2015 eport - Vukile · 2017. 6. 15. · R10.9 billion R8.2 billion Market capitalisation March 2014 R10.9 billion Portfolio value and listed property holdings November 2014 gggFirm

Integrated annual report

2015

Administration and contact details can be found on

page 173For more information please visit our website:

www.vukile.co.za

Corporate profileVukile 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 R11.0 billion at 31 March 2015 and its property portfolio was valued at R13.3 billion at year-end. There were 572 747 744 shares in issue at year-end. On 1 April 2013, Vukile became the first property company to be awarded Real Estate Investment Trust (REIT) status by the JSE Limited.

Integrated reporting and scope The group takes pleasure in presenting its 11th integrated annual report to stakeholders for the year ended 31 March 2015. 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 2014 to 31 March 2015. In addition, material post-reporting date events and business developments are also covered in this report. Reporting is based on applicable legislation and accounting guidelines, the King III Report on Corporate Governance and JSE Listings Requirements.

The scope and boundaries of the information contained in this report describe the group’s business activities and property portfolios in South Africa and Namibia. Synergy Income Fund Limited, a 64.61% held listed subsidiary, has been included in the scope and boundaries of this report for the first time. This report aims to indicate how Vukile will create and sustain value for stakeholders over the short, medium and long term.

Approval At its meeting held on 21 May 2015 the audit and risk committee reviewed and recommended the integrated annual report and the supplementary documents for approval by the directors. The directors acknowledge that they are responsible for the content of the Vukile integrated annual report and the supplementary documents. The board has applied its mind to this report and believes that, read with the supplementary documents made available online, it addresses all material issues and fairly represents the financial, operational and sustainability performance of the group.

About Vukile

IFC Corporate profile

IFC Integrated reporting and scope

IFC Approval

1 Vision

1 Values

1 Key stakeholders

2 Delivering on our stated strategy

4 Significant achievements

6 Financial highlights

6 Strategic and operational highlights

8 Ten-year review highlights

Governance review

24 Directorate

26 Corporate governance and risk management

30 Social, ethics and human resources committee report

Contents

Business review

14 From the chairman

16 From the chief executive

About VukileVukile Integrated annual report 2015

Sustainability review

36 Economic performance

43 Portfolio review

60 Partnerships

62 Human capital

62 Environment, health and safety

63 Transformation and social responsibility

Annual financial statements

66 Directors’ responsibility statement

66 Company secretary’s certification

67 Independent auditor’s report

68 Directors’ report

72 Report of the audit and risk committee

74 Statements of financial position

76 Income statements

78 Statements of comprehensive income

79 Distribution statements

80 Statements of changes in equity

82 Statements of cash flow

83 Notes to the annual financial statements

Shareholders’ information

152 Shareholders’ analysis

153 Shareholders’ diary

154 Condensed annual financial statements

160 Operating segments analysis

164 Notice of annual general meeting

171 Form of proxy

173 Corporate information

Vukile Integrated annual report 20151

Through our proactive management and the sustainable growth of our diversified portfolio, Vukile aspires to be a leading property company by providing a top-quality experience for our tenants and their customers and in so doing generate superior returns for our stakeholders.

¦ We act with integrity¦ We make a difference as a team¦ We are client focused¦ We are passionate about success¦ We deliver results to shareholders¦ We treasure our partnerships¦ We are responsible corporate citizens¦ We are proactive

Vision Values

Shareholders and debt funders

EmployeesCommunities

in which we operate

Service providers

and clients

Tenants and their

customers

Key stakeholders

About VukileVukile Integrated annual report 2015 2

Delivering on our stated strategy

Critical success factorsVukile 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. Our strategy is underpinned by the achievement of the following critical success factors (CSFs).

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 Critical success factor Critical success factor

Strategic intent Strategic intent Strategic intent

Optimise short-term and long-term returns Grow the portfolio Minimise cost of funding and refinance risk Transformation

Notable achievements Notable achievements Notable achievements Notable achievements

gg Annual growth in distribution of 8.1% continues the unbroken record of growth in distributions since listing in 2004.gg Delivered a compound annual growth rate in total return to shareholders of 23.9% over an 11-year period.gg Return on capital for the year of 15%.

gg Obtaining control of Synergy Income Fund Limited by increasing shareholding to 64.61%.gg Growth in the total portfolio of 29.9% over the past year.gg Growth in the retail portfolio of 55.7% over the past year.

gg Bank funding is diversified across five funding providers.gg Overall average cost of funding for the year equals 8.4%.gg 88% of term debt funding hedged.gg Maintained A-unsecured rating and AA-secured rating for the DMTN programme.

gg Encha’s shareholding in Vukile comprises 8.15%.gg Encha’s effective shareholding under the property sector charter code comprises 27.17%.gg Board representation aligned with property sector charter requirements.gg Achievement of an Empowerdex BEE certification at level 4. 100% Recognition level.

Critical success factor Critical success factor Critical success factor Critical success factor

Strategic intent Strategic intent Strategic intent Strategic intent

Stakeholder engagement Improve customer and tenant focus Invest in our people Operational efficiencies


gg Ongoing interaction and communication with shareholders.gg Strong relationships forged with property managers ensuring their alignment with Vukile’s strategy.gg Further expanding leasing broker network as a result of broker incentive programmes.

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

gg Maintained strong workforce having more than 250 years’ experience in the property industry.gg Stable and consistent workforce with very low staff turnover.gg Enhancing the workforce diversity in respect of age, skill and race by the introduction of new finance, investment, energy management and alternative income skills.

gg Vacancies reduced despite difficult trading environment, especially within the office sector.gg Positive lease reversion across all sectors.gg Ratio of gross recurring cost to revenue further reduced.gg Significant progress made with energy-saving initiatives and the reduction of net utility costs.

01

02 03

P

3 Vukile Integrated annual report 2015

Critical success factor Critical success factor Critical success factor

Strategic intent Strategic intent Strategic intent

Optimise short-term and long-term returns Grow the portfolio Minimise cost of funding and refinance risk Transformation


gg Annual growth in distribution of 8.1% continues the unbroken record of growth in distributions since listing in 2004.gg Delivered a compound annual growth rate in total return to shareholders of 23.9% over an 11-year period.gg Return on capital for the year of 15%.

gg Obtaining control of Synergy Income Fund Limited by increasing shareholding to 64.61%.gg Growth in the total portfolio of 29.9% over the past year.gg Growth in the retail portfolio of 55.7% over the past year.

gg Bank funding is diversified across five funding providers.gg Overall average cost of funding for the year equals 8.4%.gg 88% of term debt funding hedged.gg Maintained A-unsecured rating and AA-secured rating for the DMTN programme.

gg Encha’s shareholding in Vukile comprises 8.15%.gg Encha’s effective shareholding under the property sector charter code comprises 27.17%.gg Board representation aligned with property sector charter requirements.gg Achievement of an Empowerdex BEE certification at level 4. 100% Recognition level.

Critical success factor Critical success factor Critical success factor Critical success factor

Strategic intent Strategic intent Strategic intent Strategic intent

Stakeholder engagement Improve customer and tenant focus Invest in our people Operational efficiencies


gg Ongoing interaction and communication with shareholders.gg Strong relationships forged with property managers ensuring their alignment with Vukile’s strategy.gg Further expanding leasing broker network as a result of broker incentive programmes.

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

gg Maintained strong workforce having more than 250 years’ experience in the property industry.gg Stable and consistent workforce with very low staff turnover.gg Enhancing the workforce diversity in respect of age, skill and race by the introduction of new finance, investment, energy management and alternative income skills.

gg Vacancies reduced despite difficult trading environment, especially within the office sector.gg Positive lease reversion across all sectors.gg Ratio of gross recurring cost to revenue further reduced.gg Significant progress made with energy-saving initiatives and the reduction of net utility costs.

