ANNUAL REPORT 2009
Superior returns at lower than market risk. CONTENT
Page No. Definitions 1 Corporate information 2 Profile 3 Structure 4 Directorate 5 Financial highlights 6 Manager’s report 8 Property portfolio 12 Directors’ responsibility 14 Shari’ah advisory board 15 Shari’ah compliance certificate 16 Approval of annual financial statements 17 Company secretary’s certificate 17 Report of the independent auditors 18 Report of the trustee 19 Oasis Crescent Property Fund - Balance sheet 20 - Income statement 21 - Statement of changes in unitholders’ funds 22 - Cash flow statement 23 - Notes to the annual financial statements 24 Oasis Crescent Property Fund Managers Limited - Balance sheet 44 - Income statement 45 - Statement of changes in equity 46 - Cash flow statement 47 - Notes to the annual financial statements 48 Notice of unitholders’ meeting 62
CONFIDENTIAL
This document is confidential, contains privileged information and is intended solely for the use of the individualor entity to whom it is addressed. If you are not the intended recipient you may not disclose, copy or in any way publish the content hereof which is subject to copyright. If you have received this in error, please notify us immediately by return e-mail or by telephone. DEFINITIONS
“ALTx” the Alternative Exchange of the JSE which is a market for small to medium companies that are in a growth phase;
“CISCA” the Collective Investment Schemes Control Act (Act 45 of 2002);
“Crescent range” or “Shari’ah compliant” investment products offered by the Oasis Group, which are managed in accordance with the investment guidelines that have been established by the Oasis Group Shari’ah Advisory Board;
“FSB” Financial Services Board established by section 2 of the Financial Services Board Act, 1990 (Act No. 97 of 1990);
“the fund” Oasis Crescent Property Fund (JSE code OAS, ISIN ZAE000074332), a closed-end property fund created under the scheme, registered in terms of CISCA;
“independent valuer” Mills Fitchet Magnus Penny (Proprietary) Limited, a duly authorised professional valuer, registered without restriction in terms of the Property Valuers Professional Act, 2000 (Act No. 47 of 2000);
“the JSE” the JSE Limited (registration number 2005/022939/06), a company duly registered and incorporated with limited liability under the company laws of the RSA, licensed as an exchange under the Securities Services Act, 2004;
“NPI” or “non-permissible income” contaminated income that will be disclosed separately and treated in line with the guidelines of the Oasis Group Shari’ah Advisory Board;
“the Oasis Group” an independent organisation, which offers a range of savings products, including domestic and global collective investment schemes, as well as retirement and preservation schemes;
“OCPFM” Oasis Crescent Property Fund Managers Limited (registration number 2003/012266/06), a public company duly incorporated in terms of the laws of the RSA and approved by the Registrar to manage the scheme;
“the scheme” the Oasis Crescent Property Trust Scheme, a collective investment scheme in property registered in terms of CISCA;
“Scheme deed” the scheme deed made and entered into between OCPFM and the Trustee to establish a collective investment scheme in property and the terms under which it is administered, which was approved by the Registrar on 2 November 2005;
“Trustee” ABSA Real Estate Asset Management, a division of ABSA Bank Limited (registration number 1986/004794/06), a public company duly incorporated in terms of the laws of the RSA.
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 1 CORPORATE INFORMATION
Registered office of the fund Manager 20th Floor, Triangle House Oasis Crescent Property Fund Managers Limited 22 Riebeek Street Registration number 2003/012266/06 Cape Town, 8001 PO Box 1217, Cape Town, 8000 Principal office of the Manager: 20th Floor, Triangle House 22 Riebeek Street Cape Town, 8001 PO Box 1217, Cape Town, 8000
Directors and secretary of the manager Auditors Directors: PricewaterhouseCoopers Inc MS Ebrahim (Executive Chairman) Registration number 1998/012055/21 N Ebrahim Registered Auditors M Swingler No. 1 Waterhouse Place H Jeena* # (resigned 8 October 2008) Century City, 7441 Z Ismail Kara* # PO Box 2799, Cape Town, 8000 Dr Y Mahomed*#
Secretary: N Ebrahim (B.Soc.Sc. B.Proc.)
Trustee Independent property valuers ABSA Real Estate Asset Management, Mills Fitchet Magnus Penny (Proprietary) Limited a division of ABSA Bank Limited Registration number 1996/004736/07 Registration number 1986/004794/06 20th Floor, 1 Thibault Square 1st Floor, Block E, Flora Office Park Cape Town, 8001 Cnr Ontdekkers and Conrad Roads PO Box 4442, Cape Town, 8000 Florida, 1709 PO Box 1132, Johannesburg, 2000
Designated Advisor ** Transfer secretaries PSG Capital (Proprietary) Limited Computershare Investor Services 2004 (Proprietary) Limited (Registration number 2006/015817/07) Registration number 2004/003647/07 1st Floor Ground Floor Ou Kollege 70 Marshall Street 35 Kerk Street Johannesburg, 2001 Stellenbosch, 7600 PO Box 61051, Marshalltown, 2107 (PO Box 7403, Stellenbosch, 7599)
Attorneys Commercial banker Ebrahims Inc ABSA Bank Limited Registration number 19095/12638/21 Registration number 1986/004794/06 21st Floor, Triangle House 170 Main Street 22 Riebeek Street Johannesburg, 2001 Cape Town, 8000 PO Box 7757, Johannesburg, 2000 PO Box 477, Cape Town, 8000
Note: * Non-executive # Audit committee ** Ernst & Young Sponsors (Proprietary) Limited ceased to provide the designated advisor services from 23 May 2008. PSG Capital (Proprietary) Limited have been appointed as the designated advisor to the fund and OCPFM from 23 May 2008.
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 2 PROFILE
The Oasis Group is an independent organisation, owned and driven by its founding shareholders, management and staff. It endeavours to provide unrivalled financial products and services to its clients. Since inception, the Oasis Group has experienced success and received widespread acclaim for growth in assets under management and excellent investment performance, and for delivering on its mission, which is to provide SUPERIOR RETURNS AT LOWER THAN MARKET RISK.
Oasis offers a range of domestic and global collective investment schemes, as well as retirement and preser- vation schemes in the Crescent (socially responsible or Shari’ah compliant) and Oasis ranges. Oasis Crescent Property Fund provides an alternative to conventional South African property unit trusts or property loan stock companies for Shari’ah compliant investors to diversify the asset allocation of their investment portfolio.
The fund, created under the scheme, is a collective investment scheme in property registered in terms of CISCA to house the properties.
OBJECTIVES OF THE FUND
The objectives of the fund are to:
• provide sustainable income and real returns for investors
• provide an opportunity for clients to diversify their portfolios by investing in a liquid and transparent Shari’ah compliant property fund in the regulated environment of the JSE Limited.
• build a high-quality property portfolio consisting of commercial, industrial and retail properties backed by national, multi-national and government tenants
• develop the existing properties to their full potential
3 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 STRUCTURE
The fund is a property fund created under the scheme in terms of the CISCA to house the properties. The scheme was registered by the Registrar on 2 November 2005 and is managed by Oasis Crescent Property Fund Managers Limited. The fund structure is illustrated below:
REGULATORY MANAGEMENT BODIES
REGISTRAR FSB
JSE THE FUND OCPFM
TRUSTEE
ABSA Real Estate Asset Management
AUDITORS Pricewaterhouse Investment Property Coopers Inc Manager Administration
SHARI’AH ADVISORY BOARD
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 4 DIRECTORATE
PROFILES OF THE OCPFM DIRECTORS Zaheeda Ismail Kara, (43) Mohamed Shaheen Ebrahim (54) Designation and function: Non-executive Director Designation and function: Executive Chairman Zaheeda Ismail Kara has accumulated 20 years of Shaheen Ebrahim has successfully managed property experience since she joined Old Mutual several enterprises, acquiring over thirty years Properties as a Property Portfolio Manager in 1988. experience in commerce. He has been involved She was appointed as Director – Properties for the with the Oasis Group since the inception thereof Public Investment Commissioners in 2001 and sub- in 1997 and is Chief Operations Officer of the Oasis sequently joined Telkom SA Limited where she is Group. currently Executive Manager of Strategic Property Asset Management. Nazeem Ebrahim, B.Soc.Sc., B.Proc. (51) Designation and function: Executive Director Yousuf Mahomed, MD, FACS, FACC (63) Nazeem Ebrahim was educated at the University Designation and function: Non-executive Director of Cape Town and received B.Soc.Sc. and B.Proc. Dr. Mahomed has excelled in the medical profession degrees. He serves as an executive director of the and has proven himself to be an experienced Oasis Group. His professional experience includes businessman and at present is a member of the over twenty-five years of business and legal Indianapolis Chamber of Commerce and the practice. Business Diversity Council. He has built up a vast knowledge in the property sector, being involved Michael Swingler, CA(SA), CFA (38) in five successful real estate businesses based Designation and function: Executive Finance Director in Indianapolis. Besides Oasis Crescent Property Michael Swingler is a chartered Accountant and Fund Managers Limited, he is also a non-exec- Chartered Financial Analyst. He has been with utive director on the board of Oasis Crescent the Oasis Group since its inception and his profes- Management Company Limited and an associated sional experience includes all aspects of property company in Dubai. research and analysis. Michael is also an executive directors of the Oasis Group.
Haroon Jeena, B.Com. B.Acc. CA(SA), H.Dip Tax (45) (resigned 8 October 2008) Designation and function: Non-executive Director Haroon Jeena was educated at the University of Witwatersrand where he received Bachelor of Commerce and Bachelor of Accountancy degrees. Haroon subsequently received a Higher Diploma in Tax Law from Rand Afrikaans University. He has extensive experience in the Property Industry both as financial manager and alternate director to various listed property companies under the ad- ministration of Anglo American Property Services (Ampros) with whom he had spent 8 years and recently with Airports Company of South Africa where he is Group Manager: Property with the re- sponsibility for asset management and growth of the property portfolio.
5 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 FINANCIAL HIGHLIGHTS
2009 2008 Distribution per unit including non-permissible 107.0 101.6 income (cents) Non-permissible rental per unit (cents) (2.5) (4.4)
Non-permissible interest per unit (cents) (5.0) (6.6)
Distribution per unit excluding non-permissible 99.5 90.6 income (cents)
Property portfolio valuation (Rm) 353.3 297.1
Investments portfolio valuation (Rm) 59.2 45.0
Cash and cash equivalents (Rm) 21.7 12.6
Net asset value per unit (cents) 1235 1254
Listed market price at year end (cents) 1210 1200
Comment
Since listing the focus of OCPFM has been primarily on investing to improve:
• The quality of properties in the portfolio • The quality of the tenant mix • The quality of the operating environment • Investment in listed global property fund for scalability, geographical and currency diversification
Distribution per unit including non-permissible income increased by 5.3% from 101.60 cents to 107 cents per unit, in line with average rental escalations. Distribution per unit excluding non-permissible income increased by 9.9% from 90.59 cents to 99.53 cents.
During the current reporting period the fund issued 6.93 million units (5 million for cash and 1.93 million units in lieu of distribution). The July 2008 issue was done at 1200 cents per unit and the November 2008 issue was done at 1120 cents per unit. The funds raised are being invested in suitable investments and utilised for ongoing capital expenditure.
The industrial portfolio is fully let. The Moorsom Avenue and Sacks Circle properties were successfully let at rentals that are higher than the current rentals by 60% and 51% respectively.
The fund is in a strong position, with 13% of the capital invested offshore. It is in a net cash position of R22 million, ideally positioned to take advantage of any opportunities.
As a result of this the portfolio is exceptionally well positioned to benefit from the strong fundamentals in the property market in terms of net asset value and income generation.
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 6 FINANCIAL HIGHLIGHTS
At The Ridge@Shallcross the focus has been to develop the centre to meet the high-end standard in the market. This included significant upgrading of localised security systems such as remote cameras and patrolled security infrastructures. The centre management has also seen to all the repair and maintenance of the centre to maintain a high quality centre. We are now working on an optimum tenant mix that is appropriate for this high quality centre, especially the consolidation of sizeable areas for major tenants, and this progress is reflected in the growth in turnover and foot fall. The centre continues to improve from a demand perspective as the right tenant mix becomes apparent. Management is allowing for certain lower profiled tenancies to expire without renewals to provide opportunity for better branded occupants. The total turnover of tenants at The Ridge increased from R176.6 million during the year 2008 to R206.9 million in 2008. This shows a turnover growth of 17.2% increase on a year on year basis, which significantly outperformed the average turnover growth for South African shopping centres over this period.
