauteng Germiston, Meadowdale 30 788 66 170 Oct 2003 294 627 17 951 (1 140) 8 716 132 700 101 526 72.36 –


Giyani Plaza Limpopo Giyani 9 487 68 250 Jul 2011 130 637 11 789 414 58 839 45 016 110.70 –



Letlhabile Mall North West Letlhabile 17 000 192 878 Mar 2014 144 828 22 880 3 304 65 230 49 906 88.73 8.3




Moruleng Mall (stated at 100%) North West Moruleng 31 421 400 000 Apr 2015 483 911 38 180 1 774 217 953 166 751 107.67 2.9

Ondangwa Shoprite Centre Namibia Ondangwa 5 908 17 959 Oct 2003 61 551 7 551 787 2 390 27 722 21 210 109.41 2.7


Oshikango Spar Centre Namibia Oshikango 9 163 19 542 Oct 2003 169 805 15 134 1 798 2 751 76 480 58 513 139.40 1.1

Piet Retief Shopping Centre Mpumalanga Piet Retief 7 541 20 818 Oct 2003 120 490 11 360 1 091 2 726 54 269 41 520 108.72 –



Queenstown Nonesi Mall Eastern Cape Queenstown 28 147 376 594 Jul 2015 349 783 27 975 2 777 157 542 120 532 110.53 1.8


Rustenburg Edgars Building North West Rustenburg 9 784 83 750 Sept 2010 154 839 13 891 161 69 739 53 356 99.17 – Sandton Bryanston Grosvenor Shopping Centre Gauteng Sandton, Bryanston 4 585 31 381 Apr 2004 59 881 6 930 3 609 26 970 20 634 118.93 8.1

Soshanguve Batho Plaza Gauteng Soshanguve 13 338 143 825 Jun 2015 163 076 11 960 389 73 449 56 194 95.12 3.5


Tzaneen Maake Plaza (70%) Limpopo Tzaneen 11 026 94 010 Aug 2014 95 097 6 026 940 42 832 32 770 99.19 2.2

Vereeniging Bedworth Centre Gauteng Vereeniging 33 937 335 305 Nov 2015 338 484 13 355 1 623 152 453 116 638 79.05 2.6

Windhoek 269 Independence Avenue Namibia Windhoek 12 828 110 803 Jul 2007 173 071 23 250 4 130 77 951 59 639 147.59 4.0

199 964 2 381 858 2 441 575 250 024 50 749 – 1 099 682 841 343 110.35 4.5



139

Vu


ort 2016


34 Operating segment report continued


Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2016R000

Property revenue

R000


(net ofrecoveries)

R000Goodwill

R000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Retail continuedRetail – Synergy portfolio 199 964 2 381 858 2 441 575 250 024 50 749 – 1 099 682 841 343 110.35 4.5

Atlantis City Shopping Centre Western Cape Atlantis 22 115 302 612 Feb 2015 278 929 33 527 3 876 125 629 96 116 130.32 6.0

Elim Hubyeni Shopping Centre Limpopo Elim 12 686 108 559 Feb 2015 104 405 12 476 2 028 47 024 35 977 83.83 0.7

Emalahleni Highland Mews Mpumalanga Emalahleni 17 032 209 612 Feb 2015 209 582 17 396 1 874 94 395 72 220 97.33 7.4

Ermelo Game Centre Mpumalanga Ermelo 6 639 57 356 Feb 2015 40 530 5 421 1 440 18 255 13 966 82.12 15.7

Gugulethu Square Western Cape Gugulethu 25 322 393 147 Feb 2015 429 183 40 575 9 496 193 303 147 892 133.17 –

Hammanskraal Renbro Shopping Centre Gauteng Hammanskraal 13 308 163 821 Feb 2015 147 562 15 770 3 164 66 462 50 848 112.73 11.1

Hartbeespoort Sediba Shopping Centre North West Hartbeespoort 10 887 121 086 Feb 2015 119 755 11 569 3 182 53 937 41 266 105.84 11.1

Hillcrest Richdens Shopping Centre KwaZulu-Natal Hillcrest 10 196 111 983 Feb 2015 121 576 12 877 3 360 54 758 41 894 121.72 5.7

KwaMashu Shopping Centre KwaZulu-Natal KwaMashu 11 204 106 121 Feb 2015 106 736 13 232 4 252 48 074 36 780 105.21 5.6

Makhado Nzhelele Valley Shopping Centre Limpopo Makhado 5 308 54 669 Feb 2015 51 226 6 126 1 199 23 072 17 652 95.40 –

Newcastle Taxi City Shopping Centre KwaZulu-Natal Newcastle 5 006 52 680 Feb 2015 55 703 6 472 1 635 25 089 19 195 109.61 5.7

Phuthaditjhaba Setsing Crescent Free State Phuthaditjhaba 21 538 289 690 Feb 2015 331 015 29 644 5 748 149 089 114 065 115.68 –

Roodepoort Ruimsig Shopping Centre Gauteng Roodepoort 11 177 116 100 Feb 2015 113 875 11 586 1 923 51 289 39 240 95.37 4.9

Ulundi King Senzangakona Shopping Centre KwaZulu-Natal Ulundi 22 365 232 755 Feb 2015 263 132 26 431 6 383 118 514 90 673 101.66 1.6 Welgedacht Van Riebeeckshof Shopping Centre Western Cape Welgedacht 5 181 61 667 Feb 2015 68 367 6 922 1 189 30 792 23 559 109.74 3.1

740 178 6 601 424 10 356 049 968 867 174 344 39 979 4 664 346 3 568 591 117.02 3.3

Offices

Cape Town Bellville Suntyger Western Cape Cape Town, Bellville 6 344 67 200 Apr 2012 49 922 9 532 2 080 22 485 17 203 121.70 –

Cape Town Bellville Tijger Park Western Cape Cape Town, Bellville 20 221 194 200 Apr 2012 220 780 22 872 4 320 99 439 76 079 97.69 1.8

Cape Town Parow De Tijger Office Park Western Cape Parow 4 118 25 856 Oct 2003 38 483 4 845 1 646 17 333 13 261 98.98 7.6

East London Vincent Office Park Eastern Cape East London 9 040 59 236 Apr 2004 87 948 11 400 1 908 39 612 30 306 101.37 1.6

Johannesburg Houghton 1 West Street Gauteng Johannesburg, Houghton 4 415 33 504 Sept 2007 66 003 7 381 1 122 29 728 22 744 129.11 – Johannesburg Houghton Estate Oxford Terrace Gauteng Johannesburg, Houghton 2 588 58 345 Jul 2014 54 288 4 445 687 24 451 18 707 137.55 0.9

Johannesburg Isle of Houghton Gauteng Johannesburg, Houghton 28 070 230 100 Apr 2012 302 535 31 129 5 666 136 261 104 251 91.55 7.6

Johannesburg Parktown 55 Empire Road Gauteng Johannesburg, Parktown 5 960 43 400 Apr 2012 53 682 6 760 1 151 24 178 18 498 90.45 7.5

Midrand IBG Gauteng Midrand 8 515 80 700 Apr 2012 64 573 8 695 1 117 29 084 22 251 95.49 17.6

Midrand IBG Undeveloped Land Gauteng Midrand 0 10 500 Mar 2014 10 500 0 207 4 729 3 618 –

Pretoria Hatfield 1166 Francis Baard Street Gauteng Pretoria, Hatfield 2 871 13 469 Apr 2004 15 247 1 638 1 655 6 867 5 254 87.98 38.2

Pretoria Hatfield Festival Street Offices Gauteng Pretoria, Hatfield 5 358 41 875 Sept 2010 54 580 7 344 1 068 24 583 18 808 91.86 –

Pretoria High Court Chambers Gauteng Pretoria 12 093 54 712 Apr 2004 145 381 13 705 (1 786) 65 479 50 097 74.46 –

Pretoria Lynnwood Excel Park Gauteng Pretoria, Lynnwood 3 529 34 174 Mar 2008 18 860 2 988 684 8 495 6 499 71.91 12.9

Pretoria Lynnwood Sanlynn Gauteng Pretoria, Lynnwood 8 625 108 000 Apr 2012 136 833 15 273 3 112 61 629 47 151 139.44 –

Pretoria Lynnwood Sunwood Park Gauteng Pretoria, Lynnwood 6 412 55 464 Sept 2010 59 879 7 590 1 730 26 969 20 634 95.35 14.2

Sandton Bryanston Ascot Offices Gauteng Sandton, Bryanston 5 539 49 100 Apr 2012 47 036 5 933 1 581 21 185 16 208 80.00 –

Sandton Bryanston St Andrews Complex Gauteng Sandton, Bryanston 10 184 76 805 Sept 2010 68 735 8 880 2 607 30 958 23 685 82.84 14.8

Sandton Hyde Park 50 Sixth Road Gauteng Sandton, Hyde Park 4 108 56 573 Sept 2006 63 581 6 578 397 28 637 21 909 119.74 –

Sandton Rivonia 36 Homestead Road Gauteng Sandton, Rivonia 2 459 8 660 Apr 2004 23 887 3 048 910 10 759 8 231 84.53 –


