INTEGRATED ANNUAL REPORT 2013

The journey of growth

2013 FINANCIAL HIGHLIGHTS

Annual distribution per linked unit (cents) 131.60 5.4% Earnings per linked unit (cents) 273.50 18.9% Headline earnings per linked unit (cents) 136.16 1.2% Gross property revenue (R000) 1 166 940 25.0% Profit available for distribution (R000) 556 447 26.7% Increase in net asset value 14.8% per linked unit (cents) 176.00 to 1 369

STRATEGIC AND OPERATIONAL HIGHLIGHTS

• Portfolio growth of 26% since 2012 and improved quality through: • Acquisition of R1.5 billion portfolio from Sanlam in April 2012.  • Sales of R372 million of non-core properties. • Ranked top property fund and first in the industrial and office sector by IPD over a three year period. • Acquisition of 50% of East Rand Mall for R1.1 billion transferred on 2 April 2013. • Successful equity and debt capital raised: • R1.57 billion corporate bonds and commercial paper issued during the year. • R1.2 billion raised through vendor placement and general issues for cash during the year. • Conversion of Vukile to a REIT approved by JSE with effect from 1 April 2013. • Overall total cost of funding reduced from 9.36% (31 March 2012) to 8.1% pa at 31 March 2013. •  Gearing remains conservative at 33.5% with 91% of all interest bearing debt hedged. • Vacancies (as % of GLA) down to 6.8% (7.6% at 30 September 2012). • Positive reversions across all sectors with an average escalation on expiry rentals of 8.2%. • Weighted average base rentals increased by 12.7%. CONTENTS

ABOUT VUKILE 03 Corporate profile 03 Integrated reporting and scope 04 Property portfolio 08 Vision 08 Values 08 Strategy

BUSINESS REVIEW 12 From the chairman 14 From the chief executive

GOVERNANCE REVIEW 20 Directorate 22 Senior management 24 Corporate governance and risk management 28 Social, ethics and human resources committee report

Sustainability reVIEW 34 Key stakeholders 35 Economic performance 40 Portfolio review 54 Partnerships 57 Human capital 58 Environment, health and safety 59 Transformation and social responsibility

ANNUAL FINANCIAL STATEMENTS 62 Directors’ responsibility statement 62 Company secretary’s certification 63 Independent auditor’s report 64 Directors’ report 68 Report of the audit and risk committee 70 Statements of financial position 72 Income statements 74 Statements of comprehensive income 75 Distribution statements 76 Statements of changes in equity 78 Statements of cash flow 79 Notes to the annual financial statements

UNITHOLDERS’ INFORMATION 124 Unitholders’ analysis 125 Unitholders’ diary 126 Condensed annual financial statements 132 Notice of annual general meeting 137 Form of proxy 139 Corporate information FIVE YEAR REVIEW HIGHLIGHTS

Summarised income statement Year-end closing linked unit price

2013 2012 2011 2010 2009 Cents Group Group Group Group Group 2 000 1 898 R000 R000 R000 R000 R000 Property revenue 1 166 940 933 269 836 124 742 072 673 285 1 527 Straight-line rental income 1 500 1 423 accrual 4 829 45 993 14 368 7 041 6 209 Property expenses (452 811) (334 421) (293 603) (267 061) (235 606) 1 195 Net profit from property 1 000 operations 718 958 644 841 556 889 482 052 443 888 919 Income from asset management business 77 974 53 317 65 146 3 067 - Expenditure – asset 500 management business (32 022) (30 792) (20 233) - - Corporate administrative expenses (29 192) (25 919) (25 509) (23 781) (20 137) 0 Investment and other March March March March March income 25 615 13 557 14 380 21 188 8 712 2009 2010 2011 2012 2013 Operating profit before finance costs 761 333 655 004 590 673 482 526 432 463 Finance costs (194 285) (165 633) (161 803) (145 340) (131 358) Profit before debenture interest 567 048 489 371 428 870 337 186 301 105 Distribution Debenture interest (554 368) (437 224) (403 948) (319 231) (288 755) Cents per linked unit

Profit before capital 131.6 items 12 680 52 147 24 922 17 955 12 350 124.8

140 117.6

Headline earnings per 107.9 linked unit (cents) 136.16 134.48 124.36 107.89 99.56 120 97.9

100 74.6 70.5 67.1

Statement of financial position 80 60.9 57.0 53.8 54.3 50.5 47.0

2013 2012 2011 2010 2009 60 44.1 Restated Restated Group Group Group Group Group 40 GROUP R000 R000 R000 R000 R000 20 ASSETS Investment properties 7 389 656 5 806 158 5 083 993 4 811 152 4 545 731 0 Straight-line rental income 2009 2010 2011 2012 2013 adjustment (148 411) (131 179) (99 153) (85 715) (79 024) Interim Final Total Other non-current assets 529 061 501 650 502 579 546 733 166 845 Current assets 1 351 664 266 881 409 218 261 066 89 935 Investment properties held for sale 323 202 321 195 281 422 92 333 - Total assets 9 445 172 6 764 705 6 178 059 5 625 569 4 723 487 EQUITY AND LIABILITIES Equity attributable to owners of the parent 2 626 187 2 074 470 1 696 065 1 381 502 1 145 101 Non-current liabilities 5 755 367 3 022 150 3 618 098 3 463 718 3 258 160 Linked debentures and Vukile Property Fund Limited premium 3 275 222 2 113 213 2 116 916 1 890 753 1 534 420 Jse Code : VKE • Nsx Code : VKN Other interest-bearing borrowings 2 414 522 448 790 1 226 282 1 012 203 1 245 827 Granted REIT status with the JSE Derivative financial instruments 59 330 25 644 21 867 28 136 16 493 One-on-Ninth Deferred taxation liabilities 6 293 434 503 253 033 532 626 461 420 Corner Glenhove Road and Ninth Street Current liabilities 1 063 618 1 668 085 863 896 780 349 320 226 Melrose Estate, 2196 Total equity and liabilities 9 445 172 6 764 705 6 178 059 5 625 569 4 723 487 PO Box 2234, Parklands, 2121 PERFORMANCE OVERVIEW 2013

VACANCY PROFILE COST TO INCOME RATIO (GLA) (Stable portfolio)

% Rm % % Rbn R/m2 No. of Properties Cents per linked unit Cents 36.6 36.6

35.4 78 7 6.8 800 40 40 35.4 8 7.694 8 000 80 140 2 000 1 898 7 477 74 33.2 33.0 33.0 33.2 73 73 72 6.1 698.6 30.7 6 700 30.7 7 7 000 6 629 70 120 5.3 6.113 1 527 5 816 600 30 562.4 30 6 6 000 60 1 500 1 423 5 537.9 5.352 5 321 100 500 473.6 5 4.889 5 000 4 924 50 1 195 3.9 440.4 4.531 17.8 17.8 17.7

4 17.7 80 17.2 17.0 17.2 17.0 16.9 16.9 20 919 3.1 400 20 4 4 000 40 1 000 3 60 300 3 3 000 30 2 40 200 10 10 2 2 000 20 500

1 100 1 1 000 10 20

0 0 0 0 0 0 0 0 0 2009 2010 2011 2012 2013 2009 20102009 2011 201220102013 2011 2012 20092013 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 All recurring expenses All recurring expenses Interim Final Total All recurring expenses excluding rates and taxesAll recurring and expenses excluding electricity rates and taxes and electricity

investment property investment property number of properties (Market value) (Market value R per m2)

% %% Rm RmRm % %% Rbn RbnRbn R/m2R/mR/m2 2 No. ofNo. No.Properties of of Properties Properties CentsCents perCents linked per per linked unitlinked unit unit CentsCentsCents

36.6 36.6 36.6 78 7878 7 77 6.8 6.86.8 800 800800 40 4040 35.4 35.4 35.4 8 88 7.694 7.6947.694 8 0008 8000 000 80 8080 140 140140 2 0002 2000 000 1 898 1 8981 898 7 477 7 4777 477 74 7474 33.0 33.0 33.0 33.2 33.2 33.2 737373 73 73 73 72 7272 6.1 6.16.1 698.6 698.6698.6 6 66 700 700700 30.7 30.7 30.7 7 77 7 0007 7000 000 6 629 6 6296 629 70 7070 120 120120 5.3 5.35.3 6.113 6.1136.113 1 527 1 5271 527 5 816 5 8165 816 600 600600 562.4 562.4562.4 30 3030 6 66 6 0006 6000 000 60 6060 1 5001 1500 500 1 423 1 4231 423 5 55 537.9 537.9537.9 5.352 5.3525.352 5 321 5 3215 321 100 100100 500 500500 473.6 473.6473.6 5 55 4.889 4.8894.889 5 0005 5000 0004 924 4 9244 924 50 5050 1 195 1 1951 195 3.9 3.93.9 440.4 440.4440.4 4.531 4.5314.531 17.8 17.8 17.8

4 44 17.7 17.7 17.7 80 8080 17.2 17.2 17.2 17.0 17.0 17.0 16.9 16.9 16.9 919 919919 3.1 3.13.1 400 400400 20 2020 4 44 4 0004 4000 000 40 4040 1 0001 1000 000 3 33 60 6060 300 300300 3 33 3 0003 3000 000 30 3030 2 22 40 4040 200 200200 10 1010 2 22 2 0002 2000 000 20 2020 500 500500

1 11 100 100100 1 11 1 0001 1000 000 10 1010 20 2020

0 00 0 00 0 00 0 00 0 00 0 00 0 00 0 00 200920092009 2010 2010 2010 2011 2011 2011 2012 2012 2012201320132013 200920092009 2010 2010 2010 2011 2011 2011 2012 2012 2012201320132013 200920092009 2010 2010 2010 2011 2011 2011 2012 2012 2012201320132013 200920092009 2010 2010 2010 2011 2011 2011 2012 2012 2012201320132013 200920092009 2010 2010 2010 2011 2011 2011 2012 2012 2012201320132013 200920092009 2010 2010 2010 2011 2011 2011 2012 2012 2012201320132013 200920092009 2010 2010 2010 2011 2011 2011 2012 2012 2012201320132013 200920092009 2010 2010 2010 2011 2011 2011 2012 2012 2012201320132013 All recurringAllAll recurring recurring expenses expenses expenses InterimInterimInterim Final Final Final Total Total Total All recurringAllAll recurring recurring expenses expenses expenses excluding excluding excluding ratesrates andrates taxesand and taxes andtaxes electricityand and electricity electricity sectoral profile (Based on market value %)

60 54 53 54 54 50 50

40 37

30 30 29 29 29

18 20 17 16 17 13 10

0 2009 2010 2011 2012 2013

Offices Industrial Retail

INTEGRATED annual report 2013 1 East Rand Mall.

2 INTEGRATED annual report 2013 CORPORATE PROFILE

Vukile Property Fund Limited (‘Vukile’ or ‘the group’) is a property company, which was listed on the JSE Limited on 24 June 2004 (JSE code: VKE) and on the Namibian Stock Exchange on 11 July 2007 (NSX code: VKN). Vukile’s market capitalisation was approximately R8.2 billion at 31 March 2013 and its property portfolio was valued at R7.7 billion at year-end. There were 431 040 218 linked units in issue at year-end.

Vukile’s prime objective is to invest in properties with strong contractual cash flows for long-term sustainability and capital appreciation, leading to growing income distributions for linked unitholders. Vukile is the first property company to be awarded Real Estate Investment Trust (REIT) status by the JSE Limited. Vukile became a REIT effective 1 April 2013.

INTEGRATED REPORTING AND SCOPE

The group takes pleasure in presenting its third integrated annual report to stakeholders for the year ended 31 March 2013. This integrated annual report has been prepared to assist stakeholders in assessing Vukile’s ability to create and sustain value. Vukile’s approach is to report on the significant issues within the business along with material matters identified through engagement with its stakeholders. The company believes that by following this approach it is able to provide stakeholders with information that is relevant to their decision-making and interaction with the group.

This integrated annual report covers the group’s business, sustainability and financial activities from 1 April 2012 to 31 March 2013. In addition, material post reporting date events and business developments are also covered in this report. Reporting is based on applicable legislation and accounting guidelines, the King III Report of Corporate Governance and JSE Listings Requirements.

The scope and boundaries of the information contained in this report describe the group’s business activities and property portfolios in South Africa and Namibia. This report aims to indicate how Vukile will create and sustain value for stakeholders over the short, medium and long-term.

Business Governance Sustainability review review review (page 11) (page 19) (page 33)

For more information please visit our website: www.vukile.co.za

INTEGRATED annual report 2013 3 PROPERTY PORTFOLIO

SCHEDULE OF PROPERTIES

Building Region Town RETAIL Bloemfontein Plaza Free State Bloemfontein Cape Town Bellville Barons Western Cape Cape Town Bellville Cape Town Kenilworth Motor Showrooms (Barlows Audi) Western Cape Cape Town Kenilworth Daveyton Shopping Centre Gauteng Daveyton Durban Phoenix Plaza KwaZulu-Natal Durban Phoenix Durban Qualbert Centre KwaZulu-Natal Durban Durban Workshop KwaZulu-Natal Durban Germiston Meadowdale Land Gauteng Germiston Meadowdale Germiston Meadowdale Mall Gauteng Germiston Meadowdale Giyani Plaza Limpopo Giyani Giyani Spar Centre (Masingita Spar Centre) Limpopo Giyani Katutura Shoprite Centre Namibia Katutura Kimberley Kim Park Northern Cape Kimberley Kokstad Game Centre KwaZulu-Natal Kokstad Lichtenburg Shopping Centre North West Lichtenburg Malamulele Plaza (Mala Plaza) Limpopo Malamulele Mbombela Shoprite Centre (Nelspruit Sanlam Centre) Mpumalanga Mbombela (Nelspruit) Mbombela Truworths Centre Mpumalanga Mbombela (Nelspruit) Monsterlus Moratiwa Crossing (94.50%) Limpopo Monsterlus Ondangwa Shoprite Centre Namibia Ondangwa Shaded properties denote top ten by value.

Durban Phoenix Plaza.

4 INTEGRATED annual report 2013 Building Region Town RETAIL continued Oshakati Shopping Centre Namibia Oshakati Oshikango Spar Centre Namibia Oshikango Piet Retief Shopping Centre Mpumalanga Piet Retief Pietermaritzburg The Victoria Centre KwaZulu-Natal Pietermaritzburg Pinetown Pine Crest (50%) KwaZulu-Natal Pinetown Randburg Square Gauteng Randburg Roodepoort Hillfox Power Centre Gauteng Roodepoort Rustenburg Edgars Building North West Rustenburg Sandton Bryanston Grosvenor Shopping Centre Gauteng Sandton Bryanston Soweto Dobsonville Shopping Centre Gauteng Soweto Dobsonville Windhoek 269 Independence Avenue Namibia Windhoek

OFFICES Cape Town Bellville Louis Leipoldt Western Cape Cape Town Bellville Cape Town Bellville Suntyger (Santyger) Western Cape Cape Town Bellville Cape Town Bellville Tijger Park Western Cape Cape Town Bellville Cape Town Parow De Tijger Office Park Western Cape Parow Cape Town Pinelands Pinepark Western Cape Cape Town Pinelands Centurion 259 West Street Gauteng Centurion Durban Embassy KwaZulu-Natal Durban Durban Westville Surrey Park KwaZulu-Natal Durban Westville Shaded properties denote top ten by value.

Pinetown Pine Crest.

INTEGRATED annual report 2013 5 PROPERTY PORTFOLIO continued

Building Region Town OFFICES continued East London Vincent Office Park (Oos London Sanlam Centre) Eastern Cape East London Johannesburg Bedfordview 1 Kramer Road (Bedfordview GIS) Gauteng Johannesburg Bedfordview Johannesburg Houghton 1 West Street (Johannesburg Houghton 2446) Gauteng Johannesburg Houghton Johannesburg Isle of Houghton Gauteng Johannesburg Houghton Johannesburg Parktown 55 Empire Road (Jhb Empire Road Gauteng Johannesburg Parktown Offices) Johannesburg Parktown Oakhurst Gauteng Johannesburg Parktown Midrand IBG Gauteng Midrand Midrand Ulwazi Building (Arivia.kom Building) Gauteng Midrand Midtown Building Gauteng Pretoria Pretoria Arcadia Suncardia (Sancardia) Gauteng Pretoria Arcadia Pretoria Hatfield 1166 Francis Baard Street (DLV Building) Gauteng Pretoria Pretoria Hatfield Festival Street Offices (Hatfield Sanlam Building) Gauteng Pretoria Hatfield Pretoria High Court Chambers Gauteng Pretoria Pretoria Lynnwood Excel Park (Wymark) Gauteng Pretoria Lynnwood Pretoria Lynnwood Sanlynn Gauteng Pretoria Lynnwood Pretoria Lynnwood Sunwood Park (Sanwood Park) Gauteng Pretoria Lynnwood Randburg Triangle Gauteng Randburg Sandton Bryanston Ascot Offices Gauteng Sandton Bryanston Sandton Bryanston St Andrews Complex Gauteng Sandton Epsom Downs Sandton Hyde Park 50 Sixth Road Gauteng Sandton Hyde Park Sandton Rivonia 36 Homestead Road (Barlow Place) Gauteng Sandton Rivonia Shaded properties denote top ten by value.

Sandton Sunninghill Sunhill Park (Sanhill Park).

6 INTEGRATED annual report 2013 Building Region Town OFFICES continued Sandton Rivonia Tuscany Gauteng Sandton Rivonia Sandton Sunninghill Place Gauteng Sandton Sunninghill Sandton Sunninghill Sunhill Park (Sanhill Park) Gauteng Sandton Sunninghill

INDUSTRIAL Bloemfontein Bree Street Warehouse (Trador Cash & Carry) Free State Bloemfontein Cape Town Parow Industrial Park Western Cape Parow Centurion Samrand N1 Gauteng Centurion Samrand Durban Valley View Industrial Park KwaZulu-Natal Durban Germiston Meadowdale R24 Gauteng Germiston Meadowdale Johannesburg Rosettenville Village Main Industrial Park Gauteng Johannesburg Rosettenville Kempton Park Spartan Warehouse (Hellman International) Gauteng Johannesburg Spartan Midrand Allandale Industrial Park Gauteng Midrand Midrand Allandale Land Gauteng Midrand Midrand Sanitary City Gauteng Midrand Pinetown Richmond Industrial Park (Richmond Park) KwaZulu-Natal Pinetown Pinetown Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown Westmead Pretoria Rosslyn Warehouse Gauteng Pretoria Rosslyn Randburg Trevallyn Industrial Park Gauteng Randburg Kya Sands Randburg Tungsten Industrial Park Gauteng Randburg Strijdompark Roodepoort Robertville Industrial Park Gauteng Roodepoort Robertville Sandton Linbro Galaxy Drive Showroom (Supra Hino) Gauteng Sandton Linbro Park

Pinetown Westmead Kyalami Industrial Park.

INTEGRATED annual report 2013 7 VISION VALUES

hrough our proactive management and • We act with integrity the sustainable growth of our diversified • We make a difference as a team Tportfolio, Vukile aspires to be a leading • We are client focused We are passionate about success property company by providing a top quality • • We deliver results to unitholders experience for our tenants and their customers • We treasure our partnerships and in so doing generate superior returns for • We are responsible corporate citizens our stakeholders. • We are proactive

STRATEGY

CRITICAL SUCCESS FACTORS* Vukile has developed a strategy aimed at creating and sustaining value over the short, medium and long-term through operating a diversified fund which is overweight in the retail sector. The strategy is underpinned by the achievement of the following critical success factors (CSFs).

Operational efficiencies

Grow the portfolio

Stakeholder engagement

Optimise short-term and long-term returns Customer and tenant focus Invest in our people

Minimise cost of funding

and refinance risk

Transformation

* Updated January 2013.

8 INTEGRATED annual report 2013 STRATEGY

DELIVERING ON STATED STRATEGY During the year under review, Vukile made significant progress in achieving and delivering on its critical success factors as reflected in the table below.

Critical success factor* Notable achievements Optimise short-term and long-term returns • Annual growth in distribution of 5.4% continues the unbroken record of growth in distributions since listing in 2004. • Growth in unit price for the year of 24.3%, which together with the year’s distribution of 131.59 cents, resulted in a total return to unitholders of 33%. • Winner of International Property Database (IPD) award for the fund returning the highest total return over a three year period − testament to Vukile’s ability to deliver returns over a longer period. Grow the portfolio • Acquisition of a R1.5 billion diversified portfolio from Sanlam concluded in April 2012. • Acquisition of a 50% stake in East Rand Mall for R1.1 billion (transferred 2 April 2013). • Proposed acquisition of four to five national government tenanted buildings from Encha for c.R1.3 billion. Minimise cost of funding and refinance risk • Introduction of a Domestic Medium Term Note (DMTN) programme and unwinding of the CMBS programme. • Bank funding is diversified across four funding providers. • Overall cost of funding down to 8.10% from 9.36%. • Achieved A-unsecured rating and AA-secured rating for the DMTN programme. Improve customer and tenant focus • Research commissioned during the year at our main retail assets. • Outcomes led to re-tenanting and redevelopment opportunities to better meet customers’ needs and expectations. • Highlighted in the ongoing upgrade at Randburg Square and Durban Workshop which will meet customers’ requirements for the introduction of new retail clothing brands. Building sustainable partnerships • Strong relationships with the property managers, Broll and JHI. • The invaluable relationship with leasing brokers was strengthened by the introduction of a vacancy website, YouTube videos and Twitter feeds. • Established strategic relationship with specialist retail developer, McCormick Property Development (MPD). • Str ong project pipeline with MPD, which will result in co-ownership of five assets during F2014. Invest in our people • Successful revision of the long-term incentive scheme now known as the Conditional Unit Plan. • Introduction of the Unit Purchase Plan. • Both plans were approved by unitholders post year-end. Transformation • Encha Empowerment Transformation transaction, if approved by unitholders, will introduce Encha Properties as a significant shareholder in the company. • Encha CEO Sedise Moseneke will join Vukile as an executive director once the transaction is finalised. • Various other initiatives aimed at compliance with Property Sector Charter Scorecard. * CSFs as agreed by the board in October 2011.

INTEGRATED annual report 2013 9

Business Review

Vukile“ is gearing itself to the demands of a rapidly expanding portfolio. ” Business Review

Randburg Square. From the

uring the year under review, Vukile made great strides This is the highest return on property since pre-recession towards its strategic objectives of growing the size of levels and is a notable improvement on the 10.3% return ChairmanDthe fund, increasing its retail exposure and improving generated by the sector in 2011. the overall quality of the portfolio. These figures testify to the resilience of property as an In delivering on these objectives Vukile posted some significant investment vehicle, particularly in the prevailing soft economic markers. These include: climate with continued low levels of business and consumer • The transfer of 20 properties into Vukile’s name in confidence. However, most analysts agree that given the April 2012, following the R1.5 billion portfolio acquisition unlikelihood of a further cut in interest rates, the listed property from Sanlam. The portfolio included mainly good quality sector will probably not be able to maintain the high returns offices in decentralised nodes together with some retail of last year. assets. Following the above transaction, the PIC acquired an •  As noted in the SAPOA/IPD report, a divergence in the market approximate 20% shareholding in Vukile from Sanlam, has occurred. Retail property continues to remain buoyant reducing Sanlam’s stake in Vukile to around 5%. and industrial property has remained stable but concerns • The acquisition of a 50% share in the East Rand Mall remain over the health of the office sector as evidenced by for R1.1 billion, the transfer of which took place on 2 April 2013. The acquisition significantly enhanced high vacancies, particularly in city centres. Vukile’s exposure in the retail sector and the introduction of such a strong regional shopping centre adds further In March this year, the Real Estate Investment Trust (REIT) value and quality to the portfolio. legislation was formally adopted and Vukile was the first • An agreement with Encha Properties in March this year listed property company to be granted REIT status by to acquire four, predominantly national government- the JSE Limited effective 1 April 2013. The introduction tenanted, properties for an approximate R1.04 billion. A of REIT legislation is seen as a very positive development put and call option over the Pretoria Momentum Building for the sector. It not only removes any tax uncertainty that has been concluded on the same terms and condition as pertained to the property loan stock structure but also brings the main portfolio. The options can be exercised once a our property sector in line with most major global property new lease has been concluded with national government, markets and creates a legal structure that is well understood for a term of at least five years. On the assumption that by most international investors. With the conversion to REITs, the call or put options are exercised, the acquisition of the South Africa is expected to become the eighth largest REIT Momentum building will increase the value of the Encha market in the world and we expect that to be positive for portfolio to approximately R1.3 billion. capital inflows into the sector over time. With Vukile’s high The continued success of Vukile in accessing both the •  liquidity and growing market capitalisation, we anticipate that equity and debt capital markets through a series of well the company will in due course start to attract further foreign over-subscribed issues. unitholder interest. Market conditions Sustaining Vukile’s rapid According to the South African Property Owners Association/ International Property Databank’s (SAPOA/IPD) South Africa growth Annual Property Index, released in March this year, the South Since its listing on the JSE in 2004, Vukile has built one of African property sector delivered a 15.2% total return in 2012. South Africa’s most successful listed property companies and

12 INTEGRATED annual report 2013 as 2013’s results show, it is not only reaping the rewards of the contribution he has made as director, chairman of the past efforts but continues aggressively to pursue sustainable audit and risk committee and member of the property and growth in its profits and distributions. investment committee over the past nine years. We wish him well in his future endeavours. Vukile’s success has been largely based on its early recognition of the critical factors that would enable its sustainable growth. Prospects Over the past nine years, it has steadily put in place all the I am confident that, building on the solid foundation laid over building blocks necessary to deliver value to its unitholders: a portfolio capable of generating good yields into the long-term; the past years, the company has the strategies, the resources a broad investor base and a prudent debt structure. and the management expertise to sustain its momentum in the year ahead and beyond. In 2011, a new strategy was set with a view to growing the portfolio more aggressively with a greater emphasis on retail, The board is therefore of the opinion that Vukile should again the property sector that has been most resilient, not only in be able to deliver sustainable growth in its distributions to these challenging market conditions but also over time and unitholders in the coming year. through the economic cycles. Acknowledgements Vukile is gearing its human capital, structures and systems to Vukile’s achievements of the past year are a tribute to the efforts the demands of a rapidly expanding portfolio, but in doing so of a number of people who merit acknowledgement here. it remains dedicated to the preservation of its characteristic qualities: energy, enterprise and tenacity, as well as a long- term vision aimed at maintaining sustainable growth in I would like to express my appreciation firstly to my colleagues distributions. on the board for the wide perspective and sound judgement they bring to the board’s deliberations. I also thank Vukile’s Board changes small but highly effective management team for their energy, As the company grows, so too does the demand for ever initiative and enthusiasm. A word of appreciation also goes higher standards of corporate governance. to Vukile’s property managers, namely JHI and Broll. The expertise and efficiency of these business partners are In line with this, Vukile continues to look at the composition essential to Vukile’s success. of its board to ensure that it equips itself with the optimal balance of high-level property experience, financial skills and Finally, but by no means least, we thank Vukile’s unitholders, independent oversight. The recent appointment of Sonja debt providers and its tenants for their confidence in the Sebotsa has further assisted the board in acquiring the company and continued support. necessary skills and has greatly enhanced the diversity of experience of the board with her background in investment banking as well as empowerment advisory work.

Also during the year, the board said farewell to Hendrik Bester who retired in August 2012. Hendrik has been a valued Anton Botha board member and the company is highly appreciative of Chairman

INTEGRATED annual report 2013 13 From the Chief

he original use of the proverb: “The more things stated objectives, it did so while maintaining a solid financial executivechange the more they stay the same,” has been and operating performance. To quote Mr Karr then: “The T attributed to French Novelist Alphonse Karr as far back more things change, the more they stay the same”. as the 1800s. Performance overview The year under review was characterised by tremendous Net profit available for distribution came to R556.4 million for activity and change at Vukile with significant strides being the year ended 31 March 2013, an increase of 26.7% on made on tangible delivery against our stated strategy in 2012’s R439.1 million. The distribution for the full year transforming the company. Yet, despite all the changes, we are amounted to 131.59 cents per linked unit, up 5.4% on last proud to report on yet another year of growth in distributions year’s 124.81 cents. The growth in actual distribution includes and strong returns for investors, thereby maintaining our track non-recurring income of 11 cents per unit which arose from record of annual growth in distributions since listing. Vukile earning sales commission on the R1.5 billion portfolio bought from Sanlam in the period under review. Excluding Despite delivering a total compounded investor return of this impact, the core business delivered a very healthy growth some 21% to linked unitholders since Vukile’s listing on of 8.1% on the previous year. the JSE Limited in 2004, the changing market, prevailing economic conditions and frenetic activity in the property The property portfolio performed well in a challenging sector necessitated a careful scrutiny of what and where the operating environment with net property revenue increasing company wanted to be in the next five to ten years. 7.0% on a like-for-like basis over the previous year. We achieved positive reversion across all three sectors and As a result of this introspection and strategic deliberations, achieved an overall reversion of 8.2% on the portfolio. New Vukile identified and adopted a growth strategy and set itself an leases were also concluded above budget for the portfolio ambition of growing the size of the fund to allow it to compete as a whole with retail being the star performer coming in at with the larger players in the industry in an effort to drive down 108% of budget. its cost of capital and hence be able to compete effectively for larger and better quality assets. It is the company’s stated The asset management business segment generated a net objective to run a diversified fund that has an approximate profit ofR 63.6 million compared to R33.0 million the year 60% weighting of retail assets while always looking to improve before while asset management and other fees of R49 million the quality of the overall asset base. We also set an initial were 12% higher than the previous year. target asset size of c.R10 billion. Vacancies based on gross lettable area were well contained It is therefore very gratifying for me to report that, in the year at 6.8% at the end of the year, compared to 7.6% at under review, not only did Vukile deliver strongly on its new 30 September 2012.

14 INTEGRATED annual report 2013 New leases and renewals of 277 911m² with a contract value Portfolio overview of R1.015 billion were concluded during the year while 87% of Vukile’s property portfolio at the end of the year consisted leases to be renewed during the year ended 31 March 2013 of 78 properties with a total market value of R7.694 billion were renewed or are in the process of being renewed. and a gross lettable area of 1 028 960m². Further details of the property portfolio including acquisitions and disposals, Despite an increase in the total cost ratio to 37% which developments and refurbishments are provided in the was driven by increased electricity and municipal charges, sustainability review on pages 33 to 59. controllable costs were well maintained at 18%. Accolades Treatment of sales commission Vukile’s astute management of its portfolio was recognised by earned the industry when it scooped the Overall Investment Property Since acquiring the asset management business from Sanlam Databank (IPD) Direct Property Investment Award for 2012 at in 2010, the stable earnings pattern of Vukile has been the tenth annual IPD Direct Property Investment Awards held impacted by the inclusion of unpredictable and lumpy sales in July 2012. commission the company earns from Sanlam when assets are sold from the Sanlam portfolio. This has impacted on the Vukile won this prestigious award for recording the highest certainty with which the investment community can forecast annual total return over a three-year period, based on un- Vukile’s distribution. From a management perspective, the geared property data for the funds measured by the IPD. lumpiness in earnings can tend to mask the true operating Vukile achieved a 17.5% total return across its entire portfolio, performance of the assets, as was the case in this past year. compared to an IPD overall benchmark of 10.9%.

Vukile also won the awards for the office and industrial Accordingly, we have decided that, going forward we property portfolio performances, having achieved a 19.5% will declare any non-recurring income less non-recurring total return on its industrial portfolio and a 16.3% total return expenditure as a special distribution in the period in which it is on its office portfolio over a three-year period. Vukile’s earned. This will then be split out and clearly distinguishable performance in these sectors was significantly higher than from the core property earnings which we will refer to as our the IPD benchmark. These awards are testament to the normalised distribution. For ease of reference and to create high quality asset management and investment teams in the an appropriate base from which to evaluate future earnings company and demonstrate our ability to deliver value over the growth, we have reported in this set of numbers both the medium and longer term. normalised distribution and the distribution associated with the sales commission earned in FY2013. Funding Vukile’s growth Vukile’s appetite for expansion has been prudently managed. In that light, the abnormal sales commission of c.R64 million To partly finance the East Rand Mall acquisition, the company earned on the sale of the East Rand Mall by Sanlam will be successfully issued R250 million in commercial paper and distributed as a special distribution in the first half of FY2014 R300 million unsecured corporate bonds under its new and most likely at or around the time when the first half Domestic Medium Term Note (DMTN) programme. The issue distribution is paid in December 2013. was heavily oversubscribed and the clearing spreads of the

INTEGRATED annual report 2013 15 CHIEF EXECUTIVE’S Report continued

three and five year unsecured bonds were the same as the Following the conclusion of this deal, and assuming the option secured bonds issued in May 2012. to acquire the Momentum building is exercised at a later stage once at least a five year lease has been concluded, Encha will Following the launch of the DMTN programme, the re- own an ungeared stake in Vukile representing a holding of financing of a R450 million bank facility with a R640 million c.5.6% in Vukile’s enlarged unit capital. For purposes of the facility in July 2012, and the new issuance of R550 million Property Sector Charter, this will represent a c.18.8% holding under the DMTN programme, the company’s current all-in in Vukile, after adjusting for mandated investments. cost of finance, including margins and amortised debt raising fees, reduced from 9.36% at 31 March 2012 to a current rate A special purpose vehicle has been created within Encha to of 8.1%. Additionally, Vukile’s gearing at the end of the year assist Encha in acquiring more Vukile units and to ensure that stayed at a conservative 33.5%. Vukile’s empowerment credentials are not diluted through future rights offers or issues of shares. The special purpose vehicle The overall financing structure is well diversified across a is designed to ensure the long-term alignment of interests number of measures. Approximately half the debt has been between the two companies and the broader Vukile unitholder secured through traditional bank sources with the balance base. Other such measures include an undertaking by Encha being sourced from the debt capital markets through the to hold all its Vukile units for at least eight years; to grant Vukile DMTN programme where we have issued both secured the right of first refusal to any otherE ncha properties; and to and unsecured notes across a range of tenors, all at very offer Vukile, in the first instance, all property-related corporate competitive rates. Vukile adopts a conservative approach to opportunities in South Africa to exploit. interest rate risk and 91% of funding is hedged.

Focus on sustainability A sub-portfolio (Sovereign Tenant Portfolio) will be established within Vukile to house the new properties and possibly other Growth in distributions and scale is not the only requirement government-tenanted properties that Vukile may own or for a sustainably successful property company. A high level acquire. Encha will be appointed as the property and asset of engagement with Vukile’s service providers, tenants and manager of this new sub-portfolio and this will allow the their customers, employees, the communities in which our company to qualify for long-term government leases. buildings are located and the environment is also essential, and is therefore an integral part of Vukile’s management system. In addition, Encha CEO Dr Sedise Moseneke will join Vukile as an executive director once the transaction has been Underlining the importance the company attaches to these finalised and we welcome him to our management team. matters, a detailed sustainability review has been included in He will manage the Sovereign Tenant Portfolio but will also this report. This review details the significant progress Vukile have broader responsibilities to help grow the business and has made but it also points to the work that still has to be specifically drive transformation throughout the business. He done. is a former SAPOA president and we look forward to tapping into his broad industry experience and expertise. Over the next few years, Vukile will therefore continue to work in a robust and systematic manner towards the achievement Vukile is fully committed to the successful transformation of of these priority goals: positioning Vukile as an employer of the South African listed property sector and I believe this choice; developing close and productive partnerships with the broking community and property developers; taking deal has tremendous benefits for Vukile in that it allows it careful note of the matters that most affect our tenants and to implement a sustainable transformation transaction done their customers; limiting Vukile’s footprint on the environment in a commercially viable manner that is not only earnings through the efficient use of space and power; and raising the enhancing but also serves to create long-term alignment standard of living across all the communities in which Vukile’s across our various stakeholders. buildings are located. Prospects Focus on transformation With both the local and international economic environment Vukile’s agreement to acquire a portfolio of four to five properties remaining stubbornly sluggish we expect the forthcoming from Encha Properties in exchange for a combination of cash year to be a challenging one and very much in line with the and an issue of Vukile linked units is one of the most significant past year from an operating perspective. We are, however, broad-based black economic empowerment transactions to happy with the quality and performance of our underlying date in the listed property industry. property portfolio.

16 INTEGRATED annual report 2013 We anticipate our retail assets to continue performing well, respect of sales commission earned on the sale of East Rand while the office sector is expected to remain tough and there Mall from the Sanlam portfolio. The forecast information in will be an added impetus to try and move vacant space in the this prospects paragraph has not been reviewed or audited year ahead. Our deal pipeline remains full and the introduction by Vukile’s auditors. of various new assets, including the Encha assets, will add positively to the portfolio in all material respects and are The Vukile management team has again been very effective expected to be earnings enhancing over the short, medium and I take this opportunity of congratulating and thanking them and long-terms. for the valuable contribution they have made. I also extend my thanks to the chairman and board for their full support and Having adopted our new disclosure protocol of separating valued input provided so generously over the past year. A out the impact of non-recurring income and declaring it as a special word of appreciation is also due to the company’s special distribution and distinct from our normalised or core business partners without whose dedication and hard work earnings base, we currently expect to deliver a growth in the company would not be able to perform as it has. normalised distribution of between 4% and 6% for the year to March 2014 (March 2013: 120.44 cents per linked unit). We expect this figure to rise to between 6% and 8% for the total distribution for the year ending 31 March 2014 (March 2013: 131.59 cents per linked unit) when taking into account Laurence Rapp the special distribution of c.R64 million that will be declared in Chief executive

East Rand Mall.

INTEGRATED annual report 2013 17

Governance review As the“ company grows, so too does the demand for ever higher standards of corporate governance. ” Governance review

Pinetown Pine Crest. DIRECTORATE

EXECUTIVES responsible for asset management within Vukile, managing both the Vukile portfolios and the Sanlam portfolio which is LAURENCE GARY RAPP (42) managed on an outsourced basis by Vukile. Chief executive officer Appointed: 1 January 2010 BCom (Hons), Wharton Executive Programme Laurence has extensive experience in the financial services INDEPENDENT NON-EXECUTIVES environment, spanning investment banking, private equity, retail banking and insurance and asset management. He was ANTON DIRK BOTHA (59) previously a director of Standard Bank, having headed the Chairman Insurance and Asset Management division and, prior to that, BProc, BCom (Hons), Stanford Executive Programme being in charge of the Strategic Investments and Alliances Anton is a director and co-owner of Imalivest, an investment division. group. He also serves as a non-executive director on the Appointed: 1 August 2011 boards of University of Pretoria, JSE Limited, Sanlam Limited MICHAEL JOHN POTTS (58) and certain Sanlam subsidiaries and African Rainbow Financial director Minerals Limited. Anton made his career in investments. As CA (SA), HDip Tax Law (Wits) chief executive he lead the team that built Gensec Limited into Michael is a founding director of Vukile and prior to joining Vukile a leading South African investment banking group. was an independent advisor to the Bridge Capital Group on Appointed: 17 May 2004 property transactions, property portfolio assembly, financial structuring and capital raising. Prior to that, he was managing and STEFANES (Steve) FRANCOIS BOOYSEN (50) financial director of the South African group that forms part of the DCom, CA (SA) UK-based Hanover Acceptances Group and was involved in the Steve is the former group chief executive officer of Absa restructuring of the South African group and the introduction of Group Limited. Steve also serves on the boards of Steinhoff effective management reporting systems and strategic planning International Holdings Limited, Clover Industries Limited, methodologies. Michael was also a non-executive director of Efficient Financial Holdings Limited and Senwes Limited. Hanover Acceptances Limited (United Kingdom) and Outspan Appointed: 20 March 2012 International Limited for six and seven years respectively. Appointed: 17 May 2004 PETER JOHN COOK (66) BSc Eng (Wits), MBA (Wharton) HERMINA (Ina) CHRISTINA LOPION (53) Peter retired as an executive director of Sanlam’s financial Executive director: asset management engineering subsidiary Sanlam Capital Markets (SCM) in 2005. BSc, University of Stellenbosch, Sanlam Executive He continues to serve on the board and board committees of Development Programme: Manchester Business School SCM and other Sanlam subsidiaries. Peter was the deputy Ina has 21 years’ property experience and six years’ life chief executive of Gensec Bank (now SCM) from 2001 to insurance experience within the Sanlam Group. She is 2004 and the executive director responsible for finance, risk

1 Peter Cook 2 Mlungisi Hlongwane 3 Ina Lopion 4 Laurence Rapp 5 Mervyn Serebro 6 Peter Moyanga 7 Anton Botha 8 Nigel Payne 9 Sonja Sebotsa 10 Michael Potts 11 Steve Booysen

1 2 3 4 5

20 INTEGRATED annual report 2013 management and other support functions of investment banking position with McDonald’s Corporation for 10 years. In addition group Genbel Securities from 1997 to 2000. From 1993 to to his business interest, Peter is also a director of Reach for a 1997, Peter was the finance and administration director of the Dream Foundation. oil company, Engen. Prior to 1993 he held various executive Appointed: 17 May 2004 financial and investment positions in the mining finance house, Gencor. NIGEL GEORGE PAYNE (53) Appointed: 17 May 2004 BCom (Hons), CA (SA), MBL Nigel is a chartered accountant, having obtained his BComm SONJA emilia ncumisa SEBOTSA (41) and Higher Diploma in Accounting from Rhodes University. LLB (Hons), MA Economics and Business, Harvard He further holds a Masters in Business Leadership degree Executive Programme from the University of South Africa and is a Certified Internal Sonja has extensive experience in the investment banking Auditor. He has previously served as a partner at KPMG industry, is a co-founder of Identity Capital Partners, and was and Head of Internal Audit at Transnet. Nigel is a member previously a vice president in the investment banking division of Deutsche Bank and an executive director of Women’s of the King Committee on Corporate Governance and also Development Bank Investment Holdings. serves on the boards of Bidvest Group Limited, JSE Limited, Appointed: 16 May 2013 BSi Steel Group Limited and Mr Price Group Limited, where he holds the position of chairman. JONATHAN MLUNGISI HLONGWANE (49) Appointed: 20 March 2012 Mlungisi is a director and shareholder of Isolenu Group Holdings, which owns a commercial property portfolio across HYMIE MERVYN SEREBRO (66) the country, both in the unlisted and listed sectors. He has Mervyn is the former chief executive officer of Vusani Property been involved in civic and community movements since 1979 Investments, a fully empowered privately held consortium and is the past national president of the South African National embracing retail and office properties. He spent 32 years with Civic Organisation (SANCO). He is the former chairman of the OK Bazaars Group within which he held a number of key Lazarus Capital (Pty) Ltd. positions and directorships, including that of group managing Appointed: 30 May 2006 director. Mervyn was integrally involved in the establishment of a South African Bone Marrow Registry after the untimely PETER SIPHO MOYANGA (48) death of his son Darren of leukemia. He is also the vice Peter is an owner operator franchisee of the world renowned chairman of Reach for a Dream Foundation and founding fast foods franchise McDonald’s with whom he has seven member of the Innovative Cancer Care Foundation. restaurants. Previously, Peter held a senior management Appointed: 17 May 2004

6 7 8 9 10 11

INTEGRATED annual report 2013 21 SENIOR MANAGEMENT

1 2 3 4 5 6 7 8

COLLECTIVE EXPERIENCE

Years’ property Senior management Position experience 1 Johann Pretorius (46) Asset manager 11 2 Kobus Ferreira (55) Asset manager 24 3 Pieter Retief (61) Asset manager 33 4 Estelle Grobler (48) Senior manager − valuations and MIS 22 5 Ralph Wellhöner (48) Senior manager − acquisitions 23 6 Johann Neethling (36) Company secretary/Senior manager − corporate services 10 7 Nick Els (63) Senior manager − acquisitions 42 8 Johan le Roux (60) Senior manager − projects 30 9 Itumeleng Mothibeli (29) Asset manager 6 10 Laurence Rapp (42) CEO 2 11 Bonnie Olivier (61) Senior manager − sales 32 12 Mike Potts (58) Financial director 11 13 Theresa Myburgh (47) Senior manager − finance 13 14 Ina Lopion (53) Executive director − asset management 21 15 Thulani Makhubu (41) Asset manager 14 16 Frans Rootman (63) Asset manager 42 Over 330 years

22 INTEGRATED annual report 2013 9 10 11 12 13 13 14 15 16

Sandton Sunninghill Sunhill Park (Sanhill Park).