In the industrial component of the portfolio current rentals are significantly below market rentals and this will come through as leases are renewed.
The successful introduction of offshore investment provides scalability, geographical and currency diversifi- cation to the portfolio which significantly reduces the risk of the portfolio. A temporary decline in the capital value of the offshore investments has been driven by the current negative market cycle and sentiment and not any fundamental change in the invested fund or the underlying companies or any measurable decline in the cash flows generated by the underlying companies which is primarily rental of a contractual nature. In addition, the global economic downturn and funding constraints have resulted in new development coming to a standstill which will result in very low levels of new supply over the medium term which will support existing rental levels. With companies globally focusing on cost savings there is also a high level of retention of existing tenants being reported by property companies due to the reluctance of companies to incur additional costs to relocate to new premises.
7 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 MANAGER’S REPORT
Overview of performance
The fund has continued to deliver a competitive return relative to inflation and the average for the property unit trust sector.
2009 2008 Oasis Crescent Property Fund actual return 8.9% 7.5% Inflation 11.2% 7.5% Property Unit Trust sector 1.1% (8.1%)
Notes: 1. Performance based on total return (capital and distribution excluding non-permissible income). 2. The return was realised at low risk due to no debt.
Property portfolio
Sectoral Profile based on net rental 2009 2008 Retail 31% 37% Office 12% 19% Industrial 38% 35% Listed properties and other investments 19% 9% 100% 100%
Tenant profile %
A – Large nationals, large listeds, large franchisees, multi-nationals and government 74 B – Nationals, listeds, franchisees and medium to large professional firms 25 C – Other 1
100
% by rentable % by Lease expiry profile area revenue March 2010 71 March 2011 16 42 March 2012 21 16 March 2013 76 March 2014 onwards 49 35 100 100
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 8 MANAGER’S REPORT
The overall vacancy factor was 2.36% as at 31 March 2009 (2008: 1%) and is set out in the table below:
Vacancies based on rentable area 2009 2008 Retail 13.4% 5.9% Office - - Industrial - - Total at portfolio level 2.36% 1%
At The Ridge@Shallcross 1,773m² (2008: 891m²) was vacant due to ongoing efforts to improve the tenant mix.
Avg rental per m² Avg rental Avg rental per m² Avg rental 2009 escalation 2008 escalation (R) 2009 (R) 2008
Retail 84 7.0% 82 7.0% Office 69 8.5% 64 8.5% Industrial 20 9.0% 16 8.0%
Outlook Strong demand, combined with supply constraints, increasing replacement and land cost provides a positive outlook for rental growth. Going forward, the outlook for the fund remains positive.
Service charge The service charge is equal to 0.5% per annum of the fund’s market capitalisation and borrowing facilities based on the average daily closing prices of the units. The amount paid to OCPFM was R1,7 million (2008: R1,6 million).
Property management Property management is outsourced to OCPFM and external service providers. The amount paid to OCPFM was R799,177 (2008: R685,778).
Units in issue At year-end the number of units in issue was 33,981,445 (2008: 27,055,000).
Shareholding in OCPFM OCPFM is 100% owned by Oasis Group Holdings (Pty) Ltd.
9 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 MANAGER’S REPORT
Unitholders
Unitholders holding more than 5% of issued units as at 31 March 2009:
Name Number of units % holding Crescent Balanced Progressive 8,607,521 25.33 Fund of Funds Crescent Preservation Pension Fund 3,644,746 10.73 Crescent Retirement Annuity Fund 3,325,780 9.79 Eden Court Trust 3,458,941 10.18
Unitholders spread as at 31 March 2009:
Number of unitholders Holding in units % of total Non-Public 4 3,513,206 10.34 Public 268 30,468,239 89.66 Total 272 33,981,445 100.0%
Number of unitholders Holding in units % of total Directors 2 2,327,666 66.25% Associates of directors 2 1,185,540 33.75% Total 4 3,513,206 100.0%
Directors’ interests
Beneficial Director Direct Indirect Total
MS Ebrahim 10,853 1,152,980 1,163,833 N Ebrahim 10,853 1,152,980 1,163,833 Total 21,706 2,305,960 2,327,666
The indirect interests of the OCPFM directors are held by Eden Court Trust.
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 10 MANAGER’S REPORT
Corporate governance The OCPFM directors endorse the Code of Corporate Practices and Conduct as set out in the King II Report on Corporate Governance. By supporting the code, the OCPFM directors have recognised the need to conduct the affairs of the fund with integrity and in accordance with generally accepted corporate practices.
The trust is not a legal entity and OCPFM manages its affairs in terms of CISCA, therefore several of the require- ments of the code are not directly applicable but OCPFM has adopted the principles of the code including fairness, accountability, responsibility and transparency.
The following departures from the Code should be noted based on the specific nature and size of OCPFM:
• OCPFM has no employees and has not formed a remuneration committee • The Chairperson also assumes an executive role and carries strategic and operational responsibilities.
Board of directors The Board of OCPFM consists of three non-executive directors and three executive directors.
Name Attendance MS Ebrahim 3/3 N Ebrahim 3/3 M Swingler 3/3 H Jeena ( resigned 8 October 2008) 1/3 Z Ismail Kara 3/3 Dr Y Mahomed 3/3
Audit committee The audit committee consists of the non-executive directors and the designated advisor.
Name Attendance H Jeena ( resigned 8 October 2008) 1/3 Z Ismail Kara 3/3 Dr Y Mahomed 3/3 Designated advisor 3/3
11 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 PROPERTY PORTFOLIO
Market Market Cost value Cost value Property Lettable Acquisition 2009 2009 2008 2008 Region Sector name Location area (m²) date R’000 R’000 R’000 R’000
Western Industrial Sacks Circle 34 Sacks 20,088 Nov 2005 R23,001 R43,500 R22,639 R36,000 Cape Bellville Circle, Bellville Western Industrial Moorsom 13-19 20,842 Nov 2005 R23,461 R52,700 R23,419 R41,100 Cape Avenue Moorsom Epping Avenue, Epping Western Industrial Nourse 27 Nourse 9,698 Nov 2006 R18,642 R20,900 R18,432 R19,850 Cape Avenue Avenue Epping Epping Western Industrial Waltex Drukkery 14,290 Nov 2005 R17,412 R20,000 R17,412 R18,000 Cape Goodwood Street, Elsies River Western Office / Protea 98 St 7,261 Nov 2005 R44,144 R67,000 R44,144 R64,000 Cape Retail Assurance Georges Cape Town Mall, Cape Town Western Retail Mica Parklands 2,109 Nov 2005 R11,631 R14,200 R11,606 R13,700 Cape Parklands Main Road, Milnerton Kwa-Zulu Retail The Ridge@ 90 15,074 Jul 2006 R125,421 R135,001 R103,851 R104,450 Natal Shallcross Shallcross Road, Durban
Total 89,362 R263,712 R353,301 R241,503 R297,100
Property criteria Consistent with the tried and tested investment philosophy of the Oasis Group, the focus on quality, value and capital protection is apparent when looking at the portfolio in more detail. The portfolio has a high exposure to quality national, multi-national and government tenants with a preference for leases with a long duration. This tenant quality and certainty of cash flows are the key drivers of capital protection and delivering sustainable income.
At the time of the original purchase of the Ridge@Shallcross shopping centre, it was intended that the non- permissible income component of the property was to be sold by sectional title in order to facilitate the transaction, in order to eliminate the exposure to non-permissible business activities. As a result of which the Manager entered into an agreement of sale with Eden Court Property Fund (Pty) Limited whereby, inter alia, the Fund was to acquire:
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 12 PROPERTY PORTFOLIO
Shop 4 (Measuring 102 m²); Shop 30 (Measuring 500m²); Shop 34 (Measuring 550 m²); and Shop 57 (Measuring 451 m²), being Portion 219 (of 6) and the remainder of Erf 391 Buffelsbosch No. 965, known as the Ridge@Shallcross and situated at 90 Shallcross Road Durban, Kwa- Zulu Natal, South Africa, for a purchase consideration of R15 million (“Agreement of Sale”).
Due to certain administrative reasons the transfer of the aforementioned portions was never transferred to Eden Court Property Fund (Pty) Limited. Now that the Fund has matured it is no longer necessary to transfer the relevant non-permissible income component of the property and same will be retained by the Fund and transfer will not proceed. Therefore the Manager has entered into a Deed of Cancellation in terms of which the Fund has terminated the aforementioned Agreement of Sale and refunded the purchase consideration received, at market related value on 30 September 2008. Based on an Independent External Valuer’s report prepared by Mills Fitchet Magnus Penny (Pty) Limited and dated 1 October 2008, the market related value as of 30 September 2008 is R21.4 million. The independent external valuer is a registered valuer in terms of Property Valuers Act No. 47 of 2000.
13 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 DIRECTORS’ RESPONSIBILITY
The directors of OCPFM are responsible for the The directors have responsibility for ensuring that preparation, integrity, and fair presentation of the accounting records are kept. The accounting financial statements of the fund and the company. records should disclose with reasonable accuracy The financial statements have been prepared in the financial position of the fund and the company accordance with International Financial Reporting to enable the directors to ensure that the financial Standards (“IFRS”) and the requirements of the statements comply with the relevant legislation. Collective Investment Schemes Control Act of 2002, The fund and the company operated in a well-es- and include amounts based on judgements and tablished control environment, which incorporates estimates made by management. risk management and internal control procedures, which are designed to provide reasonable, but not The directors consider that in preparing the financial absolute, assurance that assets are safeguarded statements they have used the most appropriate and the risks facing the business, are being accounting policies, consistently applied and controlled. supported by reasonable and prudent judgements and estimates. The directors are satisfied that the The going-concern basis has been adopted in information contained in the financial statements preparing the financial statements. The directors fairly presents the results of operations for the have no reason to believe that the fund and period and the financial position of the fund and the company will not be going concerns in the of the company at year-end. The directors also foreseeable future, based on forecasts and available prepared the other information in the report and are cash resources. These financial statements support responsible for both its accuracy and its consistency the viability of the fund and the company. with the financial statements. There is no directors report as OCPFM is a wholly owned subsidiary of a company incorporated in South Africa.
The fund’s external auditors, PricewaterhouseCoo- pers Inc., audited the financial statements, and their report is presented on page 18 to 19.
Mohamed Shaheen Ebrahim Michael Swingler Executive Chairman Executive Finance Director
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 14 SHARI’AH ADVISORY BOARD
Principles Shaykh Yusuf DeLorenzo serves as an advisor to the In addition to its responsibilities in terms of compliance Dow Jones Islamic Market Index and is a leading with all conventional regulation that apply to the Islamic scholar in the United States. He has translated fund, the manager has a duty towards its socially over twenty books from Arabic, Persian and Urdu for responsible investors to provide information to and publication in English. Shaykh DeLorenzo compiled comply with the Oasis Group Shari’ah Advisory the first English translation of legal rulings issued by Board. This process includes the following: Shari’ah supervisory boards on the operations of Islamic banks. Since 1989 he has served as secretary - initial property selection based on tenant of the Fiqh Council of North America. He is also a activity and identifying core business Shari’ah consultant to several Islamic financial insti- activities that are not acceptable. tutions and was an advisor on Islamic education to - removing non-permissible income from the government of Pakistan. the income distribution which will consist mainly of interest earned on cash held for acquisition and distribution. Shaykh Nizam Yaquby received an MSc in Finance from McGill University (Canada) and has studied Although the manager has and will continue to Shari’ah law in Morocco, India and Saudi Arabia. endeavour to avoid or limit investments that will He is an active scholar in Islamic finance and has produce non-permissible income it remains an been the Professor of Tafsir, Hadith and Fiqh in inevitable part of investing in conventional markets. Bahrain since 1976. Shaykh Yaquby is a member of The non-permissible income component of the distri- the Shari’ah Board of the Accounting and Auditing bution will be separately disclosed and dispense to Organisation for Islamic Financial Institutions and registered charitable organisations with a focus on also works as an independent Shari’ah consultant in the areas of healthcare, education and disaster relief. Bahrain. He currently sits on the Islamic supervisory boards of the Dow Jones Islamic Index and several Oasis Group Shari’ah Advisory board Islamic financial institutions, which include HSBC In accordance with the provisions of Shari’ah Law Amanah Finance; Abu Dhabi Islamic Bank; Bahrain for investing, the Oasis Group Shari’ah Advisory Islamic Bank; Citi Islamic Investment Bank and others. Board is appointed to provide advice and ensure compliance with the ethical mandate.