140

Vu


ort 2016




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2016R000

Property revenue

R000


(net ofrecoveries)

R000Goodwill

R000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%


Atlantis City Shopping Centre Western Cape Atlantis 22 115 302 612 Feb 2015 278 929 33 527 3 876 125 629 96 116 130.32 6.0

Elim Hubyeni Shopping Centre Limpopo Elim 12 686 108 559 Feb 2015 104 405 12 476 2 028 47 024 35 977 83.83 0.7

Emalahleni Highland Mews Mpumalanga Emalahleni 17 032 209 612 Feb 2015 209 582 17 396 1 874 94 395 72 220 97.33 7.4

Ermelo Game Centre Mpumalanga Ermelo 6 639 57 356 Feb 2015 40 530 5 421 1 440 18 255 13 966 82.12 15.7

Gugulethu Square Western Cape Gugulethu 25 322 393 147 Feb 2015 429 183 40 575 9 496 193 303 147 892 133.17 –

Hammanskraal Renbro Shopping Centre Gauteng Hammanskraal 13 308 163 821 Feb 2015 147 562 15 770 3 164 66 462 50 848 112.73 11.1

Hartbeespoort Sediba Shopping Centre North West Hartbeespoort 10 887 121 086 Feb 2015 119 755 11 569 3 182 53 937 41 266 105.84 11.1

Hillcrest Richdens Shopping Centre KwaZulu-Natal Hillcrest 10 196 111 983 Feb 2015 121 576 12 877 3 360 54 758 41 894 121.72 5.7

KwaMashu Shopping Centre KwaZulu-Natal KwaMashu 11 204 106 121 Feb 2015 106 736 13 232 4 252 48 074 36 780 105.21 5.6

Makhado Nzhelele Valley Shopping Centre Limpopo Makhado 5 308 54 669 Feb 2015 51 226 6 126 1 199 23 072 17 652 95.40 –

Newcastle Taxi City Shopping Centre KwaZulu-Natal Newcastle 5 006 52 680 Feb 2015 55 703 6 472 1 635 25 089 19 195 109.61 5.7

Phuthaditjhaba Setsing Crescent Free State Phuthaditjhaba 21 538 289 690 Feb 2015 331 015 29 644 5 748 149 089 114 065 115.68 –

Roodepoort Ruimsig Shopping Centre Gauteng Roodepoort 11 177 116 100 Feb 2015 113 875 11 586 1 923 51 289 39 240 95.37 4.9

Ulundi King Senzangakona Shopping Centre KwaZulu-Natal Ulundi 22 365 232 755 Feb 2015 263 132 26 431 6 383 118 514 90 673 101.66 1.6 Welgedacht Van Riebeeckshof Shopping Centre Western Cape Welgedacht 5 181 61 667 Feb 2015 68 367 6 922 1 189 30 792 23 559 109.74 3.1

740 178 6 601 424 10 356 049 968 867 174 344 39 979 4 664 346 3 568 591 117.02 3.3

Offices

Cape Town Bellville Suntyger Western Cape Cape Town, Bellville 6 344 67 200 Apr 2012 49 922 9 532 2 080 22 485 17 203 121.70 –

Cape Town Bellville Tijger Park Western Cape Cape Town, Bellville 20 221 194 200 Apr 2012 220 780 22 872 4 320 99 439 76 079 97.69 1.8

Cape Town Parow De Tijger Office Park Western Cape Parow 4 118 25 856 Oct 2003 38 483 4 845 1 646 17 333 13 261 98.98 7.6

East London Vincent Office Park Eastern Cape East London 9 040 59 236 Apr 2004 87 948 11 400 1 908 39 612 30 306 101.37 1.6

Johannesburg Houghton 1 West Street Gauteng Johannesburg, Houghton 4 415 33 504 Sept 2007 66 003 7 381 1 122 29 728 22 744 129.11 – Johannesburg Houghton Estate Oxford Terrace Gauteng Johannesburg, Houghton 2 588 58 345 Jul 2014 54 288 4 445 687 24 451 18 707 137.55 0.9

Johannesburg Isle of Houghton Gauteng Johannesburg, Houghton 28 070 230 100 Apr 2012 302 535 31 129 5 666 136 261 104 251 91.55 7.6

Johannesburg Parktown 55 Empire Road Gauteng Johannesburg, Parktown 5 960 43 400 Apr 2012 53 682 6 760 1 151 24 178 18 498 90.45 7.5

Midrand IBG Gauteng Midrand 8 515 80 700 Apr 2012 64 573 8 695 1 117 29 084 22 251 95.49 17.6

Midrand IBG Undeveloped Land Gauteng Midrand 0 10 500 Mar 2014 10 500 0 207 4 729 3 618 –

Pretoria Hatfield 1166 Francis Baard Street Gauteng Pretoria, Hatfield 2 871 13 469 Apr 2004 15 247 1 638 1 655 6 867 5 254 87.98 38.2

Pretoria Hatfield Festival Street Offices Gauteng Pretoria, Hatfield 5 358 41 875 Sept 2010 54 580 7 344 1 068 24 583 18 808 91.86 –

Pretoria High Court Chambers Gauteng Pretoria 12 093 54 712 Apr 2004 145 381 13 705 (1 786) 65 479 50 097 74.46 –

Pretoria Lynnwood Excel Park Gauteng Pretoria, Lynnwood 3 529 34 174 Mar 2008 18 860 2 988 684 8 495 6 499 71.91 12.9

Pretoria Lynnwood Sanlynn Gauteng Pretoria, Lynnwood 8 625 108 000 Apr 2012 136 833 15 273 3 112 61 629 47 151 139.44 –

Pretoria Lynnwood Sunwood Park Gauteng Pretoria, Lynnwood 6 412 55 464 Sept 2010 59 879 7 590 1 730 26 969 20 634 95.35 14.2

Sandton Bryanston Ascot Offices Gauteng Sandton, Bryanston 5 539 49 100 Apr 2012 47 036 5 933 1 581 21 185 16 208 80.00 –

Sandton Bryanston St Andrews Complex Gauteng Sandton, Bryanston 10 184 76 805 Sept 2010 68 735 8 880 2 607 30 958 23 685 82.84 14.8

Sandton Hyde Park 50 Sixth Road Gauteng Sandton, Hyde Park 4 108 56 573 Sept 2006 63 581 6 578 397 28 637 21 909 119.74 –

Sandton Rivonia 36 Homestead Road Gauteng Sandton, Rivonia 2 459 8 660 Apr 2004 23 887 3 048 910 10 759 8 231 84.53 –


141

Vu


ort 2016




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2016R000

Property revenue

R000


(net ofrecoveries)

R000Goodwill

R000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Offices continued

Sandton Rivonia Tuscany Section 5 Gauteng Sandton, Rivonia 2 043 20 297 Apr 2012 14 066 2 035 328 6 335 4 847 77.48 –




Sandton Rivonia Tuscany Section 9 Gauteng Sandton, Rivonia 2 570 22 549 Apr 2012 13 110 1 964 681 5 905 4 518 65.77 19.0


Sandton Sunninghill Place Gauteng Sandton, Sunninghill 8 774 73 986 Sept 2010 87 336 7 977 2 439 39 336 30 095 84.40 5.2 Sandton Sunninghill Sunhill Park Gauteng Sandton, Sunninghill 14 790 143 500 Apr 2012 94 373 20 895 1 060 42 505 32 520 100.13 –

185 102 1 634 059 1 848 992 220 042 37 371 – 832 783 637 145 96.45 5.3

Industrial

Cape Town Parow Industrial Park Western Cape Parow 19 834 28 059 Apr 2004 71 556 9 224 1 626 32 229 24 658 39.88 –

Centurion Samrand N1 Gauteng Centurion, Samrand 11 413 12 990 Apr 2004 50 965 6 261 691 22 955 17 562 47.51 –

Durban Valley View Industrial Park KwaZulu-Natal Durban 30 790 53 795 Apr 2004 138 076 13 482 2 842 62 189 47 580 37.11 –

Germiston Meadowdale R24 Gauteng Germiston, Meadowdale 35 016 53 520 Apr 2004 184 785 19 224 2 358 83 227 63 675 48.01 8.9

Kempton Park Spartan Warehouse Gauteng Johannesburg, Spartan 5 241 5 807 Apr 2004 21 556 1 565 (3) 9 709 7 428 47.25 –

Midrand Allandale Industrial Park Gauteng Midrand 21 344 23 175 Apr 2004 108 393 12 215 2 889 48 820 37 351 49.84 1.9

Midrand Sanitary City Gauteng Midrand 6 342 15 277 Apr 2004 58 443 4 001 140 26 323 20 139 56.57 –

Pinetown Richmond Industrial Park KwaZulu-Natal Pinetown 7 940 10 800 Apr 2004 49 776 4 868 615 22 419 17 152 52.34 –

Pinetown Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown, Westmead 16 914 59 390 Sept 2010 101 184 9 250 1 360 45 573 34 867 48.98 –