INTEGRATED annual report 2013 23 CORPORATE GOVERNANCE AND RISK MANAGEMENT

ukile, incorporated under the provisions of the Companies Act, maintains a primary listing of its linked units on the VJSE Limited (JSE) and a secondary listing on the Namibian Stock Exchange (NSX).

The board considers corporate governance a priority and Independent non-executive directors the application of sound corporate governance structures, SF (Steve) Booysen policies and practices as paramount to the success of a PJ (Peter) Cook sustainable business for the benefit of all Vukile stakeholders. JM (Mlungisi) Hlongwane PS (Peter) Moyanga KING III NG (Nigel) Payne HM (Mervyn) Serebro The board is committed to complying with the Code of SEN (Sonja) Sebotsa Governance Principles as set out in King III. The board further aims to apply the best practice recommendations, as set Chairman and independence out in the King Report, in a manner that reflects the stature, The roles of the chairman and chief executive are separate market position and size of the group. A detailed list of the and the office of the chairman is occupied by an independent group’s application of the King III principles can be viewed non-executive director. All other non-executive directors are on Vukile’s website at www.vukile.co.za/governance/king3. also considered to be independent.

THE BOARD Chief executive The board appoints the chief executive (CEO). Mr Laurence The board is collectively responsible to the group’s Rapp serves as CEO and was appointed on 1 August 2011. stakeholders for the long-term success of the group and for the overall strategic direction and control of the group. Compulsory retirement age The board exercises this control through the governance The compulsory retirement age of non-executive directors is 70. framework of the group which includes detailed reporting to the board and its committees, a system of internal controls Information and professional and a delegation of authority through an approval framework. advice The directors are entitled to seek independent professional The board discharges its responsibilities as contained advice at the group’s expense concerning group affairs and within its charter. The board charter can be viewed at have access to any information they may require in discharging www.vukile.co.za/governance/boardcharter. their duties as directors. They also have unrestricted access to the services of the company secretary. COMPOSITION AND APPOINTMENT OF BOARD EVALUATION DIRECTORS The board assesses its performance and that of its individual The details of the directors, including their qualifications, directors, as well as their independence, on an on-going basis. experience, expertise and appointment dates appear on Subsequent to year-end, the company secretary facilitated pages 20 and 21 of this integrated annual report. a self-assessment of the board and committee evaluation, under supervision of the chairman of the board. Matters Directors are appointed by the board, after review and considered in the evaluation focused on the effectiveness of nomination by the nominations committee (NC). All nominated the board and its committees, including: candidates are subject to an interview by the full board. • Composition • Performance Directors • Role of the chairman At the date of this report, the board consisted of 11 directors. • Appr opriateness of the board charter and committees’ terms of reference Chairman • Communication and interpersonal relationships AD (Anton) Botha • Board dynamics and leadership.

Executive directors A report on the outcome of the evaluation has been considered LG (Laurence) Rapp (Chief executive) by the board and actions have been agreed to enhance the MJ (Mike) Potts (Financial director) effectiveness of the board and its committees, including HC (Ina) Lopion (Executive director: asset management) directors’ development needs.

24 INTEGRATED annual report 2013 DEALING IN GROUP SECURITIES preparation and circulation of board papers, drafting annual Directors, executives and senior employees are prohibited work plans, ensuring that feedback is provided to the board from dealing in Vukile’s securities during certain prescribed and board committees and preparing and circulating minutes restricted periods. A formal securities dealings policy has been of board and board committee meetings. He provides developed to ensure directors’ and employees’ compliance practical support and guidance to the board and directors on with the JSE Listings Requirements and the insider trading governance and regulatory compliance matters. legislation in terms of the Securities Services Act. In May 2012, the JSE Listings Requirements were amended to provide that, with effect from 1 December 2012, company DIRECTORS’ DECLARATIONS AND boards must consider and satisfy themselves annually CONFLICT OF INTERESTS regarding the competence, qualifications and experience of Directors’ declarations of interests are tabled and circulated the company secretary, and also whether he maintains an at every board meeting. All directors are encouraged to arm’s length relationship. The performance of the company assess any potential conflict of interest and to bring such secretary, as well as his relationship with the board, is circumstances to the attention of the chairman. assessed on an annual basis. The company secretary is not a director of the company. COMPANY SECRETARY The company secretary is responsible for the duties set out in The board has evaluated the company secretary and it is Section 88 of the Companies Act and for ensuring compliance satisfied that he is suitably qualified for the role and that he with the Listings Requirements of the JSE Limited. Director maintains an arm’s length relationship with the board. induction and training are part of the company secretary’s responsibilities. He is responsible to the board for ensuring Details of the qualifications and competencies of the company the proper administration of board proceedings, including the secretary are set out below:

Company secretary Johann Neethling Date appointed June 2010 Qualifications FCIS, MCom Experience and expertise Johann has 14 years’ experience in general and corporate finance, accounting, governance and company secretariat. He joined Vukile as part of the management team when Sanlam’s asset management business was acquired by Vukile. Prior to that he held various positions within Sanlam Properties. He serves as director and vice-president of Chartered Secretaries South Africa.

BOARD AND COMMITTEE ATTENDANCE The attendance register of non-executive directors for each board and committee meeting for the year ended 31 March 2013, is set out below: Social, ethics and Audit and risk human resources Property and Board committee committee investment committee Nomination committee Scheduled Special meetings meetings Desig- Meetings Desig- Meetings Desig- Meetings Desig- Meetings attended attended nation attended nation attended nation attended nation attended AD Botha 4/4 6/6 Member 4/4 Chairman 3/3 HSC Bester 2/4(1) Former 1/4(1) Member 2/4(1) chairman SF Booysen 4/4 5/6(2) Member 4/4 Member 4/4 Member 3/3 PJ Cook 4/4 6/6 Member 4/4 Chairman 4/4 Member 3/3 JM Hlongwane 3/4(2) 6/6 Member 4/4 Member 4/4 Member 3/3 PS Moyanga 4/4 6/6 Member 4/4 Member 4/4 NG Payne 4/4 5/6(2) Chairman 3/4(2) Member 4/4 MH Serebro 4/4 6/6 Chairman 4/4 (1) Retired on 31 August 2012. (2) Absent with prior apology. Executive directors attended every meeting that required their attendance during the year.

INTEGRATED annual report 2013 25 CORPORATE GOVERNANCE AND RISK MANAGEMENT continued

BOARD COMMITTEES in maintaining an effective internal control environment by evaluating those controls continuously to determine whether AUDIT AND RISK COMMITTEE they are adequately designed and operating efficiently and The report by the audit and risk committee (AR committee) effectively and to recommend improvements. After a thorough is set out on pages 68 to 69 of this integrated annual report. review process the AR committee resolved to appoint Deloitte The committee’s terms of reference can be viewed at as the new internal audit service provider with effect from www.vukile.co.za/governance/termsofreference/arcommittee. 1 April 2013.

Internal control External audit It is the board’s responsibility to oversee the group’s system Grant Thornton are the external auditors of Vukile and its of internal control and to keep its effectiveness under review. subsidiaries, including the Namibian subsidiaries. The The system is designed to provide reasonable assurance independence of the external auditors is recognised and against material misstatement and loss. The system of internal annually reviewed by the AR committee. financial control is designed to provide assurances on the maintenance of proper accounting records and the reliability The external auditors attend all AR committee meetings and of financial information used within the business and for have unrestricted access to the chairman of the AR committee. publication. The internal control system includes a reasonable division of responsibility and the implementation of policies and Risk management review Our approach procedures which are communicated throughout the group. The group has documented its approach to risk management Internal audit in a formal policy. The strategic intent of our risk management For the period under review KPMG fulfilled the function policy is to create an environment in which risk management is of outsourced internal audit service provider. The group applied at a consistently high level across the group, enabling operates on an outsourced internal audit model. Internal management to take informed decisions, achieve business audit is responsible for assisting the board and management objectives and maximise returns for linked unitholders.

Johannesburg Isle of Houghton.

26 INTEGRATED annual report 2013 Key risks Risk description Risk action/treatment Inability to maintain distribution growth Control: Ongoing active management of portfolio and focus on operational within top quartile of the sector. efficiencies. Cost inflation arising from utilities and Control: Active management of utility costs (especially electricity) through our local councils. energy savings programme. Transfer: The price risk associated with recoverable expenses (based on market norms) is transferred to the tenant in terms of our lease agreements. Increased vacancies and higher cost of Control: The risk is treated through establishing strong broker relationships re-letting. (ensuring that Vukile is top of mind in the broker community), developing targeted broker incentive schemes, our interactive broker website and ensuring that asking rentals are market related. Inability to refinance major debt Control: Further utilise the DMTN programme, enabling us to issue various types exposures at acceptable terms and of instruments (secured/unsecured bonds and secured/unsecured commercial conditions. paper) maintaining at least a 90% hedging of interest bearing debt in place.

PROPERTY AND INVESTMENT COMMITTEE The committee’s terms of reference can be viewed at Current members www.vukile.co.za/governance/termsofreference/property • HM Serebro (Chairman) &investmentcommittee. • JM Hlongwane HC Lopion • SOCIAL, ETHICS AND HUMAN RESOURCES PS Moyanga • COMMITTEE • NG Payne The report by the social, ethics and human resources (SEHRC • LG Rapp committee) is set out on pages 28 to 31 of this integrated annual report. The property and investment committee is an important element of the board’s system to drive its growth strategy through acquisitions, redevelopments and refurbishments. The committee’s terms of reference can be viewed at The committee comprises two executive directors and four www.vukile.co.za/governance/termsofreference/sehr independent non-executive directors. committee.

Durban Phoenix Plaza.

INTEGRATED annual report 2013 27 SOCIAL, ETHICS AND HUMAN RESOURCES COMMITTEE REPORT

he committee is constituted with a dual mandate. The The curriculum vitae of the members of the committee are set statutory duties of the committee are discharged in out on pages 20 to 21. Tterms of sections 72 (4) and (5) of the Companies Act, 2008, read with regulation 43 of the Companies Regulations The committee held four meetings during the period. All 2011, which states that all listed companies must establish these meetings were scheduled in advance. A summary of a social and ethics committee. meeting attendance is set out on page 25.

In addition to its statutory duties, the committee is Role of the committee in responsible for the strategic human resources issues of the respect of its social and group, including remuneration. ethics mandate The committee performs an oversight and monitoring role in Terms of reference respect of issues detailed in the Companies Act. The committee has adopted a combined formal terms of reference which have been approved by the board and will The committee is responsible for, inter alia: be reviewed on a periodic basis. • Monitoring the group’s activities against global responsibility protocols, including the UN Global Membership, meeting Compact Code and the principles of the Organisation attendance and evaluation for Economic Development Guidance (OEDG). The committee consists of four non-executive directors, all of • Monitoring compliance with the Employment Equity Act whom are independent. At 31 March 2013, the committee and BBBEE act. Monitoring of corporate citizenship, consumer relations, comprised the following members: • and the group’s impact on the environment, health and Directors Period served public safety. PJ Cook (Chairman)* 17 May 2004 – current SF Booysen 20 March 2012 – current AD Botha* 17 May 2004 – current JM Hlongwane* 30 May 2006 – current * Ser ved previously on the remuneration and nominations committee.

Social and ethics statement Global responsibility • The company supports and respects the principles as set out in the UN Global Compact protocols Code, OEDG’s recommendation on the prevention of corruption and the International Labour Organisation’s directive on decent work and working conditions. Work environment •  The company considers its workforce (a total of 32 employees as at 31 March 2013) to be its biggest and most important asset. Human rights and friendly labour practices are embedded in the company’s official values (refer to our value statement on page 8). Employment equity, BBBEE, •  The group has identified transformation as one of the group’s critical success factors. A transformation significant development in embedding transformation in the business is the conclusion of the Encha empowerment transformation transaction which, inter alia, will see Encha become a significant shareholder in the group and their CEO, Dr Sedise Moseneke, being appointed as an executive director. Corporate citizenship, •  The group aims to be a good corporate citizen and to be active in uplifting the communities consumer relations, and in which we operate. A report on our community involvement is presented on page 59. The the group’s impact on the group’s impact on the environment and health and safety are detailed on page 58 of this environment, health and integrated annual report. public safety Record of sponsorship, •   A register of the sponsorships, donations and humanitarian initiatives is maintained by the donations and humanitarian company secretary. For the year ended 31 March 2013, the total value of sponsorships, initiatives donations and humanitarian initiatives was c.R400 000.

28 INTEGRATED annual report 2013 Role of the committee the opportunity to continuously learn and improve their own in respect of its human performance and ultimately enable the organisation to build resources mandate the capacity to meet the requirements of an ever-changing and demanding business environment, are critical success The year under review has been a stable year from a staffing factors of Vukile’s human capital strategy for the future. perspective, after the appointment of Laurence Rapp as new CEO during the previous financial year. In line with our growth Our remuneration practices are based on core principles: strategy, two new appointments were made during the year • Adherence to legislative and regulatory requirements namely, Messrs Itumeleng Mothibili and Dean Steinberg. • Attraction and retention Itumeleng joined the team as senior manager within asset • Pay for performance management, while Dean joined the management information • Leverage and alignment systems (MIS) team following a six month internship. • Consistency • Competitiveness A major focus area for this year was the development of • Communication. appropriate incentive schemes to retain and attract talent. Both the short-term incentive bonus scheme (which was Remuneration structure included in the remuneration policy presented at last year’s Vukile’s remuneration policy applies common principles and AGM) and revised long-term incentive schemes were revised practices to all employees, including executive directors and during the year, the latter being approved post year-end. senior managers although the exact structure and quantum Vukile’s remuneration policy is set out below. of individual packages varies by role, seniority and retention criteria. Generally employees are remunerated on a Total Remuneration strategy Guaranteed Package (TGP) approach, which includes a and policy combination of base remuneration and benefits, commonly referred to as fixed remuneration. Vukile acknowledges that its people are the key driver to secure sustainable business success in the long-term. The ability of The table below summarises the components of the the organisation to engage its people to think and act like remuneration paid typically to executive directors and business leaders, to create an environment where people have management.

TYPICAL REMUNERATION OF EXECUTIVE DIRECTORS AND MANAGEMENT Fixed/variable Component Component description and intent Delivery mechanism Fixed Base salary • This is the non-variable element of the employees’ • TGPs remuneration package typically benchmarked and positioned at the market median. • The base salary reflects the scope and nature of  the role. Benefits • Benefits include health cover, retirement cover, insurance products such as death and disability cover. Variable Short-term • Aligns individual and group performance with the short- • Short-Term Incentive remuneration incentives (STI) term objectives of the group. Bonus Scheme • Focuses employees on achieving their targets as per their critical performance areas (CPA). Long-term • Long-term incentives promote a longer term view • Conditional Unit Plan incentives (LTI) of the business and ensures wealth creation for both • Unit Purchase Plan unitholders and employees.

INTEGRATED annual report 2013 29 SOCIAL, ETHICS AND HUMAN RESOURCES COMMITTEE REPORT continued

SUMMARY OF VARIABLE REMUNeRATION Short-Term Incentive Bonus Scheme The principles of the Short-Term Incentive Bonus Scheme (bonus scheme) are as follows: Discretion • The board has absolute discretion with regards to the rules of the bonus scheme, the amounts earned, the participants in the bonus scheme and annual amounts to be awarded. Participants in the scheme • Senior staff members on a Paterson Grade of D or higher. • Staff member has a maximum potential cash bonus cap. • Staff members on Paterson Grades of lower than D are paid an annual bonus equal to 15% of TGP subject to the achievement of CPA targets. Principle of determination of • Bonus pool comprises two components, ‘on-target’ component and an ‘out-performance’ bonus pool component. • On-target performance levels are set annually in the range of 33.3% to 66.7% of the maximum potential bonus pool size, having taken into account the specific targets, strategies and issues relevant to the group at the time. • Bonus pool threshold levels are set at 95% of the on-target group performance level. • Group performance at that threshold level will yield a bonus pool equal to 25% of the maximum potential bonus pool. Achievement below this level will result in no short-term incentive being paid unless the committee recommends the payment of bonuses to a limited number of employees for exceptional performance. • Any group performance that falls above the threshold level, yet beneath the on-target level, will result in a bonus pool (other than the people on the 15% scheme) pro-rated on a straight-line basis to reflect the achieved performance. • Out-performance of the on-target benchmark will result in the staff sharing in a percentage of such excess profit, which will be determined by the committee, but which will not exceed 50% of such excess profit. • This will be paid out in cash but always limited to the individual’s maximum capped cash bonus level. Should the performance in any one year yield an amount that is in excess of the maximum cash cap, such excess will fall within the terms and conditions of the Conditional Unit Plan. Amount actually paid out • For staff on the Paterson Grade D and above, any bonus payment will be split into two equal tranches. The first of which will be payable in May and the second six months later in November. All other staff will be paid their bonus in full in May.

30 INTEGRATED annual report 2013 Conditional Unit Plan The principles of the Conditional Unit Plan are as follows: Plan type • Forfeitable unit plan. Units are delivered to the participants subject to achievement of predetermined performance criteria. Plan limits • Overall limit: 2.5% of issued capital. • Individual limit: 0.5% of issued capital. • Annual limit: 0.5% of issued capital. Eligibility • Senior staff members on a Paterson Grade of D or higher. Allocation policy • Regular annual awards as percentage of TGP. • Percentages reviewed annually. • Allocation percentages for June 2013 allocation cycle: o CEO: 100 – 120% o Executive directors: 70 – 90% o Senior management: 40 – 60% o Other participants: 20 – 40%. Distributions • Paid to participants when declared, subject to claw-back. 1 Mix between group and • First portion of the award up to /3 of TGP is subject to personal performance. individual performance • Balance subject to group performance. conditions Performance conditions • 30% vesting at threshold target. • 100% vesting at stretch target (linear vesting in between). • Personal portion (CPA score): o Threshold = 70% o Stretch = 90%. • Group portion o Relative growth in distributions and share price over the South African Property Index (SAPI) over a three year period o Threshold = 100% index o Stretch = 110% index. Vesting dates • Three years from award date. Plan life • 10 years. Out-performance • If 120% of index performance is achieved, double the amount of units will be delivered to executive directors.

Unit Purchase Plan The principles of the Unit Purchase Plan are as follows:

Plan type • Purchase plan. Units are acquired by the participant through a loan provided by the company. Plan limits • Overall limit: 1.5% of issued capital. • Individual limit: 0.5% of issued capital. Eligibility • Executive directors and key senior management employees. Awards • Discretionary based on attraction, retention, and incentive criteria. Plan debt • 10 year loan. • Interest bearing at five year weighted average cost of debt or actual cost of funds raised for the allocation.

INTEGRATED annual report 2013 31

A high level of engagement with Vukile’s stakeholders

is an integral Su s tainability review part of its management system.

Sustainability review

Soweto Dobsonville Shopping Centre. KEY STAKEHOLDERS

Unitholders Service Tenants Communities and debt providers and their Employees in which funders and clients customers we operate

Sandton Bryanston Ascot Offices.

34 INTEGRATED annual report 2013 ECONOMIC PERFORMANCE

CLOSING PRICE VS MONTHLY VOLUME TRADED

Rand Volume (million)

20 25

19 20 18 15 17 10 16 15 5 14 0 Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar 2012 2013 Volume traded Closing price

ukile has made significant progress this year in GROWTH IN DISTRIBUTIONS improving the quality and size of its portfolio of The graph below reflects a constant upward trend in Vproperties. Acquisitions of properties during the year and in April 2013 amounted to R2.6 billion. Winnowing of the distributions. Distributions have increased by 114% from the portfolio was carefully pursued during the year which resulted first distributions declared for the year ended 31 March 2005. in the sale of 11 properties for R372 million at a premium to book value. DISTRIBUTION HISTORY

Cents per linked unit LIQUIDITY AND LINKED UNIT PRICE 131.6 124.8

During the 12 months ended 31 March 2013, 158 million 140 117.6 linked units were traded which equates to approximately 107.9 120

13.2 million linked units per month. 97.9 88.3 100 76.8

The total value of linked units traded during the year amounted 74.6 70.5 68.5 67.1

to R2.7 billion or 33.1% of the company’s market cap at 61.5 80 60.9 57.0 54.3 53.8

31 March 2013. 50.5 48.0 47.0 44.1

60 41.0 40.3 36.0 35.8 32.5 31.5 Vukile’s linked unit price has increased by 24% from 31 March 30.0 2012. The total capital and income return generated for 40 unitholders for the year ended 31 March 2013 amounted to 20 R5.03 or 33%. 0 The graph below reflects the comparative liquidity of Vukile 2005 2006 2007 2008 2009 2010 2011 2012 2013 against a mix of property companies – Vukile compares Interim Final Total favourably within this group. FINANCIAL RESULTS value traded as % of market The group’s net profit available for distribution increased capitalisation by R117.3 million to R556.4 million for the year ended 31 March 2013 (March 2012: R439.1 million), an increase of % 26.7%. 60

GRT 50 The acquisition of twenty properties from the Sanlam Group RDF 40 EMI SAC on 25 April 2012 contributed R86.7 million towards the HYP increase in distributable income as follows: 30 VKE 20 ACP R000 10 Net property revenue 126 144

0 10 000 20 000 30 000 40 000 50 000 60 000 Less: finance costs (39 464) Market capitalisation (Rm) as at 28 March 2013. 86 680

INTEGRATED annual report 2013 35 ECONOMIC PERFORMANCE continued

In terms of a circular distributed to unitholders in January Gross rental receivables (tenant arrears) 2012, relating to the acquisition of 20 properties from the Tenant arrears increased by R6.6 million from the prior Sanlam Group, net property revenue for the 10 months to year to R26.9 million at 31 March 2013. This increase 31 March 2013 was forecast at R109.7 million. This excludes has mainly arisen due to the acquisition of the R1.5 billion the straight-line rental accrual contained in the forecast. portfolio in April 2012, which increased the size of the Actual net rental income achieved from the date of transfer portfolio by c.25%. (25 April 2012), amounted to R126.1 million. The 10 months forecast income extrapolated for the same period equates Impairment allowance to R122.2 million. The actual results achieved reflect an The allowance for the impairment of receivables increased increase of R3.9 million over the profit forecast. Finance from R10 million at 31 March 2012 to R13.7 million at costs of R38.4 million were forecast for the 10 month period 31 March 2013, which is considered adequate at this stage. to 31 March 2013. Extrapolated from the earlier date of This represents 50.8% of tenant arrears. A summary of the transfer, the finance cost forecast equates to R42.75 million movement in the impairment allowance of trade receivables compared to the actual finance costs over the same period of is set out below. R39.5 million. Part of the savings in finance costs is R000 attributable to early repayment of certain of the debt raised to Impairment allowance 1 April 2012 10 028 finance this acquisition. Allowance for receivable impairment for the year 5 997 Receivables written off as uncollectable (2 372) SIMPLIFIED INCOME STATEMENT Impairment allowance 31 March 2013 13 653 Bad debt write-off per the statement of 2013 2012 comprehensive income 6 079 March March Calculation of distributable Group Group Asset Management Business earnings R000 R000 The asset management business segment generated a Net profit from property net profit of R63.6 million for the year against R33 million operations excluding straight-line in the prior year. This segment’s profit is reported gross of income adjustment 696 488 588 348 a consolidation adjustment of R17.6 million (March 2012: Net income from asset management business(1) 63 593 33 025 R10.5 million). Refer to note 1 of the simplified income Investment and other income 25 615 13 557 statement in the table alongside. Asset management and Administrative expenses (29 192) (25 919) other fees received of R49 million were 12% higher than the Finance costs(2) (194 285) (165 633) previous year, due to an increase in the size of the Vukile Taxation (excluding deferred tax portfolio and as a result of an internal charge to Vukile for on revaluation adjustments) (5 772) (4 278) asset management as highlighted in the table below. Available for distribution 556 447 439 100 (1) Internal asset management and other fees of R17.6 million Asset management fees are made up as follows: (2012: R10.5 million) eliminated on consolidation are included as property expenditure above and hence reduces net profit 2013 2012 from property operations and increases fee income generated Rm Rm in the asset management business segment. Asset management fees received (2) The increase in finance costs primarily relates to interest on from Sanlam 31.8 33.5 the R540 million loans raised to part finance the R1.5 billion Asset management fees received portfolio acquisition on 25 April 2012. from Vukile 17.6 10.5 49.4 44.0 Property Portfolio Results The property portfolio performed well in a difficult economic Sales commission received of R46.2 million was R27.1 million environment during the year under review. On a like-for- higher than the previous year, mainly due to the sale of a like basis (stable portfolio) net property revenue increased R1.5 billion portfolio on 25 April 2012 by Sanlam, which by 7.0% year-on-year, excluding a once-off lease payment portfolio was acquired by Vukile. of R27.8 million which was received on the expiry of a long-term structured lease in the prior year. Eleven non- The intangible asset of R362.8 million, which arose on the core properties were sold during the year as part of the acquisition of the Sanlam property asset management strategy to improve the quality of the portfolio. This resulted business, has been tested for impairment. A change in in a reduction in net property revenue of R26.2 million the income profile due to sales of properties in excess of for the year. R5.7 billion from 1 January 2010 to 30 April 2013 (generating

36 INTEGRATED annual report 2013 sales commission for Vukile of R162 million) will result in lower 2013 2012 asset management fees going forward, which together with March March variable future sales from the Sanlam portfolio, has resulted Cents per Cents per % in an impairment of R114 million in intangible assets from linked unit linked unit increase R267 million in the prior year to R153 million at 31 March 2013. Normalised distribution 120.44 111.43 8.1 This impairment does not impact on distributable earnings. Non-recurring distribution 11.15 13.38 Finance Costs Total distribution 131.59 124.81 5.4 Group finance costs, net of investment income, have increased The increase in normalised distributions year-on-year at by R17.2 million, from R152.1 million to R168.7 million. The 31 March 2013 equates to 8.1% and is a much stronger and increase in finance costs is primarily due to interest arising more accurate reflection of the performance of the business. on additional debt of R540 million raised to partly finance the acquisition of the R1.5 billion portfolio in April 2012. Following As highlighted in the unaudited condensed interim the introduction of the Domestic Medium Term Note (DMTN) financial statements and results for the six months ended programme and the refinancing of bank debt, the cost of 30 September 2012 issued on 23 November 2012, the debt has reduced from 9.36% (31 March 2012) to 8.1% at sale of East Rand Mall by Sanlam generated significant 31 March 2013. sales commission for Vukile. As the date of transfer was 2 April 2013, this non-recurring income falls within the Group Corporate Administrative March 2014 financial year. Expending Group corporate administrative expenditure of R29.2 million is The sales commission will be paid as a special distribution 12.7% higher than the previous year of R25.9 million. and clearly distinguished from the normalised distribution generated by the group. Additional consulting fees (tenant and customer surveys) and the costs of issuing a circular on 27 March 2013 contributed Unitholders are therefore advised that a special to this increase. distribution of non-recurring income amounting to c.R64 million will be paid at or around the same time as the DISTRIBUTION company’s first distribution for the six month period ending The distribution for the full year ended 31 March 2013 30 September 2013, payable in December 2013. increased by 6.78 cents per linked unit to 131.59 cents per linked unit (March 2012: 124.81 cents per linked unit), SUMMARY OF GROUP FINANCIAL an increase of 5.43% which represents 99.8% of the profit PERFORMANCE available for distribution. 2013 2012 Treatment of non-recurring income March March earned Headline earnings of linked units (Rm) 561 472 The company advised unitholders in the interim results Net asset value per linked unit (cents) 1 369 1 193 announcement issued on 23 November 2012 that, in order Distribution per linked unit (cents) 131.59 124.81 to report a more predictable and stable income stream for Loan to value ratio (%)(1) 33.5 27.6 investors going forward, abnormal sales commission and (1) Includes East Rand Mall at a directors’ valuation of R1.1 billion other non-recurring income earned would be paid as a in the calculation as debt was raised in March 2013 to partly separately identified special distribution in the financial year fund this acquisition. in which such non-recurring income is earned. As such, going forward, the company will report on its core property net asset value and cash flow earnings as part of the normalised distribution with any special The net asset value of the group increased over the reporting distributions arising from non-recurring income less non- period by 15%, from 1 193 cents per linked unit to 1 369 recurring expenditure being declared separately therefrom. cents per linked unit at 31 March 2013. The change in net asset value per linked unit, based on 431.04 million linked To facilitate ease of comparison, the following schedule units in issue at year-end, is set out in the NAV bridge graph reflects the distinction between normalised distributions and on the next page. The group net cash flow, reflecting the non-recurring distributions (sales commission plus other) over composition of cash generated and utilised during the year the past two financial years. under review, is also set out in the graph on the next page.

INTEGRATED annual report 2013 37 ECONOMIC PERFORMANCE continued

NAV BRIDGE GROUP NET CASH FLOW

Cents per linked unit R000

1 600 133 4 500 000 1 400 126 1 369 4 000 000 1 192 666 277 84 (8) (129) 3 500 000 1 200 1 109 (2) 6 3 000 000 (481 763) 1 000 364 851 (221) 2 500 000 1 243 263 800 2 000 000 600 1 500 000 1 267 304 738 201 (1 827 875) (9 316) 400 1 000 000 (168 670)

200 500 000 215 947 as previously reported Opening NAV balance (1 April 2012) Restatement of PY deferred tax units in issue Adjusted for additional linked Issue of linked units Issue of linked debentures Amortisation of debenture premium including share based remuneration Fair value surplus net of deferred tax Interest rate swap revaluation Net profit Distributions Closing NAV (31 March 2013) Balance 1 April 2012 Cash from operating activities Borrowing advances properties/fixed assets Proceeds on sale of investment Issue of linked units 0 0 Distributions investment properties and fixed assets Acquisition/improvements to financial assets Acquisition of available-for-sale Net finance costs Balance 31 March 2013

NAV Contribution to NAV growth

BORROWINGS This represents a reduction of 1.0% over the previous weighted The group’s finance strategy is to minimise funding costs and average all-in finance costs of the CMBS programme. The secured corporate bond debt of R1.02 billion is fully hedged. refinance risk. The business objectives that are necessary to implement this strategy can be summarised as follows: A R450 million bank facility was replaced with a R640 million Strategy Current position bank facility in July 2012 and comprises the following: Diversify funders to at least three providers Four funders Term Finance Diversify funding structures to incorporate, where appropriate: Months Rm costs Bank debt 47% of total debt Access facility 12 150 6.39% Secured bonds Term facility 20 150 7.71%(1) Commercial paper 53% of total debt Term facility 32 140 7.60%(1) DMTN notes } Development facility 18 200 6.82% Spread expiry terms of all interest bearing Achieved 640 debt to less than 25% per annum Hedge or fix >90% of interest bearing debt 91% hedged (1) These facilities have been hedged through interest rate swaps. Maximise interest income and limit negative Achieved through carry increase in access The above finance costs are inclusive of bank margins, debt facilities repay- able without break raising costs and interest rate hedge costs, where applicable. costs During March 2013 the company successfully issued R250 million commercial paper and R300 million unsecured The R1.02 billion securitisation programme was refinanced corporate bonds under its R5 billion DMTN programme to through a new R5 billion DMTN programme in May 2012. partly finance the acquisition of East Rand Mall, as follows: Secured corporate bonds of R1.02 billion were issued under this programme on 8 May 2012. The Global Credit Rating Term Interest Company (Pty) Ltd (GCR) awarded an AA (RSA) rating to Maturity date Year/s Rm rates these secured notes. 2013/09/28 0.5 75 5.59% 2014/03/28 1 175 5.91%(1) The average weighted all-in cost of the R1.02 billion corporate 2016/03/28 3 200 6.82%(1) (1) bonds issued equates to 8.6%, including the extension of 2018/03/28 5 100 7.36% existing interest rate swaps and new hedges over three to 550 6.46% five year periods. (1) These facilities have been hedged through interest rate swaps.

38 INTEGRATED annual report 2013 These finance costs are inclusive of bank margins, debt as security under the DMTN programme. The group has raising costs and interest rate hedge costs, where applicable. unutilised bank facilities of R638 million.

The clearing spreads of the three and five year unsecured VALUATION OF PORTFOLIO bonds were the same as those achieved for secured bonds The accounting policies of the group require that the directors issued in May 2012. The unsecured bonds carry an A rating value the entire portfolio every six months at fair market from GCR. value. Approximately one half of the portfolio is valued every six months, on a rotational basis, by registered independent Following the successful launch of the DMTN programme, third party valuers. The directors have valued the group’s the refinancing of a R640 million bank facility and the new property portfolio at R7.7 billion as at 31 March 2013. This is DMTN issuance of R550 million, the current all-in cost of finance, including margins and amortised debt raising fees, R1 581 million or 25.9% higher than the valuation as at equates to 8.1%, at 31 March 2013, down from 9.36% at 31 March 2012 mainly due to this acquisition of the 31 March 2012. R1.5 billion portfolio. The calculated forward yield for the portfolio is 9.4%. The company’s borrowing capacity is unlimited in terms of its Memorandum of Incorporation (MOI). The board policy, The external valuations by Broll Valuation and however, is to limit the group’s loan-to-value ratio (LTV) to Advisory Services (Pty) Ltd, part of the CBRE Affilliate 45%. The group’s LTV ratio at 31 March 2013 was 33.5% Network, and Jones Lang LaSalle (Pty) Ltd at compared to the bank’s covenants of 50% and the DMTN 31 March 2013 of 48.3% of the total portfolio are in line with covenant of 40% in respect of those properties mortgaged the directors’ valuations of the same properties.

Sandton Bryanston St Andrews Complex.

INTEGRATED annual report 2013 39 PORTFOLIO REVIEW

PROPERTY PORTFOLIO OVERVIEW is much more significant than its capital growth of just 4.8%. Industrial vacancies remained the lowest of all three sectors MARKET OVERVIEW at just 4.4% which is, however, a slight increase from the General economic uncertainty continues to hinder the vacancy of 4.2% in 2011. The industrial sector has been hard demand for office space. Weaknesses in the manufacturing hit by a depressed manufacturing sector, which is the biggest sector (coupled with on-going mining sector strikes) are likely hurdle to improved industrial rentals. In September 2012, the to continue to place a constraint on the demand for industrial physical volume of manufacturing production contracted at a (and in particular warehouse) space. yearly rate of 1%. An underperforming manufacturing sector However, according to the SAPOA/IPD South Africa Annual as well as slowed growth in retail sales does not augur well for Property Index, the South African commercial property sector the industrial sector. showed signs of renewed growth over 2012, delivering a 15.2% total return. This result marks a substantial Office property is still lagging quite considerably behind improvement on the 10.3% total return generated in 2011 the other sectors. Its 11.9% total return comprised 9.8% and brings the sector more closely in line with its 18 year long- income return and only 1.9% capital growth (the lowest of term average of 15.4%. The improvement is primarily as a the three sectors). This total return marks a slight uptick result of boosted capital growth of 5.8% with income returns from the 11.2% total return recorded in 2011. The office remaining relatively flat at 8.9%. sector remains suppressed partly due to weak labour market conditions and general economic uncertainties, and as such There was also a noticeable improvement in certain most of the sector has shown little to no growth. Vacancy fundamentals over 2012. Overall vacancies reduced slightly rates are still refusing to improve and market rentals have from 6.8% to 6.7% and rental growth increased from 6.2% registered a slight decline, with some growth seen here and to 7.2%, while rising operating costs – particularly electricity, there. According to SAPOA the national office vacancy rate rates and taxes, and municipal charges – continue to rose by 35 basis points from 10.35% in Q1 2012 to 10.7% in impede on income growth in the commercial property sector. Q1 2013. With a vacancy rate of just 1% in Q1 2013, prime Operating costs per square metre per month increased from office space continues to outshine the rest of the office sector. R37.70 to R42.50. [Source: Rode, IPD, Sapoa]

Retail property once again proved itself as the best PORTFOLIO OVERVIEW performer with the highest total return of the three sectors The group property portfolio at 31 March 2013 consisted of and the highest capital growth for the fourth year running. Its 78 properties with a total market value of R7.7 billion and 17.1% total return for 2012 comprised 8.1% capital growth gross lettable area of 1 028 960m², with an average value of and just 8.4% income return (the lowest of the three sectors). R99 million per property. Retail trading densities increased in Q4 2012 compared to the same period a year earlier, albeit to a lesser degree than in recent years, which is likely as a result of a slowdown in The inclusion of East Rand Mall, which was finalised post both retail sales growth and consumer confidence in 2012. year-end, increases the portfolio value to R8.8 billion and the Super regional and regional centres have outperformed the average property value to R111 million. rest of the retail sector in terms of vacancies, rental growth and capital growth. The geographical and sectoral distribution of the group’s portfolio is indicated in the graphs on page 41. The portfolio Industrial property showed significant improvement, recording is well-represented in most of the South African provinces and a 15.9% total return compared to the 11.9% recorded in 2011. Namibia. 86% of the gross income is derived from Gauteng, Its income return of 10.6% is the highest of all three sectors and KwaZulu-Natal, Western Cape and Namibia.

East Rand Mall.

40 INTEGRATED annual report 2013 Geographical Profile Post the 50% acquisition of East Rand Mall on 2 April 2013 % of gross income the retail exposure will increase to 59% with offices dropping to 30% and industrial reducing to 11%. Government services Gauteng (50%) Gauteng (54%) Retail (54%) Large national and Retail (45%) (48%) listed tenants, KwaZulu-Natal (21%) KwaZulu-Natal (18%) Offices (34%) Offices (24%) Rates and taxes (17%) government (ie local, Cleaning and security Namibia (8%) Namibia (6%) Industrial (12%) provincial and national) Industrial (31%) (10%) and major franchises Western Cape (7%) Western Cape (8%) (54%) Property management Free State (4%) TENANT Profile Free State (5%) 2013 fee (8%) 2013 2013 2013 2013 National and listed 2013 Maintenance contracts Limpopo (4%) Limpopo (3%) tenants, franchised (6%) and medium to large Mpumalanga (2%) Large nationalMpumalanga and (2%) Government services Gauteng (50%) AssetGauteng management (54%) Retail (54%) Retail (45%) professional firms listed tenants, (48%) fee (4%) North West (2%) North West (2%) (9%) KwaZulu-Natal (21%) KwaZulu-Natal (18%) Offices (34%) government (ie local, Offices (24%) Rates and taxes (17%) Sundry expenses (3%) Northern Cape (1%) provincial andNorthern national) Cape (1%) Cleaning and security Namibia (8%) InsuranceNamibia premiums(6%) (2%) Industrial (12%) Industrial (31%) Other (37%) and major franchises (10%) Eastern Cape (1%) Eastern Cape (1%) Western Cape (7%) BadWestern debt (2%) Cape (8%) (54%) Property management Free State (4%) Free State (5%) 2013 fee (8%) 2013 83% of costs from2013 top four categories. Top four regions2013 account for 86% of exposure. Top2013 four regions account for 86%National of exposure. and listed 2013 Maintenance contracts Limpopo (4%) Limpopo (3%) tenants, franchised (6%) and medium to large Mpumalanga (2%) Mpumalanga (2%) Asset management Geographical Profile professional firms fee (4%) North West (2%) North West (2%) (9%) Sundry expenses (3%) % of GLA Northern Cape (1%) Northern Cape (1%) Insurance premiums (2%) Other (37%) Bad debt (2%) Eastern Cape (1%) Eastern Cape (1%) Government services Gauteng (50%) Gauteng (54%) Retail (54%) Large national and Retail (45%) (48%) listed tenants, 83% of costs from top four categories. Top four regions account for 86% of exposure. Top four regions account for 86% of exposure.KwaZulu-Natal (21%) KwaZulu-Natal (18%) Offices (34%) Offices (24%) Rates and taxes (17%) government (ie local, Cleaning and security Namibia (8%) Namibia (6%) Industrial (12%) provincial and national) Industrial (31%) (10%) and major franchises Western Cape (7%) Western Cape (8%) (54%) Property management Free State (4%) Free State (5%) The average outstanding lease period is 2.25 years. Vukile’s 2013 fee (8%) 2013 2013 2013 2013 National and listed 2013 Maintenance contracts Limpopo (4%) Limpopo (3%) tenant concentration risk is considered to be moderate as the tenants, franchised (6%) and medium to large Mpumalanga (2%) Mpumalanga (2%) top 10 tenants account for 27.2% of total GLA. Shoprite is Asset management the single largest tenant, occupying 5.3% of total GLA with professional firms fee (4%) North West (2%) North West (2%) (9%) Sundry expenses (3%) local, provincial and national government the second largest Northern Cape (1%) Northern Cape (1%) Insurance premiums (2%) at 4.5% of total GLA. Other (37%) Bad debt (2%) Eastern Cape (1%) Eastern Cape (1%)

83% of costs from top four categories. Top four regions account for 86% of exposure. Top four regions account for 86% of exposure.

SECTORAL Profile SECTORAL Profile % gross income % of GLA

Government services GovernmentGauteng (50%)services GautengGauteng (50%) (54%) GautengRetail (54%)(54%) Large nationalRetail and(54%) LargeRetail national (45%) and Retail (45%) (48%) (48%) listed tenants, listed tenants, KwaZulu-Natal (21%) KwaZulu-NatalKwaZulu-Natal (21%) (18%) KwaZulu-NatalOffices (34%) (18%) Offices (34%) Offices (24%) Offices (24%) Rates and taxes (17%) Rates and taxes (17%) government (ie local, government (ie local, Cleaning and security CleaningNamibia and (8%) security NamibiaNamibia (8%) (6%) NamibiaIndustrial (6%) (12%) provincialIndustrial and national) (12%) provincialIndustrial and(31%) national) Industrial (31%) (10%) (10%) and major franchises and major franchises Western Cape (7%) WesternWestern Cape Cape (7%) (8%) Western Cape (8%) (54%) (54%) Property management Property management Free State (4%) Free StateFree State(4%) (5%) Free State (5%) 2013 fee (8%) 20132013 fee (8%) 20132013 20132013 2013 2013 National and listed 20132013 National and listed 2013 Maintenance contracts MaintenanceLimpopo (4%)contracts LimpopoLimpopo (4%) (3%) Limpopo (3%) tenants, franchised tenants, franchised (6%) (6%) and medium to large and medium to large Mpumalanga (2%) MpumalangaMpumalanga (2%) (2%) Mpumalanga (2%) Asset management Asset management professional firms professional firms fee (4%) feeNorth (4%) West (2%) NorthNorth West West(2%) (2%) North West (2%) (9%) (9%) Sundry expenses (3%) Sundry expenses (3%) Northern Cape (1%) NorthernNorthern Cape Cape (1%) (1%) Northern Cape (1%) Insurance premiums (2%) Insurance premiums (2%) Other (37%) Other (37%) Bad debt (2%) BadEastern debt (2%) Cape (1%) EasternEastern Cape Cape (1%) (1%) Eastern Cape (1%)

83% of costs from top four categories. 83%Top of four costs regions from topaccount four categories.for 86% of exposure. Top fourTop fourregions regions account account for 86% for 86% of exposure. of exposure. Top four regions account for 86% of exposure. INTEGRATED annual report 2013 41 PORTFOLIO REVIEW continued

TOP 10 PROPERTIES BY VALUE

Directors’ valuation at Rentable area 31 Mar 2013 % Valuation Property Location m² R000 of total R/m² Durban Phoenix Plaza Durban 24 348 541 044 7.0 22 221 Cape Town Bellville Louis Leipoldt Bellville 22 311 313 021 4.1 14 030 Pinetown Pine Crest (50%)* Pinetown 20 056 277 499 3.6 13 836 Johannesburg Isle of Houghton Houghton 28 074 274 708 3.6 9 785 Soweto Dobsonville Shopping Centre Soweto 23 177 263 238 3.4 11 358 Randburg Square Randburg 51 397 240 602 3.1 4 681 Oshakati Shopping Centre Oshakati 24 632 223 010 2.9 9 054 Durban Embassy Durban 32 365 206 425 2.7 6 378 Daveyton Shopping Centre Daveyton 17 095 186 623 2.4 10 917 Cape Town Bellville Tijger Park Bellville 20 225 170 926 2.2 8 451 263 680 2 697 096 35.1 10 229

* Represents an undivided 50% share in this property.