Dr Daud Bakar is a respected academic who was awarded a doctorate in philosophy from the University of St. Andrews in Scotland and has presented numerous papers and publications regarding Islamic banking and investment. Dr Bakar is a member of the Shari’ah Board of the Accounting and Auditing Organisation for Islamic Financial Institutions, the Shari’ah Advisory Council of the Securities Commission of Malaysia and Bank Negara Malaysia (Central Bank of Malaysia) and the Dow Jones Islamic Market Index. In addition he is a Shari’ah consultant to numerous respected investment committees throughout the world.
15 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 SHARI’AH COMPLIANCE CERTIFICATE
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OASIS CRESCENT PROPERTY FUND | Annual Report 2009 16 CRESCENT FUND TRUST
Non-permissible income (of the fund is dispensed to the Crescent Fund Trust which is a registered non-profit organisation with a focus on the areas of healthcare, education and disaster relief. The NPO number of the trust is 930002681 and SAB&T Inc, Chartered Accountants are the Auditors of the Trust.
APPROVAL OF ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
The annual financial statements of the fund and OCPFM for the year ended 31 March 2009 as set out on pages 20 to 61 were approved by the board of directors of OCPFM on 11 May 2009 and are signed on its behalf by:
Mohamed Shaheen Ebrahim Michael Swingler Executive Chairman Executive Finance Director
COMPANY SECRETARY’S CERTIFICATE for the year ended 31 March 2009
I hereby certify that for the year ended 31 March 2009, the company has lodged with the Registrar of Companies all such returns as are required of a public company in terms of Section 268G(d) of the Companies Act, 1973, as amended, and all such returns are true, correct and up to date.
Nazeem Ebrahim Company Secretary
17 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 REPORT OF THE INDEPENDENT AUDITORS for the year ended 31 March 2009
INDEPENDENT AUDITOR’S REPORT TO THE SHARE- An audit involves performing procedures to obtain HOLDERS OF OASIS CRESCENT PROPERTY FUND audit evidence about the amounts and disclosures MANAGERS LIMITED, AND TO THE UNITHOLDERS OF in the financial statements. The procedures selected THE OASIS CRESCENT PROPERTY FUND depend on the auditor’s judgement, including the assessment of the risks of material misstatement of We have audited the annual financial statements the financial statements, whether due to fraud or of Oasis Crescent Property Fund Managers Limited error. In making those risk assessments, the auditor (“the Company”) and the Oasis Crescent Property considers internal control relevant to the entity’s Fund (“the Fund”), which comprise the directors’ and preparation and fair presentation of the financial trustee’s reports, the balance sheets as at 31 March statements in order to design audit procedures that 2009, the income statements, the statements of are appropriate in the circumstances, but not for changes in equity and the cash flow statements for the purpose of expressing an opinion on the effec- the year then ended, and a summary of significant tiveness of the entity’s internal control. An audit accounting policies and other explanatory notes, also includes evaluating the appropriateness of as set out on pages 20 to 61. accounting policies used and the reasonableness of accounting estimates made by management, Directors’ Responsibility for the Financial Statements as well as evaluating the overall presentation of the The Company’s directors are responsible for the financial statements. preparation and fair presentation of these financial statements in accordance with International We believe that the audit evidence we have Financial Reporting Standards and in the manner obtained is sufficient and appropriate to provide a required by the Companies Act of South Africa and basis for our audit opinion. the Collective Investment Schemes Control Act, 2002. This responsibility includes: designing, imple- Opinion menting and maintaining internal control relevant In our opinion, the financial statements present to the preparation and fair presentation of financial fairly, in all material respects, the financial position statements that are free from material misstate- of Oasis Crescent Property Fund Managers Limited ment, whether due to fraud or error; selecting and and Oasis Crescent Property Fund at 31 March 2009, applying appropriate accounting policies; and and their financial performance and their cash making accounting estimates that are reasonable flows for the year then ended in accordance with in the circumstances. International Financial Reporting Standards and in the manner required by the Companies Act of Auditor’s Responsibility South Africa and the Collective Investment Scheme Our responsibility is to express an opinion on these Control Act, 2002. financial statements based on our audit. We conducted our audit in accordance with Inter- national Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
PricewaterhouseCoopers Inc Peet Burger Registered Auditor Cape Town Date: 12 May 2009
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 18 REPORT OF THE TRUSTEE for the year ended 31 March 2009
In terms of Section 70(1)(f) of the Collective Investments Schemes Control Act of 2002
To the unitholders of Oasis Crescent Property Fund
During the period as set out above during which the Collective Investment Schemes Control Act of 2002 has been in effect the Trust has been administered in accordance with: i) the limitations imposed on the investment and borrowing powers of the Manager by the Act; and ii) the provisions of the Act and the deed.
ABSA Bank Limited Trustee Johannesburg 11 May 2009
19 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 BALANCE SHEET as at 31 March 2009
2009 2008 Notes R '000 R '000 ASSETS Non-current assets 412,511 342,087
Investment properties 2 345,436 291,263 Property, plant and equipment 3 53 - Straight line lease accrual 2 7,865 5,837 Available-for-sale financial assets 4 59,157 44,987
Current assets 28,469 15,635
Trade receivables 5 4,063 2,337 Other receivables 6 2,733 536 Trade receivables from related parties 22.3 - 123 Cash and cash equivalents 7 21,673 12,639
Total assets 440,980 357,722
UNITHOLDERS’ FUNDS AND LIABILITIES
Unitholders’ funds 419,817 339,298
Capital of the fund 8 360,931 281,629 Non-distributable reserve 2.1 89,589 55,597 Available -for-sale reserve (30,703) 2,072
Current liabilities 21,163 18,424
Trade payables 9 2,607 2,571 Provisions 10 359 257 Other payables 11 791 1,122 Trade payables to related parties 22.3 239 263 Unitholders for distribution 17,113 12,574 Non-permissible income for dispensation 54 1,637
Total unitholders' funds and liabilities 440,980 357,722
NAV (per unit) 1 ,235 cents 1, 254 cents
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 20 INCOME STATEMENT for the year ended 31 March 2009
2009 2008 Notes R '000 R '000
Revenue 50,940 42,157
Rental and related income 43,140 38,073 Income from investments 12 5,772 1,285 Straight-lining of lease income 2 2,028 2,799
Expenses 13 17,015 15,093
Property expenses 14,559 12,702 Service charges 1,749 1,571 Other operating expenses 707 820
Net income from operations 33,925 27,064
Realised gain on sale of available for sale 2,897 - investments Fair value adjustment to investment properties excluding straight-lining of lease income 31,964 21,359
Fair value adjustment to investment properties 33,992 24,158 Straight-lining of lease income (2,028) (2,799)
Operating profit 68,786 48,423
Net finance income 1,678 1,669
Interest received Interest paid 1,692 1,681 (14) (12) Net profit for the year 70,464 50,092 Basic earnings per unit including non-permissible 15 224.6 196.2 income (cents) Distribution per unit including non-permissible income (cents) 15 107.0 101.6 Distribution per unit excluding non-permissible income (cents) 15 99.5 90.6
21 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 STATEMENT OF CHANGES IN UNITHOLDERS’ FUNDS for the year ended 31 March 2009
Capital Non- Available- Retained Total of the fund distributable for-sale income reserve reserve R ’000 R ’000 R ’000 R ’000 R ’000
Balance at 01 April 2007 233,711 31,439 - - 265,150 Issue of units 49,980 - - - 49,980 Transaction costs for issue of new units (34) - - - (34) Fair value gain on available-for-sale - - 2,072 - 2,072 financial assets Distribution received in advance (2,028) - - 1,386 (642) Transfer to non-distributable reserve - 24,158 - (24,158) - Net profit for the year ended 31 - - - 50,092 50,092 March 2008 Distribution to unitholders - - - (24,511) (24,511) Dispensation of non-permissible - - - (2,809) (2,809) income
Balance at 31 March 2008 281,629 55,597 2,072 - 339,298 Issue of units in cash 60,000 - - - 60,000 Issue of units in lieu of distribution 22,194 - - - 22,194 Transaction costs for issue of new units (277) (277) Fair value loss on available-for-sale - - (32,775) - (32,775) financial assets Transfer of realised gain on avail- - - (2,897) - (2,897) able-for-sale financial assets to income statement Distribution received in advance (2,615) - - 2,615 - Transfer to non-distributable reserve - 33,992 - (33,992) - Transfer to available-for-sale reserve - 2,897 (2,897) - Net profit for the year ended 31 - - - 70,464 70,464 March 2009 Distribution to unitholders - - - (33,835) (33,835) Dispensation of non-permissible income - - - (2,355) (2,355) Balance at 31 March 2009 360,931 89,589 (30,703) - 419,817
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 22 CASH FLOW STATEMENT for the year ended 31 March 2009
2009 2008 Notes R '000 R '000 CASH FLOWS FROM OPERATING ACTIVITIES Net profit for the year 70,464 50,092 Adjusted for: Interest received (1,692) (1,681) Interest paid 14 12 Depreciation 5 - Bad debt provision 21.1 810 132 Straight-line lease accrual 2 (2,028) (2,799) Fair value adjustment to investment properties excluding straight-lining of lease income 2 (31,964) (21,359)
35,609 24,397 (Increase)/decrease in current assets Trade receivables (2,536) (36) Other receivables (2,197) (212) Trade receivables from related parties 123 (60)
Increase/(decrease) in current liabilities Trade payables 36 171 Provisions 102 152 Other payables (331) (320) Trade payables to related parties (24) 72
Cash generated from operations 30,782 24,164 Interest paid (14) (12) Interest received 1,692 1,681 Unitholders for distribution 17 (7,101) (23,478) Non-permissible income dispensed 17 (3,939) (2,243)
Net cash inflow from operating activities 21,420 112 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of available-for-sale financial assets (49,842) (42,915) Acquisition of property, plant and equipment (58) - Acquisition of investment properties (22,209) (8,752) Net cash flow from investing activities (72,109) (51,667) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of units 60,000 49,980 Transaction cost on issue of new units (277) (34)
Net cash inflow from financing activities 59,723 49,946 NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS 9,034 (1,609) CASH AND CASH EQUIVALENTS At beginning of the year 12,639 14,248 At end of the year 7 21,673 12,639
23 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
1. Accounting policies The following standards, amendments and inter- pretations to existing standards have been issued The principal accounting policies applied in the but not yet effective and relevant to the fund’s preparation of these financial statements are set operations: out below. • IAS 23 (Amendment), ‘Borrowing costs’ (Effective 1.1 Basis of accounting 1 January 2009),
The financial statements of Oasis Crescent Property • IAS 1, ‘Presentation of Financial Statements – Fund have been prepared in accordance with In- Revised’ (Effective 1 January 2009), ternational Financial Reporting Standards (IFRS) and the requirements of the Collective Investment • IAS 27, ‘ (Revised) Consolidated financial Schemes Control Act of 2002. statements and accounting for investments in subsidiaries’ (Effective 1 July 2009), The financial statements are prepared on the historical cost basis as modified by the revaluation • IFRS 3 (AC 140), (Revised) ‘Business Combinations’ of investment properties and the revaluation of (Effective 1 July 2009), available-for-sale financial assets. • Amendment to IFRS 2, ‘Share based payment: (a) Standards, amendments and interpretations Vesting conditions and cancellations’ (Effective effective in 2009 but not relevant to the fund’s 1 January 2009), operations: • Amendment to IAS 32 and IAS1 , ‘Amendments The following standards, amendments and inter- to IAS 32 Financial Instruments: Presentation - pretations to published standards are mandatory Puttable Financial Instruments and Obligations for accounting periods beginning on or after 1 arising on Liquidation’ (Effective 1 January 2009), April 2008 but they are not relevant to the fund’s operations: • Amendments to IFRS 1 and IAS 27, ‘Consolidated and Separate Financial Statements: Cost of an • Amendments to IAS 39 - Financial Instruments: Investment in a Subsidiary, Jointly Controlled Recognition and Measurement and Entity or Associate’ (Effective 1 January 2009), IFRS 7 Financial Instruments: Disclosures - Reclassification of Financial Assets • IFRIC 13, ‘Customer loyalty programmes’ (Effective 1 July 2008) (Effective 1 July 2008),
• IFRIC 12, ‘Service concession arrangements’ • IFRIC 15, ‘Agreements for the construction of (Effective 1 January 2008), real estate’ (Effective 1 January 2009),
• IFRIC 14, ‘IAS 19 – The limit on a defined • IFRIC 16, ‘Hedges of a Net Investment in a benefit asset, minimum funding require Foreign Operation’ (Effective 1 October 2008). ments and their interaction’ (Effective 1 January 2008)
(b) Standards, amendments and interpretations to existing standards issued that are not yet effective and not relevant to the fund’s operations:
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 24 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
1.2 Tangible assets
Investment properties
Investment properties are held to earn rental Depreciation is calculated using the straight line income and for capital appreciation and are initially method to allocate their cost to their residual values recorded at cost, including the transaction cost on over their estimated useful lives as follows: acquisition. Additional expenditure on investment - Office Equipments : 5 years properties is capitalised when it is probable that future economic benefits will flow to the fund. All The asset’s residual values and useful lives are other subsequent expenditure on the properties reviewed, and adjusted if appropriate, at each is expensed in the period in which it is incurred. balance sheet date. Investment properties are not occupied by the fund. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s Investment properties are subsequently measured carrying amount is greater than its estimated at fair value, representing open market value, as recoverable amount. determined by registered external valuers as at the financial year end. Any surplus or deficit is included Gains and losses on disposals are determined by in net income. As required by the trust deed, comparing proceeds with carrying amounts. These surpluses are transferred from retained income to are included in the income statement. a non-distributable reserve, which is not available for distribution. Likewise, deficits are transferred from retained income and set off against existing 1.3 Revenue and expense recognition non-distributable reserves to the extent that such reserves are available for the particular investment Revenue comprises gross rental and related property. On the disposal of an investment property income excluding Value Added Tax. Where a lease any realised accumulated surplus included in the has a fixed escalation clause the rental income is non-distributable reserve is transferred to a capital recognised on a straight line basis over the period of reserve, which is not available for distribution. the lease. Related income from lessees is recognised as it falls due for payment. Property, plant and equipment Interest income is recognised using the effective Property, plant and equipment is stated at historical interest rate method. cost less depreciation. Historical cost includes expenditure that is directly attributable to the Dividend income is recognised when the right to acquisition of the items. receive payment is established.