Pretoria Rosslyn Warehouse Gauteng Pretoria, Rosslynn 7 541 25 500 Apr 2012 31 034 2 532 423 13 978 10 694 28.64 –

Pretoria Silverton 22 Axle Street Gauteng Pretoria, Silverton 1 817 11 226 Aug 2015 9 959 783 157 4 486 3 432 54.76 –

Pretoria Silverton 294 Battery Street Gauteng Pretoria, Silverton 5 787 21 744 Aug 2015 20 262 1 740 429 9 126 6 982 37.59 –



Pretoria Silverton 330 Alwyn Street Gauteng Pretoria, Silverton 1 185 5 287 Aug 2015 4 392 394 265 1 978 1 513 42.96 –

Pretoria Silverton 34 Bearing Crescent Gauteng Pretoria, Silverton 5 000 23 930 Aug 2015 25 090 1 839 410 11 300 8 646 47.36 –

Randburg Trevallyn Industrial Park Gauteng Randburg, Kya Sands 32 006 48 324 Apr 2004 125 066 14 411 3 560 56 330 43 097 40.99 7.2

Randburg Tungsten Industrial Park Gauteng Randburg, Strijdompark 10 365 13 336 Oct 2003 52 695 5 716 879 1 769 23 734 18 158 49.14 –

Sandton Linbro 7 on Mastiff Business Park Gauteng Sandton 15 070 126 801 Oct 2014 120 191 11 240 1 839 54 134 41 417 57.72 17.9 Roodepoort Robertville Industrial Park Gauteng Roodepoort, Robertville 28 225 15 983 Oct 2003 71 114 11 082 1 926 2 120 32 030 24 505 38.83 10.9

269 384 593 557 1 283 406 132 768 23 128 3 889 578 047 442 250 44.65 4.3

ResidentialRandburg Square Residential Gauteng Randburg 10 453 4 325 Apr 2004 22 200 1 091 334 9 999 7 650 – –

10 453 4 325 22 200 1 091 334 – 9 999 7 650 – –

HospitalCape Town Parow De Tijger Day Clinic Western Cape Cape Town, Parow 1 125 30 791 1 612 41 13 868 10 610 177.78 –

1 125 0 30 791 1 612 41 – 13 868 10 610 177.78 –


142

Vu


ort 2016




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2016R000

Property revenue

R000


(net ofrecoveries)

R000Goodwill

R000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Offices continued





Sandton Rivonia Tuscany Section 9 Gauteng Sandton, Rivonia 2 570 22 549 Apr 2012 13 110 1 964 681 5 905 4 518 65.77 19.0


Sandton Sunninghill Place Gauteng Sandton, Sunninghill 8 774 73 986 Sept 2010 87 336 7 977 2 439 39 336 30 095 84.40 5.2 Sandton Sunninghill Sunhill Park Gauteng Sandton, Sunninghill 14 790 143 500 Apr 2012 94 373 20 895 1 060 42 505 32 520 100.13 –

185 102 1 634 059 1 848 992 220 042 37 371 – 832 783 637 145 96.45 5.3

Industrial

Cape Town Parow Industrial Park Western Cape Parow 19 834 28 059 Apr 2004 71 556 9 224 1 626 32 229 24 658 39.88 –

Centurion Samrand N1 Gauteng Centurion, Samrand 11 413 12 990 Apr 2004 50 965 6 261 691 22 955 17 562 47.51 –

Durban Valley View Industrial Park KwaZulu-Natal Durban 30 790 53 795 Apr 2004 138 076 13 482 2 842 62 189 47 580 37.11 –

Germiston Meadowdale R24 Gauteng Germiston, Meadowdale 35 016 53 520 Apr 2004 184 785 19 224 2 358 83 227 63 675 48.01 8.9

Kempton Park Spartan Warehouse Gauteng Johannesburg, Spartan 5 241 5 807 Apr 2004 21 556 1 565 (3) 9 709 7 428 47.25 –

Midrand Allandale Industrial Park Gauteng Midrand 21 344 23 175 Apr 2004 108 393 12 215 2 889 48 820 37 351 49.84 1.9

Midrand Sanitary City Gauteng Midrand 6 342 15 277 Apr 2004 58 443 4 001 140 26 323 20 139 56.57 –

Pinetown Richmond Industrial Park KwaZulu-Natal Pinetown 7 940 10 800 Apr 2004 49 776 4 868 615 22 419 17 152 52.34 –

Pinetown Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown, Westmead 16 914 59 390 Sept 2010 101 184 9 250 1 360 45 573 34 867 48.98 –

Pretoria Rosslyn Warehouse Gauteng Pretoria, Rosslynn 7 541 25 500 Apr 2012 31 034 2 532 423 13 978 10 694 28.64 –

Pretoria Silverton 22 Axle Street Gauteng Pretoria, Silverton 1 817 11 226 Aug 2015 9 959 783 157 4 486 3 432 54.76 –




Pretoria Silverton 330 Alwyn Street Gauteng Pretoria, Silverton 1 185 5 287 Aug 2015 4 392 394 265 1 978 1 513 42.96 –

Pretoria Silverton 34 Bearing Crescent Gauteng Pretoria, Silverton 5 000 23 930 Aug 2015 25 090 1 839 410 11 300 8 646 47.36 –

Randburg Trevallyn Industrial Park Gauteng Randburg, Kya Sands 32 006 48 324 Apr 2004 125 066 14 411 3 560 56 330 43 097 40.99 7.2

Randburg Tungsten Industrial Park Gauteng Randburg, Strijdompark 10 365 13 336 Oct 2003 52 695 5 716 879 1 769 23 734 18 158 49.14 –

Sandton Linbro 7 on Mastiff Business Park Gauteng Sandton 15 070 126 801 Oct 2014 120 191 11 240 1 839 54 134 41 417 57.72 17.9 Roodepoort Robertville Industrial Park Gauteng Roodepoort, Robertville 28 225 15 983 Oct 2003 71 114 11 082 1 926 2 120 32 030 24 505 38.83 10.9

269 384 593 557 1 283 406 132 768 23 128 3 889 578 047 442 250 44.65 4.3

ResidentialRandburg Square Residential Gauteng Randburg 10 453 4 325 Apr 2004 22 200 1 091 334 9 999 7 650 – –

10 453 4 325 22 200 1 091 334 – 9 999 7 650 – –

HospitalCape Town Parow De Tijger Day Clinic Western Cape Cape Town, Parow 1 125 30 791 1 612 41 13 868 10 610 177.78 –

1 125 0 30 791 1 612 41 – 13 868 10 610 177.78 –


143

Vu


ort 2016



Properties owned by the groupAt 31 March 2016 Region Town

Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2016R000

Property revenue

R000


(net ofrecoveries)

R000Goodwill

R000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Motor related

Cape Town Bellville Barons Western Cape Bellville 6 778 70 000 Apr 2012 125 647 8 370 252 56 591 43 297 148.18 – Sandton Linbro Galaxy Drive Showroom Gauteng Sandton 2 840 14 264 Apr 2004 29 187 2 635 55 13 146 10 058 77.32 –

9 618 84 264 154 834 11 005 307 – 69 737 53 355 121.91 –

Held for sale

Bloemfontein Fedsure House* Free State Bloemfontein 10 866 52 300 Aug 2013 91 830 8 902 2 595 41 360 31 644 80.12 17.9

Cape Town Bellville Louis Leipoldt* Western Cape Cape Town, Bellville 22 311 106 937 Apr 2004 376 650 27 245 324 169 643 129 790 102.95 –

Midrand Ulwazi Building* Gauteng Midrand 15 634 78 238 Apr 2004 160 065 10 605 252 72 093 55 157 74.26 –

Pretoria Arcadia Suncardia* Gauteng Pretoria, Arcadia 28 938 179 600 Apr 2012 269 240 29 584 7 467 121 266 92 780 94.22 5.5

Pretoria De Bruyn Park* Gauteng Pretoria 41 418 372 000 Aug 2013 296 841 39 860 1 279 133 697 102 289 93.21 4.0

Pretoria Koedoe Arcade* Gauteng Pretoria 13 402 125 317 Aug 2013 135 364 15 667 1 015 60 968 46 645 99.70 3.5

Pretoria Navarre Building* Gauteng Pretoria 47 202 495 144 Aug 2013 413 315 62 262 9 720 186 156 142 423 112.33 1.4 Roodepoort Hillfox Power Centre* Gauteng Roodepoort 38 245 62 098 Oct 2003 254 442 27 232 9 875 8 239 114 600 87 677 65.27 8.2

218 016 1 471 634 1 997 747 221 357 32 527 8 239 899 783 688 405 92.42 4.4

* Investment property held for sale.