04 05

06 07


Significant achievements

September 2014

gggAchieved a level 4 BEE certification

gggSuccessful R600 million equity raise, including further R250 million placement with BEE partners

R10.9 billion

R8.2 billionMarket

capitalisation

March 2014

R10.9 billionPortfolio value and

listed property holdings

November 2014

gggFirm intention to acquire 100% of Synergy


February 2015

gggComprehensive take-up of the offers resulting in Synergy becoming a listed subsidiary

March 2015

gggSuccessful debt refinancing of R600 million

gggCapital conversion in line with global REIT standards

April 2015

gggAcquisition of 80% of Moruleng Mall for R320 million

gggAcquisition of Batho Plaza and Nonesi Mall for a combined value of R572 million become unconditional pending transfer

May 2015

gggSuccessful R580 million debt capital raise through the DMTN programme, notes upgraded to AA+ by GCR

gggSuccessful R1.1 billion equity raise, including further R250 million placement with BEE partners

gggAcquisition of Synergy’s external manco

March 2015

R13.8 billionPortfolio value and

listed property holdings

May 2015

R11.0 billionMarket

capitalisation

R14.7 billion

R12.1 billionMarket capitalisationh 47.6% increase* R14.7 billionPortfolio value and listed property holdingsh 34.9% increase*

*March 2014 to May 2015.


Financial highlights

Strategic and operational highlights

Earnings per share Headline earnings per share Annual normalised distribution per share Net asset value per share

+21.0% +14.1% +8.1% +14.6%to 278.01 cents to 186.81 cents to 136.77 cents to 1 716 cents

Gross property revenue (R000) Profit available for distribution (R000) Annualised total return to shareholders

+13.6% +11.5% 23.9%to R1 579 099 to R774 216 over 11 years

P Distribution of 77.688 cents per share (+8.4%) for the six months ended 31 March 2015.

P Distribution of 136.77 cents per share (+8.1%) for the 12 months ended 31 March 2015.

P gContinued strong operational performance of the property portfolio:gg Like-for-like growth in net property revenue of 6.8%

gg Vacancies (as a % of GLA) down to 4.6% (March 2014: 6.5%)

gg Positive reversions across all sectors

gg Weighted average base rentals increased by 9.0% (March 2014: 12.5%).


Earnings per share Headline earnings per share Annual normalised distribution per share Net asset value per share

+21.0% +14.1% +8.1% +14.6%to 278.01 cents to 186.81 cents to 136.77 cents to 1 716 cents

Gross property revenue (R000) Profit available for distribution (R000) Annualised total return to shareholders

+13.6% +11.5% 23.9%to R1 579 099 to R774 216 over 11 years

P Successfully implemented offer to acquire control of Synergy Income Fund Limited.

P Loan to value ratio, net of cash, conservative at 26.0% (March 2014: 30.8%) with 88% of term debt hedged, including Synergy debt.

P Achieved level 4 B-BBEE rating.

P Successful equity raise of R600 million in September 2014.

P Successful refinance of R600 million debt facilities in March 2015.


Ten-year review highlights

SUMMARISED INCOME STATEMENTS

GROUP2015R000

2014R000

2013R000

2012R000

2011R000

2010R000

2009R000

2008R000

2007R000

2006R000

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

Net profit from property operations 1 091 042 926 601 718 958 644 841 556 889 482 052 443 888 411 102 379 829 385 658Income from asset management business 24 694 92 654 77 974 53 317 65 146 3 067 – – – –Expenditure from asset management business (34 388) (38 917) (32 022) (30 792) (20 233) – – – – –Corporate administrative expenses (36 992) (34 964) (29 192) (25 919) (25 509) (23 781) (20 137) (20 914) (12 032) (21 598)Investment and other income 76 269 64 279 25 615 13 557 14 380 21 188 8 712 9 262 12 122 4 355

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

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

Profit before capital items 847 127 61 381 12 680 52 147 24 922 17 955 12 350 15 099 27 809 22 805Headline earnings per share (cents) 186.81 163.68 136.16 134.48 124.36 107.89 99.56 91.36 83.19 74.14

SUMMARISED STATEMENTS OF FINANCIAL POSITION

GROUP2015R000

2014R000

2013R000

2012R000

2011R000

2010R000

2009R000

2008R000

2007R000

2006R000

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

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

EQUITY AND LIABILITIES Equity attributable to owners of the parent 9 830 646 3 108 689 2 626 187 2 074 470 1 696 065 1 381 502 1 145 101 1 095 851 836 137 482 739Non-controlling interest 516 317 – – – – – – – – –Non-current liabilities 2 830 180 6 668 564 5 755 367 3 022 150 3 618 098 3 463 718 3 258 160 3 184 109 3 079 211 2 995 529Linked debentures and premium – 4 526 816 3 275 222 2 113 213 2 116 916 1 890 753 1 534 420 1 535 427 1 535 971 1 351 708Other interest-bearing borrowings 2 816 088 2 133 878 2 414 522 448 790 1 226 282 1 012 203 1 245 827 1 190 744 1 127 403 1 315 974Derivative financial instruments 12 919 – 59 330 25 644 21 867 28 136 16 493 – 7 720 47 166Deferred taxation liabilities 1 173 7 870 6 293 434 503 253 033 532 626 461 420 457 938 408 117 280 681Current liabilities 1 354 184 1 900 951 1 063 618 1 668 085 863 896 780 349 320 226 256 724 245 841 373 312

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


SUMMARISED INCOME STATEMENTS

GROUP2015R000

2014R000

2013R000

2012R000

2011R000

2010R000

2009R000

2008R000

2007R000

2006R000

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

Net profit from property operations 1 091 042 926 601 718 958 644 841 556 889 482 052 443 888 411 102 379 829 385 658Income from asset management business 24 694 92 654 77 974 53 317 65 146 3 067 – – – –Expenditure from asset management business (34 388) (38 917) (32 022) (30 792) (20 233) – – – – –Corporate administrative expenses (36 992) (34 964) (29 192) (25 919) (25 509) (23 781) (20 137) (20 914) (12 032) (21 598)Investment and other income 76 269 64 279 25 615 13 557 14 380 21 188 8 712 9 262 12 122 4 355

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

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

Profit before capital items 847 127 61 381 12 680 52 147 24 922 17 955 12 350 15 099 27 809 22 805Headline earnings per share (cents) 186.81 163.68 136.16 134.48 124.36 107.89 99.56 91.36 83.19 74.14

SUMMARISED STATEMENTS OF FINANCIAL POSITION

GROUP2015R000

2014R000

2013R000

2012R000

2011R000

2010R000

2009R000

2008R000

2007R000

2006R000

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

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

EQUITY AND LIABILITIES Equity attributable to owners of the parent 9 830 646 3 108 689 2 626 187 2 074 470 1 696 065 1 381 502 1 145 101 1 095 851 836 137 482 739Non-controlling interest 516 317 – – – – – – – – –Non-current liabilities 2 830 180 6 668 564 5 755 367 3 022 150 3 618 098 3 463 718 3 258 160 3 184 109 3 079 211 2 995 529Linked debentures and premium – 4 526 816 3 275 222 2 113 213 2 116 916 1 890 753 1 534 420 1 535 427 1 535 971 1 351 708Other interest-bearing borrowings 2 816 088 2 133 878 2 414 522 448 790 1 226 282 1 012 203 1 245 827 1 190 744 1 127 403 1 315 974Derivative financial instruments 12 919 – 59 330 25 644 21 867 28 136 16 493 – 7 720 47 166Deferred taxation liabilities 1 173 7 870 6 293 434 503 253 033 532 626 461 420 457 938 408 117 280 681Current liabilities 1 354 184 1 900 951 1 063 618 1 668 085 863 896 780 349 320 226 256 724 245 841 373 312

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


0 -

500 -

1 000 -

1 500 -

2 000 -

Year-end closing price

2005

53

0

2006

98

7

2007

1 0

77

2008

1 0

06

2009

91

9

2010

1 1

95

2011

1 4

23

2012

1 5

27

2013

1 8

98

2014

1 6

73

2015

1 9

25

Ten-year review highlights continued

0 -

10 -

20 -

30 -

40 -

50 -

60 -

70 -

80 -

Sectoral pro�le – based on market value (%)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Motor related Hospital Sovereign Industrial Of�ces Retail