Subsequent costs are included in the asset’s Management fees payable to Oasis Crescent carrying amount or recognised as a separate asset, Property Fund Managers Limited represent 0.5% of as appropriate, only when it is probable that future the enterprise value of the fund which consists of economic benefits associated with the item will the total market capitalisation and any long term flow to the fund and the cost of the item can be borrowings of the fund. The management fee is measured reliably. All other repairs and maintenance calculated and payable monthly based on the are charged to the income statement during the average daily closing price of the fund as recorded financial period in which they are incurred. by the JSE Limited and the average daily extent of any long term borrowings. Management fees are recognised monthly as and when the services are performed.
25 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 1.4 Financial instruments
The fund classifies its financial assets in the following Dividends on available-for-sale equity instruments categories: loans and receivables and available- are recognised in the income statement as part of for-sale financial assets. The classification depends income from investments when the fund’s right to on the purpose for which the financial assets were receive payments is established. acquired. Management determines the classifica- tion of its financial assets at initial recognition. The fair values of quoted investments are based on current bid prices. If the market for a financial asset Loans and receivables is not active (and for unlisted securities), the fund establishes fair value by using valuation techniques. Loans and receivables are non-derivative financial These include the use of recent arm’s length trans- assets with fixed or determinable payments that are actions, reference to other instruments that are sub- not quoted in an active market. They are included stantially the same and discounted cash flow analysis. in current assets, except for maturities greater than 12 months after the balance sheet date. These are The fund assesses at each balance sheet date classified as non-current assets. The fund’s loans and whether there is objective evidence that a financial receivables comprise “trade receivables”, “other asset or a group of financial assets is impaired. In receivables’’, ‘‘trade receivables from related the case of equity securities classified as available- parties’’ and “cash and cash equivalents” in the for-sale, a significant or prolonged decline in the balance sheet (note 5, 6, 7 and 22). fair value of the security below its cost is considered as an indicator that the securities are impaired. Available-for-sale financial assets If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as Available-for-sale financial assets are non-deriva- the difference between the acquisition cost and tives that are either designated in this category or the current fair value, less any impairment loss on not classified in any of the other categories. They are that financial asset previously recognised in profit or included in non-current assets unless management loss – is removed from equity and recognised in the intends to dispose of the investment within 12 months income statement. Impairment losses recognised in of the balance sheet date. the income statement on equity instruments are not reversed through the income statement. Impairment Regular purchases and sales of financial assets are testing of trade receivables is described in note 1.5 recognised on the trade-date – the date on which the fund commits to purchase or sell the asset. Financial assets and liabilities are set-off and the Investments are initially recognised at fair value plus net balance is reported in the balance sheet where transaction costs for all financial assets not carried at there is a legally enforceable right to set off and the fair value through profit or loss. Financial assets are fund intends to settle on a net basis or to realise the derecognised when the rights to receive cash flows asset and settle the liability simultaneously. from the investments have expired or have been transferred and the fund has transferred substan- tially all risks and rewards of ownership. Available- for-sale financial assets are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as ‘gains and losses from investment securities’.
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 26 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
1.5 Trade receivables 1.9 Deposits
Trade receivables are recognised initially at fair Deposits represent amounts received from the value and subsequently measured at amortised cost tenants as a security against any unpaid rentals and using the effective interest method, less provision are classified as trade payables. Initially the liability for impairment. A provision for impairment of trade is measured at its fair value plus transaction costs. receivables is established when there is objective Subsequent to initial measurement, the liability is evidence that the fund will not be able to collect measured at amortised cost using the effective all amounts due according to the original terms of interest method. the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter 1.10 Provisions bankruptcy or financial reorganisation, and default or delinquency in payments (more than 60 days A provision is recognised when there is a present overdue) are considered indicators that the trade legal or constructive obligation as a result of past receivable is impaired. The amount of the provision is events, it is probable that an outflow of economic the difference between the asset’s carrying amount resources will be required to settle the obligation and and the present value of estimated future cash a reliable estimate of the amount of the obligation flows, discounted at the original effective interest can be made. rate net of any deposit. The carrying amount of the asset is reduced through the use of an allowance 1.11 Taxation account, and the amount of the loss is recognised in the income statement within ‘‘property expenses”. No income taxation is accounted for in the fund as When a trade receivable is uncollectible, it is all income is distributed to unitholders and is taxable written off against the allowance account for trade in their hands. Likewise, no Capital Gains Tax is receivables. Subsequent recoveries of amounts accounted for in the fund as these gains will vest previously written off are credited against “property with the participatory interest holders on disposal of expenses’’. their interests.
1.6 Cash and cash equivalents 1.12 Deferred taxation
Cash and cash equivalents comprise cash on The fund is not liable for capital gains on the sale of hand, deposits held on call with banks and other directly held investment properties and accordingly short-term highly liquid investments with original no deferred taxation is provided on the revaluation maturities of three months or less. of the properties.
1.7 Capital of the fund 1.13 Segment reporting
Capital of the fund consists of unitholders’ capital A business segment is a group of assets and net of any directly attributable transaction cost on operations engaged in providing services that are issue of units, and is classified as equity. subject to risks and returns that are different from those of other business segments. A geographical 1.8 Trade payables segment is engaged in providing services within a particular economic environment that are subject Trade payables are recognised initially at fair value to risks and returns that are different from those of and subsequently measured at amortised cost using segments operating in other economic environments. the effective interest rate method. The fund operates in the following primary business segments:
27 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
Office–comprising office buildings and office parkings 1.15 Use of estimates, assumptions and judgements Industrial – industrial buildings such as warehouses and factories The preparation of the financial statements ne- Retail – comprising retail outlets cessitates the use of estimates, assumptions and Investments – comprising available-for-sale investments judgements. The estimates and assumptions affect and cash and bank balances the reported amounts of assets, liabilities and Corporate – comprising items not attributable to contingent liabilities at the balance sheet date as the other segments well as affecting the reported income and expenses for the period. Although estimates are based on The secondary segmentation is the geographical management’s best knowledge and judgement location of properties. The fund has not presented of current facts as at the balance sheet date, the secondary segment information, as the risks and returns actual outcome may differ from these estimates, are similar across the various geographical locations. possibly significantly.
Segment results include revenue and property Impairment of available-for-sale financial asset expenses that are directly attributable to a segment and the relevant portion of enterprise revenue and The fund’s investment manager follows the expenses that can be allocated on a reasonable guidance of IAS 39 to determine when an available- basis to that segment whether from external trans- for-sale asset is impaired. The determination requires actions or transactions with other segments. significant judgment. In making this judgment, the fund’s investment manager evaluates, among Segment assets and liabilities comprise those other factors, the duration and extent to which operating assets and liabilities that are directly at- the fair value of an investment is less than cost and tributable to a segment or can be allocated on a the financial health and business outlook for the reasonable basis. investee, including factors such as industry and sector performance.
1.14 Distributions to unitholders The fund’s investment manager does not consider the available- for-sale investment to be impaired, The fund has an obligation to distribute the income due to the reasons stated in the financial highlights per unit for distribution as calculated. Distributions on page 7. to unitholders are recognised as a liability once the amount for distribution has been calculated. The 1.16 Leases fund is obliged to distribute income bi-annually for the 6 months to 30 September and the 6 months to 31 Operating leases March. Distributions exclude income arising from: Properties leased out under operating leases are included in investment properties in the balance • unrealised fair value adjustments to investment sheet as per note 2. Lease income is recognised properties over the term of the lease on a straight-line basis. • realised capital gains and losses on disposal of investment properties 1.17 Leasing arrangements • non-permissible activities as prescribed by the Oasis Group Shari’ah Advisory Board. The period of leases whereby the fund leases out • unrealised gains and losses on available-for-sale its investment property under operating leases is 2 financial assets to 10 years or more. Leases generally contain fixed • realised gains and losses on available-for-sale escalation rates of approximately 6% to 12% except financial assets for Carnaud lease on Sacks Circle property where it is the higher of CPIX or 4.5%.
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 28 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
2009 2008 R '000 R '000
2. Investment properties At valuation 353,301 297,100 Straight line lease accrual (7,865) (5,837)
345,436 291,263
Movement in investment properties Carrying value at the beginning of the year 291,263 261,152 Additions 22,209 8,752 Fair value adjustment to investment properties excluding 31,964 21,359 straight-lining of lease income Revaluation 33,992 24,158 Change in straight line lease accrual (2,028) (2,799)
Carrying value at the end of the year 345,436 291,263
The investment properties were independently valued by Mills Fitchet Magnus Penny (Pty) Ltd on 31 March 2009. The fund generally values its properties using the capitalisation of net income approach which requires the valuer to establish the current net income of the existing leases to which a market derived capitalisa- tion rate is applied. However, 3 out of the 7 properties have been valued using the discounted cashflow approach. The market capitalisation rates and discount rates used were in the range of 10% to 15.50% (2008: between 9.75% and 15.50%).
The principal assumptions underlying estimation of fair value are those related to the receipt of contractual rentals, expected future market rentals, void periods ranging from 0% to 5%, maintenance requirements and appropriate discount rates. These valuations are regularly compared to actual market yield data, actual transactions by the fund and those reported by the market.
29 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 2.1 As at 31 March 2009, the following investment properties are included in the property portfolio :
Property name Market Cost Non- Market Cost Non- value 2009 distributable value 2008 distributable 2009 reserve 2008 reserve 2009 2008 R’000 R’000 R'000 R’000 R’000 R'000
Sacks Circle Bellville 43,500 23,001 20,499 36,000 22,639 13,361 Moorsom Avenue 52,700 23,461 29,239 41,100 23,419 17,681 Epping Nourse Avenue 20,900 18,642 2,258 19,850 18,432 1,418 Epping Waltex Goodwood 20,000 17,412 2,588 18,000 17,412 588 Protea Assurance 67,000 44,144 22,856 64,000 44,144 19,856 Cape Town Mica Parklands 14,200 11,631 2,569 13,700 11,606 2,094 The Ridge@Shallcross 135,001 125,421 9,580 104,450 103,851 599 Total 353,301 263,712 89,589 297,100 241,503 55,597
3. Property, Plant and Equipment Building Equipments Cost - - Additions 58 - Accumulated depreciation (5) - Carrying value at the end of the year 53 -
2009 2008 R '000 R '000 4. Available-for-sale financial assets Carrying value at the beginning of the year 44,987 - Additions 63,347 42,915 Disposals (16,402) - Revaluation (32,775) 2,072 Carrying value at the end of the year 59,157 44,987
4.1 As at 31 March 2009 1,557,797 units (2008:560,034) were held in Crescent Global Property Equity Fund at an ex-dividend price of USD3.99 (R37.97) (2008 :USD9.88 (R80.33)) per unit.