Total group 1 433 876 10 389 263 15 694 018 1 556 742 268 052 52 107 7 068 563 5 408 006 96.71 3.8

Lease commissions 41 618 (13 151)

Group total (excluding sold properties) 15 735 636 1 556 742 254 901 52 107 7 068 563 5 408 006

Sold properties 20 154 6 179

Group total – property management 1 576 896 261 080

Group – recoveries 519 504 519 504

Group total 2 096 400 780 584

Income from asset management business 2 074

Assets R000

Directors’ valuation at 31 March 2016 15 735 636

Add excluded items:

Investment property under development 87 033

Investment in associate 760 049

Equity investments 328 247

Furniture, fittings, computer equipment and other 2 127

Available-for-sale financial asset 19 842

Derivative financial instruments 41 230

Goodwill – MICC 52 107

Goodwill – VAM 106 265

Long-term loans granted 38 110

Deferred taxation assets 2 779

Long-term cash deposits 350 000

Trade and other receivables 246 873

Short-term derivative financial instrument 1 245

Taxation refundable 1 217Cash and cash equivalents 582 459

Total assets 18 355 219


144

Vu


ort 2016



Properties owned by the groupAt 31 March 2016 Region Town

Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2016R000

Property revenue

R000


(net ofrecoveries)

R000Goodwill

R000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Motor related

Cape Town Bellville Barons Western Cape Bellville 6 778 70 000 Apr 2012 125 647 8 370 252 56 591 43 297 148.18 – Sandton Linbro Galaxy Drive Showroom Gauteng Sandton 2 840 14 264 Apr 2004 29 187 2 635 55 13 146 10 058 77.32 –

9 618 84 264 154 834 11 005 307 – 69 737 53 355 121.91 –

Held for sale

Bloemfontein Fedsure House* Free State Bloemfontein 10 866 52 300 Aug 2013 91 830 8 902 2 595 41 360 31 644 80.12 17.9

Cape Town Bellville Louis Leipoldt* Western Cape Cape Town, Bellville 22 311 106 937 Apr 2004 376 650 27 245 324 169 643 129 790 102.95 –

Midrand Ulwazi Building* Gauteng Midrand 15 634 78 238 Apr 2004 160 065 10 605 252 72 093 55 157 74.26 –

Pretoria Arcadia Suncardia* Gauteng Pretoria, Arcadia 28 938 179 600 Apr 2012 269 240 29 584 7 467 121 266 92 780 94.22 5.5

Pretoria De Bruyn Park* Gauteng Pretoria 41 418 372 000 Aug 2013 296 841 39 860 1 279 133 697 102 289 93.21 4.0

Pretoria Koedoe Arcade* Gauteng Pretoria 13 402 125 317 Aug 2013 135 364 15 667 1 015 60 968 46 645 99.70 3.5

Pretoria Navarre Building* Gauteng Pretoria 47 202 495 144 Aug 2013 413 315 62 262 9 720 186 156 142 423 112.33 1.4 Roodepoort Hillfox Power Centre* Gauteng Roodepoort 38 245 62 098 Oct 2003 254 442 27 232 9 875 8 239 114 600 87 677 65.27 8.2

218 016 1 471 634 1 997 747 221 357 32 527 8 239 899 783 688 405 92.42 4.4

* Investment property held for sale.

Total group 1 433 876 10 389 263 15 694 018 1 556 742 268 052 52 107 7 068 563 5 408 006 96.71 3.8

Lease commissions 41 618 (13 151)




Group – recoveries 519 504 519 504

Group total 2 096 400 780 584


Liabilities R000

Stated capital 7 068 563

Interest-bearing borrowings 5 408 006

Add excluded items:

Equity and reserves 4 864 011

Non-controlling interest 556 681

Deferred taxation 10 743

Financial liability at amortised cost 5 269

Trade and other payables 439 937Taxation payable 2 009

Total liabilities 18 355 219


145

Vu


ort 2016




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

RetailRetail – Vukile and MICC portfolios 467 915 2 964 340 5 982 709 809 074 314 954 48 218 2 542 836 1 733 858 111.3 2.6


Boksburg East Rand Mall (50%) Gauteng Boksburg 31 494 1 111 816 Apr 2013 996 276 115 239 34 012 423 445 288 731 234.02 –


Durban Phoenix Plaza KwaZulu-Natal Durban, Phoenix 24 363 189 140 Apr 2004 660 122 81 086 29 513 280 572 191 311 214.07 –


Ga-Kgapane Modjadji Plaza (30%) Limpopo Ga-Kgapane 2 953 29 713 Mar 2014 37 173 5 242 2 180 15 800 10 773 105.76 0.3


Germiston Meadowdale Mall Gauteng Germiston, Meadowdale 35 847 66 170 Oct 2003 198 106 35 471 17 084 8 716 84 201 57 413 42.56 –

Giyani Plaza Limpopo Giyani 9 487 68 250 Jul 2011 123 212 13 909 3 850 52 369 35 708 103.10 9.2



Letlhabile Mall North West Letlhabile 17 000 192 878 Mar 2014 153 504 20 591 9 694 65 244 44 487 83.13 –




Ondangwa Shoprite Centre Namibia Ondangwa 5 908 17 959 Oct 2003 63 444 7 495 1 169 2 390 26 966 18 387 105.90 –


Oshikango Spar Centre Namibia Oshikango 9 163 19 542 Oct 2003 139 998 14 157 1 400 2 751 59 504 40 573 128.76 –

Piet Retief Shopping Centre Mpumalanga Piet Retief 7 541 20 818 Oct 2003 115 598 10 885 1 572 2 726 49 133 33 502 99.45 0.5




Roodepoort Hillfox Power Centre Gauteng Roodepoort 38 245 62 098 Oct 2003 262 108 36 929 18 356 8 239 111 404 75 962 60.25 3.8

Rustenburg Edgars Building North West Rustenburg 9 784 83 750 Sept 2010 149 102 13 672 1 184 63 373 43 212 92.68 – Sandton Bryanston Grosvenor Shopping Centre Gauteng Sandton, Bryanston 4 578 31 381 Apr 2004 57 330 11 808 5 047 24 367 16 615 130.14 –


Tzaneen Maake Plaza (30%) Limpopo Tzaneen 4 725 32 410 Aug 2014 48 166 4 782 1 879 20 472 13 959 93.48 1.0 Windhoek 269 Independence Avenue Namibia Windhoek 12 828 110 803 Jul 2007 152 659 22 535 5 389 64 885 44 242 133.25 1.7

200 000 2 381 858 2 421 987 53 866 21 683 – 1 029 421 701 920 103.07 5.6



146

Vu


ort 2016




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

RetailRetail – Vukile and MICC portfolios 467 915 2 964 340 5 982 709 809 074 314 954 48 218 2 542 836 1 733 858 111.3 2.6


Boksburg East Rand Mall (50%) Gauteng Boksburg 31 494 1 111 816 Apr 2013 996 276 115 239 34 012 423 445 288 731 234.02 –


Durban Phoenix Plaza KwaZulu-Natal Durban, Phoenix 24 363 189 140 Apr 2004 660 122 81 086 29 513 280 572 191 311 214.07 –


Ga-Kgapane Modjadji Plaza (30%) Limpopo Ga-Kgapane 2 953 29 713 Mar 2014 37 173 5 242 2 180 15 800 10 773 105.76 0.3


Germiston Meadowdale Mall Gauteng Germiston, Meadowdale 35 847 66 170 Oct 2003 198 106 35 471 17 084 8 716 84 201 57 413 42.56 –

Giyani Plaza Limpopo Giyani 9 487 68 250 Jul 2011 123 212 13 909 3 850 52 369 35 708 103.10 9.2



Letlhabile Mall North West Letlhabile 17 000 192 878 Mar 2014 153 504 20 591 9 694 65 244 44 487 83.13 –




Ondangwa Shoprite Centre Namibia Ondangwa 5 908 17 959 Oct 2003 63 444 7 495 1 169 2 390 26 966 18 387 105.90 –


Oshikango Spar Centre Namibia Oshikango 9 163 19 542 Oct 2003 139 998 14 157 1 400 2 751 59 504 40 573 128.76 –

Piet Retief Shopping Centre Mpumalanga Piet Retief 7 541 20 818 Oct 2003 115 598 10 885 1 572 2 726 49 133 33 502 99.45 0.5




Roodepoort Hillfox Power Centre Gauteng Roodepoort 38 245 62 098 Oct 2003 262 108 36 929 18 356 8 239 111 404 75 962 60.25 3.8

Rustenburg Edgars Building North West Rustenburg 9 784 83 750 Sept 2010 149 102 13 672 1 184 63 373 43 212 92.68 – Sandton Bryanston Grosvenor Shopping Centre Gauteng Sandton, Bryanston 4 578 31 381 Apr 2004 57 330 11 808 5 047 24 367 16 615 130.14 –


Tzaneen Maake Plaza (30%) Limpopo Tzaneen 4 725 32 410 Aug 2014 48 166 4 782 1 879 20 472 13 959 93.48 1.0 Windhoek 269 Independence Avenue Namibia Windhoek 12 828 110 803 Jul 2007 152 659 22 535 5 389 64 885 44 242 133.25 1.7