PROPERTY PORTFOLIO PERFORMANCE New leases and renewals of 277 911m² with a contract value of R1 015 million were concluded during the year. 87% of leases to be renewed during the year ended 31 March 2013 were renewed or are in the process of being renewed which is up from 74% in 2012.

DETAILS OF LARGE CONTRACTS

Contract value Lease duration Tenant Property Sector Rm Years

Pretoria Society of Advocates Pretoria High Court Chambers Offices 120.2 10

Edgars Rustenburg Edgars Building Retail 61.8 5

Plumblink (SA) Midrand Sanitary City Industrial 48.5 10

OK Bazaars Randburg Square Retail 17.0 5

Road Accident Fund Durban Embassy Offices 16.0 2

Edgars Randburg Square Retail 15.5 10

Clicks Durban Phoenix Plaza Retail 14.0 10

Clicks Oshakati Shopping Centre Retail 11.6 10

Pep Stores Bloemfontein Plaza Retail 11.3 4 Virgin Atlantic Airways Sandton Hyde Park 50 Sixth Road Offices 10.0 5

42 INTEGRATED annual report 2013 Group Lease Expiry Retail Lease Expiry % of GLA % of GLA

% % 100 100 90 90 80 80 70 70 60 60 50 50

40 35 40 26 30 30 18 18 20 20 17 15 15 12 7 9 10 9 10 6 10 3 0 0 Vacant 2014 2015 2016 2017 2018 Beyond Vacant 2014 2015 2016 2017 2018 Beyond 2018 2018

GLA Cumulative GLA Cumulative offices Lease Expiry INDUSTRIAL Lease Expiry % of GLA % of GLA

% % 100 100 90 90 80 80 70 70 60 60 50 50 42 44 40 40 30 30 27 20 20 14 14 13 12 10 10 10 4 4 5 5 3 3 0 0 Vacant 2014 2015 2016 2017 2018 Beyond Vacant 2014 2015 2016 2017 2018 Beyond 2018 2018 GLA Cumulative GLA Cumulative

The group lease expiry profile graph reflects that 35% of the On 31 March 2013 the portfolio’s vacancy (measured as a leases are due for renewal in 2014. Of the 35% of leases percentage of gross lettable area) was 6.8% compared to due for renewal in 2014, approximately 21 000m² is from 7.6% as at 30 September 2012 and 6.1% at 31 March 2012. properties in the process of being sold. Once transfer is The increase relative to March 2012 is largely due to the registered, the expiries on the remaining portfolio reduces to inclusion of the portfolio acquired from Sanlam in April 2012. 33%, which equates to the normal average lease period of Progress has been made in reducing the vacancies on the three years across the portfolio. acquired portfolio.

Vukile is engaged in various initiatives in an effort to reduce VACANCIES the vacancies on the portfolio including broker focus groups, At 31 March 2013, the portfolio’s vacancy (measured as a the implementation of a vacancy website, leasing incentives percentage of gross rental) was 7.1% compared to 7.3% as on selected properties, incentives to property management at 30 September 2012 and 6.8% at 31 March 2012. companies and leasing brokers.

INTEGRATED annual report 2013 43 PORTFOLIO REVIEW continued

Vacancy Profile Vacancy Profile % of gross rental % of GLA

% % % % 14 14 16 16 13.6 13.6 13.4 13.4 11.7 11.7 11.6 11.6

12 12 14 14 9.7 9.7 12 12 8.6 8.6 10 10 9.7 9.7 7.3 7.3 7.4 7.4

10 10 8.2 8.2 7.1 7.1 7.1 7.1 6.8 6.8 8 8 7.6 7.6 7.0 7.0 8 8 6.8 6.8 6.1 6.1 5.0 5.0

6 6 5.1 5.1 4.0 4.0 3.8 3.8 6 6 3.6 3.6 3.1 3.1 4 4 3.1 3.1 4 4

2 2 2 2

0 0 0 0 RetailRetail Offices Offices Industrial Industrial Total Total RetailRetail Offices Offices Industrial Industrial Total Total March 2012March 2012 SeptemberSeptember 2012 2012 March 2013March 2013 March 2012March 2012 SeptemberSeptember 2012 2012 March 2013March 2013

The properties with the highest vacancies are reflected below.

Individual Properties Vacancy Profile Vacancy > 1 000m²

Pretoria Arcadia Suncardia (32%)

Durban Embassy (20%)

Bloemfontein Bree Street Warehouse (59%)

Roodepoort Hillfox Power Centre (10%)

Pretoria Lynnwood Excel Park (100%)

Pretoria Lynnwood Sunwood Park (54%)

Cape Town Bellville Tijger Park (17%)

Randburg Trevallyn Industrial Park (9%)

Sandton Bryanston St Andrews Complex (26%)

Randburg Square (4%)

Midrand Allandale Industrial Park (10%)

Centurion 259 West Street (36%)

Johannesburg Parktown Oakhurst (20%)

Pretoria Hatfield Festival Street Offices (34%)

Sandton Sunninghill Place (17%)

Bloemfontein Plaza (4%)

Randburg Triangle (42%)

Midrand IBG (14%)

Cape Town Parow Industrial Park (6%)

Johannesburg Bedfordview 1 Kramer Road (17%)

0 2 000 4 000 6 000 8 000 10 000

Vacant area 31 March 2012 Vacant area 31 March 2013

44 INTEGRATED annual report 2013 GLA summary GLA m² Balance at 1 April 2012 922 221 GLA adjustments 83 Disposals (78 849) Acquisitions and extensions 185 505 Balance at 31 March 2013 1 028 960

Vacancy summary Area m² % Balance at 1 April 2012 55 905 6.1 Leases expired or terminated early 302 337 Renewal of expired leases (204 071) Contracts to be renewed (31 309) Tenants vacated 65 379 New letting of vacant space (118 100) Balance at 31 March 2013 70 141 6.8

2013 2012 Financial performance for the stable portfolio Rm Rm % Change Gross property revenue 916.1 837.8 9.3 Property expenses (362.4) (320.3) 13.1 Net property income 553.7 517.5 7.0 Property expense ratios (%)* 36.6 35.4 3.4

* Recurring cost to property revenue ratios (including rates and electricity costs).

BASE RENTALS well as the sale of lower value properties during the year. If (excluding recoveries) sales and acquisitions are excluded from the analysis, the The weighted average monthly base rental rates per sector, weighted average monthly base rental rates of the stable between 31 March 2012 and 31 March 2013, are set out in the graph below. The high increase in base rentals is due portfolio compare as follows between 31 March 2012 and to the portfolio purchased from Sanlam in April 2012 as 31 March 2013.

WEIGHTED AVERAGE BASE RENTALS R/m² WEIGHTED AVERAGE BASE RENTALS R/m² Excluding recoveries Stable portfolio (excluding sales and acquisitions)

100100 100100

140140 116.42 116.42 11.7%11.7% 9.1%9.1% 10.8%10.8% 6.1%6.1% 9090 86.8686.86 9090 85.1085.10 83.0583.05 12.7%12.7% 82.2882.28 7.8%7.8% 120120 8080 77.7977.79 8080 78.0078.00 77.5877.58 74.9674.96 74.0974.09 86.72 86.72 86.86 86.86

71.5871.58 84.00 84.00 85.10 85.10 83.05 83.05 7070 65.7365.73 7070 66.4366.43 100100 82.28 82.28 74.09 74.09 71.58 71.58 6060 6060 8080 5050 6.6%6.6% 5050 6.9%6.9% 39.1939.19 39.3239.32 6060 39.19 39.19 4040 36.7736.77 4040 36.8036.80 39.32 39.32 35.14 35.14 3030 3030 4040 2020 2020 2020 1010 1010 0 0 0 0 0 0 RetailRetail Offices Offices Industrial Industrial Total Total RetailRetail Offices Offices Industrial Industrial Total Total RetailRetail Offices Offices Industrial Industrial Total Total MarchMarch 2012 2012 March March 2013 2013 MarchMarch 2012 2012 March March 2013 2013 StableStable portfolio portfolio PortfolioPortfolio purchased purchased from from Sanlam Sanlam April April 2012 2012 TotalTotal INTEGRATED annual report 2013 45 PORTFOLIO REVIEW continued

WEIGHTED AVERAGE BASE RENTALS R/m² Excluding recoveries Remaining portfolio (excluding sales)

100 100

140 116.42 11.7% 9.1% 10.8% 6.1% 90 86.86 90 85.10 83.05 12.7% 82.28 7.8% 120 80 77.79 80 78.00 77.58 74.96 74.09 86.72 86.86

71.58 84.00 85.10 83.05 70 65.73 70 66.43 100 82.28 74.09 71.58 60 60 80 50 6.6% 50 6.9% 39.19 39.32 60 39.19 40 36.77 40 36.80 39.32 35.14 30 30 40 20 20 20 10 10 0 0 0 Retail Offices Industrial Total Retail Offices Industrial Total Retail Offices Industrial Total March 2012 March 2013 March 2012 March 2013 Stable portfolio Portfolio purchased from Sanlam April 2012 Total

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

WEIGHTED AVERAGE BASE RENTALS - Retail Excluding recoveries R/m2

Durban Phoenix Plaza Durban Workshop Durban Qualbert Centre Mbombela Truworths Centre (Truworths Centre Nelspruit) Windhoek 269 Independence Avenue Pinetown Pine Crest (50%) Sandton Bryanston Grosvenor Shopping Centre Cape Town Kenilworth Motor Showrooms Oshikango Spar Centre Daveyton Shopping Centre Soweto Dobsonville Shopping Centre Pietermaritzburg The Victoria Centre Malamulele Plaza (Mala Plaza) Katutura Shoprite Centre Oshakati Shopping Centre Ondangwa Shoprite Centre Giyani Plaza Piet Retief Shopping Centre Cape Town Bellville Barons Monsterlus Moratiwa Crossing (94.50%) Rustenburg Edgars Building Kokstad Game Centre Giyani Spar Centre (Masingita Spar Centre) Randburg Square 2 Mbombela Shoprite Centre (Nelspruit Sanlam Centre) Weighted average R 86.86/m Bloemfontein Plaza Kimberley Kim Park Lichtenburg Shopping Centre Roodepoort Hillfox Power Centre Germiston Meadowdale Mall

0 40 80 120 160 200

46 INTEGRATED annual report 2013 WEIGHTED AVERAGE BASE RENTALS - Offices Excluding recoveries R/m2

Sandton Hyde Park 50 Sixth Road Cape Town Bellville Suntyger Pretoria Lynnwood Sanlynn Sandton Rivonia 36 Homestead Road (Barlow Place Rivonia) Johannesburg Houghton 1 West Street (Jhb Houghton 2446) Pretoria Hatfield 1166 Francis Baard Street (DLV Building) Pretoria Lynnwood Sunwood Park Cape Town Parow De Tijger Office Park Cape Town Bellville Tijger Park Midrand Ulwazi Building (Arivia.kom Building) Midrand IBG Sandton Sunninghill Place Johannesburg Parktown Oakhurst Centurion 259 West Street East London Vincent Office Park Sandton Bryanston St Andrews Complex Sandton Rivonia Tuscany Sandton Sunninghill Sunhill Park Cape Town Bellville Louis Leipoldt Durban Westville Surrey Park Cape Town Pinelands Pinepark Johannesburg Parktown 55 Empire Road Pretoria Hatfield Festival Street Offices Pretoria Arcadia Suncardia Johannesburg Isle of Houghton Sandton Bryanston Ascot Offices Durban Embassy Midtown Building Weighted average R 83.05/m2 Johannesburg Bedfordview 1 Kramer Road (Bedfordview GIS) Randburg Triangle Pretoria High Court Chambers

0 40 80 120 160

WEIGHTED AVERAGE BASE RENTALS - Industrial Excluding recoveries R/m2

Sandton Linbro Galaxy Drive Showroom (Supra Hino) Kempton Park Spartan Warehouse (Hellman International) Centurion Samrand N1 Randburg Tungsten Industrial Park Midrand Sanitary City Midrand Allandale Industrial Park Pinetown Richmond Industrial Park Germiston Meadowdale R24 Randburg Trevallyn Industrial Park Pinetown Westmead Kyalami Industrial Park Pretoria Rosslyn Warehouse

Johannesburg Rosettenville Village Main Industrial Park Weighted average R39.19/m2 Roodepoort Robertville Industrial Park Cape Town Parow Industrial Park Durban Valley View Industrial Park

0 10 20 30 40 50 60 70

INTEGRATED annual report 2013 47 PORTFOLIO REVIEW continued

RENTAL ESCALATION NEW LEASES CONCLUDED Contracted rental escalation profile Rental concluded/budget % Average annual escalation %

8.8 148.8 11014 110 8.7 8.7 108 108

12 11.6 11.6 8.6 8.6 12 104.7 105 105 104.7 10 10 8.4 8.4 101 101 8.2 100 8.2 100 8 8 8.2 8.2 6.7 6.7 8.1 8.1 6 8.1 8.1 6 95 94 95 94 8.0 8.0 8.0 8.0 4.0 4.0 4 4 90 7.8 90 27.8 2

7.6 07.6 850 85 Retail Offices Industrial Total RetailRetail Offices Offices Industrial* Industrial Average Total Retail*Retail Offices Industrial*Industrial Average Retail* Offices Industrial Average

LEASING ACTIVITY * Excluding the Durban Workshop transaction on the old cinema premises which are being converted to retail space Lease renewals to obtain much higher rental rates. Escalation on expiry rentals %

EXPENSE CATEGORIES AND RATIOS 8.8 14 110 8.7 Recurring property108 expenses have increased year-on-year mostly due to excessive increases in electricity and water 8.6 12 11.6 consumption105 and rates and taxes. 104.7 10 8.4 101 8.2 The100 various cost components are reflected in the graph below. 8 8.2 6.7 8.1 8.1 6 95 94 8.0 8.0 4.0 4 Government services Gauteng (50%) Gauteng (54%) Retail (54%) Large national and Retail (45%) 90 (48%) listed tenants, 7.8 KwaZulu-Natal (21%) KwaZulu-Natal (18%) Offices (34%) Offices (24%) 2 Rates and taxes (17%) government (ie local, Cleaning and security Namibia (8%) Namibia (6%) Industrial (12%) provincial and national) Industrial (31%) 7.6 0 85 (10%) and major franchises Retail Offices Industrial Total Retail Offices Industrial* Average Retail* Offices Industrial Average Western Cape (7%) Western Cape (8%) (54%) Property management Free State (4%) Free State (5%) 2013 fee (8%) 2013 2013 2013 2013 National and listed 2013 * Excluding the short-term renewal at Pretoria Rosslyn Maintenance contracts Limpopo (4%) Limpopo (3%) tenants, franchised Warehouse where the previous rentals exceeded market (6%) and medium to large Mpumalanga (2%) Mpumalanga (2%) rentals significantly. Asset management professional firms fee (4%) North West (2%) North West (2%) (9%) Sundry expenses (3%) Northern Cape (1%) Northern Cape (1%) Insurance premiums (2%) Other (37%) The average escalation on expiry rentals on the total portfolio Bad debt (2%) Eastern Cape (1%) Eastern Cape (1%) of 8.2% is very positive against the backdrop of a difficult trading environment. The retail sector showed improved 83% of costs from top four categories. Top four regions account for 86% of exposure. Top four regions account for 86% of exposure. escalations mainly due to renewals done at recently renovated centres such as Randburg Square and Oshakati Shopping

Centre. The relatively low escalation on offices is to be The group continuously evaluates methods of containing expected during the current oversupply of office space. The costs in the portfolio and the stable portfolio’s recurring costs higher than budgeted lease rates concluded on retail is due to property revenue ratios (excluding electricity and rates and to contracts concluded at the recently renovated Sandton taxes) have decreased from 18.2% in March 2007 to 17.8% in Bryanston Grosvenor Shopping Centre. March 2013 and hence have been well contained.

48 INTEGRATED annual report 2013 RATIO OF GROSS RECURRING COST TO On average, our collection percentages (including legal cases) PROPERTY REVENUE on the fifth business day of the month for the last two years Stable portfolio % are as follows:

2013 2012 36.6

40 35.4 Sector % % 33.2 33.0 31.2

30.7 Retail 76.6

30.3 76.8 Offices 81.9 74.2 30 Industrial 68.2 63.8 18.2 17.8 17.8 17.7 17.0 17.2 20 16.9 QUALITY OF THE VUKILE PORTFOLIO In terms of the strategy of improving the quality in the portfolio, 10 Vukile has decided to reduce its exposure to lower B grade offices and to replace these with higher quality offices in popular office nodes. This strategy has been largely achieved. 0 In addition, the R1.5 billion acquisition from Sanlam, which 2007 2008 2009 2010 2011 2012 2013 consisted mainly of good quality offices in decentralised office All recurring expenses All recurring expenses excluding rates and taxes and electricity nodes, grew the value of the office portfolio on a R/m² basis. In terms of retail investments, the fund’s strategy to invest * The stable portfolio includes only those properties that have in high-density lower-income rural and township areas has been in the portfolio for the full 12 month period. delivered excellent results and we believe it will continue to do so. The recent acquisition of a 50% undivided share in East RENT COLLECTION AND ARREARS Rand Mall which was transferred on 2 April 2013, will enhance An important part of protecting the group against the the quality of the retail portfolio significantly. likelihood of tenants defaulting on their lease agreements is our credit vetting process prior to the acceptance of a tenant. PORTFOLIO GROWTH, REDEVELOPMENTS We have developed a comprehensive screening process for AND SALES each applicant, which assesses the tenant according to type Acquisitions (national, government, SMMEs, and other), nature of business, 50% interest in East Rand Mall main shareholders and other relevant characteristics, and in As part of an on-going strategy to grow the portfolio, increase the case of renewals, payment history. its retail exposure and improve the quality of its portfolio, the company acquired a 50% undivided share of East Rand Mall As such, it is important to closely monitor our arrears from Redefine Properties Limited (Redefine) on 2 April 2013 for book and any changes to tenant payment processes. We R1.1 billion. The 50% acquisition was concluded on the measure the effectiveness of our collections process based same terms and conditions and effected at the same time on the percentage collected by the fifth business day of that Redefine acquired the property from Sanlam Life each month. Insurance Limited.

Pinetown Pine Crest.

INTEGRATED annual report 2013 49 PORTFOLIO REVIEW continued

East Rand Mall, regarded as one of the top regional malls in approximately 85%. The Hammarsdale catchment area has South Africa, has a gross lettable area of 62 446m² and is about 42 000 households or a population of some 210 000 situated in Boksburg, Gauteng. It has an 85% comprehensive people. The centre will breathe new life into the community national tenant component which includes Edgars, Mr Price, by providing residents with their first large-scale, conveniently Woolworths and Foschini. The strong performing mall, located, retail experience. The anticipated capital expenditure supported by good trading densities among national tenants, is R194 million at an initial yield of 9.5%. has become the focal point of this Eastern Gauteng retail node with a catchment area of approximately 10 kilometres. Mini factory/warehousing complex Linbro Park The inclusion of the 50% undivided share of East Rand Mall Agreement has been reached with Stratford Property will enhance the quality of and strengthen the revenue of the Ventures for the development of a 15 000m² mini factory/ portfolio. The purchase price was R1.1 billion at an initial yield warehousing complex at Linbro Park, one of Johannesburg’s of 6.72%. With the weighted average cost of capital for the prime industrial areas. The proposed development will be acquisition in year one of 6.69%, the acquisition is earnings incorporated into Linbro Business Park, firmly established enhancing from inception and accretive thereafter. as a desirable business address, which enjoys excellent accessibility to the N3 and Sandton CBD via Marlboro Road Encha Properties while offering the added benefit of being located approximately As part of the company’s transformation strategy, the company three kilometres from the Gautrain Marlboro Station. The concluded an agreement with Encha Properties (Encha) in proposed development will comprise 22 units with a wide one of the most significant Black Economic Empowerment variety of unit sizes ranging from 350m² to 1 870m². The (BEE) initiatives in the listed property sector to date. anticipated capital expenditure is R119 million at an initial yield of 10.0% and will come on stream in April 2014. As part of the BEE initiative, Vukile will acquire four predominantly national government-tenanted properties from 50% interest in Edendale Mall Encha for an approximate R1.04 billion at a yield of 9.5%. A The acquisition of a 50% interest in Edendale Mall, put and call option over the Pretoria Momentum Building has Pietermaritzburg, a 31 700m² retail centre, has been delayed been concluded on the same terms and conditions as the due to certain suspensive conditions not being fulfilled to main portfolio which options can be exercised once a new our satisfaction. On fulfilment of the suspensive conditions, lease of at least five years has been concluded with national the mall would be a good fit for the portfolio. The mall is government. The anticipated date of renewal is 1 November enclosed, has good visibility, accessibility, adequate parking 2013. On the assumption that the call or put options are and taxi facilities. Further, the mall has a strong tenant mix exercised, the acquisition of the Momentum building will comprising national, franchise and regional brands. The node increase the value of the Encha portfolio to approximately is further strengthened by the close proximity of the Edendale R1.4 billion. The properties within the initial portfolio to be Provincial Hospital, SA police station, medical clinics and local purchased comprise Navarre Wachthuis, the Koedoe Arcade schools. It is estimated that there are approximately 90 000 and De Bruyn Park in Pretoria and the Bloemfontein Fedsure Building. A sovereign tenant sub-portfolio will be established households or about 450 000 people in the catchment area. within Vukile to house the new properties, which will be The anticipated capital expenditure is R205 million at an initial managed by Encha on an external management company yield of 8.3%. The purchase price in underpinned by a three basis. year income guarantee. The remaining 50% will be held by McCormick Group. Wingspan The company has entered into negotiations with Wingspan to JV with the McCormick Group acquire five small regional shopping centres. The acquisition, A joint venture agreement has been entered into with the if consumated, will be subject to normal terms and conditions. McCormick Group to acquire a 50% interest in five retail developments totalling 69 000m². The first three of these Hammarsdale Shopping Centre developments are now under construction with completion The Hammarsdale Shopping Centre measuring 19 200m² dates scheduled for the end of July and end October 2013. and anchored by Pick n Pay, Spar and Mr Price, will open in The anticipated capital expenditure is R380 million at an June 2013. The final national tenant component will be average initial yield of 9.0%.

50 INTEGRATED annual report 2013 Approved developments The Scene, Markham, Identity, Tekkie Town, Shoe City and Lethlabile Mall, North West Province Uzzi. Foschini and a number of other national tenants are The Lethlabile Mall is being developed by Aroprop 78 (Pty) Ltd expected to open soon. at a capital outlay of R194.2 million and a yield of 9.2%. The centre with a GLA of 17 600m², is situated in Lethlabile about Two of the anchor tenants, Woolworths and Edgars, have 30 kilometres north of Brits in the North West Province. upgraded their stores to their latest specification while the Mr Price Group has expanded their existing apparel store Shoprite is the food anchor. Other national tenants include Pep and has opened a Mr Price Home at the centre. Clicks, Stores, Ackermans, Mr Price, Jet Stores, Dunns, Capitec and Fashion World, Fashion Express, PQ Fashions and Pep have Nedbank. The national component will comprise approximately also upgraded and expanded their offerings. The Ellerines 85% of the total GLA. The anticipated completion date is April Group added Beares and Ellerines to the existing furniture 2014. component.

Upgrades/Redevelopments As part of the upgrade, a new banking mall and food court As part of the on-going strategy to improve the quality of the were added with the major tenants being Nedbank, FNB, existing portfolio, the following projects as set out below have KFC, Chesa Nyama, Pie City, London Pie, Sausage Saloon been completed, or are in progress. and Jimmy’s Killer Fish.

Randburg Square Randburg Square now offers a well balanced tenant mix The Randburg Square upgrade is progressing well with the with all the new brands that were added. In addition to anticipated completion date being August 2013. A number the improved tenant mix, enhanced sight lines, fixtures and of new national fashion brands were added to the tenant mix strategic relocation of tenants have improved the overall flow and have already started trading. These include Total Sport, of the centre. projects completed Additional GLA Total capex Yield Property Project detail m2 Rm % Completion date Randburg Square Upgrade and maintenance Phase 1 - 80.8 - June 2012 Roodepoort Hillfox Power Phase 1 of the upgrade to the exterior Centre of the centre - 6.5 - April 2012 Phase 2 of the upgrade to the exterior of the centre - 4.0 - May 2012 Oshakati Shopping Centre Redevelopment of the ex-Standard Bank premises 2 312 20.1 11.1 July 2012 Kimberley Kim Park Upgrade - 5.2 - June 2012 projects approved and in progress Additional GLA Total capex Yield Property Project detail m2 Rm % Completion date Randburg Square (1)(3) Upgrade and maintenance Phases 1, 2 and 3 - 207.5 3.1 August 2013 Cape Town Bellville Louis Leipoldt (2) Upgrade for Medi-Clinic - 33.5 - May 2013 Durban Workshop (1) Upgrade to the mall areas and conversion of cinema area to retail premises - 55.0 4.1 November 2013 Cape Town Bellville Tijger Upgrade and additional 102 parking Park (1) parking decks bays 49.8 1.8 October 2013 Cape Town Bellville Barons Upgrade to Barloworld premises - 17.5 9.4 October 2013 Roodepoort Hillfox Power Third (final) phase of the upgrade to Centre (1) the exterior of the centre - 20.0 - November 2013 Daveyton Shopping Centre Pick n Pay extension 700 7.8 9.5 October 2013 Ondangwa Shoprite Centre Extension to Shoprite 166 8.7 6.0 November 2013 (1) Post the upgrade/revamps, higher rentals on renewals and reduced vacancies can be expected. (2) This capex was agreed as part of a 15 year lease renewal. (3) The total capex of R207.5 million for phases 1,2 and 3 includes R70.8 million for maintenance/upgrade/replacement of mechanical, electrical, fire and safety installations.

INTEGRATED annual report 2013 51 PORTFOLIO REVIEW continued

The mall now offers a revitalised, holistic shopping experience • The existing plaster and steel balustrades in the malls which for residents, employees and commuters in and around were not part of the original structure will be replaced with the catchment area with a comprehensive offering of food, glass balustrades. apparel, furniture, homeware, banking and services. • The cinema area will be converted into retail area. It has been let to Ackermans, Pep and Dunns which will The new vibrant look of the mall and the new brands added, complement existing national brands such as Edgars have already resulted in a significant increase in visitors to the Active, Mr Price, Truworths, Truworths Man, Identity, mall and once fully completed, retailers will enjoy the benefit Markham, Legit and Exact. of enhanced sales. Cape Town Bellville Tijger Park The upgrade and extension will include: Cape Town Bellville Louis Leipoldt The upgrading of the exterior of buildings 1, 2 and 3 by The MediClinic lease agreement has been renewed for an • plastering the existing face brick facades and adding additional 15 years. entrance features to create a more contemporary look. The upgrading of the entrance and lift foyers, toilets and The upgrade to the Louis Leipoldt Hospital and Medical • kitchens of buildings 1 and 2. Centre will include: The upgrading of the electrical reticulation to improve A total upgrade of all the patient wards, the theatre • • energy efficiency. complex, the intensive care unit and the reception, waiting The building of two new parking decks with 102 additional rooms and administration areas. • bays on the existing Tijger Park 3 open parking area. Repairs and major maintenance to the lifts, air conditioning, • The upgrading of gardens and exterior landscaping. electrical distribution and lights, air handling systems to the • theatres and replacement of autoclaves. • The improvement of traffic flow within the park. • Repairs to and repainting of the external facades. • Repairs to the roofs. Cape Town Bellville Barons • Providing a new wind lobby to assist in air conditioning • The dealership premises, including the showrooms and efficiency. workshop areas, are being upgraded to the latest standard as required by VW Germany. A section of the existing spare parts area will be converted into a second hand car Durban Workshop showroom while the existing second hand car showroom The upgrade to Durban Workshop will address the following areas: will be incorporated into a larger new car showroom. The brick paving on the ground floor and the existing tiles • The exterior will be upgraded to optimise the prominent on the first floor will be replaced, the shop fronts which • location of the property at a major intersection. are currently of various different designs, heights and A new 10 year lease agreement has been concluded with materials, will be replaced by 3.2 metre high glass shop • Barloworld. fronts. • The shop fronts will be straightened out to allow better sight lines and visibility in the malls. Roodepoort Hillfox Power Centre • Shops and kiosks intruding into the mall and currently The third phase of the upgrade will complete the new facades obstructing the sight lines in the malls will be redesigned which were started with the phase 1 and 2 upgrades. This, or relocated. together with the recent extension and upgrade of the Food • New ceilings with lighting will be installed in selected areas Lovers Market will improve the marketability of the existing to brighten up the malls. vacant premises.

Cape Town Bellville Barons.

52 INTEGRATED annual report 2013 Daveyton Shopping Centre.

The work will include: PROPERTY SALES DURING THE YEAR • Upgrading the existing signage towers to improve the Sales price Yield centre’s visibility, especially from Hendrik Potgieter Road. Property R000 % New cladding to the façade to hide the dated roofline and • Pretoria VWL 103 000 12.5 to provide better signage opportunities for tenants. Midrand 179 15th Road • Replacing existing shop fronts with new anodised (Sony Building) 57 000 8.1 aluminium shop fronts. Johannesburg Truworths Building 43 680 7.8 • Replacing mall paving and tiling in selected areas. Glencairn Building Eloff Street } 23 520 7.8 • Upgrading the existing ablution facilities. Randburg Cresta Eva Park 40 000 8.3 • Repainting the exterior of the centre (excluding the roofs). Nelspruit Prorom 38 354 12.5 Midrand Allandale (Land) (Halfway House Ext 64) 20 700 - Daveyton Shopping Centre Katimo Mulilo Pep Stores 18 000 11.7 Work on the expansion of the Pick n Pay commenced in Johannesburg John Griffen 16 500 12.0 March 2013. The R7.8 million, yield enhancing project will Johannesburg Bassonia see the store expanded with an additional 700m². Office Park 8 300 13.4 Rundu Ellerines 2 800 14.7 The project will run for seven months and should be completed Total 371 854 at the end of October 2013. The proceeds from property sales will be utilised to acquire As part of the expansion, Pick n Pay will enter into a new properties that conform to Vukile’s investment requirements 10 year lease expanding its offering to 3 700m². and/or to fund expansions and revamps, thereby further enhancing the quality of the portfolio. This expansion is well justified by the strong historic performance of the store and should bode well for sustained, PROPERTY SALES after YEAR-end solid future trade. Sales price Yield Ondangwa Shoprite Centre Property R000 % Work to expand Shoprite by approximately 166m² will Durban Embassy 238 000 9.9 start soon and should be completed by the end of Randburg Triangle 13 500 10.5 November 2013. Total 251 500

INTEGRATED annual report 2013 53 PARTNERSHIPS

ukile adopted an internal asset management model in Broll, another well-known name in the property September 2009 in anticipation of prevailing market management industry, with property management assets Vtrends. Prior to this, the asset management function under management of R49 billion in South Africa and was outsourced to Sanlam Properties (Pty) Ltd. R12 billion in Africa, was appointed for the property management of 43% of the fund based on value as from MANAGEMENT MODEL 1 September 2011. This new relationship has been bedded down and continues to be strengthened through a shared The group has adopted an outsourced property management vision for the Vukile portfolio and open communication model since its listing in 2004 and believes that it is still the between the parties. With both companies sharing a best model given the current size of the portfolio. This model common value system and working towards the same goals, allows the asset managers to focus on strategic initiatives the potential within this partnership is growing from strength involving the property portfolio while the property managers to strength. focus more on the operational management of the properties. In other words asset management provides the strategic The company regards the relationship with its appointed direction, guidance and mandates in accordance with which property managers as one of the most important, if not the the property managers need to operate the properties on a most important partnership, and will endeavour to grow this day-to-day basis. partnership as the portfolio grows. Currently the property management for the Vukile property SANLAM AS ASSET MANAGEMENT portfolio is outsourced to JHI Properties (Pty) Ltd (JHI) for CLIENT the management of 32 properties with a market value of R4.1 billion and Broll Property Group (Pty) Ltd (Broll) for In addition to adopting the internal asset management model the management of 45 properties with a market value of for its own portfolio, Vukile acquired the asset management R3.3 billion. Pine Crest in which Vukile holds a 50% share is business of Sanlam Properties (Pty) Ltd, which is responsible managed by Old Mutual Property Group (Pty) Ltd. for the property asset management of the Sanlam investment property portfolio, with effect from 1 January 2010. Through The relationship between Vukile and the property managers the asset management business, Vukile assumes responsibility is managed by service level agreements with specific for the property asset management of the investment property performance clauses and formalised monthly meetings portfolio of approximately R8.1 billion (R6.4 billion post the held with the property managers to monitor performance sale of East Rand Mall) owned by Sanlam. and operational issues. In addition to formalised meetings, our asset managers and the property managers interact The net profit of the asset management business equates frequently to discuss property specific issues. The property to 6% of Vukile’s operating profit. In this respect, Sanlam managers are mainly responsible for daily property operations remains one of Vukile’s key stakeholders. The relationship such as leasing, invoicing of tenants, debt collection, between Vukile and Sanlam Life is governed by a property maintenance, tenant interaction, financial administration and asset management agreement with specific deliverables and the management of relationships with third party service performance clauses. A Sanlam property committee was providers and local government. established to facilitate quarterly feedback to Sanlam on the performance of its portfolio. The strategic direction for the PROPERTY MANAGERS Sanlam portfolio, Vukile’s mandate for sales and acquisitions and its performance targets are also determined by this JHI, an expert in the field of property management with a committee. proven track record and property management assets under management of R54.5 billion, has successfully managed the The relationship with Sanlam, via the property committee and bulk of the Vukile property portfolio since the inception of its members, has been bedded down and there is a healthy the fund in 2004 and manages 53% of the fund based on working relationship and mutual respect between the two value since 1 September 2011. This long-term relationship entities. For the previous Sanlam financial year, the Vukile is based on a solid foundation of shared values and goals. asset management team exceeded the overall performance JHI provides insights and expertise in order to add value to target, which was a huge achievement in the current market. the Vukile property portfolio while it is also beneficial to JHI by enhancing the quality and value of our assets under their LEASING BROKERS management. The qualities that set JHI apart, and which Vukile acknowledges the all-important role of leasing brokers initially attracted Vukile’s attention, continue to keep the in securing tenants for its buildings and will continue to relationship firmly grounded. strengthen the relationship with these brokers.

54 INTEGRATED annual report 2013 During the year under review Vukile successfully established a vacancy website (www.vukileprop.co.za) where registered users can access the latest vacancies for both portfolios under management and download updated vacancy schedules. Users can also access YouTube videos for certain properties which can be used for marketing purposes to prospective tenants. A Twitter feed also alerts followers of the latest vacancy news from Vukile.

The 2013 Gauteng regional winner and 2013 national winner of Vukile’s Power to Move programme is Fran Teagle of Broll Property Group. Fran is a director at Broll’s commercial broking division. Fran received a R30 000 prize as regional winner and a R100 000 prize as national winner for a five year three month office transaction for 3 875m².

Management hosted a series of broker functions in Johannesburg, Durban and Cape Town where brokers were introduced to its website and the 2013 broker incentive programme called ‘Power to Move’. This programme with regional and national incentives ran from April 2012 to March 2013 and included all broker deals concluded on the Sanlam portfolio and Vukile portfolio between 1 January 2012 and 31 March 2013. To qualify for selection as the regional winner for Gauteng, KwaZulu-Natal or Western Cape, a broker had to achieve at least R100 000 in cumulative commission on the portfolios within a region during the incentive period. The 2013 Western Cape regional winner of Vukile’s Power to The Vukile broker of the year must have achieved at least Move programme is Ronnie Derbyshire of EF Entrepreneur Property Group. Ronnie is a founding partner of the firm, which R250 000 in cumulative commission on the portfolios during was established in 1994. Ronny received a R30 000 prize for a the incentive period. 10 year industrial transaction for 7 710m².

The brokers received their prizes at an awards ceremony hosted for selected brokers by Vukile on 22 May 2013.

INTEGRATED annual report 2013 55 PARTNERSHIPS continued

SALES BROKERS When Vukile acquires a property, be it retail, office or industrial, Brokers play an important role, especially introducing new it does so after a rigorous process of internal risk assessment. players in the property market such as the property funds In particular, the long-term demand for the premises, age, to be listed and/or smaller buyers. During the past financial accessibility and suitability for tenants’ needs are considered. year brokers/auctioneers were involved in eight registered Vukile takes a long-term view of these properties and, as such, sales transactions to the value of R335 million and have is committed to ensuring that they provide a solid platform also introduced purchasers for a further three conditional from which its tenants can build their own businesses. transactions totalling R273 million. Due to the fact that a substantial portion of Vukile’s retail DEVELOPERS portfolio is situated in rural and township areas of South Through engagements with property developers a number Africa, it was relatively protected from the impact of the recent of development propositions are being introduced to the global financial crisis. Further protection resulted from the company. Maintaining these relationships with the property high percentage of national tenants in these centres selling developers is important especially with turnkey developments staple goods with a strong brand loyalty. where the company acquires the development on completion as a letting enterprise. The company further established a strategic partnership through a joint venture agreement with A further consideration is the correct tenant mix. Vukile is the McCormick Group to acquire a 50% interest in five retail mindful of the mix of line retailers to complement national developments totalling 69 000m². The first three of these tenants in order to provide more choice to its retail customers. developments are now under construction with completion dates scheduled for the end of July and end October 2013. In an effort to improve its services to tenants and their The anticipated capital expenditure is R380 million at an initial customers a number of customer surveys were conducted at yield of 9.0%. the more prominent retail centres in the portfolio during 2013. The results of these surveys will be taken into consideration for VUKILE’S TENANTS AND THEIR future re-tenanting or redevelopment initiatives at the centres. CUSTOMERS Vukile’s philosophy remains to offer its tenants best value for In addition, tenant satisfaction surveys were conducted during money in a specific area, by providing an enhanced shopping 2013. Although the response rate from tenants was low, the or business experience which is aligned with the aspirational company plans to conduct these surveys on a regular basis in needs of its tenants and clients. order to monitor trends around specific services or products. In order to improve Vukile’s service delivery to tenants, the The company understands that the success of its tenants’ results of these surveys will form the basis of discussions with businesses is closely linked to that of the company. Vukile continuously utilises its financing facilities and free cash from its property management companies. disposals to invest in the upgrade of its portfolio, thereby providing better facilities for its tenants. In time, improved The executive and asset management teams will continue facilities will attract customers and allow tenants to awaken with their direct contact sessions with national tenants, their full potential, thus improving their overall performance. especially on the retail level.

Cape Town Bellville Louis Leipoldt.

56 INTEGRATED annual report 2013 HUMAN CAPITAL

ukile acknowledges that its people are a key driver to BUILDING COMPETENCE AND secure sustainable business success in the long-term. CAPACITY VThe group’s strategic human resources objectives of LEARNING AND DEVELOPMENT engaging its people, developing competence and consistently Vukile is committed to create a work environment where its creating human capacity to meet the demands of the business employees are exposed to continuous learning to improve are based on: themselves and to secure the delivery of the long-term • The ability of the organisation to engage its people to think objectives of the organisation in a sustainable manner. and act like business leaders. During the year under review c.12.5% of the workforce was • Creating an environment where people have the engaged in formal tertiary studies funded by the group, with opportunity to continuously learn and improve their own two successful graduates obtaining a bachelor’s degree performance. in financial management and a CompTIA A+ Certification • Building the capacity by attracting and retaining talent respectively. In addition, two other employees will complete to meet the requirements of an ever-changing and bachelors and masters degrees in the coming year. demanding business environment. DRIVING PERFORMANCE QUALITY MANAGEMENT During the year under review, the performance management system was recalibrated to align it with the categories of The Vukile workforce consists of 32 people. The management performance defined by the conditions of the Conditional team has over 330 years’ experience within the property Unit Plan. In addition, group values were introduced into the sector. Added to this, the team possesses strong corporate performance management system, effective 1 April 2013, finance and capital raising skills, which collectively enables the to ensure that Vukile employees achieve and maintain the group to manage both its financial performance and financial defined performance objectives not only on hard performance position successfully. measures but also on softer value-driven issues.

“We invest in our people by engaging with them, building competence and capacity.”

Sandton Bryanston Grosvenor Shopping Centre.

INTEGRATED annual report 2013 57 ENVIRONMENT, HEALTH AND SAFETY

anaging and reducing the environmental footprint R4.2 million. These savings will be monitored monthly as the of our properties and having a safe and healthy accounts are received from the local authorities. Mworkforce, are vital parts of Vukile’s strategy. Vukile also had an addendum to its lease agreements drawn ENERGY MANAGEMENT up whereby the group will recover 50% of the savings Vukile’s strategy for the 2013 financial year was to start from tenants in cases where energy savings initiatives are implementing a utility management process to reduce undertaken by the landlord inside tenant premises. This the electricity and water consumption and to improve the will be investigated during FY2014 at the larger commercial recoveries per property. Before implementing such a strategy properties in the portfolio. it was necessary to do a utility audit at the identified buildings in order to see where these savings could be achieved. Further energy savings initiatives like the installation of motion sensors in the mall areas and air conditioning controls in The first saving of c.R1 million per annum was achieved at order to control the kVa are also planned during FY2014 at nine Vukile buildings through the retrofitting of light fittings some of the shopping centres. Energy audits similar to those in parking garages as per an Eskom initiative whereby the conducted during FY2013 will also be done for the next group electrical consultants, Standard Electrical, paid for the fittings of properties in the portfolio. and recovered the cost from Eskom. This was therefore done at no cost to Vukile. HEALTH AND SAFETY Health and safety are of paramount importance to the group. Vukile identified a further 12 properties for electricity audits In terms of the property management agreement between which was done by two electrical consultancies, Motla and Vukile and its property managers, they assume responsibility Terra Firma Solutions. Once the audit reports were received to ensure that all the properties comply with the Occupational they were analysed and Vukile decided to proceed with the Health and Safety Act (OHS) on an on-going basis. In addition recommendations from the consultants. Following a tender Vukile has retained the services of specific health and safety process the contractors were appointed to do the work at consultants to conduct audits on a rotational basis to ensure a cost of R6.8 million and an estimated annual saving of the highest standard of care and compliance.

58 INTEGRATED annual report 2013 TRANSFORMATION AND SOCIAL RESPONSIBILITY

ur core values are in line with being a responsible SOCIAL RESPONSIBILITY corporate citizen and we are intent on taking Vukile continues to be involved in a number of socio-economic transformation and social responsibility very seriously O development projects with the communities that are served by making a positive difference. by its properties, especially the retail centres. Two of our significant projects are detailed below. TRANSFORMATION Phoenix Plaza Bursary Scheme - This scheme is aimed at Transformation is one of Vukile’s critical success factors. The enabling grade 12 learners in the area to study at university. group embraces transformation and recently announced a The project is a partnership between Vukile, Sanlam and significant empowerment transformation transaction with its tenants. The response to this project has been very Encha Properties (Encha). Although the transaction is still favourable, and it has received significant exposure in the local to be approved by unitholders, it is set to be one of the most media. Functioning off a simple premise – bursaries are only significant Black Economic Empowerment (BEE) initiatives offered to financially disadvantaged, intellectually deserving in the listed property sector to date. recipients towards their first year of tertiary education – the fund has succeeded in sponsoring more than 200 students The transaction will not only assist Vukile in its growth so far, with a number of doctors, lawyers, accountants and strategy, through the acquisition of five investment-grade engineers among its successful graduates. properties, but also bolster the group’s employment equity Dobsonville Development Trust - A trust established to fund profile through the addition of Dr Sedise Moseneke, CEO of community based initiatives in and around the Dobsonville Encha Properties, as an executive director. Dr Moseneke Shopping Centre. The trust recently provided a sponsorship will be responsible for driving the overall transformation to the value of R200 000 to the SA Medical & Educational strategy of Vukile in line with the Property Sector Charter Foundation (SAME Foundation) in support of the Itireleng guidelines in addition to the asset management of the Clinic Project, a refurbishment project which will benefit the portfolio acquired from Encha. community members of Dobsonville.