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 30 2009 2008 R '000 R '000 5. Trade receivables Investments income receivable 122 110 Accrued dividends 1,984 945 Accrued profit from Shariah Investment 279 - Accounts receivable: Broll 30 - Municipal charges 666 314 Net accounts receivable 982 831 Accounts receivable 1,924 963 Provision for bad debts (Note 21.1) (942) (132) Receivables from seller - Nourse (adjustment account) - 137 4,063 2,337 5.1 Due to the short term nature of the trade receivables, the book value represents the fair value of trade receivables. All trade receivables are expected to be received within 12 months
6. Other receivables Deposits 51 51 Advance for purchase of property 2,024 - Prepayments: - Alternative Exchange fees (ALTx) 16 14 - Letting commission 568 361 - South African Musical Rights Organisation fees (SAMRO) 2 2 - Securities Regulation Panel fees (SRP) 4 - - Municipal charges - Waltex - 27 - Other 6 - - Close Circuit Television costs (CCTV) 62 81 2,733 536 6.1 Due to the short term nature of the other receivables, the book value represents the fair value of other receivables.
7. Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents comprise the following: Deposits at banks 21,673 12,639 The cash is held on call as per the requirements of the trust deed.
31 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 2009 2008 R '000 R '000 8. Capital of the fund Balance as at 31 March 2009 360,931 281,629 Units in issue at 31 March 2009- 33,981,445 (2008:27, 055, 000)
9. Trade payables Trade payables: - Advertisement and promotions - 2 - Municipal charges 863 1,646 - Accruals 1,446 185 - Designated advisory fees 130 117 - Seller - Ridge@Shallcross 33 46 - Deposits 135 520 - Others - 55 2,607 2,571 9.1 Deposits include an amount of R63,537 (2008: R63,537) received from Oasis Group Holdings (Pty) Limited.
10. Provisions Provisions: - Audit fees 127 95 - Trustee's fees - 10 - Valuation costs 28 25 - Printing and publishing costs 204 127 359 257
11. Other payables Income in advance 453 735 VAT payable 338 387 791 1,122
12. Income from investments Dividend received-Offshore 4,040 1,206 Short term Cash Deposits - Domestic 1,370 - - Offshore 224 - Service fee rebate-Offshore 170 87 Foreign exchange loss (32) (8) 5,772 1,285
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 32 2009 2008 R '000 R '000
13. Operating profit - expenses by nature Operating profit is stated after charging: 14,559 12,702 Property expenses - Property management fees 1,082 996 - Municipal charges 7,242 6,053 - Salaries 565 733 - Cleaning 487 296 - Bad debts (Note 21.1) 810 212 - Insurance 420 411 - Security 1,232 1,149 - Advertising and promotions 600 1,105 - Repairs & maintenance 1,280 1,138 - Others 841 609
Service charge (Note 13.1) 1,749 1,571
Other operating expenses 707 820
- Audit fee 177 120 - Designated advisor fee 123 150 - Trustee fee 128 121 - Printing & publishing 107 240 - Other operating expenses 172 189
Total Expenses 17,015 15,093
13.1 The service charge is equal to 0.5% per annum of the fund’s market capitalisation and borrowing facilities and a pro rata portion is payable on a monthly basis. The market capitalisation is based on the average daily closing price of the units as quoted on the Alternative Exchange (ALTx) of South Africa.
14. Basic and headline earnings per unit
Basic earnings and diluted earnings per unit Basic earnings per unit was 224.6 cents for the year ended 31 March 2009 (2008: 196.2 cents). The calculation of the basic earnings per unit is based on 31,366,369 (2008: 25,525,000) weighted average units in issue at the end of the year and net profit of R 70.5 million (2008: R50 million).
33 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 Headline earnings and diluted earnings per unit Headline earnings per unit was 113.6 cents for the year ended 31 March 2009 (2008: 112.6 cents). The calculation of the headline earnings per unit is based on 31,366,369 (2008: 25,525,000) weighted average units in issue during the year and headline earnings of R35.6 million (2008: R28.7 million).
2009 2008 R '000 R '000
15. Basic and headline earnings per unit Headline earnings and distribution income reconciliation Net profit for the year 70,464 50,092 Adjusted for: Realised gain on sale of avaialable for sale investments (2,897) - Fair value adjustment to investment properties (31,964) (21,359)
Headline earnings 35,603 28,733 Less: Straight line lease accrual (2,028) (2,799) Distribution including non-permissible income 33,575 25,934
Non-permissible rental income (781) (1,128) Non-permissible interest income (1,574) (1,681)
Distribution excluding non-permissible income 31,220 23,125 Distribution received in advance 2,615 1,386 Total permissible distribution for the period 33,835 24,511 Basic earnings per unit including non-permissible 224.6 196.2 income (cents) Headline earnings per unit including non-permissible 113.5 112.6 income (cents) Distribution per unit including non-permissible 107.0 101.6 income (cents) Distribution per unit excluding non-permissible 99.5 90.6 income (cents) Weighted average units in issue 31,366,369 25,525,000
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 34 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
2009 2008 R '000 R '000
16. Operating lease rentals
Future contractual rental income due from tenants can be analysed as follows: Within one year 40,498 34,312 Within two to five years 72,350 91,312 More than five years 14,155 23,381 127,003 149,005 17. Notes to cash flow statement - Distribution
Amounts unpaid at the beginning of the year 14,211 11,970 Amounts declared during the year 33,575 27,320 Distribution received in advance 2,615 642 Amounts unpaid at the end of the year (17,167) (14,211) Distribution including non-permissible income 33,234 25,721 Non-permissible income dispensed (3,939) (2,243) Distribution excluding non-permissible income 29,296 23,478 Distribution in scrip (22,194) - Distribution paid in cash 7,101 23,478
18. Capital Commitments As at 31 March 2009, there were no capital commitments (2008: R Nil) to be funded from existing cash resources.
19. Contingent Liabilities The fund has no contingent liabilities
20. Events after the balance sheet date The directors are not aware of any events subsequent to 31 March 2009 which are likely to have a material effect on the financial information contained in this report. The commitments reflected in note 18 are in the ordinary course of business.
21. Financial risk management The fund’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.
35 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 Risk management is carried out by the Oasis Group Sensitivity analysis Central Risk Committee under policies approved At 31 March 2009, if interest rates at that date had by the board of directors. The board provides the been 1% lower/higher, with all other variables held principles for overall risk management, as well as constant, net profit for the year would have been the policies covering specific areas, such as interest R286,000 (2008: R166,000) lower/higher, arising rate risk, credit risk, use of non-derivative financial mainly as a result of lower/higher interest income instruments, and investment of excess liquidity. on cash deposits at banks.
Market risk: Foreign currency risk Financial risk management The fund’s financial assets and liabilities are The fund manages interest rates risk by monitoring denominated in South African Rands (ZAR) except for interest rates on a regular basis. There were no the investments and the related investment income significant borrowings or loans outstanding during in offshore investments which are denominated in the period under review which attract interest US Dollars (USD) and translated to Rands (ZAR) at exposure to the entity. each balance sheet date at the closing rate of exchange between ZAR and USD. Market risk: Price risk The fund is exposed to property price and market Sensitivity analysis rental risks. As of 31 March 2009, if the Rand had weakened/ strengthened by 5% against the US Dollar (and Market price risk arises mainly from uncertainty assuming all other variables remained constant), about future prices of financial instruments held. It the available-for-sale reserve would have been represents the potential loss the fund might suffer R2.96 million (2008 : 2.2 million) higher /lower than through holding market positions in the face of as stated in the balance sheet and statement of price movements. changes in equity. The fund is exposed to market price risk via the This sensitivity analysis for currency risk includes quoted investment disclosed in note 4, namely units the effect of non-monetary financial instruments, held in the Crescent Global Property Equity Fund. denominated in currency, other than entity’s Price risk is managed by only investing in highly rated functional currency. well diversified collective investment schemes, with out standing track record. The foreign currency risk is managed by close monitoring of foreign currency rates on a regular Sensitivity analysis basis. As at 31 March 2009, if the closing market prices of the equity investments that the fund holds had Market risk: Cash flow interest rate risk been 10% higher/lower, with all other variables held The fund has cash on call (denominated in ZAR) constant, the available-for-sale reserve would have which attracted an average variable interest been R5.92 million (2008: R4.5 million) higher/lower. rate of 5.92 % during the year under review (2008: The sensitivity analysis for price risk excludes the 10.41%). The sensitivity analysis is based on the effect of movements in foreign currency exchange average cash balances. rates.
Interest expenses incurred is primarily on the Credit risk municipal charges. The fund is exposed to credit risk on its financial assets such as trade receivables, trade receivables from Management does not invest in interest rate derivatives. related parties and cash and cash equivalents. This risk arise due to change in the credit rating of the counter party subsequent to the fund obtaining the financial assets.
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 36
The fund has formal policies and procedures in place to ensure management of credit risk. A formal credit risk assessment is performed for all new tenants and tenancy contracts are made with tenants with an appropriate credit history. Cash is invested with high credit quality financial institutions. Furthermore, trade receivables consist of a spread of good quality tenant receivables and adequate provision is made for bad debts where applicable.
The fund does not consider significant credit risk to arise from its trade receivables to related parties.
The fund’s maximum exposure to credit risk at 31 March 2009 and 31 March 2008 is represented by the carrying amounts of trade receivables, trade receivables from related parties and cash and cash equivalents at the respective dates. The fund holds deposits which will be applied towards arrear rentals in the event of default by a tenant.
The executive directors of Oasis Crescent Property Fund Managers Limited monitor the fund’s exposure to the concentration of credit risk on a monthly basis.
37 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 The following table provides information regarding the aggregated risk exposure for financial assets with external ratings as at 31 March 2009 :
Credit rating Carrying value in Balance sheet A3 (BCA rating) Not rated R '000 Trade receivables - 4,063 4,063 Cash and cash equivalents 21,673 - 21,673
The following table provides information regarding the aggregated risk exposure for financial assets with external ratings as at 31 March 2008 :
Credit rating Carrying value in Balance sheet A3 (BCA rating) Not rated R '000 Trade receivables - 2,337 2,337 Trade receivables from related parties - 123 123 Cash and cash equivalents 12,639 - 12,639
The fund holds net deposits with a carrying value of R135,000 (2008: R519,000) which may be applied towards the arrear rentals set out above.
The counter parties included in the trade receivables and trade receivables from related parties are financial institutions, tenants, listed entities and related entities namely, Oasis Group Holdings (Pty) Limited, Eden Court Property Fund (Pty) Limited and Oasis Crescent Property Fund Managers Limited. Historically the default rates of the above entities are NIL except for the trade receivables from the tenants where the default rates was 2.18% (2008:0.68%) on rental and related income.
Impairment history
The following table provides information regarding the carrying value of financial assets that have been impaired and the ageing of financial assets that are past due but not impaired:
2009 Neither past due Financial Financial Impairment Carrying nor impaired assets that assets that value in (days) are past have been Balance due but not impaired sheet impaired (days) (days) 0-60 61-120 and 61-120 above and above Trade receivables 3,799 264 942 942 4,063 Cash and cash equivalents 21,673 - - 21,673
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 38 21. Financial risk management (continued) 2008 Neither past due Financial Financial Impairment Carrying nor impaired assets that assets that value in (days) are past have been Balance due but not impaired sheet impaired (days) (days) R’000 0-60 61-120 and 61-120 above and above Trade receivables 1,840 497 132 132 2,337 Cash and cash equivalents 123 - - 123 Cash and cash equivalents 12,639 - - 12,639
21.1. The provision for impairment of trade receivables are as follows:
2009 2008 R '000 R '000
Opening balance 132 - Provision for receivables impairment 810 212 Receivables written off during the year as uncollectible - (80) Unused amounts reversed - - Closing balance 942 132
Liquidity risk
Proper liquidity risk management implies that sufficient investments in cash and marketable securities are maintained, and that funding is available from an adequate amount of committed credit facilities.