64

16

973

53

49

22

10

10

3224

13

32

53

1 1

51

62

5

53

14

16

26

53

15

17

24

54

13

17

25

55

13

16

25

53

14

15

27

52

14

14

29

53

14

14

28

0-

30-

60-

90-

120-

150-

Cents per share

2005 2006 2007 2008 2009 2010 20152011 2012 2013 2014

Interim Final Normalised total Non-recurring

30

.03

1.5

61

.5

32

.53

6.0

68

.5

35

.8 41

.07

6.8

40

.3 48

.08

8.3

44

.1 53

.89

7.9

47

.06

0.9

10

7.9

46

.26

2.8

10

9.0

47

.66

3.8

11

1.4

52

.26

8.2

12

0.4

71

.75

4.8

12

6.5

8.7 1

3.4

11

.2

13

.8

59

.17

7.7

13

6.8

20054

.92006

3.7

2007

2.9

2008

3.0

2009

3.1

2010

3.9

2011

5.3

2012

6.1

2013

6.8

2014

6.5

2015

4.6

7-

6 -

5 -

4 -

3 -

2 -

1 -

0-

Vacancy pro�le – % of GLA


Investment property – market value (R/m2)

2005

2 9

41

2006

3 4

00

2007

4 3

54

2008

4 8

09

2009

5 0

49

2010

5 3

99

2011

5 7

67

2012

6 5

91

2013

7 4

42

2014

8 9

52

2015

9 9

6610 000 -

8 000 -

6 000 -

4 000 -

2 000 -

0 -

0 -

3 000 -

6 000 -

9 000 -

12 000 -

15 000 -

Investment property – market value (Rm)

20053

13

12006

3 6

52

2007

3 8

63

2008

4 3

18

2009

4 5

31

2010

4 8

89

2011

5 3

50

2012

6 1

13

2013

7 6

94

2014 2015

10

27

6

13 3

46

Number of properties

2005

90

2006

91

2007

71

2008

74

2009

73

73 74

72

78

2010 2011 2012 2013 2014

79

2015

93

100 -

80 -

60 -

40 -

20 -

0 -

Cost to income ratio – remaining portfolio excluding properties sold to date (%)

2007

Excluding Durban Workshop

18.5

31.6

2008

30.3

17.8

30.8

17.2

2009 2010 2011 2012 2013 2014 2015

17

.634

.2

40 -

35 -

30 -

25 -

20 -

15 -

10 -

5 -

0 -

33.0

17.7

33.1

16.9

35.3

17.0

36.5

17.6

34.8

16.8

All recurring expenses All recurring expenses excluding rates and taxes and electricity


Business reviewVukile Integrated annual report 2015 14

From the chairman

I am pleased to report that Vukile has again delivered on its guidance and achieved growing distributions and significant strategic performance for our investors.

Vukile has now established a proud 11-year unbroken track record of growth in distributions. During this time, we have delivered a total annualised return of 23.9%, grown our portfolio from R1.9 billion on listing to R13.3 billion, and increased our market capitalisation from R1.3 billion to R11.0 billion.

Yet some of the most important milestones for Vukile have been achieved over the past four years. They have fundamentally changed and improved our investment proposition.

Vukile has always performed well for its investors, delivering consistent performance through varying property cycles. In fact, we found ourselves among the top two performers in the JSE listed property sector for distribution growth per share.

However, to maintain this performance we focused on higher yielding properties. By nature, higher yielding properties carry higher risks. The properties we could compete for were often smaller or older buildings, or had the potential for future occupancy risks.

While this approach was effective for a R5.0 billion company, about four years ago we realised that it would not sustain our growth or support our need to become more competitive in the marketplace.

We needed to chart a new course for Vukile, but moving ourselves onto a more solid footing meant taking some pain. To get our yield to a point where

we could compete for better quality assets we had to throttle the growth in Vukile’s distributions during the shift.

While we were confident this was the best choice for Vukile, we hoped our shareholders would accept it and accordingly increase the multiple in Vukile’s shares.

This repositioning of Vukile presented a massive challenge for our management team, who admirably rose to the task. During the past four financial years, we have meaningfully improved our company. We have taken our yield to a point where we can compete for better assets. Vukile is now successfully adding a much better quality of property to our portfolio.

Since our 2011 results, we have grown our portfolio 26% from 74 to 93 properties, increasing its value 159% from R5.67 billion to R14.7 billion, (including acquisitions transferring post-year-end) while also disposing of some R1.1 billion of non-core, riskier assets. The average value per Vukile property has increased 98% from R72.3 million to R143 million, and the average value per square metre has increased 73% to R9 966/m².

The properties in our portfolio now have lower risk and, in many cases, offer remarkably better prospects for the future, including the potential for expansion, upgrade and redevelopment. This has dramatically improved the quality and sustainable growth of our earnings.

With a better quality property portfolio, both our funders and our shareholders have accepted our lower yields, especially lenders, which has dramatically improved Vukile’s cost of capital. Vukile’s yield has decreased from 8.27% (2011) to a current yield of 7.11% at year-end. The average cost of debt has also decreased from 9.77% (2011) to 8.4% at 31 March 2015.

Vukile’s repositioning is complete. We are a significantly larger and more competitive company than we were at the beginning of this tough, yet necessary journey. Vukile is now poised to enjoy the fruits of its strategic shift, and we will continue to find new and better ways to create value for all our stakeholders.

Operating environmentGlobal markets remain volatile, particularly emerging markets, while local property fundamentals are still challenging. We are dealing with low economic growth and the likely headwind of rising interest rates, which stand to further inhibit our markets.

South Africa’s credit rating is also a concern. We are also faced with the possibility of our economy shedding further jobs. The electricity crisis is extremely worrying too. It has had expensive negative impacts for business, including property owners, with load shedding adversely affecting all occupiers of commercial space. We are also seeing growing levels of unrest in South Africa’s rural areas, specifically regarding respect for the rights of law and physical property.

Retail and industrial properties continue to outperform the office property sector. There is an oversupply of office space that is placing pressure on rentals. With the prevailing dynamics, Vukile has limited its exposure to the office sector and moved strongly in favour of retail, which now comprises 64% of its investment properties.


Anton BothaChairman

While we have adequately dealt with South Africa’s rising interest rate environment through our conservative debt hedging and gearing strategies, we must also consider the ripple effect it has on consumer spending for our shopping centres.

Inhibitors of consumer spend seem to have little, if any, impact on the shopper markets many of our shopping centres serve. Our retail property investment strategy targets the high-growth mass consumer market in South Africa.

Shopping centres serving many lower and middle-income South Africans are showing strong defensive qualities. They tend to be dominant in rural, township and emerging nodes. They have an exceptionally high representation of national tenants with excellent lease covenants. With the drawing power of many popular national retailers, they also achieve strong trading densities. Because these centres serve growing markets, often in growing areas, they also offer good future growth potential.

Malls serving these markets also benefit from the cash economy and informal sector. While the true extent

of this market is largely unknown, these consumers are clearly creating a buffer from the impacts of interest rate hikes and other formal economy drivers.

The Vukile boardOur board comprises a strategic balance of high-level property experience, financial skills and independent oversight. It strives for the highest standards of corporate governance. There were no changes to our board during the year.

AcknowledgmentsThis year saw the conclusion of four years of huge strategic progress for Vukile, and we continued our solid track record of financial performance. These important achievements were made in the face of an extremely challenging operating environment. This is thanks to the forward-thinking, proactive approach to deal making and the accomplished skills of Laurence and his executive and management teams, who have been at Vukile’s helm to guide it to broader, more promising horizons.

I would also like to express my appreciation to my fellow directors for

the extensive knowledge and far-reaching insight they bring to the board’s deliberations.

A word of appreciation also goes to Vukile’s property managers – JHI, Broll, Encha and McCormick Property Development – for their essential role in Vukile’s success.