INTEGRATED annual report 2013 59

Vukile“ delivered strongly on its objectives while maintaining a strong financial performance. Annu a l Fin nci St a tement s

Annual Financial St”atements

Sandton Hyde Park 50 Sixth Road. DIRECTORS’ RESPONSIBILITY STATEMENT

The audited annual financial statements set out on pages 70 to 121 of this integrated annual report and the directors' report on pages 64 to 67, are the responsibility of the directors. The directors are responsible for selecting and adopting sound accounting practices, for maintaining an adequate and effective system of accounting records, for the safeguarding of assets, and for developing and maintaining a system of internal controls that, among other things, will ensure the preparation of financial statements that achieve fair presentation. After conducting appropriate procedures, the directors are satisfied that the group will be a going concern for the foreseeable future and have continued to adopt the going concern basis in preparing the financial statements. The annual financial statements were approved by the directors and are signed on their behalf by:

Anton Botha Laurence Rapp Chairman Chief executive

Melrose Estate 27 May 2013

COMPANY SECRETARY’S CERTIFICATION

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

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

Johann Neethling Company secretary

Melrose Estate 27 May 2013

The group annual financial statements have been audited by Grant Thornton. The financial director, Mr MJ Potts CA(SA), was responsible for the preparation of these audited annual financial statements. The complete integrated annual reports of the company and the group for the years ended 31 March 2012 and 31 March 2013 may be obtained from the company’s website www.vukile.co.za.

62 INTEGRATED annual report 2013 INDEPENDENT AUDITOR’S REPORT

To the unitholders of Vukile Property Fund Limited We have audited the consolidated and separate financial statements of Vukile Property Fund Limited set out on pages 70 to 121, which comprise the statements of financial position as at 31 March 2013, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information. DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatements, whether due to fraud or error. AUDITOR’S RESPONSIBILITY Our responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated and separate financial statements are free from material misstatement.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OPINION In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Vukile Property Fund Limited as at 31 March 2013, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act of South Africa. Other reports required by the Companies Act As part of our audit of the consolidated and separate financial statements for the year ended 31 March 2013, we have read the directors’ report, audit committee’s report and company secretary’s certificate for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated and separate financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

Grant Thornton Chartered Accountants (SA) Registered Auditors VR de Villiers Partner Chartered Accountant (SA) Registered Auditor 27 May 2013 Grant Thornton Office Park 137 Daisy Street Sandown, Johannesburg, 2196

INTEGRATED annual report 2013 63 Directors' Report

he directors have pleasure in submitting the ninth at a price of R14.60 per linked unit as a vender placement to directors’ report, which forms part of the annual partly fund a R1.5 billion portfolio acquisition. During December financial statements of the group and company for 2012, the company issued 20 525 000 new linked units at a Tthe year ended 31 March 2013. price of R16.70 per linked unit under a general authority to issue linked units for cash. No repurchase of securities was affected Vukile was listed on 24 June 2004 with a market capitalisation during the year. The group has no unlisted securities in issue. of approximately R1.03 billion. The company’s primary objective was, and still is, to invest in properties with GOING CONCERN strong contractual cash flows for long-term sustainability The directors have reviewed the group’s budget and cash and capital appreciation, leading to growing income flow forecast for the year to 31 March 2014. On the basis of distributions for linked unitholders. The company’s market this review, and in light of the current financial position and capitalisation has increased substantially to R8.18 billion as at existing borrowing facilities, the directors are satisfied that 31 March 2013 (2012: R5.36 billion). the group and company have access to adequate resources to continue in operational existence for the foreseeable It is pleasing to announce that the group has performed well future, are going concerns and have therefore continued over the review period and that profit available for distribution to adopt the going concern basis in preparing the annual has increased by 26.72% from R439.1 million to R556.4 million financial statements. for the year ended 31 March 2013. MANAGEMENT AND ADMINISTRATION SUMMARY OF FINANCIAL The management of Vukile is responsible for the property PERFORMANCE AND DISTRIBUTIONS asset management functions of the group. The information presented for the 12 months ended 31 March 2013 has been prepared in accordance with Vukile has contracted the following property managers International Financial Reporting Standards (IFRS) and the group’s to undertake the day-to-day management of the group’s accounting policies. The presentation of the results also complies property portfolio: with the relevant sections of the Companies Act (No. 71 of 2008), • JHI Properties (Pty) Ltd as amended and the JSE Listings Requirements. The annual • Broll Property Group (Pty) Ltd financial statements have been audited by Grant Thornton. • Old Mutual Property Group (Pty) Ltd.

The board approved a final distribution on 23 May 2013, SPECIAL RESOLUTIONS of 74.56 cents per linked unit for the six months ended The following special resolutions were passed during the 31 March 2013. This brings the total distribution for the year financial year: ended 31 March 2013 to 131.59 cents per linked unit • Resolution authorising financial assistance to related compared to the distribution of 124.81 cents per linked unit and inter-related companies in terms of S45 of the in 2012, an increase of 5.4% for the year. The increase in Companies Act 2008 (31 August 2012). distribution is in line with the forecast of 4 to 6% provided to • Resolution authorising the payment and amounts the market at the interim reporting stage in November 2012. in respect of non-executive directors remuneration (31 August 2012). • Resolution authorising the repurchase of linked units NATURE OF BUSINESS (31 August 2012). Vukile is a property holding and investment company through the direct and indirect ownership of immovable property. No material special resolutions were passed by subsidiaries Vukile also provides asset management services in respect during the financial year. of the Sanlam Group’s long-term commercial investment property portfolio. The company is listed on the JSE Limited DIRECTORS and the NSX in Namibia under the Retail REITs sector. Details of the directors, providing their full names, ages, qualifications and a brief curriculum vitae, are set out on CAPITAL STRUCTURE pages 20 and 21 of this integrated annual report. The linked unit structure comprises ordinary shares indivisibly linked to debentures on a one-to-one basis. Collectively, In terms of the Memorandum of Incorporation (MOI) of the the linked shares and debentures comprise the linked units company, one third of non-executive and executive directors which are traded together as indivisible units. have to retire annually by rotation. Any new directors that have been appointed during a year also have to retire at the next annual The authorised capital comprises 800 000 000 ordinary shares general meeting. All retiring directors will subsequently be eligible with a par value of one cent each. Each linked unit comprises one for re-election. It is the board’s policy that directors will retire at share of one cent (and a share premium of nine cents) linked to the annual general meeting following their 70th birthday. The one debenture of 490 cents. Interest payable on one debenture composition of the board of directors and its sub-committees is 499 times greater than the dividend payable per share. There is detailed on the next page. There have been no changes to were 431 040 218 linked units in issue at 31 March 2013. directors’ interests between the end of the financial year and The company issued 59 500 000 new linked units in April 2012 27 May 2013, other than as disclosed.

64 INTEGRATED annual report 2013 BOARD OF DIRECTORS Social, ethics and Property and Date of Audit and risk human resources Nomination investment Composition of board appointment committee committee committee committee Independent non-executive directors AD Botha (Chairman) 17 May 2004 Member Chairman PJ Cook 17 May 2004 Member Chairman Member PS Moyanga 17 May 2004 Member Member HM Serebro 17 May 2004 Chairman JM Hlongwane 30 May 2006 Member Member Member NG Payne 20 March 2012 Chairman Member SEN Sebotsa 16 May 2013 SF Booysen 20 March 2012 Member Member Member Executive directors LG Rapp (CEO) 1 August 2011 Member MJ Potts (FD) 17 May 2004 HC Lopion 1 January 2010 Member

Directors’ interest in material contracts The directors of Vukile have not been the subject of public The directors have no interest in material contracts or criticisms by statutory or regulatory authorities (including transactions, other than those directors involved in the professional bodies) and have not been disqualified by a court operation of the company as set out in this report. There from acting as directors of a company or from acting in the have been no bankruptcies or voluntary arrangements of the management or conduct of the affairs of any company. There above-named persons. have been no offences involving dishonesty by the directors of Vukile. The executive directors of Vukile have not acted as directors with an executive function of any company at the time of Executive directors’ service contracts or within the 12 months preceding any of the following The executive directors do not have fixed-term contracts with events taking place: receiverships, compulsory liquidations, the company. A three and six month notice period is required creditors’ voluntary liquidations, administrations, company of the executive directors and the CEO respectively for the voluntary arrangements or any composition or arrangement termination of services. Details of remuneration and incentive with its creditors generally or any class of its creditors. bonuses are set out in the following tables.

Non-executive directors’ remuneration 2013 2012 Directors’ Short-term Total Total Rand fees Salary bonus remuneration remuneration AD Botha 480 000 - - 480 000 424 650 HSC Bester(1) 197 667 - - 197 667 410 100 PJ Cook 476 000 - - 476 000 335 650 PS Moyanga 393 000 - - 393 000 246 250 HM Serebro 399 500 - - 399 500 335 600 JM Hlongwane 379 000 - - 379 000 287 800 UJ van der Walt(2) - - - - 180 050 NG Payne 432 333 - - 432 333 14 850 SF Booysen 393 000 - - 393 000 14 850 Total 3 150 500 - - 3 150 500 2 249 800

(1) Retired 31 August 2012. (2) Resigned on 16 September 2011.

INTEGRATED annual report 2013 65 Directors' Report continued

Executive directors’ remuneration 2013 2012 Short-term Value of LTI Total Total Rand Salary bonus scheme vested remuneration remuneration LG Rapp 2 415 000 2 160 000 - 4 575 000 7 920 000 MJ Potts 1 645 058 1 000 000 5 427 283 8 072 341 3 167 846 HC Lopion 1 458 250 800 000 243 952 2 502 202 2 661 990 G van Zyl(1) - - - - 2 540 410 Total 5 518 308 3 960 000 5 671 235 15 149 543 16 534 060

(1) Resigned on 30 September 2011.

Directors’ interests in linked units 2013 Direct Indirect Indirect Linked units beneficial beneficial non-beneficial Total Non-executive directors - 20 000 - 20 000 HM Serebro - 20 000 - 20 000 Executive directors 553 991 205 500 - 759 491 LG Rapp - 205 500 - 205 500 MJ Potts 526 156 - - 526 156 HC Lopion 27 835 - - 27 835 Total 553 991 225 500 - 779 491

Movement of directors’ interests in linked units Acquired Holdings of Disposed Held at during the retired of during Held at Linked units 1 April 2012 period directors the period 31 March 2013 Non-executive directors 45 000 - (25 000) - 20 000 HSC Bester 25 000 - (25 000) - - HM Serebro 20 000 - - - 20 000 Executive directors 539 937 359 857 - (140 303) 759 491 LG Rapp 196 400 9 100 - - 205 500 MJ Potts 324 754 335 670 - (134 268) 526 156 HC Lopion 18 783 15 087 - (6 035) 27 835 Total 584 937 359 857 (25 000) (140 303) 779 491

66 INTEGRATED annual report 2013 DIRECTORS’ BENEFICIAL INTERESTS UNDER THE CURRENT LONG-TERM INCENTIVE (LTI) SCHEME The following table sets out the directors’ interests in linked units through the long-term incentive scheme as at 31 March 2013. The vesting of such units remain subject to the fulfilment of performance conditions.

Vukile units MJ Potts HC Lopion LG Rapp Balance at 1 April 2012 440 571 122 845 480 903 Vested during the year (335 670) (15 087) - Allocated during the year 130 342 90 745 140 345 Distributions reinvested during the year – March 19 767 5 927 21 576 Distributions reinvested during the year – September 8 251 6 614 20 798 Balance at 31 March 2013 263 261 211 044 663 622 Market value of units at 31 March 2013 (Rm) 5.0 4.0 12.6

No changes in directors’ interests occurred between 31 March 2013 and 27 May 2013 other than as disclosed above.

INTEGRATED annual report 2013 67 Report of the Audit and Risk Committee for the year ended 31 March 2013

The audit and risk committee (AR committee) presents its report in terms of section 94 (7)(f) of the Companies Act and as recommended by King III for the financial year ended 31 March 2013.

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

MEMBERSHIP, MEETING ATTENDANCE AND EVALUATION The committee consists of four non-executive directors, all of whom are independent. At 31 March 2013, the AR committee comprised the following members: Director Period served NG Payne (Chairman) 20 March 2012 – current (Chairman since 1 September 2012) SF Booysen 20 March 2012 – current PJ Cook 17 May 2004 – current PS Moyanga 24 May 2007 – current HSC Bester (former Chairman)(1) 17 May 2004 – 31 August 2012

(1) HSC Bester retired from this committee on 31 August 2012.

The curriculum vitae of the members of the AR committee are set out on pages 20 to 21.

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

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

The AR committee held four meetings during the period. All these meetings were scheduled in advance. The attendance for each member is set out below: 18 May 7 September 15 November 8 March Director 2012 2012 2012 2013 HSC Bester (former Chairman) IA R R R NG Payne (Chairman) AW IA IA IA SF Booysen IA IA IA IA PJ Cook IA IA IA IA PS Moyanga IA IA IA IA

IA – In attendance. R – Retired on 31 August 2012. AW – Absent with apology.

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

68 INTEGRATED annual report 2013 For the year under review the AR committee discharged the Going concern status following responsibilities: •  Considered the going concern status of the company and the group on the basis of review of the annual External auditors financial statements and the information available to the Considered the independence and objectivity of the • AR committee and recommended such going concern external auditors. status for adoption by the board. The board statement • Appr oved and monitored the non-audit services rendered on the going concern status of the group and company is by the external auditors in accordance with approved contained on page 64 in the directors’ report. non-audit services policy. • Determined the external auditors’ terms of engagement and fees for 2013. Financial director and finance • Satisfied itself that the external auditors and designated function auditors are accredited on the JSE list of auditors • Reviewed the performance of the financial director, and advisors. The AR committee recommends the Mr MJ Potts, and was satisfied that he has the necessary reappointment of the external auditors and designated expertise and experience to meet the responsibilities auditors at the next annual general meeting (AGM). required by the JSE Limited. • Considered, and has satisfied itself of the expertise Financial statements and and adequacy of resources of the finance function and accounting practices experience of the senior members of the finance function. • Reviewed the accounting policies and the annual financial statements of the group for the year ended 31 March Solvency and liquidity 2013 and based on the information provided to it, the • The AR committee is satisfied that the board has AR committee considers that, in all material aspects, performed a solvency and liquidity test on the company both the accounting policies and the annual financial in terms of Sections 4 and 46 of the Companies Act and statements are appropriate and comply with the provisions has concluded that the company will satisfy the test after of the Companies Act, International Financial Reporting payment of final distribution. The AR committee can Standards (IFRS) and the JSE Listings Requirements. • Reviewed and considered any complaints relating to also confirm that the test was performed at the interim reporting and accounting practices, internal audit, distribution stage. contents of the group’s financial statements, internal financial controls or any other related matters. The Risk management and combined AR committee can confirm that no such complaints have assurance been brought to its attention during the year under review. • Reviewed the risk management reports presented by management during the course of the year. Internal financial controls and • Conducted a special risk-focus meeting during which internal audit the major risks facing the company were considered and • Reviewed the reports of both the internal and external approved. auditors detailing their findings arising from their audits • Overseeing the development of a combined assurance and the appropriate responses from management. The model for the group, which is expected to be completed AR committee can confirm that no material findings in and approved by October 2013. regards to internal financial controls have been brought to its attention during the year under review. • Monitored adherence to the annual internal audit plan. • Oversaw an internal audit review process which resulted in the appointment of Deloitte as the group’s new internal audit service provider. NG Payne Integrated reporting Chairman • At its meeting held on 16 May 2013, considered and recommended the integrated annual report for approval Melrose Estate by the board. 27 May 2013

INTEGRATED annual report 2013 69 STATEMENTS OF FINANCIAL POSITION at 31 March 2013

2013 2012 2011 Restated* Restated* GROUP Note R000 R000 R000 ASSETS Non-current assets 7 770 306 6 176 629 5 487 419 Investment properties 7 241 245 5 674 979 4 984 840 Investment properties 3 7 389 656 5 806 158 5 083 993 Straight-line rental income adjustment 4 (148 411) (131 179) (99 153) Other non-current assets 529 061 501 650 502 579 Intangible asset 5 152 965 267 096 312 832 Straight-line rental income asset 4 148 411 131 179 99 153 Deferred capital expenditure 138 385 4 411 2 723 Furniture fittings, computer equipment and other 6 5 129 1 985 1 774 Available-for-sale financial asset 8 19 417 28 468 10 208 Financial asset at amortised cost 9 1 152 2 967 4 782 Goodwill 10 63 602 65 544 71 107 Derivative financial instruments 19 - - - Current assets 1 351 664 266 881 409 218 Trade and other receivables 12 84 360 50 934 71 409 Cash and cash equivalents 1 267 304 215 947 337 809 Non-current assets held for sale 323 202 321 195 281 422 Investment properties 320 358 305 948 280 142 Investment properties 3 323 202 321 195 281 422 Straight-line rental income adjustment 4 (2 844) (15 247) (1 280) Straight-line rental income asset 4 2 844 15 247 1 280 Total assets 9 445 172 6 764 705 6 178 059 EQUITY AND LIABILITIES Equity attributable to owners of the parent 2 626 187 2 074 470 1 696 065 Share capital 14 4 310 3 510 3 510 Share premium 15 51 806 28 753 28 753 Reserves 16 2 570 071 2 042 207 1 663 802 Non-current liabilities 5 755 367 3 022 150 3 618 098 Linked debentures and premium 17 3 275 222 2 113 213 2 116 916 Other interest bearing borrowings 18 2 414 522 448 790 1 226 282 Derivative financial instruments 19 59 330 25 644 21 867 Deferred taxation liabilities 20 6 293 434 503 253 033 Current liabilities 1 063 618 1 668 085 863 896 Trade and other payables 21 228 117 188 692 173 277 Short-term borrowings 18 512 936 1 230 640 449 600 Current taxation liabilities 1 343 1 267 5 416 Linked unitholders for distribution 321 222 247 486 235 603 Total equity and liabilities 9 445 172 6 764 705 6 178 059

* Refer to note 20.

70 INTEGRATED annual report 2013 STATEMENTS OF FINANCIAL POSITION at 31 March 2013

2013 2012 2011 2013 Restated* Restated* COMPANY Note R000 R000 R000 ASSETS Non-current assets 6 535 065 5 079 366 4 628 861 Investment properties 5 653 612 4 218 062 3 757 675 Investment properties 3 5 768 689 4 321 005 3 837 470 Straight-line rental income adjustment 4 (115 077) (102 943) (79 795) Other non-current assets 881 453 861 304 871 186 Intangible asset 5 152 965 267 096 312 832 Straight-line rental income asset 4 115 077 102 943 79 795 Deferred capital expenditure 138 385 4 411 2 723 Furniture fittings, computer equipment and other 6 47 18 28 Investment in subsidiaries 7 462 780 462 780 462 780 Available-for-sale financial asset 8 11 047 21 089 7 088 Financial asset at amortised cost 9 1 152 2 967 4 782 Derivative financial instruments 19 - - 1 158 Current assets 1 353 162 252 224 366 175 Trade and other receivables 12 64 053 35 656 49 259 Loan to subsidiary 13 535 17 299 48 260 Taxation 148 305 - Debenture interest receivable 43 930 54 000 73 491 Cash and cash equivalents 1 244 496 144 964 195 165 Non-current assets held for sale 310 310 300 395 256 145 Investment properties 307 484 285 239 255 154 Investment properties 3 310 310 300 395 256 145 Straight-line rental income adjustment 4 (2 826) (15 156) (991) Straight-line rental income asset 4 2 826 15 156 991 Total assets 8 198 537 5 631 985 5 251 181 EQUITY AND LIABILITIES Equity attributable to owners of the parent 1 810 722 1 476 033 1 257 177 Share capital 14 4 310 3 510 3 510 Share premium 15 51 806 28 753 28 753 Reserves 16 1 754 606 1 443 770 1 224 914 Non-current liabilities 5 308 989 2 465 203 3 547 099 Linked debentures and premium 17 3 275 222 2 113 213 2 116 916 Other interest bearing borrowings 18 1 965 250 - 1 226 282 Derivative financial instruments 19 59 330 5 731 - Deferred taxation liabilities 20 9 187 346 259 203 901 Current liabilities 1 078 826 1 690 749 446 905 Trade and other payables 21 164 524 129 785 125 051 Short-term borrowings 18 512 936 1 230 640 - Amounts owing to subsidiaries 7 80 144 82 838 82 111 Current taxation liabilities - - 4 140 Linked unitholders for distribution 321 222 247 486 235 603 Total equity and liabilities 8 198 537 5 631 985 5 251 181

* Refer to note 20.

INTEGRATED annual report 2013 71 INCOME STATEMENTS for the year ended 31 March 2013

2013 2012 Restated* GROUP Note R000 R000 Property revenue 23 1 166 940 933 269 Straight-line rental income accrual 4 4 829 45 993 Gross property revenue 1 171 769 979 262 Property expenses 24 (452 811) (334 421) Net profit from property operations 718 958 644 841 Income − asset management business 25 77 974 53 317 Expenditure − asset management business 25 (32 022) (30 792) Corporate administrative expenses 26 (29 192) (25 919) Investment and other income 28 25 615 13 557 Operating profit before finance costs 761 333 655 004 Finance costs 29 (194 285) (165 633) Profit before debenture interest 567 048 489 371 Debenture interest (554 368) (437 224) Profit before capital items 12 680 52 147 Profit on sale of investment properties 903 3 084 Amortisation of debenture premium 6 804 3 703 Goodwill written-off on sale of subsidiary/properties by a subsidiary (821) (762) Impairment of intangible asset 5 (114 131) (45 736) Impairment of goodwill (1 121) (4 801) Profit on sale of subsidiary 1 160 1 428 (Loss)/profit before fair value adjustments (94 526) 9 063 Fair value adjustments 255 329 549 253 Gross change in fair value of investment properties 260 158 595 246 Straight-line rental income adjustment (4 829) (45 993) Profit before taxation 160 803 558 316 Taxation 30 412 834 (187 987) Profit for the year 573 637 370 329 Earnings and diluted earnings per linked unit (cents) 31 273.53 230.06

* Refer to note 20.

72 INTEGRATED annual report 2013 INCOME STATEMENTS for the year ended 31 March 2013

2013 2012 Restated* COMPANY Note R000 R000 Property revenue 23 925 967 718 652 Straight-line rental income accrual 4 (196) 37 313 Gross property revenue 925 771 755 965 Property expenses 24 (374 166) (265 936) Net profit from property operations 551 605 490 029 Income − asset management business 25 76 839 52 680 Expenditure − asset management business 25 (18 805) (17 905) Corporate administrative expenses 26 (28 530) (25 513) Investment and other income 28 136 844 106 552 Operating profit before finance costs 717 953 605 843 Finance costs 29 (160 656) (129 632) Profit before debenture interest 557 297 476 211 Debenture interest (554 368) (437 224) Profit before capital items 2 929 38 987 Profit on sale of investment properties 903 3 085 Amortisation of debenture premium 6 804 3 703 Impairment of intangible asset 5 (114 131) (45 736) (Loss)/profit before fair value adjustments (103 495) 39 Fair value adjustments 151 399 359 516 Gross change in fair value of investment properties 151 203 396 829 Straight-line rental income adjustment 196 (37 313) Profit before taxation 47 904 359 555 Taxation 30 327 537 (142 446) Profit for the year 375 441 217 109

* Refer to note 20.

INTEGRATED annual report 2013 73 STATEMENTS OF COMPREHENSIVE INCOME for the year ended 31 March 2013

2013 2012 Restated* GROUP R000 R000 Profit for the year 573 637 370 329 Other comprehensive income Cash flow hedges (33 686) (4 412) Current period losses (33 686) (3 777) Reclassification to profit or loss - (635) Available-for-sale financial assets – current period (losses)/ income (18 367) 3 453 Other comprehensive loss for the year (52 053) (959) Total comprehensive income for the year 521 584 369 370 COMPANY Profit for the year 375 441 217 109 Other comprehensive income Cash flow hedges (53 599) (6 889) Current period losses (53 599) (6 889) Reclassification to profit or loss - - Available-for-sale financial assets – current period (losses)/ income (14 856) 2 626 Other comprehensive loss for the year (68 455) (4 263) Total comprehensive income for the year 306 986 212 846 * Refer to note 20.

74 INTEGRATED annual report 2013 DISTRIBUTION STATEMENTS for the year ended 31 March 2013

Total First Second DISTRIBUTION TO VUKILE Cents per Cents per Cents per UNITHOLDERS R000 linked unit R000 linked unit R000 linked unit for the year ended 31 March 2013 Interest distribution 554 368 131.32 233 639 56.91 320 729 74.41 Dividend distribution 1 131 0.27 477 0.12 654 0.15 Total distribution 555 499 131.59 234 116 57.03 321 383 74.56

Total First Second DISTRIBUTION TO VUKILE Cents per Cents per Cents per UNITHOLDERS R000 linked unit R000 linked unit R000 linked unit for the year ended 31 March 2012 Interest distribution 437 224 124.56 190 262 54.20 246 962 70.36 Dividend distribution 892 0.25 388 0.11 504 0.14 Total distribution 438 116 124.81 190 650 54.31 247 466 70.50

2013 2012 Total number of linked units in issue at 31 March 431 040 218 351 015 218 Weighted average number of linked units in issue 412 394 876 351 015 218 Headline and diluted headline earnings per linked unit (cents) 136.16 134.48 Net asset value (cents per linked unit) 1 369 1 193

INTEGRATED annual report 2013 75 STATEMENTS OF CHANGES IN EQUITY for the year ended 31 March 2013

Revaluation Non- reserves distribu- available- Cash Share Share table for-sale flow Retained R000 capital premium reserves assets hedges earnings Total GROUP Restated balance at 31 March 2011 3 510 28 753 1 681 565 (19 830) (22 228) 24 295 1 696 065 Balance at 31 March 2011 as previously reported 3 510 28 753 1 390 050 (19 830) (22 228) 24 295 1 404 550 Change of rate in deferred taxation including straight-line rental accrual - - 291 515 - - - 291 515 Dividend distribution - - - - - (892) (892) 3 510 28 753 1 681 565 (19 830) (22 228) 23 403 1 695 173 Profit for the year - - - - - 370 329 370 329 Change in fair value of investment properties - - 595 246 - - (595 246) - Deferred taxation on change in fair value of investment properties and straight-line rental accrual - - (184 333) - - 184 333 - Share-based remuneration - - 9 927 - - - 9 927 Transfer from non-distributable reserves - - (46 163) - - 46 163 - Other comprehensive income Revaluation of available-for-sale financial asset - - - 3 453 - - 3 453 Revaluation of cash flow hedges - - - - (4 412) - (4 412) Restated balance at 31 March 2012 3 510 28 753 2 056 242 (16 377) (26 640) 28 982 2 074 470 Balance at 31 March 2012 as previously reported 3 510 28 753 1 762 960 (16 377) (26 640) 28 982 1 781 188 Change of rate in deferred taxation including straight-line rental accrual - - 293 282 - - - 293 282 Issue of share capital 800 23 053 - - - - 23 853 Dividend distribution - - - - - (1 131) (1 131) 4 310 51 806 2 056 242 (16 377) (26 640) 27 851 2 097 192 Profit for the year - - - - - 573 637 573 637 Change in fair value of investment properties - - 260 158 - - (260 158) - Deferred taxation rate change - - 426 790 - - (426 790) - Share-based remuneration - - 7 411 - - - 7 411 Transfer from non-distributable reserves - - (122 194) - - 122 194 - Other comprehensive loss Revaluation of available-for-sale financial asset - - - (18 367) - - (18 367) Revaluation of cash flow hedges - - - - (33 686) - (33 686) Balance at 31 March 2013 4 310 51 806 2 628 407 (34 744) (60 326) 36 734 2 626 187

76 INTEGRATED annual report 2013 STATEMENTS OF CHANGES IN EQUITY for the year ended 31 March 2013

Revaluation Non- reserves distribu- available- Cash Share Share table for-sale flow Retained R000 capital premium reserves assets hedges earnings Total COMPANY Restated balance at 31 March 2011 3 510 28 753 1 230 861 (17 499) 797 10 755 1 257 177 Balance at 31 March 2011 as previously reported 3 510 28 753 1 071 902 (17 499) 797 10 755 1 098 218 Change of rate in deferred taxation including straight-line rental accrual - - 158 959 - - - 158 959 Dividend distribution - - - - - (892) (892) 3 510 28 753 1 230 861 (17 499) 797 9 863 1 256 285 Profit for the year - - - - - 217 109 217 109 Change in fair value of investment properties - - 396 829 - - (396 829) - Deferred taxation on change in fair value of investment properties and straight-line rental accrual - - (142 383) - - 142 383 - Share-based remuneration - - 6 902 - - - 6 902 Transfer from non-distributable reserves - - (42 027) - - 42 027 - Other comprehensive income Revaluation of available-for-sale financial asset - - - 2 626 - - 2 626 Revaluation of cash flow hedges - - - - (6 889) - (6 889) Restated balance at 31 March 2012 3 510 28 753 1 450 182 (14 873) (6 092) 14 553 1 476 033 Balance at 31 March 2012 as previously reported 3 510 28 753 1 311 135 (14 873) (6 092) 14 553 1 336 986 Change of rate in deferred taxation including straight-line rental accrual - - 139 047 - - - 139 047 Issue of share capital 800 23 053 - - - - 23 853 Dividend distribution - - - - - (1 131) (1 131) 4 310 51 806 1 450 182 (14 873) (6 092) 13 422 1 498 755 Profit for the year - - - - - 375 441 375 441 Change in fair value of investment properties - - 151 203 - - (151 203) - Deferred taxation rate change - - 343 192 - - (343 192) - Share-based remuneration - - 4 981 - - - 4 981 Transfer from non-distributable reserves - - (127 036) - - 127 036 - Other comprehensive loss Revaluation of available-for-sale financial asset - - - (14 856) - - (14 856) Revaluation of cash flow hedges - - - - (53 599) - (53 599) Balance at 31 March 2013 4 310 51 806 1 822 522 (29 729) (59 691) 21 504 1 810 722

INTEGRATED annual report 2013 77 STATEMENTS OF CASH FLOW for the year ended 31 March 2013

2013 2012 Group Company Group Company Note R000 R000 R000 R000 Cash flow from operating activities 738 201 599 430 638 685 508 363 Profit before taxation 160 803 47 904 558 316 359 555 Adjustments 32.1 585 539 544 492 53 717 115 513 Net changes in working capital 32.2 6 272 16 412 35 795 37 828 Taxation paid 32.4 (14 413) (9 378) (9 143) (4 533)

Cash flow from investing activities (1 446 725) (1 307 478) (167 450) (34 387) Acquisition of and improvements to investment properties and deferred capital expenditure (1 823 063) (1 783 312) (201 648) (158 556) Acquisition of furniture, fittings, computer equipment and other (4 793) (46) (1 029) (5) Purchase of available-for-sale financial asset (9 316) (4 814) (14 807) (11 375) Proceeds on sale of investment properties 364 645 343 845 36 352 28 997 Proceeds on sale of furniture, fittings and computer equipment 187 5 125 - Investment and other income 25 615 136 844 13 557 106 552

Cash flow from financing activities 1 759 881 1 807 580 (593 097) (524 177) Interest bearing borrowings advanced/ (repaid) 1 243 263 1 243 263 (1 231) - Proceeds from issue of share capital 1 192 666 1 192 666 - - Finance costs (194 285) (160 656) (165 633) (129 632) Distributions paid 32.5 (481 763) (481 763) (426 233) (426 233) Movement in loan to subsidiaries - 16 764 - 33 438 Loans from subsidiaries repaid - (2 694) - (1 750) Net increase/(decrease) in cash and cash equivalents 1 051 357 1 099 532 (121 862) (50 201) Cash and cash equivalents at the beginning of the year 215 947 144 964 337 809 195 165 Cash and cash equivalents at the end of the year 32.3 1 267 304 1 244 496 215 947 144 964

78 INTEGRATED annual report 2013 NOTES TO THE ANNUAL FINANCIAL STATEMENTS at 31 March 2013

1 ACCOUNTING POLICIES Fair market value is the open market value, which, in the opinion of the directors, is the fair market The annual financial statements havebeen prepared price at which the property would have been sold in accordance with International Financial Reporting unconditionally on a willing buyer-willing seller basis Standards, the SAICA Financial Reporting Guides as for a cash consideration on the date of the valuation. issued by the Accounting Practices Committee and Gains and losses arising from changes in the fair Financial Reporting Pronouncements as issued by the value of investment properties are recognised Financial Reporting Standards Council, the JSE Limited in net profit and loss for the period in which they Listings Requirements and the Companies Act of South arise. Such gains or losses are excluded from the Africa, 2008, as amended. calculation of distributable earnings. 1.1 BASIS OF PREPARATION Gains or losses on the disposal of investment The annual financial statements have been properties are recognised in net profit or loss, prepared on the historical cost basis except for the and are calculated as the difference between the measurement of investment properties and certain net selling price and the fair value of the property financial instruments at fair value and incorporate as valued in the most recent annual financial the principal accounting policies set out below. statements. Such gains or losses are excluded from the calculation of distributable earnings. These accounting policies have been applied consistently with the previous year, other than 1.3 Deferred capital EXPENDITURE the change in the accounting policy relating to Expenditur e incurred on a ‘grassroots’ property deferred taxation. The company has adopted development is measured initially at cost. Once the amendments to IAS 12 published on the development is completed the property is 2 0 December 2010. The effect is that deferred stated at fair market value. If a decision is taken taxation on investment properties is now calculated not to proceed with the development the costs at the capital gains tax rate as opposed to a incurred to the date of that decision are expensed blended rate, on the rebuttable presumption that through profit and loss for the period. the carrying value of the investment properties will be recovered through sale. These amendments 1.4 TAXATION have been applied retrospectively in accordance The charge for current taxation is based on the with IAS 8. results for the year as adjusted for items which are non-taxable or disallowable and any adjustment for 1.2 INVESTMENT PROPERTIES tax payable or receivable for previous years. Investment properties, which are stated at fair market value, constitute land and buildings held Current tax liabilities (assets) for the current and prior by the group for rental producing purposes until or periods are measured at the amount expected to be unless a property is no longer considered a core paid to (recovered from) the taxation authorities, using property and does not meet strategic requirements. the tax rates and tax laws that have been enacted or At that stage a sale of the property will be approved substantively enacted by the reporting date. and the property will be transferred to non-current assets held for sale. Investment property is initially Temporary differences are differences between recorded at cost which includes transaction costs the carrying amounts of assets and liabilities for financial reporting purposes and their tax base. directly attributable to the acquisition thereof. The The amount of deferred tax provided is based on directors value all the properties bi-annually to fair the tax rates and tax laws in the expected manner market value. At least 50% of all properties are of realisation or settlement of the carrying amount valued every six months on a rotational basis by of assets and liabilities that have been enacted by qualified independent external property valuers and the reporting date. any differences between the respective valuations are reported in the notes to the financial statements. A deferred tax liability is recognised for all taxable temporary differences except to the extent that the Costs include costs incurred initially and costs deferred tax liability arises from: incurred subsequently to add to, or to replace a (a) the initial recognition of goodwill; or (b) goodwill for which amortisation is not part of a property. Tenant installation costs are deductible for tax purposes; or capitalised to the cost of a building. All these (c) the initial recognition of an asset or liability in items are included in the fair value of investment a transaction which: properties. If a replacement part is recognised in (i) is not a business combination; and the carrying amount of the investment property, (ii) at the time of the transaction affects the carrying amount of the replaced part is neither accounting profit nor taxable derecognised. profit (tax loss).

INTEGRATED annual report 2013 79 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

1 ACCOUNTING POLICIES continued • Gains and losses on subsequent measurement Gains and losses arising from a change in A deferred tax asset is recognised for all deductible the fair value of the financial instruments, temporary differences to the extent that it is excluding available-for-sale financial assets, probable that taxable profit will be available against are included in net profit or loss in the period which the deductible temporary difference can be in which the change arises. Such gains and utilised, unless the deferred tax asset arises from losses are excluded from the calculation of the initial recognition of an asset or liability in a distributable earnings. Gains and losses transaction that: arising from a change in the fair value of (a) is not a business combination; and available-for-sale financial assets are included (b) at the time of the transaction, affects neither in other comprehensive income in the period accounting profit nor taxable profit (tax loss). in which the change arises. • Derivative instruments The effect on deferred tax of any changes in The group uses derivative financial instruments tax rates is recognised in the profit and loss for including interest rate swaps, swaptions, the period, except to the extent that it relates to forward rate agreements and interest rate caps items previously charged or credited directly to to hedge its exposure to interest rates. It is the other comprehensive income or equity. Where policy of the group not to trade in derivative permissible, deferred tax assets are offset against financial instruments for speculative purposes. deferred tax liabilities. Derivative financial instruments are initially and subsequently recognised at fair value. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be In terms of hedge accounting, hedges are either available, against which the associated unused tax (a) fair value hedges, which hedge the exposure losses and deductible temporary differences can to changes in the fair value of a recognised be utilised. Deferred tax assets are reduced to the asset or liability; or extent that it is no longer probable that the related (b) cash flow hedges, which hedge exposure to tax benefit will be realised. variability in cash flows. In the case of fair value hedges, any gains or 1.5 FINANCIAL INSTRUMENTS losses from changes in the fair value of the hedging Financial assets and financial liabilities are instrument are recognised immediately in the profit recognised in the statement of financial position or loss for the period. when a company has become party to the contractual provisions of the instrument. Gains and losses on the effective portion of cash • Financial assets (excluding derivative flow hedging instruments in respect of forecast instruments) transactions are recognised directly in other The group’s principal financial assets are comprehensive income. Any ineffective portion of a cash flow hedge is recognised in profit or loss for trade receivables, cash and cash equivalents, the period. reimbursement rights, financial assets at amortised cost and loans to subsidiaries. At the time the hedged item affects profit or loss, These financial assets are initially measured any gain or loss previously recognised in other at fair value. Loans and receivables are comprehensive income is reclassified from equity subsequently measured at amortised cost. to profit or loss and presented as a reclassification Other financial assets are subsequently adjustment within other comprehensive income. measured at fair value. However, if a non-financial asset or liability is recognised as a result of the hedged transaction, Financial liabilities (excluding derivative •  the gains and losses previously recognised in instruments) other comprehensive income are included in the The group’s principal financial liabilities initial measurement of the hedged item. are debentures, interest bearing bank and securitised loans, trade and other payables 1.6 EQUITY AND RESERVES and other non-interest bearing borrowings. Share premium includes any premiums received on Interest bearing bank and securitised loans issue of share capital. Any transaction costs associated and overdrafts are initially recorded at the with the issuing of shares are deducted from share proceeds received net of direct issue costs. premium, net of any related income tax benefits. Interest bearing bank loans, debentures and trade and other payables are subsequently The non-distributable reserves within equity comprises measured at amortised cost. gains and losses due to the revaluation of investment

80 INTEGRATED annual report 2013 1 ACCOUNTING POLICIES continued 1.10 BASIS OF CONSOLIDATION The group annual financial statements include the financial statements of the company and its property and other capital items. Gains and losses on subsidiaries. The operating results of the subsidiaries certain financial instruments are included in reserves are included from the effective dates of acquisition for available-for-sale financial assets and cash flow up to the effective dates of disposal. hedges respectively. Inter -company balances and transactions are Share-based payments comprising the payments eliminated. made by the group in respect of long-term incentive and retention scheme awards, which Subsidiaries apply the same accounting policies as payments are amortised over the award period, those used by the company. are included in reserves. Investment in subsidiaries is carried at cost in Retained earnings include all current and prior the company’s financial statements, less any period retained profits and losses. accumulated impairment.

1.7 REVENUE RECOGNITION 1.11 GOODWILL Revenue comprises operating lease income Goodwill arising on consolidation represents the operating expense recoveries charged to tenants, excess of the cost of acquisition over the group’s asset management fees and interest income. interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary, Dividends are recognised when the company’s right at the date of acquisition. Goodwill is recognised to receive payment is established. as an asset at the carrying amount less any accumulated impairment. Goodwill is evaluated Operating lease income and recoveries are annually for impairment. recognised as income on a straight-line basis over the lease term. Interest is brought to account using Bargain purchase gains are recognised in profit or the effective interest method. loss immediately.

Contingent rents (turnover rental) are included  1.12 INTANGIBLE ASSET (ASSET in revenue when the amounts can be reliably MANAGEMENT CONTRACT) measured. The asset management contract with an indefinite useful life is stated at cost less accumulated impairment losses. The asset management The asset management business generates contract is tested for impairment annually by revenue from the rendering of services, namely comparing the recoverable amount with the asset management income, sales commission carrying amount. Useful life is reviewed in earned on the sales of properties on behalf of the each period to determine whether events and Sanlam Group and other service related income. circumstances continue to support an indefinite useful life assessment. If they do not, the change Asset management fees are measured by reference in useful life assessment from indefinite to finite is to the fair value of consideration received for accounted for as a change in estimate. services rendered. 1.13 IMPAIRMENT LOSSES Sales commission is recognised when all the At each reporting date the carrying amounts of suspensive conditions pertaining to a property sale the tangible and intangible assets are assessed agreement have been fulfilled. to determine whether there is any indication that those assets may have suffered an impairment 1.8 LETTING COMMISSIONS loss. If any such indication exists, the recoverable Letting commissions are capitalised and amortised amount of the asset is estimated in order to over the lease period. The carrying value of determine the extent of the impairment loss. letting commissions is included with investment Irrespective of whether there is an indication of properties. impairment the group also: • Tests intangible assets with an indefinite life 1.9 CASH AND CASH EQUIVALENTS for impairment annually by comparing the For the purpose of the statement of cash flows, carrying amount with the recoverable amount. cash and cash equivalents comprise cash on hand, • Tests goodwill acquired in a business deposits held at call with banks and investments in combination for impairment annually by money market instruments, net of bank overdrafts, comparing its carrying amount with its all of which are available for use by the group. recoverable amount.

INTEGRATED annual report 2013 81 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

1 ACCOUNTING POLICIES continued qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost Wher e it is not possible to estimate the recoverable of those assets. amount of an individual asset the recoverable amount of the cash-generating unit to which the Capitalisation of such borrowing costs ceases asset belongs is estimated. Value in use, included when the assets are substantially ready for their in the calculation of the recoverable amount, is intended use or sale. Investment income earned estimated taking into account future cash flows, on the temporary investment of specific borrowings forecast market conditions and the expected lives pending their expenditure on qualifying assets is of the assets. deducted from the borrowing costs capitalised. If the recoverable amount of an asset (or cash- Other borrowing costs are expensed in the period generating unit) is estimated to be less than its in which they are incurred. carrying amount, its carrying amount is reduced to the recoverable amount. The impairment loss is first 1.16 SHARE-BASED PAYMENTS allocated to goodwill and then to the other assets Services received or acquired in a share-based of the cash generating unit. Subsequent to the payment transaction are recognised as the services recognition of an impairment loss the depreciation or are received. A corresponding increase in equity amortisation charge for assets is adjusted to allocate is recognised if the services were received in an the remaining carrying value, less any residual value, equity-settled share-based payment transaction over the remaining useful life. Impairment losses are or a liability if the services were acquired in a cash- recognised in profit and loss. settled share-based payment transaction.

If any impairment loss subsequently reverses, the For equity-settled share-based payment transactions, carrying amount of the asset (or cash-generating the goods or services received, and the corresponding unit) is increased to the revised estimate of its increase in equity, are measured directly at the fair recoverable amount but limited to the carrying value of the goods or services received, unless that amount that would have been determined had no fair value cannot be estimated reliably. impairment loss been recognised in prior years. A reversal of an impairment loss is recognised in If the fair value of the goods or services received profit or loss. cannot be estimated reliably, their value and the corresponding increase in equity are measured For the purpose of impairment testing, goodwill is allocated to each of the cash-generating units indirectly by reference to the fair value, at grant expected to benefit from the synergies of the date, of the equity instruments granted. combination. No goodwill impairment losses are subsequently reversed. The attributable amount When the services received or acquired in a of goodwill is included in the profit or loss on share-based payment transaction do not qualify disposal when the relevant cash generating unit for recognition as assets, they are recognised as is sold. expenses.