The following are the contractual maturities of financial liabilities, including interest payments and excluding the impact of netting arrangements.
More than one More than three Payable within month but not months but not Carrying Contractual 1 month or on exceeding exceeding one As at 31 March 2009 amount cash flows demand three months year Non-derivative financial liabilities R’000 Trade payables 2,607 2,607 2,607 - - Trade payables to related parties 239 239 239 - - Unitholders for distribution 17,113 17,113 - 17,113 - Non-permissible income for dispensation 54 54 54 - 20,013 20,013 2,900 17,113 -
39 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
More than one More than three Payable within month but not months but not Carrying Contractual 1 month or on exceeding exceeding one As at 31 March 2008 amount cash flows demand three months year Non-derivative financial liabilities R’000 Trade payables 2,571 2,571 2,571 - - Trade payables to related parties 263 263 263 - - Unitholders for distribution 12,574 12,574 - 12,574 - Non-permissible income for dispensation 1,637 1,637 - 1,637 - 17,045 17,045 2,834 14,211 -
Capital risk management As disclosed in the prospectus of Crescent Global The fund’s objectives when managing capital is to Property Equity Fund a management fee is charged safeguard the fund’s ability to continue as a going for investing in Crescent Global Property Equity Fund concern and to provide an adequate return to the by Oasis Global Management Company (Ireland) unitholders by pricing the rentable units proportion- Limited, the manager of the fund. ately with the level of risk. There are common directors to Oasis Crescent Management considers capital to be equivalent to Property Fund Managers Limited, Eden Court the amount reflected as “Unitholders funds” on the Property Fund (Pty) Limited, Oasis Group Holdings face of the balance sheet. (Pty) Limited, and Oasis Global Management Company (Ireland) Limited. Transactions with The fund’s policy is to distribute its entire permissible related parties are executed on terms no less income as calculated to the unitholders and favorable then those arranged with third parties. dispense the non-permissible income for the year to Crescent Fund Trust, a recognised charitable trust, 22.2 Type of related party transactions as required by the Collective Investments Schemes The fund pays a service charge and a property Control Act. management fee on a monthly basis to Oasis 22. Related party transactions and balances Crescent Property Fund Managers Limited.
22.1 Identity of the related parties with whom material transactions have occurred. Oasis Crescent Property Fund Managers Limited is the management company of the fund in terms of the Collective Investment Schemes Control Act.
Eden Court Property Fund (Pty) Limited is the entity that owned any property that is not Shari’ah compliant upto 31 October 2008. Rentals are collected by Eden Court Property Fund (Pty) Limited and expenses were paid and recovered by Oasis Crescent Property Fund Managers Limited.
Oasis Group Holdings (Pty) Limited is a tenant at the Ridge@Shallcross.
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 40 22. Related party transactions and balances ( Continued)
2009 2008 R '000 R '000 22.3 Related party transactions
Service charge paid to Oasis Crescent Property 1,749 1,571 Fund Managers Limited Property management fees paid to Oasis 799 686 Crescent Property Fund Managers Limited Expense recoveries from Eden Court Property 596 999 Fund (Pty) Limited Rental, related income and deposit from Oasis Group Holdings (Pty) Limited at the Ridge@Shallcross 325 322 Related party balances Trade receivables from Eden Court Property Fund (Pty) Limited - 123 - 123
Trade payables to Oasis Group Holdings (Pty) Limited 122 38 Trade payables to Oasis Crescent Property Fund 117 225 Managers Limited 239 263
41 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
Retail Offices Industrial Investments Corporate Total 23. Segmental analysis-2009 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 Segment revenue Property income Rental and related income 21,017 7,214 14,909 - - 43,140 Income from investments Dividend income offshore - - - 4,178 - 4,178 Permissible investment income offshore - - - 224 - 224 Permissible investment income domestic - - - 1,370 - 1,370 Straight-lining of lease income 773 (178) 1,433 - 2,028 21,790 7,036 16,342 5,772 50,940 Segment expense Property expenses 10,026 2,608 1,919 - 6 14,559 Service charges - - - - 1,749 1,749 Other operating expenses - - - - 707 707 10,026 2,608 1,919 - 2,462 17,015 Operating profit before value adjustment 11,764 4,428 14,423 5,772 (2,462) 33,925 Fair value adjustment to investment properties excluding straight-lining of lease income 8,857 3,004 20,103 - - 31,964 Realised gain on sale of available for sale investments - - - - 2,897 2,897 Segment result Operating profit 20,621 7,432 34,526 5,772 435 68,786 Net finance income Non-permissible investment income - - - 1,678 1,678 Net profit 20,621 7,432 34,526 7,450 435 70,464 Segment assets Investment properties 146,525 65,883 133,028 - - 345,436 Straight-line lease accrual 2,675 1,117 4,073 - - 7,865 Available-for-sale financial assets - - - 59,157 - 59,157 Property, Plant & Equipment 53 - - - - 53 Trade receivables 1,366 - 282 - 2,415 4,063 Other receivables 2,128 44 542 - 19 2,733 Cash and cash equivalents - - - 21,673 - 21,673 152,747 67,044 137,925 80,830 2,434 440,980 Segment liabilities Trade payables 1,258 515 492 - 342 2,607 Provisions - - - - 359 359 Other payables 424 29 - 338 791 Trade payables to related parties 148 - 91 - - 239 Unitholders for distribution - - - - 17,113 17,113 Non-permissible income for dispensation - - - - 54 54 1,830 515 612 - 18,206 21,163 Capital expenditure 21,594 - 615 - - 22,209
OASIS CRESCENT PROPERTY FUND | Annual Report 2009 42 Retail Offices Industrial Investments Corporate Total 23. Segmental analysis-2008 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000
Segment revenue Property income Rental and related income 20,418 6,247 11,408 - 38,073 Income from investments Dividend income offshore - - - 1,285 - 1,285 Permissible investment income offshore ------Permissible investment income domestic ------Straight-lining of lease income 496 1,248 1,055 - 2,799 20,914 7,495 12,463 1,285 - 42,157 Segment expense Property expenses 9,341 1,718 1,643 - - 12,702 Service charges - - - - 1,571 1,571 Other operating expenses - - - - 820 820 9,341 1,718 1,643 - 2,391 15,093 Operating profit before value adjustment 11,573 5,777 10,820 1,285 (2,391) 27,064 Fair value adjustment to investment properties excluding straight-lining of lease income 540 3,395 17,424 - - 21,359 Segment result Operating profit 12,113 9,172 28,244 1,285 (2,391) 48,423 Net finance income Non-permissible investment income - - - 1,669 1,669 Net profit 12,113 9,172 28,244 2,954 (2,391) 50,092 Segment assets Investment properties 137,465 41,488 112,310 - - 291,263 Straight-line lease accrual 985 2,212 2,640 - - 5,837 Available-for-sale financial assets - - - 44,987 - 44,987 Property, Plant & Equipment 999 - 283 - 1,055 2,337 Trade receivables 183 47 292 - 14 536 Other receivables 123 - - - - 123 Cash and cash equivalents - - - 12,639 - 12,639 139,755 43,747 115,525 57,626 1,069 357,722 Segment liabilities Trade payables 2,035 104 315 - 117 2,571 Provisions - - - - 257 257 Other payables 309 390 36 - 387 1,122 Trade payables to related parties 81 - 26 - 156 263 Unitholders for distribution - - - - 12,574 12,574 Non-permissible income for dispensation - - - - 1,637 1,637 2,425 494 377 - 15,128 18,424 Capital expenditure 1,395 - 7,357 - - 8,752
43 OASIS CRESCENT PROPERTY FUND | Annual Report 2009 BALANCE SHEET as at 31 March 2009
Note(s) 2009 2008 R '000 R '000
ASSETS
Non-current assets 1,307 1,320 Available-for-sale financial asset 3 1,210 1,200 Property, plant & equipment 4 97 120
Current assets 1,952 1,649 Receivables 6 7 Trade receivables from related entities 5 1,033 729 Cash and cash equivalents 7 913 913
Total assets 3,259 2,969
EQUITY AND LIABILITIES Capital and reserves 968 599 Share capital 8 1 1 Reserves 181 172 Retained income 786 426
Non-current liabilities 2,015 2,028 Subordinated loan 6 2,000 2,000 Deferred taxation 11 15 28
Current liabilities 276 342 Trade and other payables 80 104 Trade payables to related parties 5 194 137 Taxation 2 101
Total equity and liabilities 3,259 2,969
OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 44 INCOME STATEMENT for the year ended 31 March 2009
2009 2008 Note(s) R '000 R '000
Revenue 9 2,653 2,416
Service charges 1,803 1,649 Property management fees 850 767
Other income 196 180 Dividend income 97 95 Interest received 96 83 Service fee rebate 3 2
Operating expenses 2,349 2,106
Auditors remuneration 34 60 Administration and management fees 1,805 1,725 Depreciation 14 23 18 Directors' remuneration 153 177 Other operating expenses 334 126
Profit before taxation 500 490
Taxation 10 140 142 Profit for the year 360 348
45 OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2009
Share Fair value Retained Total capital reserve income R' 000 R' 000 R' 000 R’ 000
Balance at 01 April 2007 1 172 378 551 Net profit for the year ended 31 March 2008 - - 348 348 Revaluation of investments - (1) - (1) Deferred taxation - rate change - 1 - 1 Dividend declared - - (300) (300)
Balance at 01 April 2008 1 172 426 599
Net profit for the year ended 31 March 2009 - - 360 360 Revaluation of investments - 9 - 9 Balance at 31 March 2009 1 181 786 968
Note(s) 8
OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 46 CASH FLOW STATEMENT for the year ended 31 March 2009
Note(s) 2009 2008 R '000 R '000 CASH FLOWS FROM OPERATING ACTIVITIES Cash from operating activities Cash generated from operations 12 308 323 Interest income 96 83 Dividend received 97 95 Tax Paid 13 (254) (161) Net cash from operating activities 247 340
Cash flows from investing activities Purchase of property, plant and equipment 4 - (138) Proceeds from/(repayments to) related entities (247) (59)
Net cash from investing activities (247) (197)
Total cash movement for the year - 143 Cash at the beginning of the year 913 770 Total cash at end of the year 7 913 913
47 OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
Accounting policies Property, plant and equipment are depreciated on a straight line basis and full month depreciation is 1. Presentation of Annual Financial Statements charged in the month of acquisition and no de- preciation is charged in the month of disposal to The annual financial statements have been prepared write each asset down to its estimated residual in accordance with International Financial Reporting value over the term of their useful lives: Standards, and the Companies Act of South Africa, 1973. The annual financial statements have been Item Average useful life prepared on the historical cost basis, except for the Motor vehicles 5 years measurement of certain financial instruments at fair value, and incorporate the principal accounting Each part of an item of property, plant and policies set out below. equipment with a cost that is significant in relation to the total cost of the item shall be depreciated These accounting policies are consistent with the separately. previous period. The residual values and useful lives of assets are 1.1 Significant judgements reviewed, and adjusted if appropriate, at each balance sheet date. In preparing the annual financial statements, management is required to make estimates and 1.3 Financial instruments assumptions that affect the amounts represented in the annual financial statements and related Initial recognition disclosures. Use of available information and the application of judgement is inherent in the formation The company classifies financial instruments, or their of estimates. Actual results in the future could differ component parts, on initial recognition as a financial from these estimates which may be material to the asset, a financial liability or an equity instrument in annual financial statements. accordance with the substance of the contractual arrangement. 1.2 Property, plant and equipment Financial assets and financial liabilities are The cost of an item of property, plant and recognised on the company’s balance sheet when equipment is recognised as an asset when: the company becomes party to the contractual • it is probable that future economic benefits provisions of the instrument. associated with the item will flow to the company; and Trade receivables from/(payables to) related entities • the cost of the item can be measured reliably. These include loans to holding companies, fellow subsidiaries, subsidiaries, joint ventures and Costs include costs incurred initially to acquire associates and are recognised initially at fair value or construct an item of property, plant and plus direct transaction costs. equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement Subsequently these loans are measured at amortised cost is recognised in the carrying amount of an cost using the effective interest rate method, less item of property, plant and equipment, the any impairment loss recognised to reflect irrecover- carrying amount of the replaced part is derec- able amounts. ognised. On loans receivable an impairment loss is recognised Property, plant and equipment are shown at in profit or loss when there is objective evidence that cost less accumulated depreciation and any it is impaired. accumulated impairment losses.