Finally, but by no means least, we thank Vukile’s shareholders, debt providers and tenants for their confidence in our company and continued support, as well as all our partners that have joined us on our successful journey over the past year.

Prospects Vukile is in a confident position for the future. It should again perform well for its stakeholders, progress its strategic goals and achieve further growth in the year ahead.

Anton BothaChairman


From the chief executive

This has been an excellent year for Vukile. We have carried out our goals, made excellent progress on all our strategic objectives and achieved ongoing improvements in our operating metrics.

Vukile exceeded its growth targets during the year and made excellent progress rebalancing its portfolio with better quality properties and more shopping centres. We have achieved this while remaining conservatively geared and delivering real growth in distributions for our investors.

We have built our portfolio of assets with the belief that property is a long-term endeavour. For lasting success, a long-term focus is imperative. Short-term gains should never come at the expense of nurturing a quality portfolio for the medium and long term.

By delivering on our strategy in this way, we have built Vukile into a high-quality, low-risk fund with a growing sustainable quality earnings profile. This is an excellent position to be in.

Performance overviewDespite a tough operating environment, Vukile’s distribution increased 8.1% on the prior year, delivering results slightly ahead of our initial market growth guidance of between 7% and 8%.

Gross property revenue increased by 13.6%. On a like-for-like basis, net property income grew by a credible 6.8%. Costs were well contained over the period with recurring costs to property revenue (excluding

electricity and rates and taxes) at 17.6%. When adding back electricity and rates and taxes the ratio is 34.2%. These ratios compare very favourably with our 2010 figures which were 17.7% and 34.9% respectively. As can be seen, there is an ongoing focus on cost containment within the business.

Accomplishing strong operational performance, we achieved positive reversions across all three sectors. Our mainstay retail portfolio, which now comprises 64% of our property asset base, attained reversions of 10.8% and, while at somewhat lower levels, we even saw upward reversions from our office and industrial portfolios. New leases were concluded at 5.2% above budget (market rentals) on the retail portfolio but lower than budget in the office and industrial sectors as rentals were lowered in order to push vacancies down.

Base rentals in the Vukile portfolio grew by an average 9% and in-force escalations have successfully upheld ahead of inflation at 7.8%

Vacancies as a percentage of gross rentals again improved, reducing from 6.7% in the prior year to 5.6%. Vacancies measured as a percentage of gross lettable area also reduced from 6.5% in the prior year to 4.6%. If

STRATEGY UPDATE

Strong operational focus to continuegg Vacancies

gg Energy management

gg Alternative income

management (AIM),

non-GLA revenue

gg Bad debt and arrears

management

gg New property management

agreements concluded

Continued cautious approach to balance sheet managementgg Gearing to remain below 30%

and hedging at a minimum

of 75%

Preference for retail and industrial assetsgg Strong pipeline to close

in the year ahead

gg Reduce exposure to

commercial property

Starting to explore other asset classesgg International

gg Residential

gg Healthcare

gg Favour a JV approach as

a market entry strategy

Development exposuregg Initial appetite of R100 million

to R200 million equity

component

gg Favour a JV model with

experienced developers


Laurence RappChief executive

the current development vacancies at Germiston Meadowdale Mall, East Rand Mall and Bellville Barons (collectively 7 412m2) are included, vacancies on area increased to 5.1%.

Retail vacancies remained a low 3.4%, while our office vacancies, excluding properties held for sale, have been significantly reduced from the prior year’s 17.5% to 10.2%.

We have successfully extended our lease expiry profile, with 33% of leases now expiring in 2019 or beyond (up from 24% in the prior year).

New leases and renewals of 250 111m2 with a contract value of R871 million were concluded during the year. Also, 85% of leases to be renewed during the year ended 31 March 2015, were renewed.

Our portfolio fundamentals have strengthened significantly and we remain in a strong position for the year ahead.

Growing our portfolio of assetsWe exceeded our portfolio growth targets, taking our asset base to R14.7 billion by end May 2015 by growing the value of our properties and securing strategic, value enhancing deals. These include our Synergy Income Fund transaction, as well as various direct property acquisitions.

Importantly, our growth was achieved in conjunction with important portfolio strategies. We have dramatically improved the quality of our properties. We have rebalanced our portfolio strongly in favour of retail, which now comprises 64% of our assets. The buildings in our portfolio have higher average value, carry lower risk and many include future growth potential with development, expansion and upgrade opportunities.

Vukile’s 10 largest property investments include seven retail properties, comprising 25.9% of our portfolio. Including Synergy’s assets, our investment properties span eight of the nine South African provinces, with the exception of the Northern Cape, as well as Namibia.

Synergy transactionsDelivering on our strategy to grow our investment in retail assets that meet our criteria through enhancing transactions, Vukile gained full management and financial control of Synergy Income Fund during the year. Vukile’s patient and prudent approach to its corporate action with Synergy proved successful. We achieved our Synergy acquisitions at a blended yield of 8.8%.

In December 2013, Vukile acquired 34% of Synergy, but, after failing to agree on pricing with Synergy’s board in September 2014, withdrew from discussions to pursue an alternative route to obtaining control of Synergy. In November 2014, Vukile triggered a mandatory offer by acquiring further Synergy B linked units, thereby growing its stake in the fund to around 40%.

Vukile successfully gained control of Synergy’s assets in February 2015, and Synergy became a listed subsidiary of Vukile. We now hold 88.1% of Synergy B linked units and


From the chief executive continued

11.88% of Synergy A linked units, comprising 64.61% of the entire issued capital of Synergy.

Then, in March 2015, Vukile signed agreements to acquire Synergy’s external management company, Capital Land Asset Management (CLAM), effective from 1 May 2015. The yield-enhancing transaction for Vukile secured its outright ownership of CLAM, which is responsible for the operations and management of the Synergy portfolio. With this transaction, Vukile secured the operational control of Synergy.

CLAM became a subsidiary of Vukile on 1 May 2015. We are confident that under Vukile’s ownership, CLAM’s long-term decision making for the Synergy portfolio will benefit everyone involved. CLAM will be renamed Vukile Asset Management. Synergy’s property management will be outsourced to Vukile’s current property managers, JHI and Broll.

Any deal we do is about creating value for Vukile’s investors. Doing the right deal always comes down to price and strategy. The lengthy Synergy transaction called for diligence and discipline. Rising to the challenge, each leg of this deal has been accretive to Vukile. We secured the portfolio that we wanted, and we did so at a price that is beneficial to Vukile’s shareholders.

There is a strong strategic fit between the Synergy and Vukile portfolios. Synergy has a specialised portfolio

of 15 retail properties valued at approximately R2.42 billion. Its shopping centres are also focused in the high-growth, lower-income market.

Our immediate intent is to keep Synergy listed and make strategic use of its dual listed capital structure, especially as “A units” are no longer being issued by the JSE. Vukile appointments to the Synergy board from 3 March 2015 include our CFO, Mike Potts, as non-executive director, and myself as non-executive chairman. Our director of corporate services and group company secretary, Johann Neethling, was appointed company secretary for Synergy. Further, Vukile executive director, Sedise Moseneke, has assumed the role of interim CEO of Synergy while we evaluate strategic options for the business. Rob Hawton, who joined our team in May 2015, has been appointed as the financial director of Synergy.

We will continue to grow Synergy and take it forward in a way that is aligned with Vukile’s systems, processes and resources.

Acquisitions Vukile acquired several strategic, portfolio-enhancing assets during the year valued at over R1 billion, and representing a combined initial yield of 8.8%. Most of these properties transferred only after the March 2015 year-end and hence our investors will enjoy the benefits of these assets in the 2016 financial year.

We acquired the 27 700m² dominant small regional shopping centre, Nonesi Mall, in Queenstown, Eastern Cape, for R371 million at an initial yield of 8.25%. This centre includes 96% national retailers with anchor tenants Checkers, Pick n Pay, Game and Woolworths. It offers a complete lifestyle and convenience shopping experience for the Queenstown consumer.