 1.14 FURNITURE, FITTINGS, COMPUTER For cash-settled share-based payment transactions, EQUIPMENT AND OTHER the services acquired and the liability incurred are Furniture, fittings, computer equipment and other measured at the fair value of the liability. Until the are stated at cost less accumulated depreciation liability is settled, the fair value of the liability is re- and any impairment losses. measured at each reporting date and at the date of settlement, with any changes in fair value recognised Depreciation is charged so as to write-off the cost in profit or loss for the period. If the share-based less residual value of assets over their estimated payments granted do not vest until the counterparty useful lives, using the straight-line basis. completes a specified period of service, Vukile accounts for those services on a straight-line basis The principal useful lives used for this purpose are: over the vesting period. Computer equipment 3 years Computer software 2 years If the share-based payments vest immediately, the Furniture and equipment 6 years services received are recognised immediately in full. Motor vehicles 5 years

The residual value and useful life of an asset are  1.17 INVESTMENT PROPERTY HELD reviewed at each financial year end. FOR SALE Investment property held for sale, are properties 1.15 BORROWING COSTS that will be recovered principally through a sale Borrowing costs directly attributable to the transaction. These properties are measured at acquisition, construction or production of their fair values.

82 INTEGRATED annual report 2013 1 ACCOUNTING POLICIES continued

1.18 OPERATING SEGMENTS In identifying its operating segments, management reviews the performance of its asset management business and its investment properties held by the group on an individual basis.

The measurement policies the group uses for segment reporting under IFRS 8 are the same as those used in its financial statements, except that the following items inter alia are not included in arriving at operating profit of the operating segments: • Corporate administrative expenditure. • Investment and other income.

 1.19 NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS NOT yET ADOPTED The following revisions to International Accounting Standards, relevant to the group, have not been early adopted.

Effective for accounting periods beginning on or STATEMENT after Summary of key points Impact on Vukile

IFRS 9 1 January 2015 • IFRS 9 Financial Instruments was issued in • Management Financial (ie for the November 2009 and amended in October 2010. have yet to Instruments March 2016 The standard introduces new requirements for the assess the financial year-end) classification and measurement of financial assets impact that and financial liabilities. this new and • IFRS 9 requires all recognised financial assets that amended are within the scope of IAS 39 Financial Instruments: standard Recognition and Measurement to be subsequently is likely to measured at amortised cost or fair value. have on the • The most significant effect of IFRS 9 regarding the financial classification and measurement of financial liabilities statements of relates to the accounting for changes in fair value the group. of a financial liability, designated as at fair value through profit or loss, attributable to changes in the credit risk of that liability. • The requirements in IAS 39 related to the derecognition of financial assets and financial liabilities have been incorporated unchanged into the new version of IFRS 9.

IFRS 10 1 January 2013 • IFRS 10 supercedes IAS 27 Consolidated and • No material Consolidated (ie for the Separate Financial Statements and SIC 12 impact Financial March 2014 Consolidation – Special Purpose Entities. It expected for Statements financial year-end) introduces a new, principle-based definition of Vukile. control which will apply to all investees to determine the scope of consolidation.

IFRS 11 1 January 2013 • IFRS 11 supercedes IAS 31 Interests in Joint • No material Joint (ie for the Ventures. It replaces IAS 31’s three categories impact Arrangements March 2014 of ‘jointly controlled entities’, ‘jointly controlled expected for financial year-end) operations’ and ‘jointly controlled assets’ with Vukile. two new categories – ‘joint operations’ and ‘joint ventures’. The option of using proportionate consolidation for joint ventures that was previously included in IAS 31 has been eliminated (equity accounting is now required for all joint ventures).

INTEGRATED annual report 2013 83 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

1 ACCOUNTING POLICIES continued

Effective for accounting periods beginning on or STATEMENT after Summary of key points Impact on Vukile

IFRS 12 1 January 2013 • IFRS 12 combines the disclosure requirements • No material Disclosure of (ie for the for subsidiaries, joint arrangements, associates impact Interests in Other March 2014 and structured entities within a comprehensive expected for Entities financial year-end) disclosure standard. Vukile. • It aims to provide more transparency on ‘borderline’ consolidation decisions and enhance disclosures about unconsolidated structured entities in which an investor or sponsor has involvement. IFRS 13 1 January 2013 • The new IFRS specifies how an entity should • No material Fair Value (ie for the measure fair value and disclose fair value impact Measurements March 2014 information. expected for financial year-end) Vukile.

IAS 19 (Revised) 1 January 2013 • The main changes improve the comparability and • No material Employee (ie for the understandability of changes arising from defined impact Benefits March 2014 benefit plans. expected for financial year-end) Vukile.

IAS 1 1 July 2012 • The amendment changes the structure of items • No material Presentation (ie for the presented in OCI. Items must be grouped and impact of Financial March 2014 presented into those that, in accordance with other expected for Statements financial year-end) IFRSs (a) will not be reclassified subsequently to Vukile. profit or loss and/or (b) will be classified subsequently to profit or loss when specific conditions are met.

IAS 27 1 January 2013 • Consequential changes have been made to IAS 27 • No material (Revised) (ie for the March as a result of the publication of the new IFRS 10, impact Separate 2014 financial 11 and 12. IAS 27 will now solely address separate expected for Financial year-end) financial statements, the requirements for which are Vukile. Statements substantially unchanged.

IAS 28 1 January 2013 • IAS 28 continues to prescribe the mechanics of • No material (Revised) (ie for the March equity accounting. Changes to its scope have impact Investments in 2014 financial however been made as a result of the publication expected for Associates and year-end) of IFRS 11. Vukile. Joint Ventures

IFRS 7 1 January 2013 • Amendments require entities to disclose gross • No material Financial (ie for the March amounts subject to rights of set-off, amounts set impact Instruments: 2014 financial off in accordance with the accounting standards expected for Disclosure year-end) followed, and the related net credit exposure. Vukile. and IAS 32 Financial Instruments: Presentation

84 INTEGRATED annual report 2013 2 KEY ESTIMATIONS AND UNCERTAINTIES Estimates and assumptions are an integral part of financial reporting and as such have an impact on the amounts reported in the group’s income, expenses, assets and liabilities. Judgement in these areas is based on historical experience and reasonable expectations relating to future events.

Information on the key estimations and uncertainties that have had the most significant effect on the amounts recognised in the financial statements are set out in the following notes in the financial statements: • Accounting policies – notes 1.2, 1.4, 1.5, 1.7, 1.11, 1.12, 1.13, 1.15 and 1.16. • Investment property valuation – note 3. • Deferred taxation – note 20. • Trade and other receivables – note 12. • Goodwill – notes 1.11 and 10. • Intangible assets – notes 1.12, 1.13 and 5. • Available-for-sale financial asset – note 8. 3 inVESTMENT PROPERTIES 2013 2012 Group Company Group Company R000 R000 R000 R000 STATED AT FAIR VALUE Property acquisitions and development costs 4 520 029 3 760 661 3 378 217 2 598 049 Capital expenditure and tenant installations 375 107 314 273 196 211 175 776 Net gain from fair value adjustment of investment properties 2 798 800 1 988 813 2 538 642 1 837 610 Fair value 7 693 936 6 063 747 6 113 070 4 611 435 Lease commissions 18 922 15 252 14 283 9 965 At end of year 7 712 858 6 078 999 6 127 353 4 621 400 Less: Fair value of investment properties held for sale (323 202) (310 310) (321 195) (300 395) 7 389 656 5 768 689 5 806 158 4 321 005

3.1 DETAILS OF INVESTMENT PROPERTIES The directors have valued the group’s property portfolio at R7.694 billion as at 31 March 2013 (R6.113 billion: 31 March 2012) using the discounted cash flow of the future income stream method.

This is R1.581 billion or 25.9% higher than the valuation as at 31 March 2012.

The external valuations performed by Broll Valuation and Advisory Services (Pty) Ltd, part of the CBRE Affiliate Network, and Jones Lang LaSalle (Pty) Ltd at 31 March 2013 on 48.3% of the total portfolio are in line with the directors’ valuations of the same properties.

The group’s properties, to the value of R3.9 billion, were valued by the asset management division of the group. These valuations were reviewed and approved by the directors of the company, whose experience is reflected in the directors’ report.

The group’s properties, to the value of R3.9 billion, are encumbered as security for the DMTN debt and bank loans (note 18).

3.2 VALUATION ASSUMPTIONS The range of the reversionary capitalisation rates applied to the portfolio are between 7.9% and 14.2% with the weighted average being approximately 10.2%.

The discount rates applied range between 13.1% and 17.8% with the weighted average being approximately 14.4%.

In determining future cash flows for valuation purposes, vacancies are forecast for each property based on estimated demand.

INTEGRATED annual report 2013 85 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

3 inVESTMENT PROPERTIES continued

3.3 MOVEMENT FOR THE YEAR 2013 2012 Group Company Group Company R000 R000 R000 R000 Investment properties at 1 April 6 127 353 4 621 400 5 365 415 4 093 615 Capital expenditure and tenant installations 197 148 156 749 34 687 28 121 Acquisitions and development costs 1 487 302 1 487 302 164 712 127 869 Change in fair value of investment properties 260 158 151 203 595 246 396 829 Disposal of investment properties (363 742) (342 942) (33 268) (25 912) Movement in lease commissions 4 639 5 287 561 878 Investment properties at 31 March 7 712 858 6 078 999 6 127 353 4 621 400 Reflected on the statement of financial position under: Non-current assets 7 389 656 5 768 689 5 806 158 4 321 005 Non-current assets held for sale 323 202 310 310 321 195 300 395 7 712 858 6 078 999 6 127 353 4 621 400

4 STRAIGHT-LINE RENTAL INCOME ADJUSTMENT 2013 2012 Group Company Group Company R000 R000 R000 R000 Balance at 1 April 146 426 118 099 100 433 80 786 Current year movement 4 829 (196) 45 993 37 313 Balance at 31 March 151 255 117 903 146 426 118 099 Reflected on the statement of financial position under: Non-current portion 148 411 115 077 131 179 102 943 Non-current assets held for sale 2 844 2 826 15 247 15 156 151 255 117 903 146 426 118 099

86 INTEGRATED annual report 2013 5 intANGIBLE ASSET

2013 2012 Group Company Group Company R000 R000 R000 R000 Balance at 1 April 267 096 267 096 312 832 312 832 Impairment (114 131) (114 131) (45 736) (45 736) Balance at 31 March 152 965 152 965 267 096 267 096 The intangible asset arose on the acquisition of the property asset management contract in respect of the long-term commercial property portfolio of the Sanlam Group.

The asset management agreement is evergreen and can only be terminated in specific circumstances. These circumstances have been assessed and are not currently foreseeable. Consequently the intangible asset has been determined to have an indefinite useful life.

The intangible asset was tested for impairment by comparing the estimated recoverable amount with the carrying value.

The recoverable amount, which is based on a revised forecast income profile, was calculated using the discounted cash flow method. The change in the forecast income profile has resulted in the recoverable amount being forecast at R114.13 million lower than the 2012 carrying value. An impairment charge of R114.13 million has been raised.

The forecast cash flows were discounted at a rate equivalent to the government SAGB10 rate at 31 March 2013 plus an appropriate risk premium.

6 FURNITURE, FITTINGS, COMPUTER EQUIPMENT AND OTHER

2013 2012 Group Company Group Company R000 R000 R000 R000 Cost 7 175 93 3 460 197 Accumulated depreciation (2 046) (46) (1 475) (179) Carrying value 5 129 47 1 985 18

6.1 MOVEMENT FOR THE YEAR 2013 2012 Group Company Group Company R000 R000 R000 R000 Net carrying value at 1 April 1 985 18 1 774 28 Additions 4 793 46 1 029 5 Disposals/assets scrapped (375) (4) (47) - Depreciation (1 274) (13) (771) (15) Net carrying value at 31 March 5 129 47 1 985 18

INTEGRATED annual report 2013 87 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

7 inVESTMENT IN SUBSIDIARIES

2013 2012 Company Company R000 R000 DIRECT HOLDING Linked units at cost 100% holding in MICC Property Income Fund Limited (2012: 100%)(1) 462 780 462 780 100% holding in Vukile Real Estate Sales and Leasing (Pty) Ltd (2012: 0%)(1) * - INDIRECT HOLDING MICC Properties (Pty) Ltd(1) MICC Properties Namibia (Pty) Ltd(2) Katima Mulilo Properties (Pty) Ltd(2)(3) Katatura Properties (Pty) Ltd(2) Kavango West Shopping Centre (Pty) Ltd(2)(3) Oluno Properties (Pty) Ltd(2) Oshikango Properties (Pty) Ltd(2) Super Deca Properties (Pty) Ltd(2) MICC House Namibia (Pty) Ltd(2) All the companies are 100% held within the MICC Group SPECIAL PURPOSE ENTITY Vukile Investment Property Securitisation (Pty) Ltd (VIPS)(1) Total investment in subsidiaries 462 780 462 780

(1) Incorporated in the Republic of South Africa. (2) Incorporated in Namibia. (3) Sold during the year. * Amount below R1 000.

2013 2012 Company Company R000 R000 LOANS FROM SUBSIDIARIES MICC Property Income Fund Limited(1) 3 071 274 Katima Mulilo Properties (Pty) Ltd(2)(3) - 3 071 Katatura Properties (Pty) Ltd(2) 20 295 20 295 Kavango West Shopping Centre (Pty) Ltd(2)(3) - 2 420 Oluno Properties (Pty) Ltd(2) 11 631 11 631 Oshikango Properties (Pty) Ltd(2) 160 160 Super Deca Properties (Pty) Ltd(2) 44 987 44 987 80 144 82 838

(1) This loan was repaid in May 2013 and is not interest-bearing. (2) The loans bear interest at market related deposit rates and are repayable on 45 days written notice. The interest is settled on a monthly basis. (3) This subsidiary was sold during the year.

88 INTEGRATED annual report 2013 8 AVAILABLE-FOR-SALE FINANCIAL ASSET This asset comprises equity settled share based long-term incentive re-imbursment rights stated at fair value. Fair value has been determined by reference to Vukile's quoted closing price at the reporting date after deduction of executive and management rights. 2013 2012 Group Company Group Company R000 R000 R000 R000 Re-imbursement right 19 417 11 047 28 468 21 089 Balance at 1 April 28 468 21 089 10 208 7 088 Additional units recognised - - 577 576 Performance and retention long-term incentive scheme awards 9 316 4 814 14 231 10 800 Amortisation of other long term employee benefits (2 636) (2 636) - - Units vested/released and other movements of executive rights (24 728) (15 680) (4 983) (4 308) Fair value adjustment of re-imbursement right 8 997 3 460 8 435 6 933 19 417 11 047 28 468 21 089  The terms and conditions of the new long-term retention and incentive scheme were approved by unitholders at the annual general meeting held on 31 August 2010.

A revised long-term incentive scheme and a unit purchase plan was approved by unitholders post year-end.

Sanlam Capital Markets (SCM) has assumed the obligation to discharge Vukile’s conditional financial obligations towards its executives and management as follows: Rm Vesting dates A Based on 25% CPA targets and 75% group performance 4.8 July 2013 B Based on 25% CPA targets and 75% group performance 0.6 July 2012 – 2013 C Based on 33.33% – 100% CPA target and 66.667% – 0% group performance 1.8 July 2016 D Special award – retention based 3.0 July 2016 E Based on 33.33% CPA targets and 66.667% group performance 6.5 August 2014 – 2016 F Based on 25% CPA targets and 75% group performance 2.4(1) July 2014 G Based on 25% CPA targets plus 75% group performance 3.4(1) July 2015 H Based on 40% – 100% CPA targets and 60% – 0% of group performance 4.1 July 2016 I Special award – retention based 0.4 July 2016 J Based on retention criteria 0.4(2) July 2011 – 2016 The executive directors have been allocated the following percentages of the schemes:

Scheme LG Rapp MJ Potts HC Lopion A and B 29.04% C 5.79% 70.43% D 73.0% 27.0% E 100.0% F 25.34% G 22.2% H 26.0% I 100.0% (1) MICC Property Income Fund Limited (MICC IF), a subsidiary of Vukile, has paid an amount of R5.8 million to SCM in respect of units awarded to the employees of MICC IF as part of the long-term retention and incentive scheme. (2) The Vukile group employed one additional individual from Sanlam Properties on 1 January 2011 and assumed responsibility for inter alia, the rights and obligations regarding a long-term share-based retention scheme pertaining to said employee, against a payment from Sanlam Properties of R0.4 million. Vukile, through its subsidiary, MICC IF which has employed the former Sanlam Properties’ employee, paid R0.4 million to discharge its obligations in this regard to SCM.

These re-imbursement rights from SCM are stated at fair value after deduction of executive and management rights.

Further details of the existing long-term retention and incentive share scheme are set out on pages 29 and 30.

INTEGRATED annual report 2013 89 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

9 FINANCIAL ASSET AT AMORTISED COST

2013 2012 Group Company Group Company R000 R000 R000 R000 Balance at 1 April 2 967 2 967 4 782 4 782 Less: Amortised (1 815) (1 815) (1 815) (1 815) Balance at 31 March 1 152 1 152 2 967 2 967 The financial asset comprises an interest rate hedge premium of R5.45 million paid in respect of an interest swap, which premium is amortised over the term of this underlying interest rate swap.

10 GOODWILL 2013 2012 Group Group R000 R000 Balance at 1 April 65 544 71 107 Less: Goodwill written-off on subsidiaries sold/properties sold by a subsidiary during the year (821) (762) Less: Impairment of goodwill (1 121) (4 801) Balance at 31 March 63 602 65 544 Goodwill arose on the acquisition of 100% of MICC IF and represents a premium paid on the net assets and liabilities on each property purchased. Each operating segment relative to the acquisition is defined as a cash-generating unit.

Goodwill written-off comprises the goodwill allocated to the cash-generating units (investment properties) arising on the acquisition of MICC IF in 2006 which have been sold as follows: 2013 R000 Katima Mulilo Properties (Pty) Ltd (821) Total (821) The goodwill in respect of the following properties is considered to be impaired: (1 121) Randburg Triangle (848) De Tijger Office Park (273) The remaining cash-generating units have been valued using the discounted cash flow (DCF) method in both reporting periods at amounts significantly in excess of net asset value (at cost) and goodwill. Refer to note 3.2 for assumptions used in the DCF calculations. The discount rate used was 13.16% based on the government SAGB10 rate at 31 March 2013 plus an appropriate risk premium.

Goodwill of R63.6 million is, therefore, not impaired.

90 INTEGRATED annual report 2013 11 FINANCIAL INSTRUMENTS BY CATEGORY – GROUP Note 1.5 provides a description of each category of financial assets and financial liabilities and the related accounting policies. The carrying amounts of financial assets and financial liabilities in each category are as follows:

Available- Financial for-sale asset at Loans and financial amortised receivables asset cost 31 March 2013 R000 R000 R000 ASSETS PER STATEMENT OF FINANCIAL POSITION Cash and cash equivalents 1 267 304 - - Available-for-sale financial asset - 19 417 - Trade and other receivables (excluding prepayments) 78 627 - - Financial asset at amortised cost - - 1 152

Other financial Derivatives liabilities at used for amortised cost hedging 31 March 2013 R000 R000 LIABILITIES PER STATEMENT OF FINANCIAL POSITION Other interest-bearing borrowings 2 414 522 - Linked debenture and premium 3 275 222 - Derivative financial instruments - 59 330 Trade and other payables 228 117 - Short-term borrowings 512 936 - Linked unitholders for distribution 321 222 -

Available- Financial for-sale asset at Loans and financial amortised receivables asset cost 31 March 2012 R000 R000 R000 ASSETS PER STATEMENT OF FINANCIAL POSITION Cash and cash equivalents 215 947 - - Available-for-sale financial asset - 28 468 - Trade and other receivables (excluding prepayments) 50 210 - - Financial asset at amortised cost - - 2 967

Other financial Derivatives liabilities at used for amortised cost hedging 31 March 2012 R000 R000 LIABILITIES PER STATEMENT OF FINANCIAL POSITION Other interest-bearing borrowings 448 790 - Linked debenture and premium 2 113 213 - Derivative financial instruments - 25 644 Trade and other payables 188 692 - Short-term borrowings 1 230 640 - Linked unitholders for distribution 247 486 -

INTEGRATED annual report 2013 91 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

11 FINANCIAL INSTRUMENTS BY CATEGORY – GROUP continued

The following table presents financial assets and liabilities measured at fair value in the statement of financial position in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of input used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels: • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (as prices) or indirectly (derived from prices). • Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measured.

The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows: 2013 2012 Level 1 Level 2 Total Level 1 Level 2 Total ASSETS Available-for-sale financial assets 19 417 - 19 417 28 468 - 28 468 Total 19 417 - 19 417 28 468 - 28 468 LIABILITIES Derivative financial instruments - (59 330) (59 330) - (25 644) (25 644) Total - (59 330) (59 330) - (25 644) (25 644) Net fair value 19 417 (59 330) (39 913) 28 468 (25 644) (2 824) There have been no significant transfers between Levels 1 and 2 in the reporting period under review. There were no transfers in or out of Level 3 in the reporting period under review.

MEASUREMENT OF FAIR VALUE The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.

AVAILABLE-FOR-SALE FINANCIAL ASSETS This comprises equity-settled share-based long-term incentive re-imbursement rights stated at fair value. Fair value has been determined by reference to Vukile’s quoted closing price at the reporting date after deduction of executive and management rights.

DERIVATIVE FINANCIAL INSTRUMENTS The fair values of these swap contracts are determined by ABSA Capital, Rand Merchant Bank, and Investec Bank Limited using a valuation technique that maximises the use of observable market inputs. Derivatives entered into by the group are included in Level 2 and consist of interest rate swap contracts.

12 tRADE AND OTHER RECEIVABLES 2013 2012 Group Company Group Company R000 R000 R000 R000 Gross rental receivables 26 893 17 836 20 278 15 952 Impairment of receivables (13 653) (9 087) (10 028) (8 153) Prepaid expenses 5 733 5 092 724 577 Sundry debtors 65 387 50 212 39 960 27 280 Total 84 360 64 053 50 934 35 656

Further information on receivables is set out in note 22.

92 INTEGRATED annual report 2013 13 lOAN TO SUBSIDIARY 2013 2012 Group Company Group Company R000 R000 R000 R000 Vukile Investment Property Securitisation (Pty) Ltd (VIPS) - 535 - 17 299 The loan to subsidiary comprises the proceeds on the sale of securitised properties. The loan earns interest at market related deposit rates and is payable in May 2014 when VIPS will be liquidated.

14 SHARE CAPITAL 2013 2012 Group Company Group Company R000 R000 R000 R000 Authorised – par value shares 800 000 000 ordinary shares of one cent each 8 000 8 000 8 000 8 000 ISSUED 431 040 218 (2012: 351 015 218) ordinary shares of one cent each Issued for the acquisition of properties 3 083 3 083 2 283 2 283 Issued as consideration for the acquisition of MICC Property Income Fund Limited 863 863 863 863 Issued as consideration for the acquisition of the asset management business 364 364 364 364 In issue at 31 March 4 310 4 310 3 510 3 510

2013 2012 Company Company Number of Number of linked units linked units 000 000 Opening balance 351 015 351 015 Issued on 25 April 2012 59 500 - Issued on 18 December 2012 20 525 - Balance at 31 March 431 040 351 015 In terms of the Memorandum of Incorporation and the debenture trust deed the shares are linked with unsecured subordinated variable-rate debentures of four hundred and ninety cents each. This linkage means that each share may only be issued and traded together with the debenture with which it is indivisibly linked.

SHARES UNDER CONTROL OF THE DIRECTORS 5% of the unauthorised shares of the company are under the control of the directors. This authority expires at the next annual general meeting.

INTEGRATED annual report 2013 93 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

15 SHARE PREMIUM 2013 2012 Group Company Group Company R000 R000 R000 R000 Arising on the acquisition of properties 35 209 35 209 12 156 12 156 Arising on the acquisition of MICC Property Income Fund Limited 9 662 9 662 9 662 9 662 Arising on the acquisition of asset management business 6 935 6 935 6 935 6 935 Balance at 31 March 51 806 51 806 28 753 28 753

16 RESERVES 2013 2012 Group Company Group Company R000 R000 R000 R000 Non-distributable reserves 2 533 337 1 733 102 2 013 225 1 429 217 Retained earnings 36 734 21 504 28 982 14 553 Balance at 31 March 2 570 071 1 754 606 2 042 207 1 443 770 Non-distributable reserves comprise the following: Investment property revaluation surplus and transfers 2 583 647 1 790 176 2 018 893 1 422 817 Loss on mark-to-market valuation of cash flow hedges (60 326) (59 691) (26 640) (6 092) Valuation adjustments to available-for-sale financial assets (34 744) (29 729) (16 377) (14 873) Share-based payment reserve 44 760 32 346 37 349 27 365 2 533 337 1 733 102 2 013 225 1 429 217

17 linKED DEBENTURES AND PREMIUM

2013 2012 Group Company Group Company R000 R000 R000 R000 ISSUED 431 040 218 (2012: 351 015 218) unsecured subordinated variable-rate debentures of 490 cents each 2 112 097 2 112 097 1 719 975 1 719 975 Debenture premium 1 163 125 1 163 125 393 238 393 238 Balance at 31 March 3 275 222 3 275 222 2 113 213 2 113 213  The issue of each debenture is linked to one ordinary share in the share capital of the company, together comprising one linked unit. Any further issues of linked units will be in the same ratio. In terms of the debenture trust deed, the aggregate interest entitlement of every debenture linked to each ordinary share in respect of any financial year shall not be less than 99% of distributable earnings of an income nature unless the directors exercise their discretion to reduce this percentage below 99%, but not less than 90%, prior to 31 March each year. The debentures will be redeemed at their par value in accordance with the provisions of this trust deed and/or the relevant supplemental Debenture Trust Deed in the ordinary course as and when they fall due for payment. The issue of debentures will be redeemable by the company in full at any time after 25 (twenty-five) years after the date of allotment of the relevant debentures. The debenture holders may exercise the right to require the debentures to be redeemed in accordance with the debenture trust deed only by special resolution whereafter the debentures shall be redeemed by the company at their nominal value on the last Friday, which must be a business day, prior to the 5th (fifth) anniversary of the date on which the special resolution is passed.  The debenture premium is amortised over 25 years and discounted at a rate equivalent to the SAGB10 rate at 31 March 2013 plus an appropriate risk premium.

94 INTEGRATED annual report 2013 18 Other interest bearing borrowings DETAILS OF INTEREST BEARING BORROWINGS 2013 Group Group Company Total facilities Issuances/ Issuances/ Interest Repay- Secured and unsecured available draw downs draw downs Term rates(1) ment variable rate loans R000 R000 R000 Years % dates DMTN Programme 5 000 000 Corporate bonds and commercial paper issuances 1 570 000 1 570 000 Secured Corporate bonds 580 000 580 000 3 8.58 May 15 Corporate bonds 200 000 200 000 4 8.51 May 16 Corporate bonds 240 000 240 000 5 8.83 May 17 Total issuance in May 2012 1 020 000 1 020 000 Less: Net debt raising fees offset against borrowings (7 731) (7 731) 1 012 269 1 012 269 Unsecured Commercial paper 75 000 75 000 0.5 5.59 Sep 13 Commercial paper 175 000 175 000 1 5.91 Mar 14 Corporate bonds 200 000 200 000 3 6.82 Mar 16 Corporate bonds 100 000 100 000 5 7.36 Mar 18 Total issuance in March 2013 550 000 550 000 Less: Net debt raising fees offset against borrowings (897) (897) 549 103 549 103 Total DMTN debt 1 561 372 1 561 372 SECURED BANK LOANS Absa Bank Access 150 000 - - 1 6.39 Feb 14 Term 150 000 150 000 150 000 1.7 7.71 Mar 14 Term 140 000 140 000 140 000 1.5 7.60 Mar 15 Development 172 000 113 705 113 705 1.5 6.80 Apr 14 612 000 403 705 403 705 Less: Net debt raising fees offset against borrowings (570) (570) 403 135 403 135 RMB/SCM (A) Access 25 000 25 000 25 000 5 7.04 Apr 17 Term 163 333 163 333 163 333 3 8.03 Apr 15 Term 163 333 163 333 163 333 4 8.60 Apr 16 Term 163 334 163 334 163 334 5 9.07 Apr 17 515 000 515 000 515 000 Less: Net debt raising fees offset against borrowings (1 321) (1 321) 513 679 513 679 Nedbank Term 51 222 51 222 - 3 8.66 Aug 14 Less: Net debt raising fees offset against borrowings (83) - 51 139 - Total secured and unsecured variable rate loans 2 529 325 2 478 186 Secured variable rate loans 1 980 222 1 929 083 Unsecured variable rate loans 549 103 549 103 SECURED FIXED RATE LOAN Nedbank Term 398 778 398 778 - 3 8.66 Aug 14 Less: Net debt raising fees offset against borrowings (645) - Total secured fixed rate loan 398 133 - Interest bearing borrowings 2 927 458 2 478 186 Interest bearing borrowings non-current 2 414 522 1 965 250 Interest bearing borrowings – current 512 936 512 936 (1) Interest rates incorporate swap rates, where applicable, margins and amortised debt raising costs.

INTEGRATED annual report 2013 95 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

18 Other interest bearing borrowings continued

DETAILS OF INTEREST BEARING BORROWINGS 2012 Group Group Company Total facilities Issuances/ Issuances/ Interest Repay- Secured and unsecured available draw downs draw downs Term rates(1) ment variable rate loans R000 R000 R000 Years % dates Vukile Investment Property Securitisation (Pty) Ltd (VIPS) Term 462 000 - 462 000 3 9.76 Nov 13 Term 250 000 - 250 000 3 9.82 May 12 Term 308 000 - 308 000 7 10.24 Nov 12 - 1 020 000 Less: Net debt raising fees offset against borrowings - (3 387) - 1 016 613 Secured variable rate LOANs Noteholders Term 462 000 462 000 - 3 3 months Nov 13 Term 250 000 250 000 - 3 JIBAR May 12 plus Term 308 000 308 000 - 7 margins Nov 12 1 020 000 - Less: Net debt raising fees offset against borrowings (3 387) - 1 016 613 - secured Bank loans Absa 3 months JIBAR plus 1.40 Term 450 000 214 181 214 181 to 1.69% May 12 Less: Net debt raising fees offset against borrowings (154) (154) 214 027 214 027 Nedbank Term 51 222 51 222 - 3 8.66 Aug 14 Less: Net debt raising fees offset against borrowings (138) - 51 084 - Secured fixed rate loan Nedbank Limited Term 398 778 398 778 - 3 8.66 Aug 14 Less: Net debt raising fees offset against borrowings (1 072) - 397 706 - Total secured and unsecured fixed and variable rate loans 1 679 430 1 230 640 Secured fixed rate loans 397 706 1 016 613 Secured variable rate loans 1 281 724 214 027 Interest bearing borrowings 1 679 430 1 230 640 Interest bearing borrowings non-current 448 790 - Interest bearing borrowings – current 1 230 640 1 230 640 (1) Interest rates incorporate swap rates, where applicable, margins and amortised debt raising costs.

96 INTEGRATED annual report 2013 18 Other interest bearing borrowings continued

LTV and ICR Covenants - March 2013 Trans- Cor- actional porate cov- cov- Debt drawn enant Actual enant Actual ICR down (TC) LTV TC LTV (CC) LTV CC LTV cov- ICR Funders R000 % % % % enants actual DMTN secured notes issued 1 020 000 E 40 31.5 45 39(1) - 3.42:1 DMTN unsecured notes and commercial paper issued 550 000 1 570 000 55 24.6(2) 2.0:1 5.08:1 Absa Term loans 290 000 Development loan 113 705 403 705 E 60 34.3(2) 55 39(1) SCM Term loans 245 000 E 50 34.5 50 39(1) RMB Term loans 270 000 E 50 34.5 50 39(1) 515 000 2.0:1 3.58:1 Nedbank Fixed loan 398 778 Variable loan 51 222 450 000 D 50 27.6 2.0:1 3.82:1 Total facilities 2 938 705 (1) The actual LTV ratio is calculated before transfer of 50% of East Rand Mall to Vukile on 2 April 2013. It should be noted that debt funding was raised prior to year-end to facilitate the acquisition. Post the transfer of 50% of East Rand Mall on 2 April 2013 the corporate LTV reduces to 33.5%. (2) The loan calculation in respect of the Absa loans includes the negative mark-market valuation of interest rate hedges provided by Absa, which amounted to R21.8 million at 31 March 2013. LTV = Loan to open market value of investment properties ICR = Interest rate cover ratio E = External valuations D = Directors' valuations

BORROWING POWERS The borrowing capacity of the company and its subsidiaries is unlimited in terms of their Memorandum of Incorporation but is subject to loan covenants as detailed in this note.

19 DERIVATIVE FINANCIAL INSTRUMENTS

2013 2012 Group Company Group Company assets/ assets/ assets/ assets/ (liabilities) (liabilities) (liabilities) (liabilities) R000 R000 R000 R000 Interest rate swaps – cash flow hedges (59 330) (59 330) (25 644) (5 731)

Interest rate swaps Swap 1 Swap 2 Swap 3 Swap 4 Swap 5 Swap 6 Swap 7 Swap 8 Nominal value (Rm) 179.0 89.0 240.0 50.0 351.0 111.0 140.0 150.0 Swap period 3 years 4 years 5 years 3 years 3 years 4 years 2.5 years 1.5 years Maturity date May 2015 May 2016 May 2017 May 2015 May 2015 May 2016 March 2015 March 2014 Rate(2) (NACQ) 6.33% 6.63% 7.24% 6.89% 7.35% 7.09% 5.89% 6.00% Swaps 1 – 6 cover the R1.020 billion DMTN debt and swaps 7 – 8 cover the R290 million Absa loans.

INTEGRATED annual report 2013 97 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

19 DERIVATIVE FINANCIAL INSTRUMENTS continued The following swaps have been entered into to hedge the long-term loans of R490 million from SCM and RMB: Interest rate swaps Swap 9 Swap 10 Swap 11 Nominal value (Rm) 81.66 81.66 81.66 Swap period 3.5 years 4.5 years 5.5 years Maturity date April 2015 April 2016 April 2017 Rate(2) (NACQ) 6.45% 6.95% 7.27%

Interest rate swaps Swap 12 Swap 13 Swap 14 Nominal value (Rm) 81.66 81.66 81.66 Swap period 3 years 4.5 years 5.5 years Maturity date April 2015 April 2016 April 2017 Rate(2) (NACQ) 6.38% 6.67% 7.00% Total blended swap rates(1) 6.42% 6.81% 7.14%

The following swaps have been entered into to hedge R475 million of the R550 million commercial paper and corporate bonds issued in March 2013: Interest rate swaps Swap 15 Swap 16 Swap 17 Nominal value (Rm) 175.0 200.0 100.0 Swap period 1 year 3 years 5 years Maturity date March 2014 March 2016 March 2018 Rate(1) (NACQ) 5.23% 5.44% 5.81% Swaps 1 – 6 together with swaps 15 – 17 provide a hedge for R1.495 billion of the R1.57 billion DMTN corporate bonds.

(1) All the above swap rates exclude margins and amortised transaction costs. (2) NACQ = Nominal Annual Compounded Quarterly

20 DEFERRED TAXATION 2013 2012 Group Company Group Company R000 R000 R000 R000 Deferred taxation liabilities comprise the following: Fair value adjustments and straight-line rental income adjustment - - 433 988 343 192 Other temporary differences 6 293 9 187 515 3 067 6 293 9 187 434 503 346 259 MOVEMENT Balance at 1 April 434 503 346 259 253 033 203 901 Sale of subsidiary (779) - (1 523) - Fair value adjustment - - 59 973 46 008 Capital gains tax rate adjustment and straight-line rental income adjustment (428 363) (343 192) 13 071 10 448 Under provision of deferred taxation on fair value adjustment in prior year - - 2 519 - Capital gains tax rate increase adjustment - - 108 638 85 927 Overprovision of deferred tax on fair value adjustments in prior year (5 625) - - - Other temporary differences 4 983 6 120 (275) 933 Under provision of other temporary differences in prior year 1 574 - 25 - Deferred tax asset – normal tax losses arising - - (334) (334) Deferred tax asset – capital losses arising - - (624) (624) Balance at 31 March 6 293 9 187 434 503 346 259

98 INTEGRATED annual report 2013 20 DEFERRED TAXATION continued Vukile has adopted the amendment to IAS 12 in accounting for deferred tax assets and liabilities. The effect is that deferred taxation on investment properties is now calculated at the capital gains tax rate as opposed to the blended rate, on the rebuttable presumption that the carrying value of the investment property will be recovered through sale. These amendments have been applied retrospectively in accordance with IAS 8. Distributions are not affected by the amendments to IAS 12. The retrospective impact hereof is set out below: Group Company Effect on statement of financial 2012 2011 2012 2011 position R000 R000 R000 R000 Deferred tax Balance as originally stated 727 785 544 548 485 306 362 860 Restated balance after the IAS 12 amendment (434 503) (253 033) (346 259) (203 901) Impact of change in accounting policy 293 282 291 515 139 047 158 959 Non-distributable reserve Balance as originally stated 1 719 943 1 347 992 1 290 170 1 055 200 Restated balance after IAS 12 amendment (2 013 225) (1 639 507) (1 429 217) (1 214 159) Impact of change in accounting policy (293 282) (291 515) (139 047) (158 959) Effect on the statement of comprehensive income Taxation As originally stated 189 754 - 122 534 - Restated as per IAS 12 amendment (187 987) - (142 446) - Impact of change in accounting policy 1 767 - (19 912) -

Change in capital gains tax rate V ukile’s application to the JSE Limited for REIT status was approved on 20 May 2013. The conversion to a REIT is effective from 1 April 2013.

As such, the group will not be liable for capital gains tax from 1 April 2013. The restated balance of deferred tax at 1 April 2012 on investment properties has been reduced to nil as, prospectively, capital gains tax will no longer apply.

Deferred tax is no longer calculated on the straight-line rental income accrual as the rental accrual will form part of the group’s distributions in the future. Given the conversion to a REIT, such distributions are fully deductible for tax purposes and hence no tax liability will arise on straight-line rental income accruals.

21 TRADE AND OTHER PAYABLES 2013 2012 Group Company Group Company R000 R000 R000 R000 Trade creditors 25 495 22 770 14 399 7 164 Accrued expenses 154 467 102 289 140 353 97 687 Tenant deposits 48 155 39 465 33 940 24 934 228 117 164 524 188 692 129 785

INTEGRATED annual report 2013 99 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

22 FINANCIAL RISK MANAGEMENT The group’s financial instruments consist mainly of interest rate swaps, financial assets, deposits with banks, accounts receivable and payable, long-term borrowings and loans to and from subsidiaries. In respect of all financial instruments listed above, the book value approximates fair value. The group purchases or issues financial instruments to finance operations and to manage interest rate risks that may arise from time to time.

 The board of directors has overall responsibility for the establishment and oversight of the group’s risk management framework. The audit and risk committee is responsible for developing and monitoring the group’s risk management policies. The audit and risk committee reports regularly to the board of directors on its activities.

 The group’s risk management policies are established to identify and analyse the risks faced by the group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the group’s activities.

 The audit and risk committee oversees how management monitors compliance with the group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the group. The group operates an outsourced internal audit model. For the period under review KPMG fulfilled the function of outsourced internal audit service provider. Internal audit is responsible for assisting the board and management in maintaining an effective internal control environment by evaluating those controls continuously to determine whether they are adequately designed and operating efficiently and effectively and to recommend improvements. After a thorough review process the audit and risk committee resolved to appoint Deloitte as the new internal audit service provider with effect from 1 April 2013.

Credit risk management Potential areas of credit risk comprise mainly cash and trade receivables. In order to minimise any possible risks relating to such investments, surplus funds can only be invested in the ‘Big Four’ banks and AAA rated money market funds up to pre-determined levels. Trade receivables consist of a large, widespread tenant base. Management has established a credit policy in terms of which each new tenant is analysed individually for credit worthiness before the group’s standard payment terms and conditions are offered which include, in the majority of cases, the provision of a deposit of at least one month’s rental. When available, the group’s credit review includes external ratings. The group monitors the financial position of its tenants on an ongoing basis. Adjustment is made for impairment of specific bad debts and at year end management did not consider there to be any material credit risk exposure, not covered by an allowance for doubtful debts. The group impairment allowance for doubtful debts amounted to approximately R13.7 million (2012: R10.0 million) net of tenant deposits held as security.

The group held tenant cash deposits amounting to R48.2 million at 31 March 2013 (2012: R33.9 million) as collateral for the rental commitments of tenants.

The individually impaired receivables relate mainly to non-national tenants which have been summonsed for non-payment of rentals, or who have vacated the premises due to difficult economic conditions. A portion of the impaired receivables is expected to be recovered. The ageing of the allowance for bad debts in respect of the impaired receivables is as follows: 2013 2012 Group Company Group Company R000 R000 R000 R000 Not more than 30 days 6 121 3 291 2 560 2 370 More than 30 days but not more than 60 days 1 396 830 919 749 More than 60 days but not more than 90 days 1 122 624 669 563 More than 90 days 5 014 4 342 5 880 4 471 At 31 March 13 653 9 087 10 028 8 153 At reporting date there were no specific concentrations of credit risk. Disclosure of receivables – Past due but not impaired. Past due – Amounts uncollected one day or more beyond their contractual due date are ‘past due’. Trade receivables that are due and that are subject to a dispute are not considered impaired until the resolution of the dispute. As of 31 March 2013 group trade receivables of R13.2 million (2012: R10.3 million) were past due but not impaired. Company trade receivables of R8.8 million (2012: R7.8 million) were past due but not impaired at 31 March 2013. These related to a number of independent customers for whom there is no recent history of default.

100 INTEGRATED annual report 2013 22 FINANCIAL RISK MANAGEMENT continued

2013 2012 Group Company Group Company R000 R000 R000 R000 The age analysis of these trade receivables is as follows: Not more than 30 days 6 546 3 900 6 336 4 680 More than 30 days but not more than 60 days 1 999 1 126 660 385 More than 60 days but not more than 90 days 766 506 566 409 More than 90 days 3 929 3 217 2 688 2 325 13 240 8 749 10 250 7 799 Movements on the group allowance for impairment of trade receivables are as follows: At 1 April 10 028 8 153 9 911 8 445 Allowance for receivables impairment 5 997 3 109 1 555 720 Receivables written off during the year as uncollectable (2 372) (2 175) (1 438) (1 012) At 31 March 13 653 9 087 10 028 8 153

Allowance for impaired receivables and receivables written off have been included in ‘operating costs’ in note 24 to the annual financial statements. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

MARKET RISK Interest rate risk management At 31 March 2013 the group had interest-bearing borrowings of R2.939 billion. 91% of the interest-bearing debt has been fixed or hedged.

The group’s interest rate risk management position and maturity analysis of other interest-bearing borrowings are summarised below: Debt Rate %(1) Amount Rm Maturity date Interest rate DMTN Variable 8.58 580.0 May 2015 Hedged Variable 8.51 200.0 May 2016 Hedged Variable 8.83 240.0 May 2017 Hedged Variable 5.59 75.0 Sept 2013 - Variable 5.91 175.0 March 2014 Hedged Variable 6.82 200.0 March 2016 Hedged Variable 7.36 100.0 March 2018 Hedged RMB/SCM Variable 7.04 25.0 April 2017 - Variable 8.03 163.3 April 2015 Hedged Variable 8.60 163.3 April 2016 Hedged Variable 9.07 163.4 April 2017 Hedged Absa Variable 7.71 150.0 March 2014 Hedged Variable 7.60 140.0 March 2015 Hedged Variable 6.80 113.7 April 2014 - Nedbank Variable 8.66 51.2 August 2014 Variable Fixed 8.66 398.8 August 2014 Fixed Total 2 938.7 (1) Includes swap rates, where applicable, margins and amortised debt raising costs.