1.3 Financial instruments (continued)
OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 48 Impairment losses are reversed in subsequent periods Cash and cash equivalents when an increase in the investment’s recoverable amount can be related objectively to an event Cash and cash equivalents comprise cash on hand occurring after the impairment was recognised, and demand deposits, and other short-term highly subject to the restriction that the carrying amount liquid investments that are readily convertible to a of the investment at the date the impairment is known amount of cash and are subject to an insig- reversed shall not exceed what the amortised cost nificant risk of changes in value. These are initially would have been had the impairment not been and subsequently recorded at fair value. recognised. Available-for-sale financial assets Trade and other receivables These financial assets are non-derivatives that are Trade receivables are measured at initial recognition either designated in this category or not classified at fair value, and are subsequently measured at elsewhere.They are included in non-current assets amortised cost using the effective interest rate unless management intends to dispose of the method. Appropriate allowances for estimated investment within 12 months of the balance sheet date. irrecoverable amounts are recognised in profit or loss when there is objective evidence that the Investments are recognised and derecognised on asset is impaired. Significant financial difficulties of a trade date basis where the purchase or sale of an the debtor, probability that the debtor will enter investment is under a contract whose terms require bankruptcy or financial reorganisation, and default delivery of the investment within the timeframe or delinquency in payments (more than 30 days established by the market concerned. overdue) are considered indicators that the trade receivable is impaired. The allowance recognised These investments are measured initially and sub- is measured as the difference between the asset’s sequently at fair value plus transaction costs for all carrying amount and the present value of estimated financial assets not carried at fair value through future cash flows discounted at the effective interest profit or loss . Gains and losses arising from changes rate computed at initial recognition. in fair value are recognised directly in equity until the security is disposed of or is determined to be The carrying amount of the asset is reduced impaired. Financial assets are derecognised when through the use of an allowance account, and the rights to receive cash flows from the investments the amount of the loss is recognised in the income have expired or have been transferred and the statement within operating expenses. When a trade company has transferred substantially all risks and receivable is uncollectible, it is written off against rewards of ownership. Available-for-sale financial the allowance account for trade receivables. assets are subsequently carried at fair value. Subsequent recoveries of amounts previously written off are credited against operating expenses in the The company assesses at each balance sheet date income statement. whether there is objective evidence that a financial asset or a group of financial assets is impaired. In Trade and other payables the case of equity securities classified as available for sale, a significant or prolonged decline in the fair Trade payables are initially measured at fair value, value of the security below its cost is considered as an and are subsequently measured at amortised cost, indicator that the securities are impaired. If any such using the effective evidence exists for available-for-sale financial assets, interest rate method. the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or
49 OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
1.3 Financial instruments (continued) 1.4 Tax
loss – is removed from equity and recognised in the Current tax assets and liabilities income statement. Impairment losses recognised in the income statement on equity instruments are not Current tax for current and prior periods is, to the reversed through the income statement. extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior Impairment losses recognised in profit or loss for periods exceeds the amount due for those periods, equity investments classified as available-for-sale the excess is recognised as an asset. are not subsequently reversed through profit or loss. Impairment losses recognised in profit or loss Current tax liabilities (assets) for the current and prior for debt instruments classified as availablefor-sale periods are measured at the amount expected to are subsequently reversed if an increase in the fair be paid to (recovered from) the tax authorities, value of the instrument can be objectively related using the tax rates (and tax laws) that have been to an event occurring after the recognition of the enacted or substantively enacted by the balance impairment loss. sheet date.
Interest on available-for-sale securities calculated Deferred tax assets and liabilities using the effective interest method is recognised in the income statement as part of ‘other income’. A deferred tax liability is recognised for all taxable Dividends on available-for-sale equity instruments temporary differences, except to the extent that the are recognised in the income statement as part of deferred tax liability arises from the initial recognition ‘other income’ when the company’s right to receive of an asset or liability in a transaction which at the payments is established. time of the transaction, affects neither accounting profit nor taxable profit (tax loss). The fair values of quoted investments are based on current bid prices. If the market for a financial A deferred tax asset is recognised for all deductible asset is not active (and for unlisted securities), the temporary differences to the extent that it is probable company establishes fair value by using valuation that taxable profit will be available against which the techniques. deductible temporary difference can be utilised. A deferred tax asset is not recognised when it arises When securities classified as available-for-sale from the initial recognition of an asset or liability in are sold or impaired, the accumulated fair value a transaction at the time of the transaction, affects adjustments recognised in equity are included in neither accounting profit nor taxable profit (tax loss). the income statement as ‘gains and losses from investment securities’. A deferred tax asset is recognised for the carry forward of unused tax losses and unused STC credits Financial assets and liabilities are set-off and the to the extent that it is probable that future taxable net balance reported in the balance sheet where profit will be available against which the unused tax there is a legally enforceable right to set off and the losses and unused STC credits can be utilised. company intends to settle on a net basis or to realise the asset and settle the liability simultaneously.
OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 50 Deferred tax assets and liabilities are measured at Provisions are adjusted to reflect the time value the tax rates that are expected to apply to the of money using a pre-tax rate that reflects current period when the asset is realised or the liability is market assessments of the time value of money and settled, based on tax rates (and tax laws) that have the risks specific to the obligation. The increase in the been enacted or substantively enacted by the provision due to the passage of time is recognised balance sheet date. as an expense.
Tax expenses
Current and deferred taxes are recognised as 1.7 Revenue income or an expense and included in profit or loss for the period, except to the extent that the tax Revenue is measured at the fair value of the con- arises from: sideration received or receivable and represents the amounts receivable for goods and services • a transaction or event which is recognised, in provided in the normal course of business, net of the same or a different period, directly in equity, or trade discounts and volume rebates, and value • a business combination. added tax.
Current tax and deferred taxes are charged or Interest is recognised, in profit or loss, using the credited directly to equity if the tax relates to items effective interest rate method. that are credited or charged, in the same or a different period, directly to equity. Portfolio management fees are earned from property fund management and administration 1.5 Share capital and equity activities, and are recognised as revenue when the related services have been performed. Ordinary shares are classified as equity. 1.8 Translation of foreign currencies Incremental costs directly attributable to the issue of new shares or options are shown in equity as a Foreign currency transactions deduction, net of tax, from the proceeds. A foreign currency transaction is recorded, on initial 1.6 Provisions recognition in Rands, by applying to the foreign currency amount the spot exchange rate between Provisions are recognised when: the functional currency and the foreign currency at the date of the transaction. • the company has a present obligation as a result of a past event; At each balance sheet date: • it is probable that an outflow of resources • foreign currency monetary items are translated embodying economic benefits will be required using the closing rate; to settle the obligation; and • non-monetary items that are measured in • a reliable estimate can be made of the terms of historical cost in a foreign currency are obligation. translated using the exchange rate at the date of the transaction; and The amount of a provision is the present value of the • non-monetary items that are measured at fair expenditure expected to be required to settle the value in a foreign currency are translated using obligation. the exchange rates at the date when the fair value was determined.
51 OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 1.8 Translation of foreign currencies (continued)
When a gain or loss on a non-monetary item is recognised directly in equity, any exchange component of that gain or loss is recognised directly in equity. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss.
Cash flows arising from transactions in a foreign currency are recorded in Rands by applying to the foreign currency amount the exchange rate between the Rand and the foreign currency at the date of the cash flow.
2. Statements and interpretations not yet effective (a) Standards, amendments and interpretations effective in 2009 but not relevant to the company’s operations: The following standards, amendments and interpretations to published standards are mandatory for accounting periods beginning on or after 1 April 2008 but they are not relevant to the company’s operations: • Amendments to IAS 39 - Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures - Reclassification of Financial Assets (Effective 1 July 2008), • IFRIC 12, 'Service concession arrangements' (Effective 1 January 2008), • IFRIC 14, 'IAS 19 – The limit on a defined benefit asset, minimum funding requirements and their interaction’ (Effective 1 January 2008). (b) Standards, amendments and interpretations to existing standards issued that are not yet effective and not relevant to the company’s operations: The following standards, amendments and interpretations to existing standards have been issued but not yet effective and not relevant to the company’s operations: • IAS 23 (Amendment), ‘Borrowing costs’ (Effective 1 January 2009), • IAS 1, ‘Presentation of Financial Statements – Revised’ (Effective 1 January 2009), • IAS 27, ‘ (Revised) Consolidated financial statements and accounting for investments in subsidiar- ies’ (Effective 1 July 2009), • IFRS 3 (AC 140), (Revised) ‘Business Combinations’ (Effective 1 July 2009), • IFRS 8, ‘Operating segments ‘ (Effective 1 January 2009), • Amendment to IAS 32 and IAS1 , ‘Amendments to IAS 32 Financial Instruments: Presentation - Puttable Financial Instruments and Obligations arising on Liquidation’ (Effective 1 January 2009), • Amendments to IFRS 1 and IAS 27, ‘Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate’ (Effective 1 January 2009), • IFRIC 13, ‘Customer loyalty programmes’ (Effective 1 July 2008), • IFRIC 15, ‘Agreements for the construction of real estate’ (Effective 1 January 2009), • IFRIC 16, ‘Hedges of a Net Investment in a Foreign Operation’ (Effective 1 October 2008)
OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 52 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
2009 2008 R '000 R '000
3. Availabe-for-sale financial assets
Availabe for sale 100,000 units in Oasis Crescent Property Fund at fair value 1,210 1,200
Fair values are determined annually at balance sheet date.
Schedule of movement Carrying value at the beginning of the year 1,200 1,201 Unrealised gain/ (loss)for the year 10 (1)
Carrying value at the end of the year 1,210 1,200
The above quoted investment represents seed capital in the Oasis Crescent Property Fund. The fair value of investments in listed closed ended investment schemes is determined by reference to the current bid prices. 4. Property, plant & equipment 2009 2008 Cost Accumulated carying Cost Accumulated Carrying depreciation value depreciation value Motor Vehicles 138 (41) 97 138 (18) 120
A register containing the information required by paragraph 22(3) of Schedule 4 of the Companies Act is available for inspection at the registered office of the company.
5. Trade receivables from/(payables to) related entities Holding company Oasis Group Holdings (Pty) Limited 611 489 Oasis Group Holdings (Pty) Limited - payable (194) (137) 417 352
The above loans are unsecured, interest free and have no fixed terms of repayment.
53 OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 2009 2008 R '000 R '000
Related entities
Oasis Crescent Property Fund 394 225 Eden Court Property Company No.1 (Pty) Limited 1 - Eden Court Property Fund (Pty) Limited 15 15 Oasis Crescent Land Developers (Pty) Limited 10 - Eden Court Advisory Services CC 2 - 422 240 The above loans are unsecured, interest free and have no fixed terms of repayment.
Trade receivables 1,033 729 Trade payables (194) (137) 839 592
Credit quality of loans to group companies The credit quality of loans to group companies that are neither past due nor impaired can be assessed by reference to historical information about counterparty default rates.
Credit rating Not rated 1,033 729
6 Subordinated loan Oasis Group Holdings (Pty) Limited 2000 2000 The subordinated loan is a requirement for the registration of the Oasis Crescent Property Trust Scheme. The loan is unsecured, bears no interest and has no fixed terms of repayment.
7. Cash and cash equivalents Cash and cash equivalents consist of:
Bank balances 68 35 Money market investments 845 878 913 913
OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 54 2009 2008 R '000 R '000
Credit quality of cash at bank and short term deposits, excluding cash on hand
The credit quality of cash at bank and short term deposits, excluding cash on hand, can be assessed by reference to external credit ratings
Credit rating AAA 68 35
The effective interest on the money market investments was 9.96% (2008:10.6%) and has an average maturity of 90 days.