The Silverton distribution warehouse portfolio comprises six warehouse buildings with a total GLA of 21 253m² and is located in Pretoria, Gauteng. Vukile acquired the portfolio for R101 million at an initial yield of 9.25%. The warehouses are in an established industrial node with strong tenants and minimal vacancies. It includes distribution warehouses for Game, Massmart, Waltons and Edcon. The well-designed buildings are easily sub-divisible.

Moruleng Mall in the North West province is a 32 000m² dominant small regional shopping centre, anchored by Pick n Pay, Shoprite and Edgars, featuring 88% national retailers. Vukile acquired an 80% holding in this asset, with the remaining 20% held by the Bakgatla-Ba-Kgafela Tribal Authority. Our 80% share of Moruleng Mall was acquired for R320 million at an initial yield of 8.7%.

Batho Plaza is a convenient, well- located community retail offering, servicing the Soshanguve community. Located in the City of Tshwane, Gauteng, the 12 500m² community


shopping centre comprises 80% national retailers including its anchor tenants Shoprite and Cashbuild. Vukile has acquired the centre for R140 million at an initial yield of 9.5%.

Vukile also secured a further 40% interest in the leasehold centre of Maake Plaza, located 25 kilometres south-east of Tzaneen in the Limpopo province. This will take Vukile’s holding in the centre to 70%. Its investment partners are McCormick Group, which will hold the remaining 30% stake in the centre. The entire Maake Plaza measures 15 752m². Vukile’s latest investment in the centre is valued at R61.6 million at a 9.7% initial yield. Maake Plaza is anchored by Shoprite and Cashbuild and includes 86% national tenants. Vukile’s initial holding of 30% transferred in July 2014, and the additional 40% stake is expected to transfer in July 2015.

In October 2014, we took transfer of a 15 070m2 mini-factory/warehousing development at Linbro Park, one of Johannesburg’s prime industrial areas. The property was acquired for R125 million at an initial yield of 10% which is underpinned by a one-year income guarantee.

RedevelopmentsVukile continually evaluates its assets to add value through redevelopments, expansions and upgrades.

During the year, we began refurbishing and extending our largest asset, East Rand Mall in Boksburg, Gauteng, in joint development with co-owner, Redefine Properties. The project will grow the mall’s GLA by 6 785m2 to 69 299m2. The extension will be anchored by Mr Price Emporium, with other major tenants in the popular, dominant centre including Edgars, Woolworths, Ster-Kinekor, Truworths, Foschini, Ackermans, Incredible Connection, Cotton On, CNA, Jet and Galaxy Bingo. East Rand Mall links with its neighbouring East Rand Galleria (now renamed South Point), which is also being redeveloped. Once both projects are complete, shoppers will experience an upgraded dominant super regional of around 120 000m2. The East Rand Mall redevelopment is scheduled for completion in August 2016. Vukile’s portion of the project’s capital cost is R168.25 million at an initial yield of 6.8%.

The upgrade and expansion of Meadowdale Mall in Edenvale, Gauteng, should be complete in October 2015. Vukile has a 67% stake in the centre, with co-owners Moolman Group owning 33%. This project will result in Meadowdale Mall being redeveloped and receiving a 9 500m2 extension, taking it to 45 347m2. This landmark centre is currently anchored by Checkers Hyper. Meat World and Apple Tree will join the centre

as anchors in the refreshed larger centre. Vukile’s portion of the capital expenditure for the redevelopment is R109 million, representing an initial yield of 9.1%.

An amount of R75 million is being invested to upgrade The Workshop in Durban. The scope of work includes an upgrade of the food court and toilet blocks as well as the installation of a number of new tenants, including Pep Stores, Dunns, Ackermans, KFC and London Pie. There is also a general upgrade being undertaken that will include new tiling, shop fronts, additional lighting and new ceilings in selected areas that will collectively give the centre a new bright and fresh look. The upgraded centre will stand to benefit from further planned development in close proximity to The Workshop. These developments include an extension to the existing convention centre and the new Durban Central Library, new city museum as well as a new central bus rapid transport main terminal.

DisposalsWe sold five non-core properties during the year for a total R150 million, net of selling costs. The capital from these sales will be recycled to enhance Vukile’s portfolio.


From the chief executive continued

Funding our growthVukile is conservatively geared and well hedged. We closed the year with gearing of 26.6% and 88% of our interest-bearing debt hedged. Our annualised cost of finance was 8.4%. We will continue to be conservative with our approach to debt management. We believe this is prudent with the rising interest rate cycle which is likely to start emerging later in the year. We intend to keep our gearing below 30% and our hedging levels above 75%.

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

Post-year-end, Vukile conducted two very successful equity and debt capital raises. In April 2015 we raised R1.1 billion in equity in a heavily oversubscribed book build. Encha took up R250 million of the equity in terms of the Encha Equity Tap Structure with the balance being placed in the institutional market at a price of 1 900cps.

In May 2015, we refinanced R580 million of term debt in our Domestic Medium Term Note programme. Once again the issue was heavily oversubscribed and we achieved pricing within our guidance range. The secured notes were placed

over a three and five-year tenor and have been rated as AA+ by Global Credit Ratings (GCR).

Asset managementDue to a change in Sanlam’s strategy, Vukile sold back to Sanlam its asset management business. This earnings-neutral deal will leave Vukile with a much simpler and predictable income stream in future. It has also freed up capacity to take on the asset management of Synergy, as detailed earlier in this report.

TransformationWe are proud to have achieved a certified level 4 B-BBEE contributor rating. Empowerdex Verification Services certified Vukile’s B-BBEE rating in line with the generic property sector code for internally managed REITs.

Vukile has been extremely successful in accomplishing transformation in ownership, preferential procurement, enterprise development and economic development.

We are committed to the principles of social responsibility, economic transformation and empowerment on all levels and will continue to pursue these objectives. We have identified employment equity and skills development as target areas for improvement.

Our innovative transaction with Encha Properties in August 2013 is now supporting our sustainable transformation success by growing our empowerment shareholding as our company grows. This is an exception in our industry, which continues to grapple with the challenge of growth at the expense of diluting black ownership. We’re pleased to be reaping the benefits of the foresight applied in shaping this deal. Encha now owns 8.15% of Vukile.

Strategic prioritiesWe will continue our strong operational focus, with a specific emphasis on vacancy management, arrears management, energy management and alternative income management.

All these areas are key to optimise Vukile’s performance and ensure we are getting the most from our portfolio. We believe that energy management will become a core competency of property management in the future, and plan to grow our internal expertise and skills in this area. Similarly, alternative income management is becoming an increasingly important role in Vukile, identifying and unlocking non-GLA income opportunities in our portfolio.

We will continue to take a cautious approach to our balance sheet management. Our gearing will remain below 30%, with a minimum hedging level of 75%.


Vukile’s portfolio strategy is to be overweight in retail property. We have now substantially achieved this. Our property portfolio comprises, by market value, 64% retail, 16% offices, 9% industrial, 7% sovereign, 3% hospital and 1% motor-related properties. We will continue to favour retail and industrial assets, reduce our exposure to the softer office market, and build on our already significant pipeline of developments.

Besides our core portfolio – which includes retail, industrial, and office properties – we will develop an incubator portfolio by actively seeking opportunities in other asset classes and geographies to grow Vukile even further. These include residential, student accommodation, retirement, and healthcare properties. We will also investigate international investment. Wherever possible, we will approach these new market entries with a joint venture strategy with specialists in these areas.

To ensure our ability to grow with new property assets that best meet our investment criteria, we will continue to work in joint ventures with established, respected developers. This will help secure access to development opportunities, while minimising our exposure to development risk. Initially, we will limit

our appetite to between R100 million and R200 million of a development’s equity.