200 000 2 381 858 2 421 987 53 866 21 683 – 1 029 421 701 920 103.07 5.6



147

Vu


ort 2016




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%


Atlantis City Shopping Centre Western Cape Atlantis 22 115 302 612 Feb 2015 310 001 7 136 3 626 131 760 89 842 118.08 5.1 Elim Hubyeni Shopping Centre Limpopo Elim 12 685 108 559 Feb 2015 109 974 2 713 1 192 46 742 31 872 83.13 2.5 Emalahleni Highland Mews Mpumalanga Emalahleni 17 032 209 612 Feb 2015 210 859 4 329 250 89 622 61 109 86.18 7.2 Ermelo Game Centre Mpumalanga Ermelo 6 639 57 356 Feb 2015 58 141 1 104 631 24 712 16 850 84.05 16.9 Gugulethu Square Western Cape Gugulethu 25 322 393 147 Feb 2015 399 061 8 504 3 823 169 613 115 653 123.67 0.6 Hammanskraal Renbro Shopping Centre Gauteng Hammanskraal 13 308 163 821 Feb 2015 167 786 3 881 1 791 71 314 48 626 103.52 9.3 Hartbeespoort Sediba Shopping Centre North West Hartbeespoort 10 887 121 086 Feb 2015 122 920 2 916 969 52 245 35 624 101.21 20.2 Hillcrest Richdens Shopping Centre KwaZulu-Natal Hillcrest 10 270 111 983 Feb 2015 113 511 2 641 1 087 48 246 32 897 112.47 8.1 KwaMashu Shopping Centre KwaZulu-Natal KwaMashu 11 204 106 121 Feb 2015 107 239 2 927 1 368 45 580 31 079 100.37 6.1 Makhado Nzhelele Valley Shopping Centre Limpopo Makhado 5 309 54 669 Feb 2015 55 696 1 380 648 23 673 16 141 90.90 5.7 Newcastle Taxi City Shopping Centre KwaZulu-Natal Newcastle 5 006 52 680 Feb 2015 53 348 1 158 395 22 675 15 461 105.31 2.3 Phuthaditjhaba Setsing Crescent Free State Phuthaditjhaba 21 538 289 690 Feb 2015 298 226 5 747 2 092 126 755 86 429 107.54 2.3 Roodepoort Ruimsig Shopping Centre Gauteng Roodepoort 11 179 116 100 Feb 2015 117 466 2 955 1 384 49 927 34 043 91.45 9.7 Ulundi King Senzangakona Shopping Centre KwaZulu-Natal Ulundi 22 325 232 755 Feb 2015 235 224 4 810 1 656 99 978 68 171 94.80 1.0 Welgedacht Van Riebeeckshof Shopping Centre Western Cape Welgedacht 5 181 61 667 Feb 2015 62 535 1 665 771 26 579 18 123 103.91 –

667 915 5 346 198 8 404 696 862 940 336 637 48 218 3 572 257 2 435 778 108.66 3.5

OfficesCape Town Bellville Suntyger Western Cape Cape Town, Bellville 6 344 67 200 Apr 2012 48 799 10 314 3 962 20 741 14 143 118.55 – Cape Town Bellville Tijger Park Western Cape Cape Town, Bellville 20 221 194 200 Apr 2012 242 979 26 399 11 492 103 274 70 418 92.52 9.0 Cape Town Parow De Tijger Office Park Western Cape Parow 4 118 25 856 Oct 2003 22 929 6 414 2 723 9 746 6 645 94.20 8.8 East London Vincent Office Park Eastern Cape East London 9 040 59 236 Apr 2004 78 549 11 999 3 671 33 386 22 764 96.44 – Johannesburg Houghton 1 West Street Gauteng Johannesburg, Houghton 4 415 33 504 Sept 2007 62 191 9 044 3 366 26 433 18 024 120.63 – Johannesburg Houghton Estate Oxford Terrace Gauteng Johannesburg, Houghton 2 588 58 345 Jul 2014 46 957 2 469 1 334 19 958 13 609 130.27 15.5 Johannesburg Isle of Houghton Gauteng Johannesburg, Houghton 28 070 230 100 Apr 2012 266 509 42 001 14 852 113 275 77 237 84.56 5.2 Johannesburg Parktown 55 Empire Road Gauteng Johannesburg, Parktown 5 960 43 400 Apr 2012 41 998 7 804 3 077 17 850 12 172 90.74 12.0 Midrand IBG Gauteng Midrand 8 515 80 700 Apr 2012 61 249 11 204 4 306 26 033 17 751 88.73 18.5 Midrand IBG undeveloped land Gauteng Midrand 0 10 500 Mar 2014 10 500 0 0 4 463 3 043 – – Midrand Ulwazi Building Gauteng Midrand 15 634 78 238 Apr 2004 84 224 23 671 9 604 35 798 24 409 89.81 10.4 Pretoria Arcadia Suncardia Gauteng Pretoria, Arcadia 28 937 179 600 Apr 2012 163 001 33 815 20 072 69 280 47 240 90.92 30.1 Pretoria Hatfield 1166 Francis Baard Street Gauteng Pretoria, Hatfield 2 871 13 469 Apr 2004 15 095 4 002 1 963 6 416 4 375 87.95 51.5 Pretoria Hatfield Festival Street Offices Gauteng Pretoria, Hatfield 5 358 41 875 Sept 2010 50 899 8 624 3 446 21 634 14 751 137.80 – Pretoria High Court Chambers Gauteng Pretoria 12 093 54 712 Apr 2004 132 405 20 213 7 813 56 276 38 373 68.93 – Pretoria Lynnwood Excel Park Gauteng Pretoria, Lynnwood 3 529 34 174 Mar 2008 15 630 4 018 2 609 6 643 4 530 68.99 25.7 Pretoria Lynnwood Sanlynn Gauteng Pretoria, Lynnwood 8 624 108 000 Apr 2012 101 632 17 686 5 869 43 197 29 454 127.52 – Pretoria Lynnwood Sunwood Park Gauteng Pretoria, Lynnwood 6 412 55 464 Sept 2010 54 711 9 106 3 648 23 254 15 856 90.23 7.2 Randburg Square Office Tower Gauteng Randburg 10 453 4 325 Apr 2004 22 200 8 707 7 470 9 436 6 434 68.14 – Sandton Bryanston Ascot Offices Gauteng Sandton, Bryanston 5 539 49 100 Apr 2012 44 600 8 854 3 823 18 956 12 926 84.67 – Sandton Bryanston St Andrews Complex Gauteng Sandton, Bryanston 9 908 76 805 Sept 2010 74 687 10 319 5 386 31 744 21 645 77.35 15.5 Sandton Hyde Park 50 Sixth Road Gauteng Sandton, Hyde Park 4 108 56 573 Sept 2006 46 442 7 291 2 807 19 739 13 459 119.83 9.3 Sandton Rivonia 36 Homestead Road Gauteng Sandton, Rivonia 2 459 8 660 Apr 2004 22 869 4 099 1 999 9 720 6 628 77.55 – Sandton Rivonia Tuscany Gauteng Sandton, Rivonia 11 088 114 700 Apr 2012 71 937 11 920 5 355 30 575 20 848 81.06 5.6 Sandton Sunninghill Place Gauteng Sandton, Sunninghill 8 774 73 986 Sept 2010 68 947 11 368 2 445 29 305 19 982 95.82 10.0 Sandton Sunninghill Sunhill Park Gauteng Sandton, Sunninghill 14 790 143 500 Apr 2012 164 534 24 587 7 934 69 932 47 684 92.57 –

239 848 1 896 222 2 016 473 335 928 141 026 – 857 064 584 400 91.95 9.6


148

Vu


ort 2016




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%


Atlantis City Shopping Centre Western Cape Atlantis 22 115 302 612 Feb 2015 310 001 7 136 3 626 131 760 89 842 118.08 5.1 Elim Hubyeni Shopping Centre Limpopo Elim 12 685 108 559 Feb 2015 109 974 2 713 1 192 46 742 31 872 83.13 2.5 Emalahleni Highland Mews Mpumalanga Emalahleni 17 032 209 612 Feb 2015 210 859 4 329 250 89 622 61 109 86.18 7.2 Ermelo Game Centre Mpumalanga Ermelo 6 639 57 356 Feb 2015 58 141 1 104 631 24 712 16 850 84.05 16.9 Gugulethu Square Western Cape Gugulethu 25 322 393 147 Feb 2015 399 061 8 504 3 823 169 613 115 653 123.67 0.6 Hammanskraal Renbro Shopping Centre Gauteng Hammanskraal 13 308 163 821 Feb 2015 167 786 3 881 1 791 71 314 48 626 103.52 9.3 Hartbeespoort Sediba Shopping Centre North West Hartbeespoort 10 887 121 086 Feb 2015 122 920 2 916 969 52 245 35 624 101.21 20.2 Hillcrest Richdens Shopping Centre KwaZulu-Natal Hillcrest 10 270 111 983 Feb 2015 113 511 2 641 1 087 48 246 32 897 112.47 8.1 KwaMashu Shopping Centre KwaZulu-Natal KwaMashu 11 204 106 121 Feb 2015 107 239 2 927 1 368 45 580 31 079 100.37 6.1 Makhado Nzhelele Valley Shopping Centre Limpopo Makhado 5 309 54 669 Feb 2015 55 696 1 380 648 23 673 16 141 90.90 5.7 Newcastle Taxi City Shopping Centre KwaZulu-Natal Newcastle 5 006 52 680 Feb 2015 53 348 1 158 395 22 675 15 461 105.31 2.3 Phuthaditjhaba Setsing Crescent Free State Phuthaditjhaba 21 538 289 690 Feb 2015 298 226 5 747 2 092 126 755 86 429 107.54 2.3 Roodepoort Ruimsig Shopping Centre Gauteng Roodepoort 11 179 116 100 Feb 2015 117 466 2 955 1 384 49 927 34 043 91.45 9.7 Ulundi King Senzangakona Shopping Centre KwaZulu-Natal Ulundi 22 325 232 755 Feb 2015 235 224 4 810 1 656 99 978 68 171 94.80 1.0 Welgedacht Van Riebeeckshof Shopping Centre Western Cape Welgedacht 5 181 61 667 Feb 2015 62 535 1 665 771 26 579 18 123 103.91 –