8. Share capital Authorised and issued 1,000 Ordinary shares of R 1 each 1 1
9. Revenue Service charges 1,803 1,649 Property management fees 850 767 2,653 2,416
10. Taxation Major components of the tax expense Current Normal tax - current period 155 142 Deferred Originating and reversing temporary differences (15) - 140 142 Reconciliation of the tax expense Reconciliation between accounting profit and tax expense Accounting profit 500 490 Tax at the applicable tax rate of 28% (2008: 29%) 140 142
55 OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 2009 2008 R '000 R '000
11. Deferred tax Deferred tax liability Available-for-sale financial assets (29) (28) Audit Fee accrual 14 - (15) (28)
Reconciliation of deferred tax asset (liability) At beginning of the year (28) (29) Reduction due to rate change - 1 Increase on available-for-sale financial assets (1) - Reduction due to audit fee accrual 14 - (15) (28)
12. Cash generated from operations Profit before taxation 500 490 Adjustments for: Depreciation 23 18 Dividends received (97) (95) Interest received (96) (83) Changes in working capital: Receivables 1 4 Trade and other payables (23) (11) 308 323
13. Tax paid Balance at beginning of the year (101) (120) Current tax for the year recognised in income statement (155) (142) Balance at end of the year 2 101 (254) (161) 14. Directors’ remuneration Non-executive (for services as directors) H Jeena (resigned 08 October 2008) 31 59 Z I Kara 61 59 Dr. Y Mahomed 61 59 153 177
OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 56 Details of directors interest
At year end, directors’ hold the following direct and indirect interests in the units of Oasis Crescent Property Fund respectively: 2009 Director Direct Indirect Total MS Ebrahim 11 1153 1164 N Ebrahim 11 1153 1164 22 2306 2328
2008 Director Direct Indirect Total MS Ebrahim 10 142 152 N Ebrahim 10 142 152 20 284 304
15. Related parties
The related parties are the directors of the company, the holding company, the ultimate holding company, fellow subsidiaries and funds managed by the preceeding companies . The company's current loan accounts with related entities are detailed in note 5 and the company's investment with related parties are detailed in note 7. Transactions with related parties are executed on terms no less favourable than those arranged with third parties.
Oasis Group Holdings (Pty) Limited charges a monthly management fee which essentially represents a recovery of routine overhead costs incurred in connection with the administration of the business.
Eden Court Property Fund (Pty) Limited is the vehicle that accumulates the properties carrying the non Shari'ah compliant tenants. Oasis Crescent Property Fund Managers Limited received services charges and property administration fees from Eden Court Property Fund (Pty) Limited.
The company is controlled by Oasis Group Holdings (Pty) Limited, which owns 100% of the issued share capital. The ultimate holding company is Eden Court Holdings (Pty) Limited.
57 OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
2009 2008 R '000 R '000 Related party transactions
Revenue received from related parties Oasis Crescent Property Fund - service charges 1,747 1,571 Eden Court Property Fund (Pty) Limited - service charges 44 78 Oasis Crescent Property Fund - property management fees 800 686 Eden Court Property Fund (Pty) Limited - property management fees 50 81
Expenses paid to related parties Oasis Group Holdings (Pty) Limited - service charges 1,805 1,725
16. Risk management
The company’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.
Risk management is carried out by the Oasis Group Central Risk Committee under policies approved by the board of directors.The board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, company treasury maintains flexibility in funding by maintaining availability under committed credit lines.
The company manages liquidity risk through an ongoing review of future commitments and credit facilities.
Cash flow forecasts are prepared and adequate utilised borrowing facilities are monitored.
The table below analyses the company’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 58 Carrying Contractual Payable More than one amount cash flows within 1 month but not month or on exceeding demand three months At 31 March 2009 R ‘000 R ‘000 R ‘000 R ‘000 Non-derivative financial liabilities Subordinated loan 2,000 2,000 2,000 - Trade and other payables 80 29 10 19 Trade payables to related entities 194 194 194 -
At 31 March 2008 Non-derivative financial liabilities Subordinated loan 2,000 2,000 2,000 - Trade and other payables 104 44 10 34 Trade payables to related parties 137 137 137 -
Interest rate risk
Cash and cash equivalents are exposed to interest rate risk. Deposits at banks attract a variable average interest rate of 8% (2008: 6.7%)
The company has investments in Money Market Unit Trust Investments (denominated in South African Rand) which attracts a variable annualised yield of 9.96% (2008: 10.6 %).
The company manages interest rate risk by monitoring interest rates on a regular basis.
Sensitivity analysis
At 31 March 2009, if interest rates relevant to the current account and Money Market Unit Trust Investments at that date had been 1% lower/higher, with all other variables held constant, net profit for the year would have been R 6,194 (2008: R 6,428) lower / higher.
Credit risk
Credit risk consists mainly of cash deposits, cash equivalents, and trade debtors. The company only deposits cash with major banks with high quality credit standing and excess cash is deposited in Oasis Money market Unit Trust funds.
59 OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2009
16. Risk management (continued)
The company has formal policies and procedures in place to ensure management of credit risk. A formal credit risk assessment is performed for all new clients and client contracts are made with those with an appropriate credit history. Furthermore, trade receivables consist of a spread of good quality client receivables and adequate provision is made for bad debts where applicable.
The company does not consider significant credit risk to arise from its trade receivables to related entities.
The counter parties include high net worth individuals, and highly regulated entities. Historically, the default rate has been zero
Foreign exchange risk
The majority of the groups’s financial assets and liabilities are denominated in South African Rand (ZAR). As a result, the company is not subject to significant amounts of risk due to fluctuations in foreign currency movements. In accordance with IFRS 7, currency risk is not considered to arise from financial instruments that are non-monetary items.
Price risk
Market price risk arises mainly from uncertainty about future prices of financial instruments held. It represents the potential loss the company might suffer through holding market positions in the face of price movements.
The company is exposed to market price risk via the quoted investment disclosed in note 3, namely units held in the Oasis Crescent Property Fund, which represents seed capital as required by the Collective Investment Schemes Control Act, 2002. The Company is not involved in trading of marketable securities, other than the seed capital it holds in Oasis Crescent Property Fund.
Sensitivity analysis
If the market in which the Oasis Crescent Property Fund is invested increased / decreased by 10%, with all other variables being constant, the fair value reserve would have been R104,060 (2008: R103,000) higher/lower. In accordance with the company’s policy, the executive directors monitor the company’s overall exposure to market price risk on a daily basis, and the full board of directors review it on a quarterly basis.
OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 60 16. Risk management (continued)
Capital risk management
Capital consists of capital and reserves as disclosed on the face of the balance sheet as well as the subordinated loan.The company’s objectives when managing capital are to safeguard the company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure.
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders or sell assets. The company is required to maintain a capital balance equivalent to the statutory capital adequacy requirement (“CAR”). The CAR is determined in accordance with section 88(1) of the Collective Investments Schemes Control Act, 2002.
The required capital to be maintained is: • a basic capital which must be the greater of an amount of R600,000 or a sum equivalent of 13 weeks’ of fixed cost for the whole of the collective investment scheme business of a manager or such other amount as the registrar may determine in a particular case. • seed capital of R1 million to be invested by the manager in each portfolio administered by the manager: Provided that - (i) the prescribed amount may be reduced by 10 percent for every R1million invested by investors in a portfolio which investors may not be connected to but must be independent from the manager; and (ii) if the sum of R1 million has been reduced to nil in terms of subparagraph (i) and disinvestment from a portfolio causes the investment in the portfolio to reduce to less than R10 million, a manager need not reinvest any further sum in terms of this paragraph ; plus • position risk capital of a sum equivalent to a percentage of the amount paid for participatory interests in a portfolio determined as follows in respect of each type of portfolio:Money Market portfolio 10 per cent; income portfolio 15 per cent ; and all other portfolios 25 per cent.
Fixed costs are defined in section 88(1) of the Collective Investments Schemes Control Act, 2002.
Summary of the company’s CAR requirements is shown in the table below: 2009 2008 R '000 R '000 Required Capital 684 600 Actual Capital 2,779 2,575
17, Additional information required in terms of the Collective Investment Schemes Control Act of 2002
In terms of the Collective Investment Schemes Control Act the manager is required to have a minimum capital of R684,478. At 31 March 2009 the available capital including the subordinated loan was in excess of R 2.09million.
61 OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 NOTICE OF GENERAL MEETING
Notice is hereby given that a general meeting of unitholders of Oasis Crescent Property Fund (“OCPF”) will be held at the registered office of OCPF, 20th Floor, Triangle House, 22 Riebeek Street, Cape Town on Monday, 20 July 2009, commencing at 10:00 for the purpose of considering and, if deemed fit, passing with or without modification, the following ordinary resolutions: ORDINARY RESOLUTION NUMBER 1 Issuing of units for cash “Resolved that in terms of the JSE Limited (“JSE”) Listings Requirements, the directors of Oasis Crescent Property Fund Managers Limited, the manager of OCPF as approved by the Registrar of Collective Investment Schemes (“the Manager”), are hereby authorised to allot and issue for cash without restrictions to any public unitholder (as defined by the JSE Listings Requirements), as and when suitable opportunities arise, in their discretion, units in the capital of OCPF, subject to the following conditions: (a) this authority shall only be valid until the next general meeting of OCPF but shall not extend beyond 15 months from the date of this resolution; (b) the issues for cash in the aggregate in any one financial year shall not exceed 50% of the issued capital of OCPF, on a fully diluted basis; (c) in determining the price at which an issue of units for cash will be made in terms of this authority, the maximum discount permitted shall be 10% of the weighted average traded price of OCPF’s units on the JSE (adjusted for any dividend declared but not yet paid or for any capitalisation award made to unitholders), over the 30 business days prior to the date that the price of the issue is determined or agreed by the directors of the Manager; (d) this authority includes the issue of units arising from any options or convertible securities issued by OCPF for cash; and (e) this authority requires a 75% majority of the votes cast in favour of this resolution by all unitholders present or represented by proxy at the general meeting convened to approve this resolution.” ORDINARY RESOLUTION NUMBER 2 General authority to the directors of the Manager “Resolved that any executive director of the Manager of OCPF, be and are hereby authorised to do all such things and sign all documents and take all such action as they consider necessary to carry into effect these resolutions.” VOTING AND PROXIES An OCPF unitholder entitled to attend and vote at the general meeting is entitled to appoint one or more proxies to attend, speak and vote in his/her stead. For the convenience of registered certificated unitholders or unitholders who have de- materialised their linked units with own name registration, a form of proxy (blue) is attached hereto. Duly completed forms of proxy must be received by the transfer secretaries at their registered office, Ground Floor, 70 Marshall Street, Johannes- burg, 2001 (PO Box 61051, Marshalltown, 2107), by no later than 10:00 on Thursday, 16 July 2009. Unitholders who have dematerialised their units and have not selected own name registration must advise their Central Securities Depository Participant (“CSDP”) or broker of their voting instructions should they be unable to attend the general meeting but wish to be represented thereat. Dematerialised unitholders without own name registration should contact their CSDP or broker with regard to the cut-off time for their voting instructions. If, however, such members wish to attend the general meeting in person, then they will need to request their CSDP or broker to provide them with the necessary authority in terms of the custody agreement entered into between them and their CSDP or broker.
By order of the directors of the Manager N Ebrahim Company secretary of the Manager Cape Town 20 June 2008 Registered office of OCPF Registered office of Transfer Secretaries 20th Floor, Triangle House Computershare Investor Services 2004 (Proprietary) Limited 22 Riebeek Street (Registration number 2004/003647/07) Cape Town, 8001 Ground Floor (PO Box 1217, Cape Town, 8000) 70 Marshall Street Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
OASIS CRESCENT PROPERTY FUND MANAGERS | Annual Report 2009 62 The Oasis Tree of Life
An oasis is a symbol of hope, a place of plenty in a barren landscape. A tree in the heart of an oasis, is the dynamic product of a life-sustaining source, and is the evidence of the power of this source to create abundance in harsh conditions.
Oasis investment portfolios seek to provide dynamic products with superior performance in harsh market conditions.
OASIS CRESCENT PROPERTY FUND A property fund created under the Oasis Crescent Property Trust Scheme, registered in terms of the Collective Investment Schemes Control Act (Act 45 of 2002) (“CISCA”) SOUTH AFRICA
Cape Town
20th Floor, Triangle House , 22 Riebeek Street,
PO Box 1217 Cape Town 8000
Tel: +27 (0) 21 413 7860 Fax: +27 (0) 21 413 7900
Durban
Shop 49
The Ridge@Shallcross
90 Shallcross Road Durban 4134
Tel: +27 (0) 31 409 0786 Fax: +27 (0) 31 409 0777
Johannesburg
4th Floor, West Office Tower,
Nelson Mandela Square Sandton
Tel: +27 (0) 11 263 7860 Fax: +27 (0) 11 263 7861
www.oasiscrescent.com | [email protected]