ProspectsWith the economy unable to generate any meaningful growth, we anticipate that tough trading conditions will continue into the year ahead. We do, however, expect to deliver growth in distributions of between 7% and 8% for FY2016 driven off a strong focus on improving operational efficiencies and the benefits of our accretive acquisitions coming through for the full year. Much emphasis will be placed on bedding down and integrating the recently acquired retail assets and Synergy into our systems and portfolio.

We will continue to look for accretive acquisitions that are in line with our retail strategy as well as begin looking at opportunities in new markets both locally and abroad. The overall focus of Vukile remains to build a high-quality, low-risk portfolio with a high- quality earnings stream that is capable of generating stable long-term returns.

The forecast growth in distribution is based on the assumptions that the macro-economic environment does not deteriorate further and no major corporate failures will occur. Forecast rental income has been based on contractual escalations and market-related renewals.

This forecast has not been reviewed or reported on by the company’s auditors.

AcknowledgementsVukile has delivered a fantastic performance this year, thanks to our management team and staff. Our team represents a wonderful blend of experience and new talent. Their energy is evident and their passion is palpable in everything they do. We extend our sincere appreciation for their hard work and dedication to strengthening and growing Vukile.

We would also like to express our gratitude to the board members for their steadfast support and meaningful participation over the past year.

Our thanks also go to Vukile’s business partners whose exceptional efforts play an invaluable role in driving our performance. Finally we would like to thank our tenants and financiers for their continued association and commitment to Vukile.

Laurence RappChief executive


Governance reviewVukile Integrated annual report 2015 24

Directorate

Executives

1. Laurence Gary Rapp (44)Chief executive officerBCom (Hons) Cum Laude, Wharton Executive Development Programme Laurence has been the driving force behind Vukile’s transformation and growth since his appointment in 2011. He is closely involved in all aspects of deal making and the corporate finance function of Vukile. Prior to joining Vukile, Laurence was a director of Standard Bank and head of the insurance and asset management division and his experience spans the areas of investment banking, private equity, retail banking and insurance and asset management. He currently serves as the chairman of SA REIT, an industry body driving listed property interests, as well as non-executive chairman of Synergy Income Fund Limited.Appointed: 1 August 2011

2. Michael John Potts (60)Financial directorCA(SA), HDip Tax LawMichael is a founding director of Vukile and, prior to joining Vukile, was an independent adviser to the Bridge Capital Group on property transactions, property portfolio assembly, financial structuring and capital raising. Prior to that, he was managing and financial director of the South African group that forms part of the UK-based Hanover

Acceptances Group and a non-executive director of Hanover Acceptances Limited (United Kingdom) and Outspan International Limited for six and seven years respectively. He currently serves as a non-executive director of Synergy Income Fund Limited.Appointed: 17 May 2004

3. Hermina (Ina) Christina Lopion (55)Executive director: asset managementBSc, Executive Development Programme: Manchester Business SchoolIna has 24 years’ property experience and six years’ life insurance experience within the Sanlam Group. She is responsible for asset management within Vukile, managing both the Vukile portfolio and the Sanlam portfolio (until February 2015) which is managed on an outsourced basis by Vukile.Appointed: 1 January 2010

4. Gabaiphiwe Sedise Moseneke (38)Executive directorBDS, CCPPSedise is responsible for Vukile’s Sovereign tenant sub-portfolio and for jointly driving Vukile’s overall portfolio growth and transformation objectives. He was chief executive of Encha Properties from 2004 up until Vukile’s acquisition of a portfolio of government tenanted properties from Encha in 2013. He is a past president of the South African Property Owners Association (SAPOA) and is the non-executive chairman

of Encha Property Services. Sedise also sits on the board of Nu-Hold Group, an upmarket residential and commercial property development and investment company. He is a member of the South African Institute of Black Property Practitioners (SAIBPP).Appointed: 1 August 2013

Independent non-executives

5. Anton Dirk Botha (61)Chairman BProc, BCom (Hons), Stanford Executive ProgrammeAnton is a director and co-owner of Imalivest, an investment group. He also serves as a non-executive director on the boards of the University of Pretoria, JSE Limited, Sanlam Limited, certain Sanlam subsidiaries and African Rainbow Minerals Limited. Anton made his career in investments. As chief executive, he led the team that built Gensec Limited into a leading South African investment banking group.Appointed: 17 May 2004

6. Stefanes (Steve) Francois Booysen (52)DCom, CA(SA)Steve is the former group chief executive officer of Absa Group Limited. Steve also serves on the boards of Steinhoff International Holdings Limited, Clover Industries Limited, Efficient Financial Holdings Limited and Senwes Limited.Appointed: 20 March 2012

4 5 6

1 2 3


7. Sonja Emilia Ncumisa de Druyn Sebotsa (43)

LLB (Hons), MA Economics and Business, Harvard Executive ProgrammeSonja has extensive experience in the investment banking industry, is a co-founder of Identity Capital Partners, and was previously a vice-president in the investment banking division of Deutsche Bank and an executive director of Women’s Development Bank Investment Holdings.Appointed: 16 May 2013

8. Peter Sipho Moyanga (50)Peter is an owner-operator franchisee of the world renowned fast foods franchise, McDonald’s, with whom he has eight restaurants. Previously, Peter held a senior management position with McDonald’s Corporation for 10 years. In addition to his business interest, Peter is also a director of Reach for a Dream Foundation.Appointed: 17 May 2004

9. Nigel George Payne (55)BCom (Hons), CA(SA), MBLNigel serves on the boards of Bidvest Group Limited, JSE Limited, BSi Steel Group Limited and Mr Price Group Limited, where he holds the position of chairman.Appointed: 20 March 2012

10. Hymie Mervyn Serebro (68)Mervyn is the former chief executive officer of Vusani Property Investments, a fully empowered privately held consortium embracing retail and office properties. He spent 32 years with the OK Bazaars Group within which he held a number of key positions and directorships, including that of group managing director. Mervyn was integrally involved in the establishment of a South African Bone Marrow Registry after the untimely death of his son, Darren, due to leukaemia. He is also the chairman of Reach for a Dream Foundation, a director of the Innovative Cancer Care Foundation and Chairman of Syenap.Appointed: 17 May 2004

11. Hatla Ntene (61)BSc (QS)Hatla, a registered quantity surveyor, has over 25 years of experience in project management, cost engineering and contract administration. He is the executive chairman of Mvua Property Partners, a commercial property investment firm, and serves as a non-executive director of AECOM South Africa, Calgro M3 and Don Group.Appointed: 25 October 2013

12. Renosi Denise Mokate (57)BA, MA, PhDRenosi has over 27 years’ experience in the field of development economics and planning and has served in various academic and executive roles. She is a former executive director of the World Bank as well as a former deputy governor of the South African Reserve Bank. She currently serves as a director of Bidvest Bank and is chairperson of the Government Employees Pension Fund.Appointed: 11 December 2013

10 11 12

7 8 9

PICTURE TO

BE SUPPLIED


Corporate governance and risk management

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

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

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

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

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

Composition and appointment of directorsThe details of the directors, including their qualifications, experience, expertise and appointment dates appear on pages 24 and 25 of this integrated annual report.

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

DirectorsAt the date of this report, the board consisted of 12 directors.

ChairmanAD (Anton) Botha

Executive directorsLG (Laurence) Rapp (chief executive) MJ (Mike) Potts (financial director)HC (Ina) Lopion (executive director: asset management)GS (Sedise) Moseneke (executive director)

Independent non-executive directorsSF (Steve) BooysenPS (Peter) MoyangaNG (Nigel) PayneHM (Mervyn) SerebroSEN (Sonja) SebotsaH (Hatla) NteneRD (Renosi) Mokate

Chairman and independenceThe roles of the chairman and chief executive are separate and the office of the chairman is occupied by an independent non-executive director. All other non-executive directors are also considered to be independent.

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

Compulsory retirement age The compulsory retirement age of non-executive directors is 70.