667 915 5 346 198 8 404 696 862 940 336 637 48 218 3 572 257 2 435 778 108.66 3.5

OfficesCape Town Bellville Suntyger Western Cape Cape Town, Bellville 6 344 67 200 Apr 2012 48 799 10 314 3 962 20 741 14 143 118.55 – Cape Town Bellville Tijger Park Western Cape Cape Town, Bellville 20 221 194 200 Apr 2012 242 979 26 399 11 492 103 274 70 418 92.52 9.0 Cape Town Parow De Tijger Office Park Western Cape Parow 4 118 25 856 Oct 2003 22 929 6 414 2 723 9 746 6 645 94.20 8.8 East London Vincent Office Park Eastern Cape East London 9 040 59 236 Apr 2004 78 549 11 999 3 671 33 386 22 764 96.44 – Johannesburg Houghton 1 West Street Gauteng Johannesburg, Houghton 4 415 33 504 Sept 2007 62 191 9 044 3 366 26 433 18 024 120.63 – Johannesburg Houghton Estate Oxford Terrace Gauteng Johannesburg, Houghton 2 588 58 345 Jul 2014 46 957 2 469 1 334 19 958 13 609 130.27 15.5 Johannesburg Isle of Houghton Gauteng Johannesburg, Houghton 28 070 230 100 Apr 2012 266 509 42 001 14 852 113 275 77 237 84.56 5.2 Johannesburg Parktown 55 Empire Road Gauteng Johannesburg, Parktown 5 960 43 400 Apr 2012 41 998 7 804 3 077 17 850 12 172 90.74 12.0 Midrand IBG Gauteng Midrand 8 515 80 700 Apr 2012 61 249 11 204 4 306 26 033 17 751 88.73 18.5 Midrand IBG undeveloped land Gauteng Midrand 0 10 500 Mar 2014 10 500 0 0 4 463 3 043 – – Midrand Ulwazi Building Gauteng Midrand 15 634 78 238 Apr 2004 84 224 23 671 9 604 35 798 24 409 89.81 10.4 Pretoria Arcadia Suncardia Gauteng Pretoria, Arcadia 28 937 179 600 Apr 2012 163 001 33 815 20 072 69 280 47 240 90.92 30.1 Pretoria Hatfield 1166 Francis Baard Street Gauteng Pretoria, Hatfield 2 871 13 469 Apr 2004 15 095 4 002 1 963 6 416 4 375 87.95 51.5 Pretoria Hatfield Festival Street Offices Gauteng Pretoria, Hatfield 5 358 41 875 Sept 2010 50 899 8 624 3 446 21 634 14 751 137.80 – Pretoria High Court Chambers Gauteng Pretoria 12 093 54 712 Apr 2004 132 405 20 213 7 813 56 276 38 373 68.93 – Pretoria Lynnwood Excel Park Gauteng Pretoria, Lynnwood 3 529 34 174 Mar 2008 15 630 4 018 2 609 6 643 4 530 68.99 25.7 Pretoria Lynnwood Sanlynn Gauteng Pretoria, Lynnwood 8 624 108 000 Apr 2012 101 632 17 686 5 869 43 197 29 454 127.52 – Pretoria Lynnwood Sunwood Park Gauteng Pretoria, Lynnwood 6 412 55 464 Sept 2010 54 711 9 106 3 648 23 254 15 856 90.23 7.2 Randburg Square Office Tower Gauteng Randburg 10 453 4 325 Apr 2004 22 200 8 707 7 470 9 436 6 434 68.14 – Sandton Bryanston Ascot Offices Gauteng Sandton, Bryanston 5 539 49 100 Apr 2012 44 600 8 854 3 823 18 956 12 926 84.67 – Sandton Bryanston St Andrews Complex Gauteng Sandton, Bryanston 9 908 76 805 Sept 2010 74 687 10 319 5 386 31 744 21 645 77.35 15.5 Sandton Hyde Park 50 Sixth Road Gauteng Sandton, Hyde Park 4 108 56 573 Sept 2006 46 442 7 291 2 807 19 739 13 459 119.83 9.3 Sandton Rivonia 36 Homestead Road Gauteng Sandton, Rivonia 2 459 8 660 Apr 2004 22 869 4 099 1 999 9 720 6 628 77.55 – Sandton Rivonia Tuscany Gauteng Sandton, Rivonia 11 088 114 700 Apr 2012 71 937 11 920 5 355 30 575 20 848 81.06 5.6 Sandton Sunninghill Place Gauteng Sandton, Sunninghill 8 774 73 986 Sept 2010 68 947 11 368 2 445 29 305 19 982 95.82 10.0 Sandton Sunninghill Sunhill Park Gauteng Sandton, Sunninghill 14 790 143 500 Apr 2012 164 534 24 587 7 934 69 932 47 684 92.57 –

239 848 1 896 222 2 016 473 335 928 141 026 – 857 064 584 400 91.95 9.6


149

Vu


ort 2016




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

IndustrialCape Town Parow Industrial Park Western Cape Parow 19 834 28 059 Apr 2004 70 606 9 596 2 299 30 010 20 462 36.99 – Centurion Samrand N1 Gauteng Centurion, Samrand 11 413 12 990 Apr 2004 45 506 5 644 2 137 19 341 13 188 46.79 – Durban Valley View Industrial Park KwaZulu-Natal Durban 30 790 53 795 Apr 2004 124 869 13 365 3 044 53 073 36 189 34.51 – Germiston Meadowdale R24 Gauteng Germiston, Meadowdale 35 016 53 520 Apr 2004 186 169 23 845 7 163 79 128 53 954 46.41 2.9 Kempton Park Spartan Warehouse Gauteng Johannesburg, Spartan 5 241 5 807 Apr 2004 23 197 4 665 1 052 9 859 6 723 60.68 – Midrand Allandale Industrial Park Gauteng Midrand 21 344 23 175 Apr 2004 98 898 15 225 1 043 42 035 28 662 46.43 1.2 Midrand Sanitary City Gauteng Midrand 6 342 15 277 Apr 2004 54 718 4 123 575 23 257 15 858 51.32 – Pinetown Richmond Industrial Park KwaZulu-Natal Pinetown 7 940 10 800 Apr 2004 40 395 6 144 2 412 17 169 11 707 49.64 – Pinetown Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown, Westmead 16 914 59 390 Sept 2010 90 851 10 398 3 176 38 614 26 330 45.03 – Pretoria Rosslyn Warehouse Gauteng Pretoria, Rosslynn 7 541 25 500 Apr 2012 30 278 2 948 780 12 869 8 775 27.02 – Randburg Trevallyn Industrial Park Gauteng Randburg, Kya Sands 32 006 48 324 Apr 2004 130 456 18 339 6 554 55 448 37 808 38.69 – Randburg Tungsten Industrial Park Gauteng Randburg, Strijdompark 10 365 13 336 Oct 2003 47 490 7 119 2 126 1 769 20 185 13 763 46.80 – Sandton Linbro 7 on Mastiff Business Park Gauteng Sandton 15 070 126 801 Oct 2014 120 278 6 182 294 51 122 34 858 65.07 – Roodepoort Robertville Industrial Park Gauteng Roodepoort, Robertville 28 225 15 983 Oct 2003 88 538 15 352 4 831 2 120 37 631 25 659 37.97 13.1

248 041 492 757 1 152 249 142 945 37 486 3 889 489 741 333 936 42.17 2.0

SovereignBloemfontein Fedsure House Free State Bloemfontein 10 866 52 300 Aug 2013 77 153 11 594 4 790 32 792 22 360 74.04 5.5 Pretoria De Bruyn Park Gauteng Pretoria 41 418 372 000 Aug 2013 334 050 54 355 19 084 141 982 96 812 86.32 11.3 Pretoria Koedoe Arcade Gauteng Pretoria 13 402 125 317 Aug 2013 136 223 21 696 7 066 57 899 39 479 91.11 3.2 Pretoria Navarre Building Gauteng Pretoria 47 519 495 144 Aug 2013 446 487 65 645 15 612 189 771 129 397 102.66 2.1

