2013 Annual Report

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2013 Annual Report 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.
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