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

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

Board evaluationThe board assesses its performance and that of its individual directors, as well as their independence, on an ongoing basis. The company secretary facilitates a comprehensive board and committee evaluation biennially. The last board and committee evaluation was conducted in May 2014 under supervision of the chairman of the board. Matters considered in the evaluation focused


on the effectiveness of the board and its committees, including:gg Compositiongg Performancegg Role of the chairmangg Appropriateness of the board charter and committees’ terms of referencegg Communication and interpersonal relationshipsgg Board dynamics and leadershipgg Independence considerations for all directors and specific consideration of directors with terms of service in excess of nine years.

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

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

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

Company secretaryThe company secretary is responsible for the duties set out in section 88 of the Companies Act and for ensuring compliance with the Listings Requirements of the JSE Limited. Director induction and training are part of the company secretary’s responsibilities. He is responsible to

the board for ensuring the proper administration of board proceedings, including the preparation and circulation of board papers, drafting annual work plans, ensuring that feedback is provided to the board and board committees and preparing and circulating minutes of board and board committee meetings. He provides practical support and guidance to the board and directors on governance and regulatory compliance matters.

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

The board has evaluated the company secretary and it is satisfied that he is suitably qualified for the role and that he maintains an arm’s-length relationship with the board.

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

Company secretary Johann Neethling

Date appointed June 2010Qualifications FCIS, MCom, JSE Sponsor Development ProgrammeExperience and expertise Johann has 16 years’ experience in the areas of assurance, general and corporate finance,

governance and company secretariat. He joined Vukile as part of the management team when Sanlam’s asset management business was acquired by Vukile. Prior to that, he held various positions within the property division of Sanlam. He serves as a director and senior vice-president of Chartered Secretaries Southern Africa.


Corporate governance and risk management continued

Board and committee attendance The attendance register of non-executive directors for each board and committee meeting for the year ended 31 March 2015, is set out below:

Director

Scheduled board

meetings attended

Special board

meetings attended

Auditand risk

committeeMeetings attended

Social, ethics and

human resources


Property and

investment committee

Meetings attended

Nomina-tions


AD Botha 4/4 1/1 4/4 Member 3/3 Chairman 3/3SF Booysen 4/4 1/1 Member 4/4 Chairman 3/3 Member 3/3PS Moyanga 4/4 1/1 Member 4/4 Member 5/7* RD Mokate 4/4 1/1 Member 3/3 Member 3/3H Ntene 4/4 1/1 Member 7/7 SEN Sebotsa 3/4* 1/1 Member 3/3 Member 3/3HM Serebro 4/4 1/1 Chairman 7/7 NG Payne 4/4 1/1 Chairman 4/4 Member 5/7*

*Absent with prior apology.

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

Board committees Audit and risk committeeThe report by the audit and risk committee (AR committee) is set out on pages 28 and 29 of this integrated annual report. The committee’s terms of reference can be viewed at www.vukile.co.za/governance/termsofreference/arcommittee.

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

The internal control system includes a reasonable division of responsibility and the implementation of policies and procedures which are communicated throughout the group.

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

External auditGrant Thornton is the external auditor of Vukile and its subsidiaries, including the Namibian subsidiaries. The independence of the external auditors

is recognised and annually reviewed by the AR committee.

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

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


Key risks

Risk description Risk action/treatment

Inability to refinance major debt exposures at acceptable terms and conditions

gg Diversified sources of funding across five banking institutions as well as access to debt capital markets through the Domestic Medium Term Note programme.

Potential high inflation environment resulting in increased interest rates

gg Conservative hedging policy with 88.0% of all debt currently hedged.gg Averaged tenure of interest rate hedges extended to 3.5 years at year-end.

Vacancy levels – oversupply especially in the office sector gg Significant improvement in the quality of the portfolio over the past three years.gg Ensuring that products stay abreast with the market and that asking rentals are market related.gg Strong relationship with third-party brokers.gg Leasing incentives for tenants and brokers.gg Property managers to stay close to tenants in order to understand changing needs. gg Level 4 B-BBEE certification.

Inconsistent supply of critical services (electricity, water, municipal services: refuse, property transfer and legal services)

gg Diversification across nodes.gg Installing generators for emergency power.gg Installing water tanks where necessary.

Political risk and social disturbances (labour unrest) linked to retail property development in areas where the group has properties

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

Impact of the new National Treasury/DPW policy for lease renewals, resulting in shorter-term leases/exit clauses being exercised.

gg Continuous liaison with DPW and the SAPOA transformation committee. gg Our exposure to this sector is currently at 8% and, in terms of board policy, will not exceed 15% of total investment properties.

Property and investment committeeCurrent membersgg HM Serebro (chairman)gg HC Lopiongg PS Moyangagg NG Paynegg LG Rappgg H Ntene

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

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

Social, ethics and human resources committee The report by the social, ethics and human resources (SEHR committee) is set out on pages 30 to 33 of this integrated annual report.

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


The committee is constituted with a dual mandate. The statutory duties of the committee are discharged in terms of sections 72(4) and (5) of the Companies Act, 2008, read with regulation 43 of the Companies Regulations 2011, which states that all listed companies must establish a social and ethics committee.

In addition to its statutory duties, the committee is responsible for the strategic human resources issues of the group, including remuneration.

Terms of referenceThe committee has adopted a combined formal terms of reference which have been approved by the board and will be reviewed on a periodic basis.

Membership, meeting attendance and evaluationThe committee consists of four non-executive directors, all of whom are independent. At 31 March 2015, the committee comprised the following members:

Directors Period served

SF Booysen (chairman)

20 March 2012 – current

AD Botha17 May 2004 – current

RD Mokate1 January 2015 – current

SEN Sebotsa1 January 2014 – current

The curricula vitae of the members of the committee are set out on pages 24 and 25.

The committee held three meetings during the period. All these meetings were scheduled in advance. A summary of meeting attendance is set out on page 28.

Role of the committee in respect of its social and ethics mandateThe committee performs an oversight and monitoring role in respect of issues detailed in the Companies Act.

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

Social and ethics statement

Global responsibility protocols

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

Work environment gg The group considers its workforce (a total of 33 employees as at 31 March 2015) 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 1).

Employment equity, B-BBEE, transformation

gg The group has identified transformation as one of its critical success factors. A significant development in embedding transformation in the business was the conclusion of the Encha empowerment transformation transaction which, inter alia, has resulted in Encha becoming a significant shareholder in the group and their CEO, Dr Sedise Moseneke, being appointed as an executive director. Encha currently holds a 8.15% stake in Vukile, which represents a 27.17% effective shareholding under the property sector charter code. gg Vukile current has a level 4 B-BBEE rating from Empowerdex.

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

gg The group aims to be a good corporate citizen and to be active in uplifting the communities in which it operates. A report on our community involvement is presented on page 63. The group’s impact on the environment and health and safety are detailed on page 62 of this integrated annual report.

Record of sponsorship, donations and humanitarian initiatives

gg A register of the sponsorships, donations and humanitarian initiatives is maintained by Dr Moseneke. For the year ended 31 March 2015, the total value of sponsorships, donations and humanitarian initiatives was c.R745 000.

Social, ethics and human resources committee report


Remuneration strategy and policyVukile acknowledges that its people are the key driver to secure sustainable business success in the long term. The ability of the organisation to engage its people to think and act like business leaders, to create an environment where people have the opportunity to continuously learn and improve their own performance and ultimately enable the organisation to build the capacity to meet the requirements of an ever-changing and

demanding business environment, are critical success factors of Vukile’s human capital strategy for the future.

Our remuneration practices are based on core principles:gg Adherence to legislative and regulatory requirementsgg Attraction and retentiongg Pay for performancegg Leverage and alignmentgg Consistencygg Competitivenessgg Communication.

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

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

Typical remuneration of executive directors and management

Fixed/variable Component Component description and intent Delivery mechanism

Fixed remuneration Base salary gg This is the non-variable element of the employee’s package typically benchmarked and positioned at the market median.gg The base salary reflects the scope and nature of the role.gg Given the increased scale and complexity of Vukile, all executive roles will be externally evaluated during the coming financial year to ensure that salaries are accurately benchmarked.

gg TGPs

Benefits gg Benefits include health cover, retirement cover and insurance products, such as death and disability cover.