The short-term floating access facility of R150 million is not hedged. It is estimated that for the year ended 31 March 2013 a 1% change in interest rates would have affected the group’s profit before debenture interest by approximately R2.65 million.

Details of the group’s interest rate swap contracts are set out in note 19 of these annual financial statements.

INTEGRATED annual report 2013 101 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

22 FINANCIAL RISK MANAGEMENT continued

Current 12 months maturity Non-current Non-current analysis 1-5 years > 5 years MATURITY ANALYSIS R000 R000 R000 Other interest-bearing borrowings 512 936 2 414 522 - Linked debentures and premium - - 3 275 222 Trade and other payables 228 117 - - Linked unitholders for distribution 321 222 - -

LIQUIDITY RISK MANAGEMENT Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s policy is to optimise its exposure to liquidity risk by balancing its exposure to interest rate risk and to refinancing risk.

In effect the group seeks to borrow for as long as possible at the lowest acceptable cost. The group regularly reviews the maturity profile of its financial liabilities and seeks to avoid concentration of maturities through the regular replacement of facilities and by using a selection of maturity dates.

The tables on page 101 and above set out the maturity analysis of the group’s interest-bearing borrowings based on the undiscounted contractual cash flows.

The linked debentures are redeemable after 25 years from date of allotment which redemption will be financed by way of a new issue of linked debentures of an equivalent amount.

New long-term loans will be entered into with relevant banks on the expiry of existing bank debt facilities. Cash flows are monitored on a monthly basis to ensure that cash resources are adequate to meet funding requirements.

In terms of covenants with Nedbank, RMB and SCM the nominal value of long-term interest bearing bank debt may not exceed 50% of the value of non-securitised assets. The DMTN loan-to-value covenant is 40% of the external values of specific property assets mortgaged as security under the DMTN programme. In terms of the ABSA loans to Vukile the nominal value of long-term interest-bearing debt together with the value of any negative mark-to-market valuation of interest rate hedges concluded with ABSA may not exceed 55% of the external value of the non-securitised properties. Full details hereof are set out in note 18. The directors have imposed a 45% loan-to-value ratio in determining the limit of the group’s external borrowings. Based on the DMTN loan covenant of 40% and 45% in terms of the group’s self-imposed covenant the company has the following borrowing capacity: 2013 2012 Group Group R000 R000 Value of property assets 7 693 936 6 113 071 40/45% thereof 3 300 364 2 750 882 Nominal value of borrowings utilised at year end (2 938 705) (1 684 200) Potential borrowing capacity 361 659 1 066 682

23 REVENUE 2013 2012 Group Company Group Company R000 R000 R000 R000 Property revenue 1 166 940 925 967 933 269 718 652 Income from asset management business 77 974 76 839 53 317 52 680 Included in property revenue: Turnover rental 10 395 5 969 13 297 9 734

102 INTEGRATED annual report 2013 24 PROPERTY EXPENSES 2013 2012 Group Company Group Company R000 R000 R000 R000 Municipal fixed charges 91 166 77 468 67 843 54 223 Municipal consumption costs 195 678 147 905 146 977 111 421 Operating costs 111 098 90 327 77 062 59 084 Repairs and maintenance 22 334 19 681 16 984 14 197 Asset management fees - 13 765 - 8 163 Property management fees 32 535 25 020 25 555 18 848 452 811 374 166 334 421 265 936

25 PROFIT FROM ASSET MANAGEMENT BUSINESS 2013 2012 Group Company Group Company R000 R000 R000 R000 Income 77 974 76 839 53 317 52 680 Income asset management fees 30 230 30 230 33 493 33 493 Sales commission 46 621 46 621 19 486 19 486 Less: Sales fee paid (378) (378) (323) (323) Management and other fees 1 501 366 661 24 Expenditure (32 022) (18 805) (30 792) (17 905) Administration costs (4 651) (18 805) (6 365) (17 905) Depreciation (1 260) - (757) - Staff costs (24 225) - (22 353) - Rent paid (1 886) - (1 317) - Profit from asset management business 45 952 58 034 22 525 34 775

26 cORPORATE ADMINISTRATIVE EXPENSES 2013 2012 Group Company Group Company R000 R000 R000 R000 Administration expenses include: Administration costs 8 101 7 633 10 556 6 110 Depreciation of furniture, fittings and computer equipment 1 274 13 771 15 Operating lease: premises 1 886 633 1 317 720 Share-based remuneration 7 411 4 981 9 927 6 902 Corporate staff and related costs (including directors’ remuneration) 10 150 10 150 12 612 12 612 Internal audit fee 629 629 267 267 Loss on sale of furniture, fittings and computer equipment 188 (1) - -

SHARE-BASED REMUNERATION As reported previously, the unitholders have approved a long-term retention and incentive scheme which is based on individual performance relative to personal critical performance area targets and group’s performance relative to industry benchmarks. Refer to note 8 in this regard together with page 29 of this integrated annual report.

The charges to the company income statement for the year ended 31 March 2013 amounted to R5.0 million (March 2012: R6.9 million) and to a subsidiary’s income statement R2.4 million (March 2012: R3.0 million), relating to the asset management business.

As the above are equity-settled share-based payments, the accounting treatment is to recognise the share-based payments on a straight-line basis over the vesting periods.

INTEGRATED annual report 2013 103 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

27 AUDITORS’ REMUNERATION 2013 2012 Group Company Group Company Audit fees R000 R000 R000 R000 Current year 1 752 1 094 1 728 926 Other services 106 106 184 152 1 858 1 200 1 912 1 078

28 inVESTMENT AND OTHER INCOME 2013 2012 Group Company Group Company R000 R000 R000 R000 Debenture interest received from subsidiary - 110 905 - 93 979 Dividends received from subsidiary - 25 - 21 Interest on deposits and receivables 24 877 23 697 13 500 10 428 Management fees received - 2 067 - 2 067 Other income 738 150 57 57 25 615 136 844 13 557 106 552

29 FINANCE COSTS 2013 2012 Group Company Group Company R000 R000 R000 R000 Secured loans 187 705 154 558 158 631 117 515 Unsecured loans - - 773 5 944 Amortisation of debt raising fees 4 765 4 283 4 414 4 358 Amortisation interest rate swaption 1 815 1 815 1 815 1 815 194 285 160 656 165 633 129 632

30 tAXATION 2013 2012 Group Company Group Company R000 R000 R000 R000 Normal taxation 4 597 - 4 708 - Normal taxation over provision in prior year (328) - (626) - Capital gains tax net of current year normal tax loss 9 535 9 535 132 - Secondary taxation on companies (STC) and non- resident shareholders’ tax (NRST) 793 - 780 88 Total normal taxation 14 597 9 535 4 994 88 Capital gains tax deferred asset arising - - (624) (624) Capital gains tax rate adjustment and straight-line rental accrual (428 363) (343 192) 13 071 10 448 Deferred taxation on fair value surplus (over provision)/under provision in prior year (5 625) - 2 519 - Capital gains tax rate increase - - 108 638 85 927 Deferred taxation asset – tax losses arising - - (334) (334) Deferred taxation on fair value adjustment of investment properties - - 59 973 46 008 Deferred taxation on other temporary differences 4 983 6 120 (275) 933 Deferred taxation on other temporary differences − underprovision prior year 1 574 - 25 - (412 834) (327 537) 187 987 142 446

104 INTEGRATED annual report 2013 30 tAXATION continued 2013 2012 Group Company Group Company RECONCILIATION OF TAX RATE % % % %

Standard tax rate 28.00 28.00 28.00 28.00 CGT 8.59 28.83 (0.09) (0.17) Permanent differences (23.69) (23.45) 2.41 3.07 STC/NRST 0.49 - 0.02 0.02 Change in use - - (17.50) (15.20) Rate change (266.39) (716.41) 19.46 23.90 Prior year adjustment (2.72) - 0.34 - Namibia rate differential 0.47 - 0.93 - Deferred tax asset not recognised 0.23 - - - Other (1.71) (0.70) 0.11 - Effective tax rate (256.73) (683.73) 33.68 39.62

31 R ECONCILIATION OF earnings TO HEADLINE EARNINGS AND TO PROFIT AVAILABLE FOR DISTRIBUTION 2013 2012 Group Cents per Group Cents per R000 linked unit R000 linked unit Attributable profit after taxation 573 637 139.10 370 329 105.50 Adjusted for: Debenture interest 554 368 134.43 437 224 124.56 Earnings per linked unit 1 128 005 273.53 807 553 230.06 Change in fair value of investment properties (255 329) (61.91) (549 253) (156.48) Total tax effects of adjustments (418 606) (101.51) 170 638 48.62 Write-off of goodwill on sale of subsidiary/ properties sold by a subsidiary 821 0.20 762 0.22 Impairment of goodwill 1 121 0.27 4 801 1.37 Profit on sale of subsidiary (1 160) (0.28) (1 428) (0.41) Profit on sale of investment properties (903) (0.22) (3 084) (0.88) Loss on sale of furniture, fittings and computer equipment 188 0.05 - - Impairment of intangible asset 114 131 27.68 45 736 13.03 Amortisation of debenture premium (6 804) (1.65) (3 703) (1.05) Headline earnings of linked units 561 464 136.16 472 022 134.48 Loss on sale of furniture, fittings and computer equipment (188) (0.05) - - Straight-line rental accrual net of deferred taxation (4 829) (1.17) (32 922) (9.38) Available for distribution 556 447 134.94 439 100 125.10

2013 2012 Group Group Calculation of distributable earnings R000 R000 Net profit from property operations 718 958 644 841 Less: Straight-line income adjustment (4 829) (45 993) Investment and other income 25 615 13 557 Net income from the asset management business 45 952 22 525 Administrative expenses (29 192) (25 919) Finance costs (194 285) (165 633) Taxation (excluding deferred tax on revaluation adjustments) (5 772) (4 278) Available for distribution 556 447 439 100

INTEGRATED annual report 2013 105 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

32 STATEMENTS OF CASH FLOW The following convention applies to figures under ‘adjustments’ below. Inflows of cash are represented by figures in brackets while outflows of cash are represented by figures without brackets.

32.1 ADJUSTMENTS 2013 2012 Group Company Group Company R000 R000 R000 R000 Gross change in fair value of investment properties (260 158) (151 203) (595 246) (396 829) Finance costs 194 285 160 656 165 633 129 632 Debenture interest 554 368 554 368 437 224 437 224 Investment and other income (25 615) (136 844) (13 557) (106 552) Share-based remuneration 7 411 4 981 9 927 6 902 Amortised debt raising costs and movement in interest rate swaps 4 765 4 283 4 144 4 358 Amortised financial asset 1 815 1 815 1 815 1 815 Write-off goodwill on sale of subsidiary/ properties sold by a subsidiary 821 - 762 - Impairment of goodwill 1 121 - 4 801 - Profit on sale of subsidiary (1 160) - (1 428) - Profit on sale of investment properties (903) (903) (3 084) (3 085) Loss/(profit) on sale of furniture, fittings and computer equipment 188 (1) - - Impairment of intangible asset 114 131 114 131 45 736 45 736 Depreciation on furniture, fittings and equipment 1 274 13 771 15 Amortisation of debenture premium (6 804) (6 804) (3 703) (3 703) Other - - (78) - 585 539 544 492 53 717 115 513

32.2 NET CHANGES IN WORKING CAPITAL 2013 2012 Group Company Group Company R000 R000 R000 R000 Movement in working capital (Increase)/decrease in trade and other receivables (33 426) (18 327) 20 475 33 094 Increase in trade and other payables 39 425 34 739 15 415 4 734 Sale of subsidiary – movement in working capital 273 - (95) - 6 272 16 412 35 795 37 828

32.3 CASH AND CASH EQUIVALENTS 2013 2012 Group Company Group Company R000 R000 R000 R000 Held on deposit for tenants 47 181 38 403 33 149 24 195 Held on short-term interest-bearing deposits 1 185 846 1 185 846 94 569 76 000 Cash on hand 34 277 20 247 88 229 44 769 1 267 304 1 244 496 215 947 144 964

106 INTEGRATED annual report 2013 32 STATEMENTS OF CASH FLOW continued

32.4 TAXATION PAID 2013 2012 Group Company Group Company Note R000 R000 R000 R000 Amount owing at beginning of year 1 267 (305) 5 416 4 140 Sale of subsidiary (108) - - - Capital gains taxation 30 9 535 9 535 132 - Current taxation 30 4 269 - 4 082 - Secondary taxation on companies and non-resident shareholders’ tax 30 793 - 780 88 15 756 9 230 10 410 4 228 Net amount owing at end of year (1 343) 148 (1 267) 305 Tax paid during year 14 413 9 378 9 143 4 533

32.5 DISTRIBUTION TO LINKED UNITHOLDERS 2013 2012 Group Company Group Company R000 R000 R000 R000 Distribution to linked unitholders owing at beginning of year 247 486 247 486 235 603 235 603 Debenture interest per income statement 554 368 554 368 437 224 437 224 Dividends declared 1 131 1 131 892 892 Distribution to linked unitholders owing at end of year (321 222) (321 222) (247 486) (247 486) Distribution paid during the year 481 763 481 763 426 233 426 233

33 RELATED PARTY TRANSACTIONS 2013 2012 Amounts Amounts Amount paid/ owed to/(by) Amount paid/ owed to/(by) (received) related parties (received) related parties Type of transaction R000 R000 R000 R000 Sanlam Life Insurance Limited(1) Lease rentals - - 430 - Asset management fees and sales commission received - - (17 571) - Kuper Legh Property Group(2) Property management and other fees - - 1 735 - Inter group transactions MICC Property Income Fund (MICC IF) Asset management fees(3) 38 055 - 27 460 - MICC Properties Corporate administration recovery(4) (2 067) - (2 067) - MICC Namibian subsidiaries Interest paid(5) 5 212 - 5 447 - (1) The Sanlam Group ceased to be a related party from 1 August 2011. The Sanlam Group currently holds less than 7% of the company’s linked units in issue. The amounts received and paid have been disclosed for a four month period to 31 July 2011. (2) The property management agreement with Kuper Legh Property Group expired on 31 August 2011 and hence this company, through its main shareholder, is no longer a related party. (3) Fees paid by Vukile for the management of the group’s and Sanlam’s property portfolios by MICC IF. (4) Allocation of corporate and administration costs attributable to the MICC group paid to Vukile. (5) Market related interest paid by Vukile on loans advanced by its Namibian subsidiaries.

INTEGRATED annual report 2013 107 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

34 OPerating segment report Directors’ Linked Gross valuation at debentures Interest- Weighted Vacancy lettable Purchase Effective 31 March Property Property and bearing average on gross Properties owned by the group area price date of 2013 revenue expenditure Goodwill premiums borrowings rental rental at 31 March 2013 Region Town m2 R000 acquisition R000 R000 R000 R000 R000 R000 R/m2 pm % RETAIL Bloemfontein Plaza Free State Bloemfontein 38 519 45 726 Apr 2004 151 033 42 069 22 375 64 293 108 496 64.88 3.76 Cape Town Bellville Barons Western Cape Cape Town Bellville 6 778 70 000 Apr 2012 77 703 6 910 1 146 33 077 17 821 81.75 - Cape Town Kenilworth Motor Showrooms Cape Town (Barlows Audi)** Western Cape Kenilworth 3 100 24 025 Apr 2004 35 554 4 327 403 15 135 11 159 110.85 - Daveyton Shopping Centre Gauteng Daveyton 17 095 49 883 Apr 2004 186 623 28 727 10 499 79 443 74 087 103.89 4.01 Durban Phoenix Plaza KwaZulu-Natal Durban Phoenix 24 348 189 140 Apr 2004 541 044 68 483 24 802 230 316 176 617 189.04 0.45 Durban Qualbert Centre KwaZulu-Natal Durban 4 777 24 432 Oct 2003 67 405 7 392 1 529 3 212 28 694 19 064 123.76 - Durban Workshop KwaZulu-Natal Durban 20 129 133 400 Apr 2012 105 031 37 410 21 516 44 711 96 480 129.75 3.89 Germiston Germiston Meadowdale Land Gauteng Meadowdale - - Oct 2003 16 650 7 088 - - Germiston Germiston Meadowdale Mall Gauteng Meadowdale 35 339 66 170 Oct 2003 142 938 31 319 17 696 8 716 60 847 80 772 41.49 0.90 Giyani Plaza Limpopo Giyani 9 442 68 250 Jul 2011 86 733 12 053 3 069 36 921 31 085 86.23 0.47 Giyani Spar Centre (Masingita Spar Centre) Limpopo Giyani 5 485 13 947 Oct 2003 45 580 6 312 3 140 1 808 19 403 16 279 71.71 6.34 Katutura Shoprite Centre Namibia Katutura 10 593 41 157 Oct 2003 99 012 16 928 6 653 5 613 42 148 43 657 93.01 - Kimberley Kim Park Northern Cape Kimberley 10 498 47 915 Sep 2010 44 283 11 612 7 545 18 851 29 947 64.58 5.07 Kokstad Game Centre KwaZulu-Natal Kokstad 12 867 37 666 Oct 2003 110 667 12 344 2 557 4 951 47 110 31 835 72.44 0.78 Malamulele Plaza (Mala Plaza) Limpopo Malamulele 6 193 11 758 Oct 2003 68 290 8 684 3 171 1 524 29 070 22 396 93.72 - Mbombela Shoprite Centre (Nelspruit Sanlam Centre) Mpumalanga Mbombela 13 930 39 963 Sep 2010 66 890 15 373 9 238 28 474 39 647 65.14 3.14 Mbombela Truworths Centre Mpumalanga Mbombela 1 920 7 336 Apr 2004 35 467 3 071 415 15 098 7 920 121.10 - Monsterlus Moratiwa Crossing (94.5%) Limpopo Monsterlus 11 686 61 540 Nov 2007 104 105 14 815 4 913 44 316 38 208 81.09 - Ondangwa Shoprite Centre Namibia Ondangwa 5 739 17 959 Oct 2003 44 221 6 032 764 2 390 18 824 15 557 87.17 - Oshakati Shopping Centre Namibia Oshakati 24 632 76 929 Oct 2003 223 010 33 906 13 065 10 425 94 933 87 443 88.33 - Oshikango Spar Centre Namibia Oshikango 9 163 19 542 Oct 2003 113 465 11 355 1 194 2 751 48 301 29 284 109.93 - Piet Retief Shopping Centre Mpumalanga Piet Retief 7 542 20 818 Oct 2003 85 722 9 455 1 429 2 726 36 491 24 384 85.58 - Pietermaritzburg The Victoria Centre KwaZulu-Natal Pietermaritzburg 11 016 55 685 Oct 2003 118 652 14 064 3 910 7 358 50 509 36 271 95.11 1.79 Pinetown Pine Crest (50%) KwaZulu-Natal Pinetown 20 056 99 338 Apr 2004 277 499 37 225 11 645 118 128 96 003 113.56 4.19 Randburg Square Gauteng Randburg 51 397 70 668 Apr 2004 240 602 54 164 35 054 102 422 139 689 69.78 4.31 Roodepoort Hillfox Power Centre Gauteng Roodepoort 38 070 62 098 Oct 2003 168 197 34 343 20 756 8 239 71 600 88 570 53.21 9.54 Rustenburg Edgars Building Northwest Rustenburg 9 784 83 750 Sep 2010 106 560 12 088 1 072 45 361 31 175 80.95 - Sandton Bryanston Grosvenor Shopping Centre Gauteng Sandton Bryanston 4 578 31 381 Apr 2004 68 701 8 542 5 181 29 245 22 030 111.59 7.71 Soweto Dobsonville Shopping Centre Gauteng Soweto Dobsonville 23 177 56 118 Apr 2004 263 238 37 789 13 640 112 058 97 458 98.72 1.74 Windhoek 269 Independence Avenue Namibia Windhoek 12 828 110 803 Jul 2007 135 054 18 234 4 239 57 491 47 025 115.64 6.98 450 681 1 637 397 3 829 929 605 026 252 616 59 713 1 630 358 1 560 359 ** Leasehold property.

108 INTEGRATED annual report 2013 34 OPerating segment report Directors’ Linked Gross valuation at debentures Interest- Weighted Vacancy lettable Purchase Effective 31 March Property Property and bearing average on gross Properties owned by the group area price date of 2013 revenue expenditure Goodwill premiums borrowings rental rental at 31 March 2013 Region Town m2 R000 acquisition R000 R000 R000 R000 R000 R000 R/m2 pm % RETAIL Bloemfontein Plaza Free State Bloemfontein 38 519 45 726 Apr 2004 151 033 42 069 22 375 64 293 108 496 64.88 3.76 Cape Town Bellville Barons Western Cape Cape Town Bellville 6 778 70 000 Apr 2012 77 703 6 910 1 146 33 077 17 821 81.75 - Cape Town Kenilworth Motor Showrooms Cape Town (Barlows Audi)** Western Cape Kenilworth 3 100 24 025 Apr 2004 35 554 4 327 403 15 135 11 159 110.85 - Daveyton Shopping Centre Gauteng Daveyton 17 095 49 883 Apr 2004 186 623 28 727 10 499 79 443 74 087 103.89 4.01 Durban Phoenix Plaza KwaZulu-Natal Durban Phoenix 24 348 189 140 Apr 2004 541 044 68 483 24 802 230 316 176 617 189.04 0.45 Durban Qualbert Centre KwaZulu-Natal Durban 4 777 24 432 Oct 2003 67 405 7 392 1 529 3 212 28 694 19 064 123.76 - Durban Workshop KwaZulu-Natal Durban 20 129 133 400 Apr 2012 105 031 37 410 21 516 44 711 96 480 129.75 3.89 Germiston Germiston Meadowdale Land Gauteng Meadowdale - - Oct 2003 16 650 7 088 - - Germiston Germiston Meadowdale Mall Gauteng Meadowdale 35 339 66 170 Oct 2003 142 938 31 319 17 696 8 716 60 847 80 772 41.49 0.90 Giyani Plaza Limpopo Giyani 9 442 68 250 Jul 2011 86 733 12 053 3 069 36 921 31 085 86.23 0.47 Giyani Spar Centre (Masingita Spar Centre) Limpopo Giyani 5 485 13 947 Oct 2003 45 580 6 312 3 140 1 808 19 403 16 279 71.71 6.34 Katutura Shoprite Centre Namibia Katutura 10 593 41 157 Oct 2003 99 012 16 928 6 653 5 613 42 148 43 657 93.01 - Kimberley Kim Park Northern Cape Kimberley 10 498 47 915 Sep 2010 44 283 11 612 7 545 18 851 29 947 64.58 5.07 Kokstad Game Centre KwaZulu-Natal Kokstad 12 867 37 666 Oct 2003 110 667 12 344 2 557 4 951 47 110 31 835 72.44 0.78 Malamulele Plaza (Mala Plaza) Limpopo Malamulele 6 193 11 758 Oct 2003 68 290 8 684 3 171 1 524 29 070 22 396 93.72 - Mbombela Shoprite Centre (Nelspruit Sanlam Centre) Mpumalanga Mbombela 13 930 39 963 Sep 2010 66 890 15 373 9 238 28 474 39 647 65.14 3.14 Mbombela Truworths Centre Mpumalanga Mbombela 1 920 7 336 Apr 2004 35 467 3 071 415 15 098 7 920 121.10 - Monsterlus Moratiwa Crossing (94.5%) Limpopo Monsterlus 11 686 61 540 Nov 2007 104 105 14 815 4 913 44 316 38 208 81.09 - Ondangwa Shoprite Centre Namibia Ondangwa 5 739 17 959 Oct 2003 44 221 6 032 764 2 390 18 824 15 557 87.17 - Oshakati Shopping Centre Namibia Oshakati 24 632 76 929 Oct 2003 223 010 33 906 13 065 10 425 94 933 87 443 88.33 - Oshikango Spar Centre Namibia Oshikango 9 163 19 542 Oct 2003 113 465 11 355 1 194 2 751 48 301 29 284 109.93 - Piet Retief Shopping Centre Mpumalanga Piet Retief 7 542 20 818 Oct 2003 85 722 9 455 1 429 2 726 36 491 24 384 85.58 - Pietermaritzburg The Victoria Centre KwaZulu-Natal Pietermaritzburg 11 016 55 685 Oct 2003 118 652 14 064 3 910 7 358 50 509 36 271 95.11 1.79 Pinetown Pine Crest (50%) KwaZulu-Natal Pinetown 20 056 99 338 Apr 2004 277 499 37 225 11 645 118 128 96 003 113.56 4.19 Randburg Square Gauteng Randburg 51 397 70 668 Apr 2004 240 602 54 164 35 054 102 422 139 689 69.78 4.31 Roodepoort Hillfox Power Centre Gauteng Roodepoort 38 070 62 098 Oct 2003 168 197 34 343 20 756 8 239 71 600 88 570 53.21 9.54 Rustenburg Edgars Building Northwest Rustenburg 9 784 83 750 Sep 2010 106 560 12 088 1 072 45 361 31 175 80.95 - Sandton Bryanston Grosvenor Shopping Centre Gauteng Sandton Bryanston 4 578 31 381 Apr 2004 68 701 8 542 5 181 29 245 22 030 111.59 7.71 Soweto Dobsonville Shopping Centre Gauteng Soweto Dobsonville 23 177 56 118 Apr 2004 263 238 37 789 13 640 112 058 97 458 98.72 1.74 Windhoek 269 Independence Avenue Namibia Windhoek 12 828 110 803 Jul 2007 135 054 18 234 4 239 57 491 47 025 115.64 6.98 450 681 1 637 397 3 829 929 605 026 252 616 59 713 1 630 358 1 560 359 ** Leasehold property.

INTEGRATED annual report 2013 109 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

34 OPerating segment report continued Directors’ Linked Gross valuation at debentures Interest- Weighted Vacancy lettable Purchase Effective 31 March Property Property and bearing average on gross Properties owned by the group area price date of 2013 revenue expenditure Goodwill premiums borrowings rental rental at 31 March 2013 Region Town m2 R000 acquisition R000 R000 R000 R000 R000 R000 R/m2 pm % offices Cape Town Bellville Louis Leipoldt Western Cape Cape Town Bellville 22 311 106 937 Apr 2004 313 021 24 206 2 523 133 249 62 427 82.87 - Cape Town Bellville Suntyger (Suntyger) Western Cape Cape Town Bellville 6 342 67 200 Apr 2012 57 421 8 561 3 173 24 443 22 079 113.17 11.58 Cape Town Bellville Tijger Park Western Cape Cape Town Bellville 20 225 194 200 Apr 2012 170 926 23 433 9 393 72 761 60 433 88.53 16.97 Cape Town Parow De Tijger Office Park Western Cape Parow 4 168 25 856 Oct 2003 28 288 5 072 1 882 12 042 13 080 93.74 11.67 Cape Town Cape Town Pinelands Pinepark Western Cape Pinelands 2 804 13 347 Apr 2004 29 815 3 776 1 420 12 692 9 738 81.65 - Centurion 259 West Street Gauteng Centurion 5 180 17 979 Apr 2004 33 144 4 630 2 188 14 109 11 941 85.95 36.46 Durban Westville Surrey Park KwaZulu-Natal Durban Westville 3 176 22 600 Apr 2012 27 605 3 242 1 526 11 751 8 361 81.89 29.01 East London Vincent Office Park (Oos London Sanlam Centre) Eastern Cape East London 9 040 59 236 Apr 2004 64 530 10 746 3 246 27 470 27 714 85.53 - Johannesburg Bedfordview 1 Kramer Road Johannesburg (Bedfordview GIS) Gauteng Bedfordview 6 759 26 396 Apr 2004 38 070 7 611 3 697 16 206 19 629 69.75 16.63 Johannesburg Houghton 1 West Street (Johannesburg Johannesburg Houghton 2446) Gauteng Houghton 4 415 33 504 Sep 2007 67 087 7 825 2 628 28 558 20 181 104.27 0.41 Johannesburg Johannesburg Isle of Houghton Gauteng Houghton 28 074 230 100 Apr 2012 274 707 36 971 13 830 116 940 95 348 75.35 1.51 Johannesburg Parktown 55 Empire Road (Jhb Empire Johannesburg Road Offices) Gauteng Parktown 5 960 43 400 Apr 2012 49 165 6 634 2 634 20 929 17 109 79.74 12.41 Johannesburg Johannesburg Parktown Oakhurst Gauteng Parktown 9 138 34 400 Mar 2006 97 852 13 343 4 429 41 655 34 411 85.99 20.47 Midrand IBG Gauteng Midrand 8 515 80 700 Apr 2012 78 365 9 958 3 654 33 359 25 682 88.01 13.57 Midrand Ulwazi Building (Arivia.kom Building) Gauteng Midrand 15 634 78 238 Apr 2004 121 466 24 464 4 958 51 707 63 093 88.11 - Pretoria Arcadia Suncardia (Sancardia) Gauteng Pretoria Arcadia 28 722 179 600 Apr 2012 163 896 26 652 14 301 69 769 68 735 77.16 31.70 Pretoria Hatfield 1166 Francis Baard Street (DLV Building) Gauteng Pretoria 2 871 13 469 Apr 2004 22 889 4 627 2 323 9 744 11 933 95.87 - Pretoria Hatfield Festival Street Offices (Hatfield Sanlam Building) Gauteng Pretoria Hatfield 5 358 41 875 Sep 2010 40 726 6 646 2 420 17 336 17 140 77.58 33.99 Pretoria High Court Chambers Gauteng Pretoria 12 093 54 712 Apr 2004 117 716 17 481 5 679 50 110 45 083 59.05 - Pretoria Lynnwood Excel Park (Waymark) Gauteng Pretoria Lynnwood 3 480 34 174 Mar 2008 18 527 3 293 1 062 7 887 8 493 - 100.00 Pretoria Lynnwood Sanlynn Gauteng Pretoria Lynnwood 8 620 108 000 Apr 2012 116 375 14 713 4 851 49 539 37 945 107.05 - Pretoria Lynnwood Sunwood Park (Sanwood Park) Gauteng Pretoria Lynnwood 6 388 55 464 Sep 2010 45 679 4 977 2 868 19 445 12 836 95.35 54.21 Sandton Bryanston Ascot Offices Gauteng Sandton Bryanston 5 539 49 100 Apr 2012 40 929 7 489 3 408 17 423 19 314 73.16 6.55 Sandton Sandton Bryanston St Andrews Complex Gauteng Epsom Downs 9 903 76 805 Sep 2010 89 631 10 698 4 689 38 155 27 590 84.18 25.62 Sandton Hyde Park 50 Sixth Road Gauteng Sandton Hyde Park 4 101 56 573 Sep 2006 51 889 10 115 3 486 22 089 26 086 143.42 - Sandton Rivonia 36 Homestead Road (Barlow Place) Gauteng Sandton Rivonia 2 459 8 660 Apr 2004 35 721 4 492 1 444 15 206 11 585 106.81 - Sandton Rivonia Tuscany Gauteng Sandton Rivonia 11 088 114 700 Apr 2012 117 604 13 069 4 119 50 063 33 705 83.94 4.13 Sandton Sunninghill Place Gauteng Sandton Sunninghill 8 774 73 986 Sep 2010 71 350 10 758 3 727 30 373 27 745 87.69 16.77 Sandton Sunninghill Sunhill Park Gauteng Sandton Sunninghill 14 790 143 500 Apr 2012 148 139 21 820 7 445 63 061 56 274 83.31 - 275 927 2 044 711 2 532 533 347 302 123 003 1 078 071 895 690

Industrial Bloemfontein Bree Street Warehouse (Trador Cash & Carry) Free State Bloemfontein 6 563 18 100 Apr 2012 12 420 - 742 5 287 - - 59.43 Cape Town Parow Industrial Park Western Cape Parow 19 834 28 059 Apr 2004 59 893 7 859 1 883 25 496 20 268 32.39 5.75 Centurion Samrand N1 Gauteng Centurion Samrand 11 413 12 990 Apr 2004 55 720 7 471 2 248 23 719 19 268 46.71 - Durban Valley View Industrial Park KwaZulu-Natal Durban 30 790 53 795 Apr 2004 102 711 11 883 1 296 43 723 30 646 32.33 - Germiston Germiston Meadowdale R24 Gauteng Meadowdale 35 016 53 520 Apr 2004 168 582 19 972 5 873 71 764 51 508 41.30 0.90 Johannesburg Rosettenville Village Main Industrial Johannesburg Park Gauteng Rosettenville 8 057 5 400 Apr 2004 24 524 4 368 2 343 10 440 11 265 34.36 - Kempton Park Spartan Warehouse (Hellman Gauteng Johannesburg International) Spartan 5 241 5 807 Apr 2004 33 720 4 305 842 14 354 11 103 58.28 - Midrand Allandale Industrial Park Gauteng Midrand 21 344 23 175 Apr 2004 57 848 11 940 6 794 24 625 30 793 43.80 9.66 Midrand Sanitary City Gauteng Midrand 6 342 15 277 Apr 2004 43 960 3 671 477 18 713 9 467 44.00 - Pinetown Richmond Industrial Park (Richmond Park) KwaZulu-Natal Pinetown 7 940 10 800 Apr 2004 33 454 5 123 1 890 14 241 13 212 42.58 - Pinetown Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown Westmead 16 914 59 390 Sep 2010 86 471 9 624 3 805 36 810 24 820 39.71 4.51 Pretoria Rosslyn Warehouse Gauteng Pretoria Rosslynn 7 541 25 500 Apr 2012 18 488 4 677 282 7 870 12 062 35.14 - Randburg Trevallyn Industrial Park Gauteng Randburg Kya Sands 32 006 48 324 Apr 2004 126 483 17 714 6 536 53 842 45 684 40.36 9.00 Randburg Randburg Tungsten Industrial Park Gauteng Strijdompark 10 365 13 336 Oct 2003 57 122 6 264 2 591 1 769 24 316 16 155 44.12 8.79 Roodepoort Roodepoort Robertville Industrial Park Gauteng Robertville 28 225 15 983 Oct 2003 93 025 14 967 6 231 2 120 39 600 38 600 33.72 2.86 Sandton Linbro Galaxy Drive Showroom (Supra Hino) Gauteng Sandton Linbro Park 2 840 14 264 Apr 2004 33 851 3 052 1 242 14 410 7 871 63.11 - 250 431 403 720 1 008 272 132 890 45 075 3 889 429 210 342 722

110 INTEGRATED annual report 2013 34 OPerating segment report continued Directors’ Linked Gross valuation at debentures Interest- Weighted Vacancy lettable Purchase Effective 31 March Property Property and bearing average on gross Properties owned by the group area price date of 2013 revenue expenditure Goodwill premiums borrowings rental rental at 31 March 2013 Region Town m2 R000 acquisition R000 R000 R000 R000 R000 R000 R/m2 pm % offices Cape Town Bellville Louis Leipoldt Western Cape Cape Town Bellville 22 311 106 937 Apr 2004 313 021 24 206 2 523 133 249 62 427 82.87 - Cape Town Bellville Suntyger (Suntyger) Western Cape Cape Town Bellville 6 342 67 200 Apr 2012 57 421 8 561 3 173 24 443 22 079 113.17 11.58 Cape Town Bellville Tijger Park Western Cape Cape Town Bellville 20 225 194 200 Apr 2012 170 926 23 433 9 393 72 761 60 433 88.53 16.97 Cape Town Parow De Tijger Office Park Western Cape Parow 4 168 25 856 Oct 2003 28 288 5 072 1 882 12 042 13 080 93.74 11.67 Cape Town Cape Town Pinelands Pinepark Western Cape Pinelands 2 804 13 347 Apr 2004 29 815 3 776 1 420 12 692 9 738 81.65 - Centurion 259 West Street Gauteng Centurion 5 180 17 979 Apr 2004 33 144 4 630 2 188 14 109 11 941 85.95 36.46 Durban Westville Surrey Park KwaZulu-Natal Durban Westville 3 176 22 600 Apr 2012 27 605 3 242 1 526 11 751 8 361 81.89 29.01 East London Vincent Office Park (Oos London Sanlam Centre) Eastern Cape East London 9 040 59 236 Apr 2004 64 530 10 746 3 246 27 470 27 714 85.53 - Johannesburg Bedfordview 1 Kramer Road Johannesburg (Bedfordview GIS) Gauteng Bedfordview 6 759 26 396 Apr 2004 38 070 7 611 3 697 16 206 19 629 69.75 16.63 Johannesburg Houghton 1 West Street (Johannesburg Johannesburg Houghton 2446) Gauteng Houghton 4 415 33 504 Sep 2007 67 087 7 825 2 628 28 558 20 181 104.27 0.41 Johannesburg Johannesburg Isle of Houghton Gauteng Houghton 28 074 230 100 Apr 2012 274 707 36 971 13 830 116 940 95 348 75.35 1.51 Johannesburg Parktown 55 Empire Road (Jhb Empire Johannesburg Road Offices) Gauteng Parktown 5 960 43 400 Apr 2012 49 165 6 634 2 634 20 929 17 109 79.74 12.41 Johannesburg Johannesburg Parktown Oakhurst Gauteng Parktown 9 138 34 400 Mar 2006 97 852 13 343 4 429 41 655 34 411 85.99 20.47 Midrand IBG Gauteng Midrand 8 515 80 700 Apr 2012 78 365 9 958 3 654 33 359 25 682 88.01 13.57 Midrand Ulwazi Building (Arivia.kom Building) Gauteng Midrand 15 634 78 238 Apr 2004 121 466 24 464 4 958 51 707 63 093 88.11 - Pretoria Arcadia Suncardia (Sancardia) Gauteng Pretoria Arcadia 28 722 179 600 Apr 2012 163 896 26 652 14 301 69 769 68 735 77.16 31.70 Pretoria Hatfield 1166 Francis Baard Street (DLV Building) Gauteng Pretoria 2 871 13 469 Apr 2004 22 889 4 627 2 323 9 744 11 933 95.87 - Pretoria Hatfield Festival Street Offices (Hatfield Sanlam Building) Gauteng Pretoria Hatfield 5 358 41 875 Sep 2010 40 726 6 646 2 420 17 336 17 140 77.58 33.99 Pretoria High Court Chambers Gauteng Pretoria 12 093 54 712 Apr 2004 117 716 17 481 5 679 50 110 45 083 59.05 - Pretoria Lynnwood Excel Park (Waymark) Gauteng Pretoria Lynnwood 3 480 34 174 Mar 2008 18 527 3 293 1 062 7 887 8 493 - 100.00 Pretoria Lynnwood Sanlynn Gauteng Pretoria Lynnwood 8 620 108 000 Apr 2012 116 375 14 713 4 851 49 539 37 945 107.05 - Pretoria Lynnwood Sunwood Park (Sanwood Park) Gauteng Pretoria Lynnwood 6 388 55 464 Sep 2010 45 679 4 977 2 868 19 445 12 836 95.35 54.21 Sandton Bryanston Ascot Offices Gauteng Sandton Bryanston 5 539 49 100 Apr 2012 40 929 7 489 3 408 17 423 19 314 73.16 6.55 Sandton Sandton Bryanston St Andrews Complex Gauteng Epsom Downs 9 903 76 805 Sep 2010 89 631 10 698 4 689 38 155 27 590 84.18 25.62 Sandton Hyde Park 50 Sixth Road Gauteng Sandton Hyde Park 4 101 56 573 Sep 2006 51 889 10 115 3 486 22 089 26 086 143.42 - Sandton Rivonia 36 Homestead Road (Barlow Place) Gauteng Sandton Rivonia 2 459 8 660 Apr 2004 35 721 4 492 1 444 15 206 11 585 106.81 - Sandton Rivonia Tuscany Gauteng Sandton Rivonia 11 088 114 700 Apr 2012 117 604 13 069 4 119 50 063 33 705 83.94 4.13 Sandton Sunninghill Place Gauteng Sandton Sunninghill 8 774 73 986 Sep 2010 71 350 10 758 3 727 30 373 27 745 87.69 16.77 Sandton Sunninghill Sunhill Park Gauteng Sandton Sunninghill 14 790 143 500 Apr 2012 148 139 21 820 7 445 63 061 56 274 83.31 - 275 927 2 044 711 2 532 533 347 302 123 003 1 078 071 895 690

Industrial Bloemfontein Bree Street Warehouse (Trador Cash & Carry) Free State Bloemfontein 6 563 18 100 Apr 2012 12 420 - 742 5 287 - - 59.43 Cape Town Parow Industrial Park Western Cape Parow 19 834 28 059 Apr 2004 59 893 7 859 1 883 25 496 20 268 32.39 5.75 Centurion Samrand N1 Gauteng Centurion Samrand 11 413 12 990 Apr 2004 55 720 7 471 2 248 23 719 19 268 46.71 - Durban Valley View Industrial Park KwaZulu-Natal Durban 30 790 53 795 Apr 2004 102 711 11 883 1 296 43 723 30 646 32.33 - Germiston Germiston Meadowdale R24 Gauteng Meadowdale 35 016 53 520 Apr 2004 168 582 19 972 5 873 71 764 51 508 41.30 0.90 Johannesburg Rosettenville Village Main Industrial Johannesburg Park Gauteng Rosettenville 8 057 5 400 Apr 2004 24 524 4 368 2 343 10 440 11 265 34.36 - Kempton Park Spartan Warehouse (Hellman Gauteng Johannesburg International) Spartan 5 241 5 807 Apr 2004 33 720 4 305 842 14 354 11 103 58.28 - Midrand Allandale Industrial Park Gauteng Midrand 21 344 23 175 Apr 2004 57 848 11 940 6 794 24 625 30 793 43.80 9.66 Midrand Sanitary City Gauteng Midrand 6 342 15 277 Apr 2004 43 960 3 671 477 18 713 9 467 44.00 - Pinetown Richmond Industrial Park (Richmond Park) KwaZulu-Natal Pinetown 7 940 10 800 Apr 2004 33 454 5 123 1 890 14 241 13 212 42.58 - Pinetown Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown Westmead 16 914 59 390 Sep 2010 86 471 9 624 3 805 36 810 24 820 39.71 4.51 Pretoria Rosslyn Warehouse Gauteng Pretoria Rosslynn 7 541 25 500 Apr 2012 18 488 4 677 282 7 870 12 062 35.14 - Randburg Trevallyn Industrial Park Gauteng Randburg Kya Sands 32 006 48 324 Apr 2004 126 483 17 714 6 536 53 842 45 684 40.36 9.00 Randburg Randburg Tungsten Industrial Park Gauteng Strijdompark 10 365 13 336 Oct 2003 57 122 6 264 2 591 1 769 24 316 16 155 44.12 8.79 Roodepoort Roodepoort Robertville Industrial Park Gauteng Robertville 28 225 15 983 Oct 2003 93 025 14 967 6 231 2 120 39 600 38 600 33.72 2.86 Sandton Linbro Galaxy Drive Showroom (Supra Hino) Gauteng Sandton Linbro Park 2 840 14 264 Apr 2004 33 851 3 052 1 242 14 410 7 871 63.11 - 250 431 403 720 1 008 272 132 890 45 075 3 889 429 210 342 722

INTEGRATED annual report 2013 111 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

34 OPerating segment report continued Directors’ Linked Gross valuation at debentures Interest- Weighted Vacancy lettable Purchase Effective 31 March Property Property and bearing average on gross Properties owned by the group area price date of 2013 revenue expenditure Goodwill premiums borrowings rental rental at 31 March 2013 Region Town m2 R000 acquisition R000 R000 R000 R000 R000 R000 R/m2 pm % held for sale Durban Embassy* KwaZulu-Natal Durban 32 365 107 041 Apr 2004 206 425 32 738 13 681 87 873 84 431 72.28 20.28 Lichtenburg Shopping Centre* North West Lichtenburg 8 423 18 706 Apr 2004 40 509 6 440 2 001 17 244 16 609 53.75 8.64 Midrand Allandale Land* Gauteng Midrand - 5 655 Apr 2004 20 157 8 580 - - Midtown Building* Gauteng Pretoria 8 086 34 947 Apr 2004 43 219 8 108 2 000 18 398 20 911 72.21 - Randburg Triangle* Gauteng Randburg 3 047 12 725 Oct 2003 12 892 2 612 1 660 5 488 6 736 60.10 42.34 51 921 179 074 323 202 49 898 19 342 137 583 128 687

Total group 1 028 960 4 264 902 7 693 936 1 135 116 440 036 63 602 3 275 222 2 927 458 Lease commissions 18 922 Group total (excluding sold properties) 7 712 858 1 135 116 440 036 63 602 3 275 222 2 927 458 Sold properties 31 824 12 775 Group total - Property management 1 166 940 452 811 63 602 3 275 222 2 927 458 Income from asset management business 77 974 Expenditure - asset management business 32 022 * Investment property held for sale.