113 205 1 044 761 993 913 153 290 46 552 – 422 444 288 048 93.11 5.9

HospitalCape Town Bellville Louis Leipoldt Western Cape Cape Town, Bellville 22 311 106 937 Apr 2004 363 277 28 507 3 450 154 404 105 282 95.77 –

22 311 106 937 363 277 28 507 3 450 – 154 404 105 282 95.77 –


150

Vu


ort 2016




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

IndustrialCape Town Parow Industrial Park Western Cape Parow 19 834 28 059 Apr 2004 70 606 9 596 2 299 30 010 20 462 36.99 – Centurion Samrand N1 Gauteng Centurion, Samrand 11 413 12 990 Apr 2004 45 506 5 644 2 137 19 341 13 188 46.79 – Durban Valley View Industrial Park KwaZulu-Natal Durban 30 790 53 795 Apr 2004 124 869 13 365 3 044 53 073 36 189 34.51 – Germiston Meadowdale R24 Gauteng Germiston, Meadowdale 35 016 53 520 Apr 2004 186 169 23 845 7 163 79 128 53 954 46.41 2.9 Kempton Park Spartan Warehouse Gauteng Johannesburg, Spartan 5 241 5 807 Apr 2004 23 197 4 665 1 052 9 859 6 723 60.68 – Midrand Allandale Industrial Park Gauteng Midrand 21 344 23 175 Apr 2004 98 898 15 225 1 043 42 035 28 662 46.43 1.2 Midrand Sanitary City Gauteng Midrand 6 342 15 277 Apr 2004 54 718 4 123 575 23 257 15 858 51.32 – Pinetown Richmond Industrial Park KwaZulu-Natal Pinetown 7 940 10 800 Apr 2004 40 395 6 144 2 412 17 169 11 707 49.64 – Pinetown Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown, Westmead 16 914 59 390 Sept 2010 90 851 10 398 3 176 38 614 26 330 45.03 – Pretoria Rosslyn Warehouse Gauteng Pretoria, Rosslynn 7 541 25 500 Apr 2012 30 278 2 948 780 12 869 8 775 27.02 – Randburg Trevallyn Industrial Park Gauteng Randburg, Kya Sands 32 006 48 324 Apr 2004 130 456 18 339 6 554 55 448 37 808 38.69 – Randburg Tungsten Industrial Park Gauteng Randburg, Strijdompark 10 365 13 336 Oct 2003 47 490 7 119 2 126 1 769 20 185 13 763 46.80 – Sandton Linbro 7 on Mastiff Business Park Gauteng Sandton 15 070 126 801 Oct 2014 120 278 6 182 294 51 122 34 858 65.07 – Roodepoort Robertville Industrial Park Gauteng Roodepoort, Robertville 28 225 15 983 Oct 2003 88 538 15 352 4 831 2 120 37 631 25 659 37.97 13.1

248 041 492 757 1 152 249 142 945 37 486 3 889 489 741 333 936 42.17 2.0

SovereignBloemfontein Fedsure House Free State Bloemfontein 10 866 52 300 Aug 2013 77 153 11 594 4 790 32 792 22 360 74.04 5.5 Pretoria De Bruyn Park Gauteng Pretoria 41 418 372 000 Aug 2013 334 050 54 355 19 084 141 982 96 812 86.32 11.3 Pretoria Koedoe Arcade Gauteng Pretoria 13 402 125 317 Aug 2013 136 223 21 696 7 066 57 899 39 479 91.11 3.2 Pretoria Navarre Building Gauteng Pretoria 47 519 495 144 Aug 2013 446 487 65 645 15 612 189 771 129 397 102.66 2.1

113 205 1 044 761 993 913 153 290 46 552 – 422 444 288 048 93.11 5.9

HospitalCape Town Bellville Louis Leipoldt Western Cape Cape Town, Bellville 22 311 106 937 Apr 2004 363 277 28 507 3 450 154 404 105 282 95.77 –

22 311 106 937 363 277 28 507 3 450 – 154 404 105 282 95.77 –


151

Vu


ort 2016




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Motor related

Cape Town Bellville Barons Western Cape Cape Town, Bellville 6 778 70 000 Apr 2012 104 416 8 202 852 44 380 30 261 138.49 –

Sandton Linbro Galaxy Drive Showroom Gauteng Sandton 2 840 14 264 Apr 2004 30 664 2 905 488 13 033 8 887 72.26 –

9 618 84 264 135 080 11 107 1 340 0 57 413 39 148 113.93 –

Held for saleCape Town Pinelands Pinepark* Western Cape Cape Town, Pinelands 2 804 13 347 Apr 2004 18 420 4 249 1 282 7 829 5 338 95.23 – Centurion 259 West Street* Gauteng Centurion 5 359 17 979 Apr 2004 30 350 4 908 2 436 12 900 8 796 89.69 30.8 Johannesburg Parktown Oakhurst* Gauteng Johannesburg, Parktown 9 065 34 400 Mar 2006 71 000 11 023 5 943 30 177 20 577 85.88 19.2 Johannesburg Rosettenville Village Main Industrial Park* Gauteng Johannesburg, Rosettenville 8 057 5 400 Apr 2004 27 249 4 920 2 672 11 582 7 897 35.63 – Kokstad Game Centre* KwaZulu-Natal Kokstad 12 867 37 666 Oct 2003 133 000 13 906 3 160 4 951 56 529 38 545 81.51 –

38 152 108 792 280 019 39 006 15 493 4 951 119 017 81 153 73.72 9.0

Total group 1 339 090 9 079 931 13 345 707 1 573 723 581 984 57 058 5 672 340 3 867 745 90.92 4.6

Lease commissions 39 640





Expenditure – asset management business 34 388

Assets R000

Directors’ valuation at 31 March 2015 13 385 347Add excluded items: Deferred capital expenditure 15 849Investments 384 800Furniture, fittings, computer equipment and other 3 248Available-for-sale financial asset 21 576Goodwill 57 058Long-term loans granted 38 110Deferred taxation assets 3 888Trade and other receivables 147 429Taxation refundable 133Cash and cash equivalents 473 889

Total assets 14 531 327


152

Vu


ort 2016




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Motor related

Cape Town Bellville Barons Western Cape Cape Town, Bellville 6 778 70 000 Apr 2012 104 416 8 202 852 44 380 30 261 138.49 –

Sandton Linbro Galaxy Drive Showroom Gauteng Sandton 2 840 14 264 Apr 2004 30 664 2 905 488 13 033 8 887 72.26 –

9 618 84 264 135 080 11 107 1 340 0 57 413 39 148 113.93 –

Held for saleCape Town Pinelands Pinepark* Western Cape Cape Town, Pinelands 2 804 13 347 Apr 2004 18 420 4 249 1 282 7 829 5 338 95.23 – Centurion 259 West Street* Gauteng Centurion 5 359 17 979 Apr 2004 30 350 4 908 2 436 12 900 8 796 89.69 30.8 Johannesburg Parktown Oakhurst* Gauteng Johannesburg, Parktown 9 065 34 400 Mar 2006 71 000 11 023 5 943 30 177 20 577 85.88 19.2 Johannesburg Rosettenville Village Main Industrial Park* Gauteng Johannesburg, Rosettenville 8 057 5 400 Apr 2004 27 249 4 920 2 672 11 582 7 897 35.63 – Kokstad Game Centre* KwaZulu-Natal Kokstad 12 867 37 666 Oct 2003 133 000 13 906 3 160 4 951 56 529 38 545 81.51 –

38 152 108 792 280 019 39 006 15 493 4 951 119 017 81 153 73.72 9.0

Total group 1 339 090 9 079 931 13 345 707 1 573 723 581 984 57 058 5 672 340 3 867 745 90.92 4.6

Lease commissions 39 640





Expenditure – asset management business 34 388

Liabilities R000

Stated capital 5 672 340Interest-bearing borrowings 3 867 745Add excluded items: Equity and reserves 4 156 906Non-controlling interest 516 317Deferred taxation 2 573Financial liability at amortised cost 12 919Trade and other payables 300 880Taxation payable 1 647

Total liabilities 14 531 327


153

Vu


ort 2016

36 Capital managementThe group’s capital management objectives are:�g To ensure the group’s ability to continue as a going concern. �g To provide an adequate return to shareholders by pricing services commensurately with the level of risk.

The group monitors capital on the basis of the carrying amount of equity less cash equivalents as presented in the statement of financial position and derivative liabilities.

Capital for the reporting periods under review is summarised as follows:

2016GroupR000

2015GroupR000

Total equity 11 932 574 9 830 646Derivative liabilities 5 269 12 919Cash and cash equivalents (932 459) (473 889)

Capital 11 005 384 9 369 676

Total equity 11 932 574 9 830 646Borrowings 5 408 006 3 867 745

Overall financing 17 340 580 13 698 391

Capital-to-overall financing ratio 0.63 0.68

Management assesses the group’s capital requirements in order to maintain an efficient overall financing structure which avoids excessive leverage. The group manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure the group may issue new shares or sell assets to reduce debt.