Add excluded items: Intangible asset 152 965 Deferred capital expenditure 138 385 Furniture, fittings, computer equipment and other 5 129 Available-for-sale financial asset 19 417 Financial asset at amortised cost 1 152 Goodwill 63 602 Trade and other receivables 84 360 Cash and cash equivalents 1 267 304 Total assets 9 445 172 Linked debentures and premium 3 275 222 Interest-bearing borrowings 2 927 458 Add excluded items: Equity and reserves 2 626 187 Derivative financial instruments 59 330 Deferred taxation 6 293 Trade and other payables 228 117 Taxation payable 1 343 Linked holders for distribution 321 222 Total liabilities 9 445 172

112 INTEGRATED annual report 2013 34 OPerating segment report continued Directors’ Linked Gross valuation at debentures Interest- Weighted Vacancy lettable Purchase Effective 31 March Property Property and bearing average on gross Properties owned by the group area price date of 2013 revenue expenditure Goodwill premiums borrowings rental rental at 31 March 2013 Region Town m2 R000 acquisition R000 R000 R000 R000 R000 R000 R/m2 pm % held for sale Durban Embassy* KwaZulu-Natal Durban 32 365 107 041 Apr 2004 206 425 32 738 13 681 87 873 84 431 72.28 20.28 Lichtenburg Shopping Centre* North West Lichtenburg 8 423 18 706 Apr 2004 40 509 6 440 2 001 17 244 16 609 53.75 8.64 Midrand Allandale Land* Gauteng Midrand - 5 655 Apr 2004 20 157 8 580 - - Midtown Building* Gauteng Pretoria 8 086 34 947 Apr 2004 43 219 8 108 2 000 18 398 20 911 72.21 - Randburg Triangle* Gauteng Randburg 3 047 12 725 Oct 2003 12 892 2 612 1 660 5 488 6 736 60.10 42.34 51 921 179 074 323 202 49 898 19 342 137 583 128 687

Total group 1 028 960 4 264 902 7 693 936 1 135 116 440 036 63 602 3 275 222 2 927 458 Lease commissions 18 922 Group total (excluding sold properties) 7 712 858 1 135 116 440 036 63 602 3 275 222 2 927 458 Sold properties 31 824 12 775 Group total - Property management 1 166 940 452 811 63 602 3 275 222 2 927 458 Income from asset management business 77 974 Expenditure - asset management business 32 022 * Investment property held for sale.

Add excluded items: Intangible asset 152 965 Deferred capital expenditure 138 385 Furniture, fittings, computer equipment and other 5 129 Available-for-sale financial asset 19 417 Financial asset at amortised cost 1 152 Goodwill 63 602 Trade and other receivables 84 360 Cash and cash equivalents 1 267 304 Total assets 9 445 172 Linked debentures and premium 3 275 222 Interest-bearing borrowings 2 927 458 Add excluded items: Equity and reserves 2 626 187 Derivative financial instruments 59 330 Deferred taxation 6 293 Trade and other payables 228 117 Taxation payable 1 343 Linked holders for distribution 321 222 Total liabilities 9 445 172

INTEGRATED annual report 2013 113 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

34 OPerating segment report continued Linked Gross Directors’ debentures Interest- Weighted Vacancy lettable Purchase Effective valuation at Property Property and bearing average on gross Properties owned by the GROUP area price date of 31 Mar 2012 revenue expenditure Goodwill premiums borrowings rental rental at 31 March 2012 Region Town m2 R000 acquisition R000 R000 R000 R000 R000 R000 R/m2 pm % Retail Bloemfontein Plaza Free State Bloemfontein 38 448 45 726 Apr 2004 144 247 38 648 21 239 - 49 864 39 629 60.27 4.34 Cape Town Kenilworth Motor Showrooms (Barlows Cape Town Audi)** Western Cape Kenilworth 3 100 24 025 Apr 2004 43 085 3 999 396 - 14 894 11 837 102.64 - Daveyton Shopping Centre Gauteng Daveyton 17 095 49 883 Apr 2004 182 501 25 113 7 659 - 63 088 50 138 96.06 3.13 Durban Phoenix Plaza KwaZulu-Natal Durban Phoenix 24 342 189 140 Apr 2004 495 381 63 706 22 382 - 171 247 136 095 178.09 2.27 Durban Qualbert Centre KwaZulu-Natal Durban 4 777 24 432 Oct 2003 57 574 6 573 1 236 3 212 19 903 15 817 116.21 - Germiston Germiston Meadowdale Land Gauteng Meadowdale - - Oct 2003 16 650 - - - 5 756 4 574 - - Germiston Germiston Meadowdale Mall Gauteng Meadowdale 35 339 66 170 Oct 2003 125 694 26 617 16 024 8 716 43 451 34 532 38.65 9.27 Giyani Plaza Limpopo Giyani 9 442 68 250 Jul 2011 73 086 7 940 1 798 - 25 265 20 079 77.60 0.45 Giyani Spar Centre (Masingita Spar Centre) Limpopo Giyani 5 485 13 947 Oct 2003 34 489 5 737 2 314 1 808 11 922 9 475 63.20 6.94 Katutura Shoprite Centre Namibia Katutura 10 587 41 157 Oct 2003 91 376 14 725 5 629 5 613 31 588 25 104 86.23 0.21 Kimberley Kim Park Northern Cape Kimberley 10 585 47 915 Sep 2010 38 487 9 922 6 881 - 13 305 10 573 59.98 13.38 Kokstad Game Centre KwaZulu-Natal Kokstad 12 867 37 666 Oct 2003 109 306 11 853 2 902 4 951 37 786 30 029 67.60 1.46 Malamulele Plaza (Mala Plaza) Limpopo Malamulele 6 193 11 758 Oct 2003 56 469 6 640 1 848 1 524 19 521 15 514 86.02 3.47 Mbombela Shoprite Centre (Nelspruit Sanlam Centre) Mpumalanga Mbombela 13 915 39 963 Sep 2010 53 436 13 749 7 934 - 18 472 14 680 59.60 4.85 Mbombela Truworths Centre Mpumalanga Mbombela 1 920 7 336 Apr 2004 30 727 2 740 327 - 10 622 8 442 113.18 - Monsterlus Moratiwa Crossing (94.5%) Limpopo Monsterlus 11 686 61 540 Nov 2007 91 702 13 974 4 310 - 31 700 25 193 77.30 2.00 Ondangwa Shoprite Centre Namibia Ondangwa 5 739 17 959 Oct 2003 42 450 5 498 686 2 390 14 674 11 662 80.43 - Oshakati Shopping Centre Namibia Oshakati 22 269 76 929 Oct 2003 190 628 27 919 10 507 10 425 65 898 52 371 80.20 - Oshikango Spar Centre Namibia Oshikango 9 163 19 542 Oct 2003 104 166 10 476 999 2 751 36 009 28 617 95.07 1.31 Piet Retief Shopping Centre Mpumalanga Piet Retief 7 542 20 818 Oct 2003 67 788 7 452 1 251 2 726 23 433 18 623 75.35 0.94 Pietermaritzburg The Victoria Centre KwaZulu-Natal Pietermaritzburg 11 016 55 685 Oct 2003 100 560 13 627 4 013 7 358 34 762 27 627 89.13 2.15 Pinetown Pine Crest (50%) KwaZulu-Natal Pinetown 20 073 99 338 Apr 2004 204 072 35 222 10 820 - 70 545 56 064 105.80 5.29 Randburg Square Gauteng Randburg 50 945 70 668 Apr 2004 150 083 81 361 30 986 - 51 882 41 232 59.25 13.73 Roodepoort Hillfox Power Centre Gauteng Roodepoort 37 440 62 098 Oct 2003 168 208 29 847 13 050 8 239 58 147 46 211 50.13 9.16 Rustenburg Edgars Building North West Rustenburg 9 784 83 750 Sep 2010 95 966 11 133 972 - 33 174 26 365 75.66 - Sandton Bryanston Grosvenor Shopping Centre Gauteng Sandton Bryanston 4 603 31 381 Apr 2004 56 412 5 408 3 127 - 19 501 15 498 109.71 32.43 Soweto Dobsonville Shopping Centre Gauteng Soweto Dobsonville 23 177 56 118 Apr 2004 229 436 33 926 12 700 - 79 313 63 032 91.63 2.29 Windhoek 269 Independence Avenue Namibia Windhoek 12 828 110 803 Jul 2007 135 296 17 539 4 614 - 46 771 37 170 106.74 7.62 420 360 1 433 997 3 189 275 531 344 196 604 59 713 1 102 493 876 183 ** Leasehold property.

114 INTEGRATED annual report 2013 34 OPerating segment report continued Linked Gross Directors’ debentures Interest- Weighted Vacancy lettable Purchase Effective valuation at Property Property and bearing average on gross Properties owned by the GROUP area price date of 31 Mar 2012 revenue expenditure Goodwill premiums borrowings rental rental at 31 March 2012 Region Town m2 R000 acquisition R000 R000 R000 R000 R000 R000 R/m2 pm % Retail Bloemfontein Plaza Free State Bloemfontein 38 448 45 726 Apr 2004 144 247 38 648 21 239 - 49 864 39 629 60.27 4.34 Cape Town Kenilworth Motor Showrooms (Barlows Cape Town Audi)** Western Cape Kenilworth 3 100 24 025 Apr 2004 43 085 3 999 396 - 14 894 11 837 102.64 - Daveyton Shopping Centre Gauteng Daveyton 17 095 49 883 Apr 2004 182 501 25 113 7 659 - 63 088 50 138 96.06 3.13 Durban Phoenix Plaza KwaZulu-Natal Durban Phoenix 24 342 189 140 Apr 2004 495 381 63 706 22 382 - 171 247 136 095 178.09 2.27 Durban Qualbert Centre KwaZulu-Natal Durban 4 777 24 432 Oct 2003 57 574 6 573 1 236 3 212 19 903 15 817 116.21 - Germiston Germiston Meadowdale Land Gauteng Meadowdale - - Oct 2003 16 650 - - - 5 756 4 574 - - Germiston Germiston Meadowdale Mall Gauteng Meadowdale 35 339 66 170 Oct 2003 125 694 26 617 16 024 8 716 43 451 34 532 38.65 9.27 Giyani Plaza Limpopo Giyani 9 442 68 250 Jul 2011 73 086 7 940 1 798 - 25 265 20 079 77.60 0.45 Giyani Spar Centre (Masingita Spar Centre) Limpopo Giyani 5 485 13 947 Oct 2003 34 489 5 737 2 314 1 808 11 922 9 475 63.20 6.94 Katutura Shoprite Centre Namibia Katutura 10 587 41 157 Oct 2003 91 376 14 725 5 629 5 613 31 588 25 104 86.23 0.21 Kimberley Kim Park Northern Cape Kimberley 10 585 47 915 Sep 2010 38 487 9 922 6 881 - 13 305 10 573 59.98 13.38 Kokstad Game Centre KwaZulu-Natal Kokstad 12 867 37 666 Oct 2003 109 306 11 853 2 902 4 951 37 786 30 029 67.60 1.46 Malamulele Plaza (Mala Plaza) Limpopo Malamulele 6 193 11 758 Oct 2003 56 469 6 640 1 848 1 524 19 521 15 514 86.02 3.47 Mbombela Shoprite Centre (Nelspruit Sanlam Centre) Mpumalanga Mbombela 13 915 39 963 Sep 2010 53 436 13 749 7 934 - 18 472 14 680 59.60 4.85 Mbombela Truworths Centre Mpumalanga Mbombela 1 920 7 336 Apr 2004 30 727 2 740 327 - 10 622 8 442 113.18 - Monsterlus Moratiwa Crossing (94.5%) Limpopo Monsterlus 11 686 61 540 Nov 2007 91 702 13 974 4 310 - 31 700 25 193 77.30 2.00 Ondangwa Shoprite Centre Namibia Ondangwa 5 739 17 959 Oct 2003 42 450 5 498 686 2 390 14 674 11 662 80.43 - Oshakati Shopping Centre Namibia Oshakati 22 269 76 929 Oct 2003 190 628 27 919 10 507 10 425 65 898 52 371 80.20 - Oshikango Spar Centre Namibia Oshikango 9 163 19 542 Oct 2003 104 166 10 476 999 2 751 36 009 28 617 95.07 1.31 Piet Retief Shopping Centre Mpumalanga Piet Retief 7 542 20 818 Oct 2003 67 788 7 452 1 251 2 726 23 433 18 623 75.35 0.94 Pietermaritzburg The Victoria Centre KwaZulu-Natal Pietermaritzburg 11 016 55 685 Oct 2003 100 560 13 627 4 013 7 358 34 762 27 627 89.13 2.15 Pinetown Pine Crest (50%) KwaZulu-Natal Pinetown 20 073 99 338 Apr 2004 204 072 35 222 10 820 - 70 545 56 064 105.80 5.29 Randburg Square Gauteng Randburg 50 945 70 668 Apr 2004 150 083 81 361 30 986 - 51 882 41 232 59.25 13.73 Roodepoort Hillfox Power Centre Gauteng Roodepoort 37 440 62 098 Oct 2003 168 208 29 847 13 050 8 239 58 147 46 211 50.13 9.16 Rustenburg Edgars Building North West Rustenburg 9 784 83 750 Sep 2010 95 966 11 133 972 - 33 174 26 365 75.66 - Sandton Bryanston Grosvenor Shopping Centre Gauteng Sandton Bryanston 4 603 31 381 Apr 2004 56 412 5 408 3 127 - 19 501 15 498 109.71 32.43 Soweto Dobsonville Shopping Centre Gauteng Soweto Dobsonville 23 177 56 118 Apr 2004 229 436 33 926 12 700 - 79 313 63 032 91.63 2.29 Windhoek 269 Independence Avenue Namibia Windhoek 12 828 110 803 Jul 2007 135 296 17 539 4 614 - 46 771 37 170 106.74 7.62 420 360 1 433 997 3 189 275 531 344 196 604 59 713 1 102 493 876 183 ** Leasehold property.

INTEGRATED annual report 2013 115 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

34 OPerating segment report continued Linked Gross Directors’ debentures Interest- Weighted Vacancy lettable Purchase Effective valuation at Property Property and bearing average on gross Properties owned by the GROUP area price date of 31 Mar 2012 revenue expenditure Goodwill premiums borrowings rental rental at 31 March 2012 Region Town m2 R000 acquisition R000 R000 R000 R000 R000 R000 R/m2 pm % offices Cape Town Bellville Louis Leipoldt Western Cape Cape Town Bellville 22 311 106 937 Apr 2004 287 847 22 237 2 209 - 99 505 79 080 77.09 - Cape Town Parow De Tijger Office Park Western Cape Parow 4 159 25 856 Oct 2003 30 572 4 509 1 818 273 10 568 8 399 90.24 23.50 Cape Town Cape Town Pinelands Pinepark Western Cape Pinelands 2 804 13 347 Apr 2004 26 929 3 340 1 314 - 9 309 7 398 75.60 - Centurion 259 West Street Gauteng Centurion 5 180 17 979 Apr 2004 35 093 5 629 2 307 - 12 131 9 641 81.37 15.97 Durban Embassy KwaZulu-Natal Durban 32 346 107 041 Apr 2004 202 785 34 446 13 840 - 70 100 55 711 71.27 10.25 East London Vincent Office Park (Oos London Sanlam Centre) Eastern Cape East London 9 035 59 236 Apr 2004 71 747 9 478 2 774 - 24 802 19 711 80.12 3.28 Randburg Cresta Eva Park Gauteng Johannesburg 10 911 30 657 Apr 2004 46 528 8 728 3 983 - 16 084 12 783 75.31 34.45 Johannesburg Bedfordview 1 Kramer Road Johannesburg (Bedfordview GIS) Gauteng Bedfordview 6 759 26 396 Apr 2004 37 733 6 914 3 117 - 13 044 10 366 64.58 17.59 Johannesburg Houghton 1 West Street (Johannesburg Johannesburg Houghton 2446) Gauteng Houghton 4 415 33 504 Sep 2007 54 348 7 093 2 925 - 18 787 14 931 101.65 0.81 Johannesburg Johannesburg Parktown Oakhurst Gauteng Parktown 9 138 34 400 Mar 2006 91 395 12 977 4 547 - 31 594 25 109 81.95 1.17 Midrand Ulwazi Building (Arivia.kom Building) Gauteng Midrand 15 634 78 238 Apr 2004 169 350 22 125 6 531 - 58 542 46 525 81.59 0.57 Pretoria Hatfield 1166 Francis Baard Street (DLV Building) Gauteng Pretoria 2 871 13 469 Apr 2004 25 916 3 795 1 561 - 8 959 7 120 95.24 4.10 Pretoria Hatfield Festival Street Offices (Hatfield Sanlam Building) Gauteng Pretoria Hatfield 5 358 41 875 Sep 2010 40 733 7 010 2 401 - 14 081 11 190 77.69 1.41 Pretoria High Court Chambers Gauteng Pretoria 12 093 54 712 Apr 2004 84 717 14 669 6 312 - 29 286 23 274 45.16 - Pretoria Lynnwood Excel Park (Wymark) Gauteng Pretoria Lynnwood 3 480 34 174 Mar 2008 39 630 4 645 591 - 13 700 10 888 92.66 - Pretoria Lynnwood Sunwood Park (Sanwood Park) Gauteng Pretoria Lynnwood 6 388 55 464 Sep 2010 60 136 4 971 2 893 - 20 788 16 521 86.94 43.69 Randburg Triangle Gauteng Randburg 3 047 12 725 Oct 2003 14 981 3 249 1 270 848 5 179 4 116 62.18 4.71 Sandton Epsom Sandton Bryanston St Andrews Complex Gauteng Downs 9 903 76 805 Sep 2010 87 958 11 139 5 596 - 30 406 24 164 78.89 22.42 Sandton Hyde Park 50 Sixth Road Gauteng Sandton Hyde Park 4 181 56 573 Sep 2006 58 190 9 516 3 400 - 20 116 15 986 147.55 2.28 Sandton Rivonia 36 Homestead Road (Barlow Place) Gauteng Sandton Rivonia 2 459 8 660 Apr 2004 30 672 4 029 1 315 - 10 603 8 426 97.99 - Sandton Sunninghill Place Gauteng Sandton Sunninghill 8 774 73 986 Sep 2010 88 677 10 404 4 360 - 30 655 24 362 82.05 15.77 181 246 962 034 1 585 937 210 903 75 064 1 121 548 239 435 701

Industrial Cape Town Parow Industrial Park Western Cape Parow 19 834 28 059 Apr 2004 69 540 6 874 2 537 - 24 039 19 105 31.72 19.39 Centurion Samrand N1 Gauteng Centurion Samrand 11 413 12 990 Apr 2004 55 344 5 895 1 808 - 19 132 15 205 42.59 14.95 Durban Valley View Industrial Park KwaZulu-Natal Durban 30 790 53 795 Apr 2004 97 687 11 138 1 044 - 33 769 26 837 30.03 - Germiston Germiston Meadowdale R24 Gauteng Meadowdale 34 977 53 520 Apr 2004 149 259 18 847 5 789 - 51 597 41 006 38.72 8.24 Johannesburg Rosettenville Village Main Industrial Johannesburg Park Gauteng Rosettenville 8 057 5 400 Apr 2004 22 881 3 946 2 181 - 7 910 6 286 32.01 - Kempton Park Spartan Warehouse (Hellman Gauteng Johannesburg International) Spartan 5 241 5 807 Apr 2004 32 429 3 963 800 - 11 210 8 909 53.96 - Midrand Allandale Industrial Park Gauteng Midrand 21 344 23 175 Apr 2004 79 312 10 565 2 892 - 27 417 21 789 41.33 23.54 Midrand Allandale land Gauteng Midrand - 5 655 Apr 2004 17 700 - - - 6 119 4 863 - - Midrand Sanitary City Gauteng Midrand 6 342 15 277 Apr 2004 38 702 3 373 434 - 13 379 10 632 42.44 - Pinetown Richmond Industrial Park (Richmond Park) KwaZulu-Natal Pinetown 7 940 10 800 Apr 2004 29 864 5 117 1 832 - 10 323 8 204 40.60 - Pinetown Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown Westmead 16 914 59 390 Sep 2010 72 064 8 769 3 737 - 24 912 19 798 36.65 3.24 Randburg Kya Randburg Trevallyn Industrial Park Gauteng Sands 32 006 48 324 Apr 2004 127 872 15 947 7 160 - 44 204 35 130 37.66 11.86 Randburg Randburg Tungsten Industrial Park Gauteng Strijdompark 10 365 13 336 Oct 2003 48 288 6 108 2 109 1 769 16 693 13 266 41.69 6.42 Roodepoort Roodepoort Robertville Industrial Park Gauteng Robertville 28 105 15 983 Oct 2003 86 339 13 284 6 041 2 120 29 846 23 720 31.11 4.93 Sandton Linbro Galaxy Drive Showroom (Supra Hino) Gauteng Sandton Linbro Park 2 840 14 264 Apr 2004 29 547 2 446 533 - 10 214 8 117 58.99 - Sony Building Gauteng Midrand 11 001 33 530 Apr 2004 59 834 9 215 4 511 - 20 684 16 438 57.15 24.71 247 169 399 305 1 016 662 125 487 43 408 3 889 351 448 279 305

116 INTEGRATED annual report 2013 34 OPerating segment report continued Linked Gross Directors’ debentures Interest- Weighted Vacancy lettable Purchase Effective valuation at Property Property and bearing average on gross Properties owned by the GROUP area price date of 31 Mar 2012 revenue expenditure Goodwill premiums borrowings rental rental at 31 March 2012 Region Town m2 R000 acquisition R000 R000 R000 R000 R000 R000 R/m2 pm % offices Cape Town Bellville Louis Leipoldt Western Cape Cape Town Bellville 22 311 106 937 Apr 2004 287 847 22 237 2 209 - 99 505 79 080 77.09 - Cape Town Parow De Tijger Office Park Western Cape Parow 4 159 25 856 Oct 2003 30 572 4 509 1 818 273 10 568 8 399 90.24 23.50 Cape Town Cape Town Pinelands Pinepark Western Cape Pinelands 2 804 13 347 Apr 2004 26 929 3 340 1 314 - 9 309 7 398 75.60 - Centurion 259 West Street Gauteng Centurion 5 180 17 979 Apr 2004 35 093 5 629 2 307 - 12 131 9 641 81.37 15.97 Durban Embassy KwaZulu-Natal Durban 32 346 107 041 Apr 2004 202 785 34 446 13 840 - 70 100 55 711 71.27 10.25 East London Vincent Office Park (Oos London Sanlam Centre) Eastern Cape East London 9 035 59 236 Apr 2004 71 747 9 478 2 774 - 24 802 19 711 80.12 3.28 Randburg Cresta Eva Park Gauteng Johannesburg 10 911 30 657 Apr 2004 46 528 8 728 3 983 - 16 084 12 783 75.31 34.45 Johannesburg Bedfordview 1 Kramer Road Johannesburg (Bedfordview GIS) Gauteng Bedfordview 6 759 26 396 Apr 2004 37 733 6 914 3 117 - 13 044 10 366 64.58 17.59 Johannesburg Houghton 1 West Street (Johannesburg Johannesburg Houghton 2446) Gauteng Houghton 4 415 33 504 Sep 2007 54 348 7 093 2 925 - 18 787 14 931 101.65 0.81 Johannesburg Johannesburg Parktown Oakhurst Gauteng Parktown 9 138 34 400 Mar 2006 91 395 12 977 4 547 - 31 594 25 109 81.95 1.17 Midrand Ulwazi Building (Arivia.kom Building) Gauteng Midrand 15 634 78 238 Apr 2004 169 350 22 125 6 531 - 58 542 46 525 81.59 0.57 Pretoria Hatfield 1166 Francis Baard Street (DLV Building) Gauteng Pretoria 2 871 13 469 Apr 2004 25 916 3 795 1 561 - 8 959 7 120 95.24 4.10 Pretoria Hatfield Festival Street Offices (Hatfield Sanlam Building) Gauteng Pretoria Hatfield 5 358 41 875 Sep 2010 40 733 7 010 2 401 - 14 081 11 190 77.69 1.41 Pretoria High Court Chambers Gauteng Pretoria 12 093 54 712 Apr 2004 84 717 14 669 6 312 - 29 286 23 274 45.16 - Pretoria Lynnwood Excel Park (Wymark) Gauteng Pretoria Lynnwood 3 480 34 174 Mar 2008 39 630 4 645 591 - 13 700 10 888 92.66 - Pretoria Lynnwood Sunwood Park (Sanwood Park) Gauteng Pretoria Lynnwood 6 388 55 464 Sep 2010 60 136 4 971 2 893 - 20 788 16 521 86.94 43.69 Randburg Triangle Gauteng Randburg 3 047 12 725 Oct 2003 14 981 3 249 1 270 848 5 179 4 116 62.18 4.71 Sandton Epsom Sandton Bryanston St Andrews Complex Gauteng Downs 9 903 76 805 Sep 2010 87 958 11 139 5 596 - 30 406 24 164 78.89 22.42 Sandton Hyde Park 50 Sixth Road Gauteng Sandton Hyde Park 4 181 56 573 Sep 2006 58 190 9 516 3 400 - 20 116 15 986 147.55 2.28 Sandton Rivonia 36 Homestead Road (Barlow Place) Gauteng Sandton Rivonia 2 459 8 660 Apr 2004 30 672 4 029 1 315 - 10 603 8 426 97.99 - Sandton Sunninghill Place Gauteng Sandton Sunninghill 8 774 73 986 Sep 2010 88 677 10 404 4 360 - 30 655 24 362 82.05 15.77 181 246 962 034 1 585 937 210 903 75 064 1 121 548 239 435 701

Industrial Cape Town Parow Industrial Park Western Cape Parow 19 834 28 059 Apr 2004 69 540 6 874 2 537 - 24 039 19 105 31.72 19.39 Centurion Samrand N1 Gauteng Centurion Samrand 11 413 12 990 Apr 2004 55 344 5 895 1 808 - 19 132 15 205 42.59 14.95 Durban Valley View Industrial Park KwaZulu-Natal Durban 30 790 53 795 Apr 2004 97 687 11 138 1 044 - 33 769 26 837 30.03 - Germiston Germiston Meadowdale R24 Gauteng Meadowdale 34 977 53 520 Apr 2004 149 259 18 847 5 789 - 51 597 41 006 38.72 8.24 Johannesburg Rosettenville Village Main Industrial Johannesburg Park Gauteng Rosettenville 8 057 5 400 Apr 2004 22 881 3 946 2 181 - 7 910 6 286 32.01 - Kempton Park Spartan Warehouse (Hellman Gauteng Johannesburg International) Spartan 5 241 5 807 Apr 2004 32 429 3 963 800 - 11 210 8 909 53.96 - Midrand Allandale Industrial Park Gauteng Midrand 21 344 23 175 Apr 2004 79 312 10 565 2 892 - 27 417 21 789 41.33 23.54 Midrand Allandale land Gauteng Midrand - 5 655 Apr 2004 17 700 - - - 6 119 4 863 - - Midrand Sanitary City Gauteng Midrand 6 342 15 277 Apr 2004 38 702 3 373 434 - 13 379 10 632 42.44 - Pinetown Richmond Industrial Park (Richmond Park) KwaZulu-Natal Pinetown 7 940 10 800 Apr 2004 29 864 5 117 1 832 - 10 323 8 204 40.60 - Pinetown Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown Westmead 16 914 59 390 Sep 2010 72 064 8 769 3 737 - 24 912 19 798 36.65 3.24 Randburg Kya Randburg Trevallyn Industrial Park Gauteng Sands 32 006 48 324 Apr 2004 127 872 15 947 7 160 - 44 204 35 130 37.66 11.86 Randburg Randburg Tungsten Industrial Park Gauteng Strijdompark 10 365 13 336 Oct 2003 48 288 6 108 2 109 1 769 16 693 13 266 41.69 6.42 Roodepoort Roodepoort Robertville Industrial Park Gauteng Robertville 28 105 15 983 Oct 2003 86 339 13 284 6 041 2 120 29 846 23 720 31.11 4.93 Sandton Linbro Galaxy Drive Showroom (Supra Hino) Gauteng Sandton Linbro Park 2 840 14 264 Apr 2004 29 547 2 446 533 - 10 214 8 117 58.99 - Sony Building Gauteng Midrand 11 001 33 530 Apr 2004 59 834 9 215 4 511 - 20 684 16 438 57.15 24.71 247 169 399 305 1 016 662 125 487 43 408 3 889 351 448 279 305

INTEGRATED annual report 2013 117 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

34 OPerating segment report continued Linked Gross Directors’ debentures Interest Weighted Vacancy lettable Purchase Effective valuation at Property Property and bearing average on gross Properties owned by the GROUP area price date of 31 Mar 2012 revenue expenditure Goodwill premiums borrowings rental rental at 31 March 2012 Region Town m2 R000 acquisition R000 R000 R000 R000 R000 R000 R/m2 pm % Held for sale Glencairn Building* Gauteng Johannesburg 13 378 41 875 Apr 2004 23 520 16 187 6 371 - 8 131 6 462 73.07 3.64 John Griffin* Gauteng Johannesburg 9 774 5 298 Apr 2004 16 500 3 358 2 230 - 5 704 4 533 17.64 - Katima Mulilo Pep Stores** Namibia Katima Mulilo 2 472 6 149 Oct 2003 18 000 2 020 160 821 6 222 4 945 71.41 Lichtenburg Shopping Centre* North West Lichtenburg 8 423 18 706 Apr 2004 39 779 5 817 1 795 - 13 751 10 928 49.91 5.67 Midtown Building* Gauteng Pretoria 8 086 34 947 Apr 2004 44 634 7 497 1 520 - 15 429 12 262 65.65 - Nelspruit Prorom* Mpumalanga Nelspruit 6 178 16 108 Apr 2004 34 920 5 664 1 136 - 12 071 9 594 70.90 7.73 Rundu Ellerines* Namibia Rundu 1 283 4 330 Oct 2003 2 800 292 126 - 968 769 29.61 40.93 Truworths Building* Gauteng Johannesburg 6 919 40 550 Apr 2004 43 680 6 596 655 - 15 100 12 000 76.53 - VWL Building* Gauteng Pretoria 16 933 67 346 Apr 2004 97 363 14 635 4 529 - 33 657 26 748 52.04 1.57 73 446 235 309 321 196 62 066 18 522 821 111 033 88 241

Total group 922 221 3 030 645 6 113 070 929 800 333 598 65 544 2 113 213 1 679 430 Lease commissions 14 283 Group total (excluding sold properties) 6 127 353 929 800 333 598 65 544 2 113 213 1 679 430 Sold properties 3 469 823 Group total - Property management 933 269 334 421 Income from asset management business 53 317 Expenditure - asset management business 30 792 * Investment property held for sale. ** Leasehold property.

Add excluded items: Intangible asset 267 096 Deferred capital expenditure 4 411 Furniture, fittings, computer equipment and other 1 985 Available-for-sale financial asset 28 468 Financial asset at amortised cost 2 967 Goodwill 65 544 Trade and other receivables 50 934 Cash and cash equivalents 215 947 Total assets 6 764 705 Linked debentures and premium 2 113 213 Interest-bearing borrowings 1 679 430 Add excluded items: Equity and reserves 2 074 470 Derivative financial instruments 25 644 Deferred taxation 434 503 Trade and other payables 188 692 Taxation payable 1 267 Linked holders for distribution 247 486 Total liabilities 6 764 705

118 INTEGRATED annual report 2013 34 OPerating segment report continued Linked Gross Directors’ debentures Interest Weighted Vacancy lettable Purchase Effective valuation at Property Property and bearing average on gross Properties owned by the GROUP area price date of 31 Mar 2012 revenue expenditure Goodwill premiums borrowings rental rental at 31 March 2012 Region Town m2 R000 acquisition R000 R000 R000 R000 R000 R000 R/m2 pm % Held for sale Glencairn Building* Gauteng Johannesburg 13 378 41 875 Apr 2004 23 520 16 187 6 371 - 8 131 6 462 73.07 3.64 John Griffin* Gauteng Johannesburg 9 774 5 298 Apr 2004 16 500 3 358 2 230 - 5 704 4 533 17.64 - Katima Mulilo Pep Stores** Namibia Katima Mulilo 2 472 6 149 Oct 2003 18 000 2 020 160 821 6 222 4 945 71.41 Lichtenburg Shopping Centre* North West Lichtenburg 8 423 18 706 Apr 2004 39 779 5 817 1 795 - 13 751 10 928 49.91 5.67 Midtown Building* Gauteng Pretoria 8 086 34 947 Apr 2004 44 634 7 497 1 520 - 15 429 12 262 65.65 - Nelspruit Prorom* Mpumalanga Nelspruit 6 178 16 108 Apr 2004 34 920 5 664 1 136 - 12 071 9 594 70.90 7.73 Rundu Ellerines* Namibia Rundu 1 283 4 330 Oct 2003 2 800 292 126 - 968 769 29.61 40.93 Truworths Building* Gauteng Johannesburg 6 919 40 550 Apr 2004 43 680 6 596 655 - 15 100 12 000 76.53 - VWL Building* Gauteng Pretoria 16 933 67 346 Apr 2004 97 363 14 635 4 529 - 33 657 26 748 52.04 1.57 73 446 235 309 321 196 62 066 18 522 821 111 033 88 241

Total group 922 221 3 030 645 6 113 070 929 800 333 598 65 544 2 113 213 1 679 430 Lease commissions 14 283 Group total (excluding sold properties) 6 127 353 929 800 333 598 65 544 2 113 213 1 679 430 Sold properties 3 469 823 Group total - Property management 933 269 334 421 Income from asset management business 53 317 Expenditure - asset management business 30 792 * Investment property held for sale. ** Leasehold property.

Add excluded items: Intangible asset 267 096 Deferred capital expenditure 4 411 Furniture, fittings, computer equipment and other 1 985 Available-for-sale financial asset 28 468 Financial asset at amortised cost 2 967 Goodwill 65 544 Trade and other receivables 50 934 Cash and cash equivalents 215 947 Total assets 6 764 705 Linked debentures and premium 2 113 213 Interest-bearing borrowings 1 679 430 Add excluded items: Equity and reserves 2 074 470 Derivative financial instruments 25 644 Deferred taxation 434 503 Trade and other payables 188 692 Taxation payable 1 267 Linked holders for distribution 247 486 Total liabilities 6 764 705

INTEGRATED annual report 2013 119 NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

35 cAPITAL MANAGEMENT The group’s capital management objectives are: • To ensure the group’s ability to continue as a going concern. • To provide an adequate return to unitholders by pricing services commensurately with the level of risk.

The group monitors capital on the basis of the carrying amount of equity plus its unitholders’ linked debenture loans less cash equivalents and cash flow hedges recognised in equity.

Capital for the reporting periods under review is summarised as follows: 2013 2012 Group Group R000 R000 Total equity 5 901 409 4 187 683 Cash flow hedges 60 326 26 640 Cash and cash equivalents (1 267 304) (215 947) Capital 4 694 431 3 998 376 Total equity 5 901 409 4 187 683 Borrowings 2 938 705 1 684 182 Overall financing 8 840 114 5 871 865 Capital-to-overall financing ratio 0.53 0.68 The board’s policy is to maintain a strong capital base comprising its unitholders’ interest so as to maintain investor creditor and market confidence and to sustain future development of the business. It is the group’s stated purpose to deliver long- term sustainable growth in distributions per linked unit. Generally at least 99% of net profits as defined in the debenture trust deed are distributed on a six monthly basis.

The board of directors monitors the level of distributions to unitholders and ensures compliance with the terms of the debenture trust deed. There were no changes in the group’s approach to capital management during the year. Neither the company nor any of its subsidiaries are subject to externally imposed capital requirements.

36 FUTURE MINIMUM LEASE INCOME 2013 2012 Group Company Group Company R000 R000 R000 R000 Receivable within one year 698 611 563 172 537 436 404 877 Receivable between one and five years 1 188 646 954 052 882 715 653 091 Receivable after five years 650 610 510 417 547 357 391 066 Total future contractual lease revenue 2 537 867 2 027 641 1 967 508 1 449 034 Rental straight-line adjustment already accrued (151 255) (117 903) (146 426) (118 099) Future straight-line lease revenue 2 386 612 1 909 738 1 821 082 1 330 935

120 INTEGRATED annual report 2013 37 COMMITMENTS 2013 2012 Group Company Group Company R000 R000 R000 R000 OPERATING LEASE COMMITMENTS Premises Payable within one year 2 092 2 092 1 016 - Payable between one and five years 9 136 9 136 - - 11 228 11 228 1 016 - OTHER Payable within one year 263 - 744 - Payable between one and five years 241 - 517 - 504 - 1 261 - CAPITAL COMMITMENTS Authorised and contracted 468 246 465 267 98 148 73 465 Authorised but not contracted 133 037 95 578 136 710 53 987 It is intended that the above capital expenditure will be funded by way of bank facilities surplus cash and the sales proceeds of investment properties.

38 eVENTS after period end Acquisition of 50% of east rand mall for r1.1 Billion Further to various sens announcements during the year, the acquisition of 50% of East Rand Mall was successfully concluded on 2 April 2013 and the property was transferred on that date.

Announcement regarding empowerment initiative V ukile announced on 12 March 2013 that it had concluded an agreement to acquire five investment grade, predominantly government tenanted buildings from the Encha Group for approximately R1.3 billion. The transaction is expected to be concluded in July/August 2013.

Announcement regarding acquisition of wingspan portfolio V ukile announced on 26 April 2013 that it had entered into negotiations to acquire five small regional shopping centres from Wingspan.

Accelerated book build V ukile announced on 7 May 2013 that it had successfully raised R400 million by way of an accelerated book build. A total of 20 512 821 new Vukile linked units were issued on 16 May 2013 at a subscription price of R19.50 per linked unit.

Included in the issue price of R19.50 is an antecedent divestiture of 89.94 cents per linked unit for the period 1 October 2012 to 16 May 2013.

INTEGRATED annual report 2013 121

Vukile“ has the strategies, the resources and the management expertise to deliver sustainable growth. unitholders’ information” unitholders’ information

Daveyton Shopping Mall. UNITHOLDERS’ Analysis as at 31 March 2013

% of total % of Number of issued share Holders unitholders units capital ANALYSIS OF UNITHOLDINGS 1 − 1 000 1 261 21.40 365 776 0.08 1 001 − 10 000 3 303 56.07 14 340 834 3.33 10 001 − 100 000 1 042 17.69 29 645 920 6.88 100 001 − 1 000 000 215 3.65 67 238 876 15.60 1 000 001 and more 70 1.19 319 448 812 74.11 Total 5 891 100.00 431 040 218 100.00 MAJOR BENEFICIAL UNITHOLDERS (5% and more of the linked units in issue) Government Employees Pension Fund (GEPF) 91 188 631 21.16 Stanlib 32 621 554 7.57 Sanlam Group 29 852 659 6.93 MAJOR INSTITUTIONAL UNITHOLDERS (5% and more of the linked units in issue) Public Investment Corporation 86 412 432 20.05 Stanlib Asset Management 52 730 475 12.23 Investec Asset Management 33 638 909 7.80 Prudential Portfolio Management 24 530 098 5.69 Sanlam Investment Management 24 445 462 5.67 Old Mutual Investment Group 21 688 501 5.03 UNITHOLDER SPREAD Non-public: 5 0.08 91 968 123 21.34 Directors 4 0.07 779 492 0.18 Holdings >10% of issued capital 1 0.01 91 188 631 21.16 Public 5 886 99.92 339 072 095 78.66 Total 5 891 100.00 431 040 218 100.00 DISTRIBUTION OF UNITHOLDERS Collective investment schemes 164 2.78 160 802 555 37.31 Retirement benefit funds 159 2.70 156 020 235 36.20 Retail shareholders 4 499 76.37 36 372 942 8.44 Assurance and insurance companies 30 0.51 25 538 179 5.92 Trusts 666 11.31 15 464 837 3.59 Scrip lending 11 0.19 10 690 922 2.48 Custodians 30 0.51 8 017 336 1.86 Foundations and charitable funds 120 2.04 7 772 804 1.80 Private companies 105 1.78 3 923 512 0.91 Stockbrokers and nominees 16 0.27 3 054 480 0.71 Hedge funds 6 0.10 1 267 668 0.29 Close corporations 58 0.98 1 208 449 0.28 Medical aid funds 10 0.17 739 326 0.17 Investment partnerships 17 0.29 166 973 0.04 Total 5 891 100.00 431 040 218 100.00

124 INTEGRATED annual report 2013 UNITHOLDERS’ DIARY

Financial year-end 31 March Publication of abridged financial statements 27 May 2013 Financial report and notice of AGM posted by 30 June 2013 AGM 30 August 2013 Interim period-end 30 September

Sandton Hyde Park 50 Sixth Road.

INTEGRATED annual report 2013 125 Condensed annual financial statements

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION at 31 March 2013

2013 2012 2011 Restated* Restated* GROUP R000 R000 R000 ASSETS Non-current assets 7 770 306 6 176 629 5 487 419 Investment properties 7 241 245 5 674 979 4 984 840 Investment properties 7 389 656 5 806 158 5 083 993 Straight-line rental income adjustment (148 411) (131 179) (99 153) Other non-current assets 529 061 501 650 502 579 Intangible asset 152 965 267 096 312 832 Straight-line rental income asset 148 411 131 179 99 153 Deferred capital expenditure 138 385 4 411 2 723 Furniture fittings, computer equipment and other 5 129 1 985 1 774 Available-for-sale financial asset 19 417 28 468 10 208 Financial asset at amortised cost 1 152 2 967 4 782 Goodwill 63 602 65 544 71 107 Current assets 1 351 664 266 881 409 218 Trade and other receivables 84 360 50 934 71 409 Cash and cash equivalents 1 267 304 215 947 337 809 Investment properties held for sale 323 202 321 195 281 422 Total assets 9 445 172 6 764 705 6 178 059 EQUITY AND RESERVES 2 626 187 2 074 470 1 696 065 Non-current liabilities 5 755 367 3 022 150 3 618 098 Linked debentures and premium 3 275 222 2 113 213 2 116 916 Other interest bearing borrowings 2 414 522 448 790 1 226 282 Derivative financial instruments 59 330 25 644 21 867 Deferred taxation liabilities 6 293 434 503 253 033 Current liabilities 1 063 618 1 668 085 863 896 Trade and other payables 228 117 188 692 173 277 Short-term borrowings 512 936 1 230 640 449 600 Current taxation liabilities 1 343 1 267 5 416 Linked unitholders for distribution 321 222 247 486 235 603 Total equity and liabilities 9 445 172 6 764 705 6 178 059 * Refer to note 20.

126 INTEGRATED annual report 2013 CONDENSED CONSOLIDATED INCOME STATEMENT for the year ended 31 March 2013

2013 2012 Restated* GROUP R000 R000 Property revenue 1 166 940 933 269 Straight-line rental income accrual 4 829 45 993 Gross property revenue 1 171 769 979 262 Property expenses (452 811) (334 421) Net profit from property operations 718 958 644 841 Net income from asset management business 45 952 22 525 Corporate administrative expenses (29 192) (25 919) Investment and other income 25 615 13 557 Operating profit before finance costs 761 333 655 004 Finance costs (194 285) (165 633) Profit before debenture interest 567 048 489 371 Debenture interest (554 368) (437 224) Profit before capital items 12 680 52 147 Profit on sale of investment properties 903 3 084 Amortisation of debenture premium 6 804 3 703 Goodwill written-off on sale of subsidiary/properties by a subsidiary (821) (762) Impairment of intangible asset (114 131) (45 736) Impairment of goodwill (1 121) (4 801) Profit on sale of subsidiary 1 160 1 428 (Loss)/profit before fair value adjustments (94 526) 9 063 Fair value adjustments 255 329 549 253 Gross change in fair value of investment properties 260 158 595 246 Straight-line rental income adjustment (4 829) (45 993) Profit before taxation 160 803 558 316 Taxation 412 834 (187 987) Profit for the year 573 637 370 329 Earnings per linked unit (cents) 273.53 230.06 Diluted earnings per linked unit (cents) 273.53 230.06 Number of linked units in issue 431 040 218 351 015 218 * Refer to note 20.

INTEGRATED annual report 2013 127 Condensed annual financial statements continued

RECONCILIATION OF EARNINGS TO HEADLINE EARNINGS AND TO PROFIT AVAILABLE FOR DISTRIBUTION for the year ended 31 March 2013

2013 2012 Group Cents per Group Cents per R000 linked unit R000 linked unit Attributable profit after taxation 573 637 139.10 370 329 105.50 Adjusted for: Debenture interest 554 368 134.43 437 224 124.56 Earnings per linked unit 1 128 005 273.53 807 553 230.06 Change in fair value of investment properties (255 329) (61.91) (549 253) (156.48) Total tax effects of adjustments (418 606) (101.51) 170 638 48.62 Write-off in goodwill on sale of subsidiary/properties sold by a subsidiary 821 0.20 762 0.22 Impairment of goodwill 1 121 0.27 4 801 1.37 Profit on sale of subsidiary (1 160) (0.28) (1 428) (0.41) Profit on sale of investment properties (903) (0.22) (3 084) (0.88) Loss on disposal of furniture, fittings and equipment 188 0.05 - - Impairment of intangible asset 114 131 27.68 45 736 13.03 Amortisation of debenture premium (6 804) (1.65) (3 703) (1.05) Headline earnings of linked units 561 464 136.16 472 022 134.48 Loss on disposal of furniture, fittings and equipment (188) (0.05) - - Straight-line rental accrual net of deferred taxation (4 829) (1.17) (32 922) (9.38) Profit available for distribution 556 447 134.94 439 100 125.10

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW for the year ended 31 March 2013

2013 2012 Group Group R000 R000 Cash flow from operating activities 738 201 638 685 Cash flow from investing activities (1 446 725) (167 450) Cash flow from financing activities 1 759 881 (593 097) Net increase/(decrease) in cash and cash equivalents 1 051 357 (121 862) Cash and cash equivalents at the beginning of the year 215 947 337 809 Cash and cash equivalents at the end of the year 1 267 304 215 947

128 INTEGRATED annual report 2013 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2013

Share capital Non- and share distributable Retained R000 premium reserves earnings Total GROUP Restated balance at 31 March 2011 32 263 1 639 507 24 295 1 696 065 Balance at 31 March 2011 as previously reported 32 263 1 347 992 24 295 1 404 550 Change of rate in deferred taxation including straight line rental accrual - 291 515 - 291 515 Dividend distribution - - (892) (892) 32 263 1 639 507 23 403 1 695 173 Profit for the year - - 370 329 370 329 Change in fair value of investment properties - 595 246 (595 246) - Deferred taxation on change in fair value of investment properties and straight-line rental accrual - (184 333) 184 333 - Share-based remuneration - 9 927 - 9 927 Transfer from non-distributable reserve - (46 163) 46 163 - Other comprehensive income Revaluation of available-for-sale financial asset - 3 453 - 3 453 Revaluation of cash flow hedges - (4 412) - (4 412) Restated balance at 31 March 2012 32 263 2 013 225 28 982 2 074 470 Balance at 31 March 2012 as previously reported 32 263 1 719 943 28 982 1 781 188 Change of rate in deferred taxation including straight line rental accrual - 293 282 - 293 282 Issue of shares 23 853 - - 23 853 Dividend distribution - - (1 131) (1 131) 56 116 2 013 225 27 851 2 097 192 Profit for the year - - 573 637 573 637 Change in fair value of investment properties - 260 158 (260 158) - Deferred taxation rate change - 426 790 (426 790) - Share-based remuneration - 7 411 - 7 411 Transfer from non-distributable reserve - (122 194) 122 194 - Other comprehensive loss Revaluation of available-for-sale financial asset - (18 367) - (18 367) Revaluation of cash flow hedges - (33 686) - (33 686) Balance at 31 March 2013 56 116 2 533 337 36 734 2 626 187

INTEGRATED annual report 2013 129 Condensed annual financial statements continued

CONDENSED OPERATING SEGMENT REPORT for the year ended 31 March 2013

Asset manage- ment R000 Industrial Offices Retail Total business Total GROUP March 2013 Group income for the year ended 31 March 2013 Property revenue 135 924 415 611 615 405 1 166 940 77 974 1 244 914 Straight-line rental income accrual 562 1 720 2 547 4 829 4 829 136 486 417 331 617 952 1 171 769 77 974 1 249 743 Property expenses (46 237) (151 476) (255 098) (452 811) (32 022) (484 833) Profit from property and other operations 90 249 265 855 362 854 718 958 45 952 764 910 Group statement of financial position at 31 March 2013 Assets Investment properties 1 008 272 2 532 533 3 829 929 7 370 734 7 370 734 Add: Lease commissions 18 922 18 922 7 389 656 7 389 656 Goodwill 3 889 59 713 63 602 63 602 Intangible asset 152 965 152 965 Investment properties held for sale 20 157 262 536 40 509 323 202 323 202 1 032 318 2 795 069 3 930 151 7 776 460 152 965 7 929 425 Add: Excluded items Deferred capital expenditure 138 385 Furniture, fittings and other equipment 5 129 Available-for-sale financial asset 19 417 Financial asset at amortised cost 1 152 Trade and other receivables 84 360 Cash and cash equivalents 1 267 304 Total assets 9 445 172 Liabilities Linked debentures and premium 437 790 1 189 830 1 647 602 3 275 222 3 275 222 Interest bearing borrowings 342 722 1 007 768 1 576 968 2 927 458 2 927 458 780 512 2 197 598 3 224 570 6 202 680 6 202 680 Add: Excluded items Equity 2 626 187 Derivative financial instrument 59 330 Deferred taxation liabilities 6 293 Trade and other payables 228 117 Current taxation liabilities 1 343 Linked unitholders for distribution 321 222 Total equity and liabilities 9 445 172

130 INTEGRATED annual report 2013 CONDENSED OPERATING SEGMENT REPORT for the year ended 31 March 2012

Asset manage- ment R000 Industrial Offices Retail Total business Total GROUP March 2012 Group income for the year ended 31 March 2012 Property revenue 130 222 255 126 547 921 933 269 53 317 986 586 Straight-line rental income accrual 6 539 13 156 26 298 45 993 - 45 993 136 761 268 282 574 219 979 262 53 317 1 032 579 Property expenses (45 632) (88 875) (199 914) (334 421) (30 792) (365 213) Profit from property and other operations 91 129 179 407 374 305 644 841 22 525 667 366 Group statement of financial position at 31 March 2012 Assets Investment properties 1 016 662 1 585 937 3 189 276 5 791 875 5 791 875 Add: Lease commissions 14 283 14 283 5 806 158 5 806 158 Goodwill 3 917 931 60 696 65 544 65 544 Intangible asset 267 096 267 096 Investment properties held for sale 16 500 200 437 104 258 321 195 321 195 1 037 079 1 787 305 3 354 230 6 192 897 267 096 6 459 993 Add: Excluded items Deferred capital expenditure 4 411 Furniture, fittings and other equipment 1 985 Available-for-sale financial asset 28 468 Financial asset at amortised cost 2 967 Trade and other receivables 50 934 Cash and cash equivalents 215 947 Total assets 6 764 705 Liabilities Linked debentures and premium 357 152 617 527 1 138 534 2 113 213 2 113 213 Interest bearing borrowings 283 838 490 767 904 825 1 679 430 1 679 430 640 990 1 1 08 294 2 043 359 3 792 643 3 792 643 Add: Excluded items Equity 2 074 470 Derivative financial instruments 25 644 Deferred taxation liabilities 434 503 Trade and other payables 188 692 Current taxation liabilities 1 267 Linked unitholders for distribution 247 486 Total equity and liabilities 6 764 705

INTEGRATED annual report 2013 131 NOTICE OF ANNUAL GENERAL MEETING

otice is hereby given that the ninth annual general meeting • a debenture holder who is entitled to attend the AGM is (AGM) of the shareholders and debenture holders of Vukile entitled to appoint a proxy or two or more proxies to attend NProperty Fund Limited (‘Vukile’ or ‘the company’) will be and participate (but not vote) in the meeting in the place of the held in the Main Boardroom, One-on-Ninth, Corner Glenhove debenture holder; and Road and Ninth Street, Melrose Estate, 2196 at 09:00 on Friday • a proxy need not be a shareholder of the company. 30 August 2013 for the purposes of: A summarised form of the annual financial statements is set out • considering and adopting the directors’ report, the annual on pages 126 to 131. The complete annual financial statements financial statements and the audit and risk committee report are set out on pages 64 to 121 of the integrated annual report. of the company for the year ended 31 March 2013 contained in the integrated annual report to which this notice of AGM 1 SPECIAL RESOLUTION NO 1 is attached; NON-EXECUTIVE DIRECTOR • transacting any other business as may be transacted at an REMUNERATION AGM of shareholders of a company; and “Resolved that • considering and, if deemed fit, adopting with or without 1.1 the company be and is authorised to pay remuneration modification, the shareholder special and ordinary resolutions to its directors for their services as directors with effect of set out below, 1 April 2013 on the following basis: which AGM is to be: Retainers • participated in and voted at by shareholders as at the record 1.1.1   Non-executive date of Friday 23 August 2013; and director R122 500 per annum • participated in by debenture holders as at the record date of 1.1.2  Chairman of the board (all-inclusive Friday 23 August 2013, in terms of Section 62 (3)(a), read with fee) R564 000 per annum Section 59, of the Companies Act, 71 of 2008, as amended 1.1.3 Chairman of the (the ‘Companies Act’ or ‘Act’). audit and risk committee R138 500 per annum Important dates to note 1.1.4  Chairman of the social, ethics and • Record date to receive this notice: Friday 21 June 2013. human resources • Last day to trade in order to be eligible to participate in and committee R83 000 per annum vote at the AGM: Friday 16 August 2013. 1.1.5   Chairman of the property • Record date to participate in and vote at the AGM (voting and investment record date): Friday 23 August 2013. committee R83 000 per annum • Due to the expanded meaning of ‘shareholder’ in Section Attendance fees 57 (1) of the Companies Act, the company has expanded its 1.1.6   Boar d (excluding the R17 600 per notice to shareholders and debenture holders for a ‘combined’ chairman) meeting attended AGM. Due to Vukile’s linked unit structure, its shareholders 1.1.7   Audit and risk R21 300 per are also its debenture holders and the matters to be voted committee meeting attended 1.1.8   Social, ethics and on at the AGM are matters on which shareholders, and not human resources R17 600 per debenture holders, are entitled to vote. As a result, a proxy committee meeting attended form has only been included for shareholders. 1.1.9   Pr operty and R17 600 per investment committee meeting attended.” SECTION 63 (1) OF THE COMPANIES In order for this special resolution no 1 to be adopted, ACT: IDENTIFICATION OF MEETING the support of at least 75% of the total number of votes PARTICIPANTS which the shareholders present or represented by proxy Kindly note that meeting participants (including proxies) are at this meeting are entitled to cast, is required. required to provide reasonably satisfactory identification before REASON FOR AND EFFECT OF being entitled to attend or participate in a meeting. In this regard, SPECIAL RESOLUTION NO 1 all Vukile shareholders and debenture holders recorded in the Vukile remains committed to high standards of governance registers of the company on the record date for participating in and as such believe that through offering fair remuneration and voting at the AGM will be required to provide identification to non-executives allows the company to attract and satisfactory to the chairman of the AGM. Forms of identification retain quality board members. A general increase in non- include valid identity documents, driver’s licences and passports. executive directors’ remuneration for the year equal to 6.5% was approved by the board and is recommended SECTION 62 (3)(e) OF THE to linked unitholders. In addition to this increased retainers COMPANIES ACT for the chairmen of both the property and investment In terms of Section 62 (3)(e) of the Companies Act: committee and the social, ethics and human resources • a shareholder who is entitled to attend and vote at the AGM is committee were reviewed in line with market benchmarks. entitled to appoint a proxy or two or more proxies to attend, Given Vukile’s growth strategy and the resulting high participate in and vote at the meeting in the place of the number of corporate actions, the board is required to meet shareholder; for ad-hoc meetings much more regularly than in the past.

132 INTEGRATED annual report 2013 To this extent, six special board meetings were held during Requirements) unless a repurchase programme is in the year ended 31 March 2013. Going forward special place (where the dates and quantities of linked units to meetings will be remunerated at 50% of the normal board be repurchased during the prohibited period are fixed) and/or committee attendance fee after consultation with and full details thereof announced on SENS prior to the chairman of the board or committee regarding the commencement of the prohibited period.” specific circumstance of the meeting. In order for this special resolution no 2 to be adopted, the Since the chairman of the board is not paid meeting support of at least 75% of the total number of votes which the attendance fees the increase in his all-inclusive fee shareholders present or represented by proxy at this meeting incorporates a component to compensate him for his are entitled to cast, is required. attendance of the increased number of ad-hoc meetings REASON FOR AND THE EFFECT OF now being held each year. SPECIAL RESOLUTION NO 2 In accordance with the Listings Requirements, the directors 2 sPECIAL RESOLUTION NO 2 record that although there is no immediate intention to effect REPURCHASE OF LINKED UNITS a repurchase of the linked units of the company, the directors “Resolved that the company or any of its subsidiaries be and will utilise this general authority to repurchase linked units as are hereby authorised by way of a general authority to acquire and when suitable opportunities present themselves, which ordinary shares and debentures issued as linked units by the opportunities may require expeditious and immediate action. company, in terms of Sections 46 and 48 of the Companies The directors undertake that, having considered the effects of Act, and in terms of the Listings Requirements (the Listings a repurchase of the maximum number of linked units allowed Requirements) of the JSE Limited (the JSE) being that: for under this general authority and the price at which the  • any such acquisition of linked units shall be implemented repurchases may take place pursuant to the repurchase through the order book of the JSE and without any prior general authority, for a period of 12 (twelve) months after the arrangement; date of the notice of AGM: • this general authority shall be valid until the company’s  • the company and the group will be able, in the ordinary next AGM, provided that it shall not extend beyond course of business, to pay its debts; 15 months from the date of passing this special resolution; • the consolidated assets of the company and the group, • an announcement will be published as soon as the fairly valued in accordance with International Financial company or any of its subsidiaries have acquired linked Reporting standards, will exceed the consolidated units constituting, on a cumulative basis, 3% of the liabilities of the company and the group; and number of linked units in issue prior to the acquisition • the company and the group’s ordinary share capital, pursuant to which the aforesaid 3% threshold is reached, reserves and working capital will be adequate for ordinary and for each 3% in aggregate acquired thereafter, business purposes. containing full details of such acquisitions; The following additional information, some of which may • acquisitions of linked units in aggregate in any one appear elsewhere in the integrated annual report of which financial year may not exceed 20% (or 10% where this notice forms part, is provided in terms of the Listings the acquisitions are effected by a subsidiary) of the Requirements for purposes of the general authority: company’s issued ordinary share capital as at the date of • directors and management – pages 20 to 23 passing of this special resolution; • major beneficial unitholders – page 124 • in determining the price at which linked units issued by • directors’ interests in linked units – page 66 the company are acquired by it or any of its subsidiaries • share capital of the company – page 93. in terms of this general authority, the maximum premium Litigation statement at which such linked units may be acquired will be 10% of In terms of Section 11.26 of the Listings Requirements, the the weighted average of the market value at which such directors, whose names appear on pages 20 and 21 of this linked units are traded on the JSE over the five business integrated annual report of which this notice forms part, are days immediately preceding the date of repurchase of not aware of any legal or arbitration proceedings that are such linked units; pending or threatened, that may have or have had in the • the company (or a subsidiary) is duly authorised by its recent past, being at least the previous 12 (twelve) months, a Memorandum of Incorporation (MOI) to acquire linked material effect on the company’s or group’s financial position. units issued by it; Directors’ responsibility statement  • at any point in time, the company may only appoint one The directors, whose names appear on pages 20 and 21 of agent to effect any repurchase on the company’s behalf; this integrated annual report of which this notice forms part, • the board of directors of the company must resolve collectively and individually accept full responsibility for the that the repurchase is authorised, the company and its accuracy of the information pertaining to this special resolution subsidiaries have passed the solvency and liquidity test, and certify that, to the best of their knowledge and belief, as set out in Section 4 of the Companies Act, and since there are no facts that have been omitted which would make the test was performed, there have been no material any statement false or misleading, and that all reasonable changes to the financial position of the group; and enquiries to ascertain such facts have been made and that  • repurchases may not take place during a prohibited the special resolution contains all information required by the period (as defined in paragraph 3.67 of the Listings Companies Act and the Listings Requirements.

INTEGRATED annual report 2013 133 NOTICE OF ANNUAL GENERAL MEETING continued

Material changes committee, nomination committee and the investment Other than the facts and developments reported on in this committee since his appointment in 2006. integrated annual report of which this notice forms part,  “Resolved that there have been no material changes in the affairs or financial 3.1 the following retiring directors, who are to retire in terms position of the company and its subsidiaries since the date of of articles 16.2.5 and 16.3.2 of the company’s MOI, but signature of the audit report and up to the date of this notice. being eligible, offer themselves for re-election, be and are To permit the company or any of its subsidiaries, by way of a hereby re-elected each on a separate (and not collective) general approval, to acquire ordinary shares and debentures basis: issued as linked units by the company as and when suitable 3.1.1 Mr MJ Potts, who is to retire by rotation; opportunities to do so arise. 3.1.2 Mr HM Serebro, who is to retire by rotation; and 3.1.3 Ms SEN Sebotsa, who is to retire pursuant to her 3 ordinary RESOLUTION NO 1 appointment during the year.” ADOPTION OF ANNUAL FINANCIAL Brief CVs of all the directors appear on pages 20 and 21 of this STATEMENTS integrated annual report of which this notice forms part. “Resolved that the annual financial statements for the year In order for ordinary resolutions no 3.1.1, 3.1.2 and 3.1.3 ended 31 March 2013, including the reports of the directors to be adopted, the support of a majority of votes cast by shareholders present or represented by proxy at this meeting and the audit and risk committee be and are hereby received is required. and adopted.” In order for ordinary resolution no 1 to be adopted, the 6 ordinary RESOLUTION NO 4 support of a majority of votes cast by shareholders present or ELECTION OF MEMBERS TO AUDIT AND represented by proxy at this meeting is required. RISK COMMITTEE 4 ordinary RESOLUTION NO 2 “Resolved that the following directors, who meet the requirements of Section 94 (4) of the Companies Act, be and RE-APPOINTMENT OF AUDITORS are hereby elected on a separate (and not collective) basis as “Resolved to re-appoint Grant Thornton (with the designated members of the audit and risk committee in terms of section registered auditor being C Pretorius) as auditors of the 94 (2) of the Companies Act until the next AGM: company from the conclusion of this AGM.” 4.1 Mr SF Booysen The audit and risk committee have evaluated the performance 4.2 Mr PS Moyanga and independence of Grant Thornton and C Pretorius and 4.3 Mr NG Payne.” recommend their re-appointment as auditors of the company Brief CVs of all the proposed members of the audit and risk under Section 90 of the Companies Act. committee appear on pages 20 and 21 of this integrated In order for this ordinary resolution no 2 to be adopted, the annual report of which this notice forms part. support of a majority of votes cast by shareholders present or In order for this ordinary resolution no 4 to be adopted, the represented by proxy at this meeting is required. support of a majority of votes cast by shareholders present or 5 ordinary RESOLUTION NO 3 represented by proxy at this meeting is required. RE-ELECTION OF DIRECTORS 7 ordinary RESOLUTION NO 5 Directors UNISSUED LINKED UNITS The following directors retire in terms of article 16 of the “Resolved that the authorised but unissued linked units of company’s MOI, namely: the company be and are hereby placed under the control of • Mr PJ Cook the directors of the company until the next AGM, who are • Mr JM Hlongwane authorised to allot or issue any such shares at their discretion, • Mr MJ Potts subject at all times to the provisions of the Companies Act, • Mr HM Serebro the company’s MOI and the Listings Requirements provided • Ms SEN Sebotsa.  Availability of directors for re-election that each ordinary share of R0.01 each be issued together Mr PJ Cook with an unsecured variable-rate subordinated debenture of Mr Cook has indicated that he wishes to retire from the board 490 cents each as a linked unit and provided further that the and has therefore not made himself available for re-election. number of shares issued at any time may not exceed: Mr Cook has served on the board and as chairman of the  • 10% of the total number of shares in issue at the date of social, ethics and human resources committee since the listing the integrated annual report, being 451 553 040 shares; of the company on the JSE in 2004. plus Mr JM Hlongwane  • that number of shares required to be issued under the Mr Hlongwane has also indicated that he wishes to retire company’s distribution reinvestment scheme.” from the board and has therefore not made himself available In order for this ordinary resolution no 5 to be adopted, the for re-election. Mr Hlongwane has served on the board support of a majority of votes cast by shareholders present or and as member of the social, ethics and human resources represented by proxy at this meeting is required.

134 INTEGRATED annual report 2013 8 ordinary RESOLUTION NO 6  • the maximum discount at which linked units may be GENERAL AUTHORITY TO ISSUE issued is 5% of the weighted average traded of such LINKED UNITS FOR CASH linked units measured over the 30 business days prior to “Resolved that subject to the restrictions set out below, the date that the price of the issue is agreed between the and subject to the provisions of the Companies Act and the company and the party subscribing for the linked units; Listings Requirements, the directors be and they are hereby and authorised by way of a general authority, to allot and issue  • after the company has issued linked units in terms of this ordinary shares of R0.01 each (ordinary shares) together general authority to issue linked units for cash representing with unsecured variable-rate subordinated debentures of on a cumulative basis within a financial year, 5% or more 490 cents each (debentures) for cash on the following basis: of the number of linked units in issue prior to that issue, • that each ordinary share be linked to a debenture to form the company shall publish an announcement containing full a linked unit (the linked units); details of that issue, including: this authority shall not extend beyond 15 (fifteen) months •  (i) the number of linked units issued; from the date of this AGM; (ii) the average discount to the weighted average traded  • the linked units which are the subject of the issue for cash must be of a class already in issue or, where this is not price of the linked units over the 30 business days the case, must be limited to such shares or rights as are prior to the date that the issue is agreed in writing convertible into a class already in issue; between the company and the party/ies subscribing • the allotment and issue of linked units for cash shall be for the linked units; and made only to persons qualifying as ‘public shareholders’, (iii) the effects of the issue on the net asset value per as defined in the Listings Requirements, and not to linked unit, net tangible asset value per linked unit, ‘related parties’; earnings per linked unit, headline earnings per linked  • linked units which are the subject of general issues for cash: unit, and if applicable diluted earnings and diluted (i) may not exceed 5% of the total number of linked headline earnings per linked unit. units in issue determined immediately prior to the This authority shall be restricted to the issue of linked units issue as and when suitable situations arise; to finance the acquisition or development of property assets (ii) in aggregate in any one financial year may not (in direct or indirect form) or at any time to settle debt in exceed 10% of the company’s linked units in issue respect of any of the company’s property assets, and further, of that class (for purposes of determining the linked units comprising the 10% number in any one year, provided that any such issues for cash may be made prior account must be taken of the dilution effect, in the to the registration of transfer of any property assets to be year of issue of options or convertible securities, by acquired or developed.” including the number of any linked units which may In terms of the Listings Requirements in order for this ordinary be issued in future arising out of the issue of such resolution no 6 to be adopted, at least 75% of the votes options/convertible securities); held by shareholders present or represented by proxy at the (iii) of a particular class will be aggregated with any meeting need to be cast in favour of this resolution in order to securities that are compulsorily convertible into give effect hereto. securities of that class and, in the case of the issue of compulsorily convertible securities, aggregated 9 ordinary RESOLUTION NO 7 with the securities of that class into which they are REMUNERATION POLICY compulsorily convertable; and “Resolved that, through a non-binding advisory vote, the (iv) as regards the number of linked units which may be issued in aggregate (the 10% number), same shall company’s remuneration policy and its implementation, as be based on the number of linked units of that class set out on pages 29 to 31 of this integrated annual report be in issue added to those that may be issued in future and is hereby approved.” (arising from the conversion of options/convertible In order for this ordinary resolution no 7 to be adopted, the securities), at the date of such application: support of a majority of votes cast by shareholders present or (a) less any linked units of the class issued, or to be represented by proxy at this meeting is required. issued in future arising from options/convertible securities issued, during the current financial year 10 ORDINARY RESOLUTION NO 8 (which commenced 1 April 2013); and IMPLEMENTATION OF RESOLUTIONS (b) plus any linked units of that class to be issued “Resolved that any director of the company, and where pursuant to: applicable the secretary of the company, be and is hereby (aa) a rights issue which has been announced, is authorised to do all such things, sign all such documents and irrevocable and is fully underwritten; or (bb) an acquisition (in respect of which final terms take all actions as may be necessary to implement the above have been announced) which acquisition ordinary and special resolutions.” issue securities may be included as though In order for this ordinary resolution no 8 to be adopted, the they were securities in issue at the date of support of a majority of votes cast by shareholders present or application; represented by proxy at this meeting is required.

INTEGRATED annual report 2013 135 NOTICE OF ANNUAL GENERAL MEETING continued

GENERAL INSTRUCTIONS FOR representative to so attend and participate at the AGM on its behalf SHAREHOLDERS is passed by its directors. Resolutions authorising representatives Shareholders are encouraged to attend, speak and vote at the AGM. in terms of section 57 (5) of the Companies Act must be lodged ELECTRONIC PARTICIPATION with the company’s transfer secretaries prior to the AGM. The company has made provision for Vukile shareholders or their proxies to participate electronically in the AGM by way of GENERAL INSTRUCTIONS FOR telephone conferencing. Should you wish to participate in the DEBENTURE HOLDERS AGM by telephone conference call as aforesaid, you, or your Debenture holders are encouraged to attend and speak at the AGM. proxy, will be required to advise the company thereof by no later ELECTRONIC PARTICIPATION than 09:00 on Friday 23 August 2013 by submitting by e-mail to The company has made provision for its debenture holders or their the company secretary at [email protected] or by proxies to participate electronically in the AGM by way of telephone fax to be faxed to +27 (0) 86 667 6569, for the attention of Johann conferencing. Should you wish to participate in the AGM by Neethling, relevant contact details, including an e-mail address, telephone conference call as aforesaid, you, or your proxy, will be cellular number and landline as well as full details of the Vukile required to advise the company thereof by no later than 09:00 on shareholder’s title to securities issued by the company and proof Friday 23 August 2013 by submitting by e-mail to the company of identity, in the form of copies of identity documents and share secretary at [email protected] or by fax to be faxed to certificates (in the case of materialised Vukile shares) and (in the +27 (0) 86 667 6569, for the attention of Johann Neethling, relevant case of dematerialised Vukile shares) written confirmation from contact details, including an e-mail address, cellular number and the Vukile shareholder’s CSDP confirming the Vukile shareholder’s landline as well as full details of the debenture holder’s title to title to the dematerialised Vukile shares. Upon receipt of the securities issued by the company and proof of identity, in the form required information, the Vukile shareholder concerned will be of copies of identity documents and debenture certificates (in the provided with a secure code and instructions to access the case of materialised debentures) and (in the case of dematerialised electronic communication during the AGM. Vukile shareholders debentures) written confirmation from the debenture holder’s must note that access to the electronic communication will be CSDP confirming the debenture holder’s title to the dematerialised at the expense of the Vukile shareholders who wish to utilise the debentures. Upon receipt of the required information, the facility. Vukile shareholders and their appointed proxies attending debenture holder concerned will be provided with a secure code by conference call will not be able to cast their votes at the AGM and instructions to access the electronic communication during the through this medium. AGM. Debenture holders must note that access to the electronic PROXIES AND AUTHORITY FOR communication will be at the expense of the debenture holder who REPRESENTATIVES TO ACT wishes to utilise the facility. A form of proxy is attached for the convenience of any Vukile PROXIES AND AUTHORITY FOR shareholder holding certificated shares, who cannot attend the REPRESENTATIVES TO ACT AGM but wishes to be represented thereat. Due to Vukile’s linked unit structure, its shareholders are also its The attached form of proxy is only to be completed by those debenture holders and the matters to be voted on at the AGM shareholders who are: are matters on which shareholders and not debenture holders • holding shares in certificated form; or are entitled to vote. As a result, a proxy form has only been • recorded on the company’s sub-register in dematerialised included for shareholders. Debenture holders wishing to appoint electronic form with ‘own name’ registration. a proxy or two or more proxies to attend and participate (but All other beneficial owners who have dematerialised their shares not vote) in the AGM, may contact the company secretary on through a Central Securities Depository Participant (CSDP) or broker and wish to attend the AGM, must instruct their CSDP or [email protected] or by fax on +27 (0) 86 667 6569, broker to provide them with the necessary letter of representation, to obtain such form of proxy. or they must provide the CSDP or broker with their voting By order of the board instructions in terms of the relevant custody agreement entered Vukile Property Fund Limited into between them and the CSDP or broker. These shareholders Johann Neethling must not use a form of proxy. Forms of proxy must be deposited Company secretary at the Transfer Secretaries, Link Market Services South Africa (Pty) Registered Office Ltd at 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein One-on-Ninth 2001 (PO Box 4844, Johannesburg, 2000) to be received no later Cnr Glenhove Road and Ninth Street than 09:00 on Wednesday 28 August 2013. Any shareholder Melrose Estate, 2196 who completes and lodges a form of proxy will nevertheless be Transfer secretaries entitled to attend, speak and vote in person at the AGM should the Link Market Services South Africa (Pty) Ltd, shareholder decide to do so. 13th Floor Rennie House A company that is a shareholder, wishing to attend and participate 19 Ameshoff Street at the AGM should ensure that a resolution authorising a Braamfontein, 2001

136 INTEGRATED annual report 2013 FORM OF PROXY ANNUAL GENERAL MEETING

VUKILE PROPERTY FUND LIMITED (Incorporated in the Republic of South Africa) (Registration Number 2002/027194/06) ISIN: ZAE000056370 • JSE Code: VKE • NSX Code: VKN Granted REIT status with the JSE (‘Vukile’ or ‘the company’)

This form of proxy is for use by: • registered shareholders who have not yet dematerialised their Vukile linked units; and • registered shareholders who have already dematerialised their Vukile linked units and which units are registered in their own names in the company’s sub-register. For completion by the aforesaid registered shareholders of Vukile who are unable to attend the annual general meeting (AGM) of the company to be held in the Main Boardroom, One-on-Ninth, Corner Glenhove Road and Ninth Street, Melrose Estate, 2196, at 09:00 on Friday 30 August 2013. I/we (BLOCK LETTERS PLEASE) ______of (address) ______being the registered holder of ______Vukile shares hereby appoint: 1 ______of ______or failing him/her 2 ______of ______or failing him/her the chairman of the AGM as my/our proxy to vote for me/us on my/our behalf at the AGM of the company and at any adjournment or postponement thereof, for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed at the AGM, and to vote on the resolutions in respect of the ordinary shares registered in my/our name(s), in the following manner: Please indicate with an ‘X’ in the appropriate spaces below how you wish your votes to be cast. Unless this is done the proxy will vote as he/she thinks fit. FOR* AGAINST* ABSTAIN* Special resolution 1 1.1 Approve the following non-executive directors’ remuneration 1.1.1 Non-executive directors’ retainer 1.1.2 Chairman’s retainer – board 1.1.3 Chairman’s retainer – audit and risk committee 1.1.4 Chairman’s retainer – social, ethics and human resources committee 1.1.5 Chairman’s retainer– property and investment committee 1.1.6 Meeting fees – board 1.1.7 Meeting fees – audit and risk committee 1.1.8 Meeting fees – social, ethics and human resources committee 1.1.9 Meeting fees – property and investment committee Special resolution 2 Repurchase of linked units Ordinary resolution 1 Adoption of annual financial statements Ordinary resolution 2 Re-appointment of auditors Ordinary resolution 3 3.1 Re-election of directors: 3.1.1 Mr MJ Potts 3.1.2 Mr HM Serebro 3.1.3 Ms SEN Sebotsa Ordinary resolution 4 Election of the following member to the audit and risk committee 4.1 Mr SF Booysen 4.2 Mr PS Moyanga 4.3 Mr NG Payne Ordinary resolution 5 Unissued linked units Ordinary resolution 6 General authority to issue linked units for cash Ordinary resolution 7 Remuneration policy Ordinary resolution 8 Implementation of resolutions * One vote per share held by Vukile shareholders recorded in the register on the voting record date; mark ‘for’, ‘against’ or ‘abstain’ as required. If no options are marked the proxy will be entitled to vote as he/she thinks fit. Unless otherwise instructed, my/our proxy may vote or abstain from voting as he/she thinks fit.

Signed at ______this ______day of ______2013

Signature ______assisted by (if applicable) ______

A shareholder entitled to attend and vote at the AGM is entitled to appoint a proxy to attend, vote and speak in his/her stead. A proxy need not be a shareholder of the company. Each shareholder is entitled to appoint one or more proxies to attend, speak and on a poll, vote in place of that shareholder at the AGM. Forms of proxy must be deposited at Link Market Services South Africa (Pty) Ltd (PO Box 4844, Johannesburg, 2000) to be received no later than 09:00 on Wednesday 28 August 2013. Please read the notes on the reverse side hereof.

INTEGRATED annual report 2013 137 NOTES TO FORM OF PROXY ANNUAL GENERAL MEETING

VUKILE PROPERTY FUND LIMITED (Incorporated in the Republic of South Africa) (Registration Number 2002/027194/06) ISIN: ZAE000056370 • JSE Code: VKE • NSX Code: VKN Granted REIT status with the JSE (‘Vukile’ or ‘the company’)

1. Only shareholders who are registered in the register of the company 11.3 the proxy appointment remains valid only until the end of the under their own name on the date on which shareholders must relevant meeting at which it was intended to be used, unless be recorded as such in the register maintained by the transfer revoked as contemplated in section 58 (5) of the Companies Act. secretaries, Link Market Services South Africa (Pty) Ltd, being 23 12. Any alteration or correction made to this form of proxy must be August 2013 (voting record date) may complete a form of proxy or initialled by the signatory/ies. A deletion of any printed matter and the attend the annual general meeting (AGM). This includes shareholders who have not dematerialised their shares or who have dematerialised completion of any blank space(s) need not be signed or initialled. their shares with ‘own-name’ registration. The person whose name 13. Documentary evidence establishing the authority of a person signing stands first on the form of proxy and who is present at the AGM will this form of proxy in a representative capacity must be attached to be entitled to act as proxy to the exclusion of those whose names this form unless previously recorded by the transfer secretaries of the follow. A proxy need not be a shareholder of the company. company or waived by the chairman of the AGM. 2. Certificated shareholders wishing to attend the AGM have to ensure 14. A minor must be assisted by his/her parent/guardian unless the beforehand with the transfer secretaries of the company (being Link relevant documents establishing his/her legal capacity are produced Market Services South Africa (Pty) Ltd) that their shares are registered in their own name. or have been registered by the transfer secretaries. 3. Beneficialshareholders whose shares are not registered in their 15. A company holding shares in the company that wishes to attend and ‘own name’, but in the name of another, for example, a nominee, participate at the AGM should ensure that a resolution authorising a may not complete a proxy form, unless a form of proxy is issued representative to act is passed by its directors. Resolutions authorising to them by a registered shareholder and they should contact the representatives in terms of section 57 (5) of the Companies Act must registered shareholder for assistance in issuing instruction on voting be lodged with the company’s transfer secretaries prior to the AGM. their shares, or obtaining a proxy to attend, speak and, on a poll, vote 16. Where there are joint holders of shares any one of such persons may at the AGM. 4. Dematerialised shareholders who have not elected ‘own name’ vote at any meeting in respect of such shares as if he were solely registration in the register of the company through a Central Securities entitled thereto; but if more than one of such joint holders be present Depository Participant (CSDP) and who wish to attend the AGM, or represented at the meeting, that one of the said persons whose must instruct the CSDP or broker to provide them with the necessary name appears first in the register of shareholders of such shares or authority to attend. his proxy, as the case may be shall alone be, shall be entitled to vote 5. Dematerialised shareholders who have not elected ‘own name’ in respect thereof. registration in the register of the company through a CSDP and who 17. On a show of hands, every shareholder of the company present in are unable to attend, but wish to vote at the AGM, must timeously provide their CSDP or broker with their voting instructions in terms person or represented by proxy shall have one vote only. On a poll a of the custody agreement entered into between that shareholder and shareholder who is present in person or represented by a proxy shall the CSDP or broker. be entitled to that proportion of the total votes in the company which 6. A shareholder may insert the name of a proxy or the names of two or the aggregate amount of the nominal value of the shares held by him more alternative proxies of the shareholder’s choice in the space, with bears to the aggregate amount of the nominal value of all the shares or without deleting ‘the chairman of the AGM’. The person whose of the relevant class issued by the company. name stands first on the form of proxy and who is present at the AGM 18. The chairman of the AGM may reject or accept any proxy which will be entitled to act as proxy to the exclusion of those whose names follow. is completed and/or received other than in accordance with the 7. The completion and lodging of this form will not preclude the relevant instructions, provided that he shall not accept a proxy unless he is shareholder from attending the AGM and speaking and voting satisfied as to the matter in which a shareholder wishes to vote. in person thereat to the exclusion of any proxy appointed, should 19. A proxy may not delegate his/her authority to act on behalf of the such shareholder wish to do so. In addition to the aforegoing, a shareholder to another person. shareholder may revoke the proxy appointment by (i) cancelling it in 20. A shareholder’s instruction to the proxy must be indicated by the writing, or making a later inconsistent appointment of a proxy; and (ii) insertion of the relevant number of shares to be voted on behalf of delivering a copy of the revocation instrument to the proxy, and to the that shareholder in the appropriate space provided. Failure to comply company. 8. The revocation of a proxy appointment constitutes a complete and with the above will be deemed to authorise the chairperson of the final cancellation of the proxy’s authority to act on behalf of the AGM, if the chairperson is the authorised proxy, to vote in favour relevant shareholder as of the later of the date: of the resolutions at the AGM or other proxy to vote or to abstain 8.1 stated in the revocation instrument, if any; or from voting at the AGM as he/she deems fit, in respect of the shares 8.2 upon which the revocation instrument is delivered to the proxy concerned. A shareholder or the proxy is not obliged to use all the and the relevant company as required in section 58 (4)(c)(ii) of the votes exercisable by the shareholder or the proxy, but the total of Companies Act, 71 of 2008, as amended (the Companies Act). votes cast in respect whereof abstention is recorded may not exceed 9. Should the instrument appointing a proxy or proxies have been delivered to the company, as long as that appointment remains the total of the votes exercisable by the shareholder or the proxy. in effect, any notice that is required by the Companies Act or the 21. It is requested that this form of proxy be lodged or posted or faxed to company’s Memorandum of Incorporation (MOI) to be delivered the Transfer Secretaries, Link Market Services South Africa (Pty) Ltd by the company to the shareholder must be delivered by the at 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001 company to; (PO Box 4844, Johannesburg, 2000) to be received by the company 9.1 the shareholder; or no later than 09:00 on Wednesday 28 August 2013. 9.2 the proxy or proxies if the shareholder has in writing directed 22. A quorum for the purposes of considering the ordinary and special the relevant company to do so and has paid any reasonable fee charged by the company for doing so. resolutions shall comprise 25% of all the voting rights that are entitled 10. A proxy is entitled to exercise, or abstain from exercising, any voting to be exercised by shareholders in respect of each matter to be right of the relevant shareholder without direction, except to the decided at the AGM. In addition, a quorum shall consist of three extent that the MOI of the company or the instrument appointing the shareholders of the company personally present or represented proxy provide otherwise. by proxy (and if the shareholder is a body corporate, it must be 11. If the company issues an invitation to shareholders to appoint one or represented) and entitled to vote at the AGM. more persons named by the company as a proxy, or supplies a form 23. This form of proxy may be used at any adjournment or postponement of instrument for appointing a proxy: 11.1 such invitation must be sent to every shareholder who is entitled of the AGM, including any postponement due to a lack of quorum, to receive notice of the meeting at which the proxy is intended unless withdrawn by the shareholder. to be exercised; 24. The aforegoing notes contain a summary of the relevant provisions 11.2 the company must not require that the proxy appointment be of Section 58 of the Companies Act, as required in terms of made irrevocable; and that Section.

138 INTEGRATED annual report 2013 CORPORATE INFORMATION

DIRECTORS LISTING INFORMATION Vukile was listed on the JSE Limited on 24 June 2004 and on the Anton Dirk Botha(e,h) (Chairman) Namibian Stock Exchange on 11 July 2007. Laurence Gary Rapp(a,g) (Chief executive) JSE Code VKE Michael John Potts(a) (Financial director) NSX Code VKN Hermina Christina Lopion(a,g) (Executive director: asset management) ISIN ZAE000056370 Stefanes Francois Booysen(c,e,i) SECTOR Financial - Retail REITs Peter John Cook(c,d,i) Jonathan Mlungisi Hlongwane(e,g,i) TRANSFER SECRETARIES Peter Sipho Moyanga(c,g) Nigel George Payne(b,g) LINK MARKET SERVICES SOUTH AFRICA Sonja Emilia Ncumisa Sebotsa (PTY) LTD (f) Hymie Mervyn Serebro 13th Floor PO Box 4844 (a) Executive Rennie House Johannesburg (b) Chairman of audit and risk committee 19 Ameshoff Street (c) Member of audit and risk committee 2000 (d) Chairman of social, ethics and human resources committee Braamfontein (e) Member of social, ethics and human resources committee 2001 (f) Chairman of property and investment committee (g) Member of property and investment committee (h) Chairman of nominations committee (i) Member of nominations committee AUDITORS GRANT THORNTON company SECRETARY AND 137 Daisy Street Private Bag X28 REGISTERED OFFICE Corner Grayston Drive Benmore Sandown 2010 JOHANN NEETHLING 2196 One-on-Ninth PO Box 2234 Corner Glenhove Road and Ninth Street Parklands PRINCIPAL BANKERS Melrose Estate 2121 2196 ABSA BANK LIMITED 3rd Floor Absa Towers East PO Box 7335 SPONSORS 160 Main Street Johannesburg Johannesburg 2000 SOUTH AFRICA 2001 Java Capital 2 Arnold Road PO Box 2087 INVESTOR AND MEDIA RELATIONS Rosebank Parklands 2196 2121 DU PLESSIS ASSOCIATES Central House PO Box 87386 namibia 40 Central Street Houghton IJG Group Houghton 2041 2198 First Floor PO Box 186 +27 (0)11 728 4701 Heritage Sqaure Windhoek Tel 100 Robert Mugabe Avenue Fax +27 (0)11 728 2547 Windhoek Email [email protected]

Our website is regularly updated to provide the latest information on the company.

Designed and produced by du Plessis Associates www.vukile.co.za One-on-Ninth, Cnr Glenhove Road and Ninth Street, Melrose Estate, 2196 PO Box 2234, Parklands, 2121, Gauteng, South Africa Tel: (+27) 11 288 1000 • Fax: (+27) 11 288 1001 • [email protected] • www.vukile.co.za vukile property fund limited - INTEGRATED ANNUAL REPORT 2013 - the journey of growth