The board’s policy is to maintain a strong capital base comprising its shareholders’ interest so as to maintain investor creditor and market confidence and to sustain future development of the business. It is the group’s stated purpose to deliver long-term sustainable growth in dividend per share. Generally at least 99% of net profits are distributed annually, on a six-monthly basis.

There were no changes in the group’s approach to capital management during the year. Neither the company nor any of its subsidiaries are subject to externally imposed capital requirements. The group has complied with its bank and corporate bond covenants.

37 Joint operations

Vukile’s share of profit and loss and net assets2016R000

2015R000

Statement of profit or loss and other comprehensive income– Revenue 151 976 184 707– Property expenses (21 529) (57 504)

Property operating profit 130 447 127 203Straight-line lease income adjustment 24 112 12 457Fair value adjustments 79 280 42 763

Operating profit 233 839 182 423

Statement of financial positionOpening fair value of property assets 1 564 265 1 486 760Acquisitions 205 326 32 410Capital expenditure 4 653 2 332Net fair value adjustments 79 280 42 763Straight-line lease income adjustment 24 112 12 457

Fair value of investment property for accounting purposes 1 877 636 1 576 722Straight-line lease income adjustment (24 112) (12 457)

Closing fair value of property assets 1 853 524 1 564 265Current assets 20 151 18 850

Total assets 1 873 675 1 583 115

Owners’ equity 928 352 822 445Other non-current liabilities 929 130 746 695Current liabilities 16 193 13 975




154

Vu


ort 2016


37 Joint operations continued

Vukile’s share of profit and loss and net assets continued2016R000

2015R000

Joint operations comprise the following properties:Boksburg East Rand Mall (50%)Pinetown Pine Crest (50%)Monsterlus Moratiwa Crossing (94.50%)Tzaneen Maake Plaza (70%) (2015: 30%)

Ga-Kgapane Modjadji Plaza (30%)

The above operations are classified as joint operations whereby the group recognises its share of the assets and liabilities and income and expenses.

2016 2015

GroupR000

CompanyR000

GroupR000

CompanyR000

38 Future minimum lease incomeReceivable within one year 1 413 161 984 845 1 207 632 837 126Receivable between one and five years 2 881 967 1 935 166 2 410 150 1 657 959Receivable after five years 1 328 845 819 414 796 788 659 815

Total future contractual lease revenue 5 623 973 3 739 425 4 414 570 3 154 900Rental straight-line adjustment already accrued (544 678) (383 880) (283 866) (260 761)

Future straight-line lease revenue 5 079 295 3 355 545 4 130 704 2 894 139

39 CommitmentsFinancial lease commitmentsPremisesPayable within one year 2 709 2 709 2 486 2 486Payable between one and five years 1 660 1 660 4 370 4 370

4 369 4 369 6 856 6 856

Capital commitmentsAuthorised and contracted 563 638 563 638 283 600 193 749

Authorised but not contracted 152 772 114 372 122 400 107 388

It is intended that the above capital expenditure will be funded by way of bank facilities, surplus cash and the sales proceeds of investment properties.

40 Post-year-end eventR400 million equity capital raise

In April 2016 Vukile concluded a successful equity capital raise of R400 million. Shares were issued to the market at a price of R16.90 per share. Proceeds from the capital raise were used to repay debt in April 2016.


155

Vu


ort 2016


156

Vu


ort 2016


Vu


ort 2016

157

SHAREHOLDERS’ ANALYSIS

SHAREHOLDERS’ ANALYSIS

as at 31 March 2016

Shareholder spreadNumber of

shareholdings% of total

shareholdingsNumber of

shares% of issued

capital

1 – 1 000 651 11.51 341 643 0.051 001 – 10 000 3 341 59.04 14 686 071 2.2710 001 – 100 000 1 270 22.45 36 264 523 5.60100 001 – 1 000 000 294 5.20 90 170 824 13.92Over 1 000 000 102 1.80 506 204 226 78.16

Total 5 658 100.00 647 667 287 100.00

Distribution of shareholdersCollective investment schemes 265 4.68 244 575 565 37.76 Organs of state 3 0.05 103 385 972 15.96 Retirement benefit funds 253 4.47 92 179 200 14.23 Private companies 93 1.64 63 590 297 9.82 Retail shareholders 3 880 68.57 38 058 586 5.88 Custodians 52 0.92 31 096 189 4.80 Assurance companies 39 0.69 23 951 911 3.70 Trusts 742 13.11 19 006 453 2.93 Scrip lending 13 0.23 9 046 723 1.40 Foundations and charitable funds 151 2.67 8 721 972 1.35 Stockbrokers and nominees 22 0.39 6 608 246 1.02 Managed funds 28 0.49 1 774 710 0.27 Medical aid funds 21 0.37 1 673 312 0.26 Close corporations 49 0.87 1 137 990 0.18 Hedge funds 6 0.11 882 552 0.14 Public companies 2 0.04 667 877 0.10 Investment partnerships 18 0.32 497 093 0.08 Insurance companies 10 0.18 472 248 0.07 Public entities 6 0.11 340 382 0.05 Unclaimed scrip 5 0.09 9 0.00

Total 5 658 100.00 647 667 287 100.00

Shareholder typeNon-public shareholders 11 0.19 96 723 386 14.93Directors and associates 9 0.17 3 026 652 0.46Government Employees Pension Fund (holdings >10% of issued capital) 2 0.02 93 696 734 14.47Public shareholders 5 647 99.81 550 943 901 85.07

Total 5 658 100.00 647 667 287 100.00


158

Vu


ort 2016

SHAREHOLDERS’ ANALYSIS CONTINUED

SHAREHOLDERS’ DIARYfor the year ended 31 March 2016

Financial year-end 31 March 2016

Publication of abridged financial statements 24 May 2016

Financial report and notice of AGM posted by 30 June 2016

AGM 29 August 2016

Interim period-end 30 September 2016

Fund managers with a holding greater than 5% of the issued sharesNumber of

shares% of issued

capital

Public Investment Corporation 96 178 917 14.85Stanlib Asset Management 46 219 056 7.14Old Mutual Investment Group 43 991 463 6.79Investec Asset Management 33 117 166 5.11

Total 219 506 602 33.89

Beneficial shareholders with a holding greater than 5% of the issued sharesNumber of

shares% of issued

capital

Government Employees Pension Fund 93 696 734 14.47Opiconsivia Trading 302 (Pty) Ltd 51 670 033 7.98Old Mutual Group 37 826 651 5.84Stanlib Asset Management 36 447 069 5.63Total 219 640 487 33.92

Number of shareholdings

Total number of shareholdings 5 658

Total number of shares in issue 647 667 287


159

Vu


ort 2016

CORPORATE INFORMATION

Directors Anton Dirk Botha(e, h) (Chairman)Laurence Gary Rapp(a, g) (Chief executive)Michael John Potts(a) (Financial director)Hermina Christina Lopion(a, g) (Executive director: asset management)Gabaiphiwe Sedise Moseneke(a)

Stefanes Francois Booysen(c, d, i) (Executive director)Renosi Denise Mokate(e, c, i) Peter Sipho Moyanga(c, g) Hatla Ntene(g) Nigel George Payne(b, g) Hymie Mervyn Serebro(f)

(a) Executive.(b) Chairman of audit and risk committee.(c) Member of audit and risk committee.(d) Chairman of social, ethics and human resources committee.(e) Member of social, ethics and human resources committee.(f) Chairman of property and investment committee.(g) Member of property and investment committee.(h) Chairman of nominations committee.(i) Member of nominations committee.

Group secretary and registered office Johann Neethling PO Box 2234One-on-Ninth ParklandsCorner Glenhove Road and Ninth Street 2121Melrose Estate 2196

SponsorsSouth AfricaJava Capital6A Sandown Valley Crescent PO Box 2087Sandown ParklandsSandton 21212146

NAMIBIA IJG GroupFirst Floor PO Box 186Heritage Square Windhoek100 Robert Mugabe Avenue Windhoek

Listing informationVukile was listed on the JSE Limited on 24 June 2004 and on the Namibian Stock Exchange on 11 July 2007.JSE code VKENSX code VKNISIN ZAE000056370Sector Financial – retail REITs

Transfer secretariesLink Market Services South Africa (Pty) Ltd13th Floor PO Box 4844Rennie House Johannesburg19 Ameshoff Street 2000Braamfontein 2001 AuditorsGrant Thornton Johannesburg PartnershipWanderers Office Park Private Bag X552 Corlett Drive NorthlandsIllovo 2116Johannesburg2196

Principal bankersAbsa Bank Limited PO Box 73353rd Floor JohannesburgAbsa Towers East 2000160 Main Street Johannesburg2001

Investor and media relations Marketing Concepts1st Floor Wierda Court107 Johan AvenueWierda ValleySandtonJohannesburg2196Telephone +27 11 783 0700Fax +27 11 783 3702

www.vukile.co.za


160

Vu


ort 2016

www.vukile.co.za

Documents

Vukile Property Fund Limited - INTEGRATED ANNUAL REPORTproperty portfolios in South Africa and Namibia and interests in other listed property companies. Synergy Income Fund Limited,