Variable remuneration

Short-term incentives (STIs)

gg Aligns individual and group performance with the short-term objectives of the group.gg Focuses employees on achieving their targets as per their critical performance areas (CPAs).

gg Short-Term Incentive Bonus Scheme

Long-term incentives (LTIs)

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

gg Conditional Share Plangg Share Purchase Plan


Social, ethics and human resources committee report continued

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

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

Participants in the scheme

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

Principle of determination of bonus pool

gg Bonus pool comprises two components, “on-target” component and an “outperformance” component. gg On-target performance levels are determined annually in the range of 33.3% to 66.7% of the maximum potential bonus pool size, having taken into account the specific targets, strategies and issues relevant to the group at the time of setting the range.gg Bonus pool threshold levels are set at 95% of the on-target group performance level. gg 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. gg 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.gg Outperformance 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. gg This will be paid out in cash but always limited to the individual’s maximum capped cash bonus level. Should the performance in any one year yield an amount that is in excess of the maximum cash cap, such excess will fall within the terms and conditions of the Conditional Share Plan.

Amount actually paid out

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

Bonus-malus and claw-back

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

Conditional Share PlanThe principles of the Conditional Share Plan are as follows:

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

Plan limits gg Overall limit: 2.5% of issued capital.gg Individual limit: 0.5% of issued capital.gg Annual limit: 0.5% of issued capital.gg Current utilisation of the scheme is equal to 20.77% of its potential maximum limit.

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

Allocation policy gg Regular annual awards as percentage of TGP.gg Allocation percentages are reviewed annually. gg Allocation percentages for May 2015 allocation cycle:g– CEO: 100% to 120%g– Executive directors/prescribed officers: 70% to 90%g– Senior management: 40% to 60%g– Other participants: 20% to 40%.


Conditional Share Plan continued

Distributions equivalent

gg Paid to participants, subject to claw-back.

Mix between group and individual performance conditions

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

Performance conditions

gg 30% vesting at threshold target.gg 100% vesting at stretch target (linear vesting in between).gg Personal performance portion (CPA score):g– Threshold: 70%g– Stretch: 90%.

gg Due to the variability in business models of the constituents of the SAPY, the committee has reconsidered the appropriateness of using the SAPY as the relevant benchmark for the company performance measure. In addition to aforementioned relative performance measure, the committee has considered it appropriate to also introduce an absolute performance measure.gg Company performance portion will therefore be split in two:g– 50% – relative performance measureg– Growth in Vukile’s distributions and share price versus peer group index (previously the SAPY) over a three-year period

g– Threshold: 100% indexg– Stretch: 110% index.

g– 50% – absolute performance measureg– Growth in Vukile’s distribution versus CPI plus a margin determined by the committee from time to time after consideration of specific internal and external factors.

Vesting dates gg Three years from award date.

Plan life gg 10 years.

Outperformance gg If 120% of index performance is achieved, double the amount of shares will be delivered to executive directors and prescribed officers.

Malus and claw-back gg CSP allocation already vested is subject to claw-back provisions in the case of the discovery of deficient performance relative to the evaluation of the shares that have vested, malice or mala fide error becoming apparent.

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

Plan type gg Purchase plan. Shares are acquired by the participant through a loan provided by the company.

Plan limits gg Overall limit: 1.5% of issued capital.gg Individual limit: 0.5% of issued capital.gg Current utilisation of the scheme is equal to 35% of its potential maximum limit.

Eligibility gg Executive directors and key senior management employees.

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

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


Sustainability reviewVukile Integrated annual report 2015 36

Economic performance

Vukile has made excellent progress this year in improving the quality of its portfolio of properties. Acquisitions of properties with a high national tenant component and with strong cash flows were acquired during

the year ended 31 March 2015 at a cost of R2.78 billion, including Synergy’s portfolio. Winnowing of the portfolio was pursued during the year which resulted in the sale of five non-core higher-risk properties for R150 million, net of costs.

Liquidity and share priceDuring the 12 months ended 31 March 2015, 169 million shares were traded which equates to approximately 14 million shares per month.

The Vukile share price has increased year-on-year by 15.1% from R16.73 to R19.25.

- 0

- 10 000 000

- 20 000 000

- 30 000 000

- 40 000 000

Volume traded

April May June July August September October November December January February March

Volume (’000)Rand

10 7

84

8 19

6

8 48

1

11 4

48

11 6

29 13 8

94

11 5

37

8 30

7

15 5

90

32 0

02

17 2

1819 4

98

Closing price

20152014

Closing price versus monthly volume traded

21.00 -

20.00 -

19.00 -

18.00 -

17.00 -

16.00 -

15.00 -

14.00 -

The total value of shares traded during the year amounted to R2.9 billion or 26.4% of the company’s market capitalisation at 31 March 2015.

The graph alongside reflects the comparative liquidity of Vukile against a mix of property companies for the year ended 31 March 2015.

ACP

SAC VKE

EMIHYP RDF

GRT

Value traded as % of market capitalisation

Market capitalisation (Rm) as at 31 March 2015

70 -

60 -

50 -

40 -

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10 -

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10 000

-

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

0-

30-

60-

90-

120-

150-

Cents per share

2005 2006 2007 2008 2009 2010 20152011 2012 2013 2014

Interim Final Normalised total Non-recurring

30

.03

1.5

61

.5

32

.53

6.0

68

.5

35

.8 41

.07

6.8

40

.3 48

.08

8.3

44

.1 53

.89

7.9

47

.06

0.9

10

7.9

46

.26

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.66

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1.4

52

.26

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71

.75

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6.5

8.7 1

3.4

11

.2

13

.8

59

.17

7.7

13

6.8

Financial resultsThe group’s net profit available for distribution increased by R80.3 million (11.5%) to R774.2 million for the year ended 31 March 2015 (March 2014: R693.9 million).

Simplified income statementThis income statement does not comply with IFRS as IFRS adjustments have been excluded. In order to facilitate the comparison with the prior year this income statement excludes the Synergy Income Fund Limited’s (Synergy) results on a consolidated basis and merely reflects income generated from the investment in Synergy.

Calculation of distributable earnings

2015MarchGroupR000

2014MarchGroupR000

% change

Net profit from property operations excluding straight-line income adjustment 935 415 847 301 10.4Net income from asset management business 16 432 79 544 (79.3)Income from listed property investment (Fairvest) 26 115 9 084 >100Income from Synergy 33 144 5 778 >100Investment and other income 24 851 49 417 (49.7)Administrative expenses (38 133) (34 968) 9.1Finance costs (260 915) (256 605) 1.7Taxation (including deferred tax on timing differences) (26) (5 678) (>100)Shares issued cum distribution 33 262 – >100Costs of acquiring Synergy 2 778 – >100Pre-acquisition dividends arising on fair value calculation of Synergy units at date of obtaining control 1 293 – >100

Available for distribution 774 216 693 873 11.5

Property portfolio results During the past financial year, the property portfolio performed very well in a difficult economic environment. The retail sector continued to outperform the other sectors while the industrial sector continued showing signs of improvement. The commercial sector still battled with vacancies in selected properties due to an oversupply of space in those nodes. Vacancies on the total portfolio, including Synergy, reduced from 6.5% to 4.6% of GLA, while the expiry profile improved substantially compared to previous reporting periods, thereby significantly reducing the risk in the portfolio. For the Vukile portfolio, positive reversions were achieved on renewals across all sectors, but more so in the retail sector with reversions of 10.8% being achieved, while Synergy’s retail portfolio achieved reversions of 9.1% across the portfolio. On the Vukile portfolio new transactions were concluded higher than budget in the retail sector but below budget in the industrial and commercial sectors in an effort to reduce vacancies.


Economic performance continued

Five non-core properties were sold during the year in terms of the group’s winnowing strategy. The properties were sold at a 10.7% discount to fair value primarily as a result of the decision to sell the vacant 1 Kramer Road, Bedfordview property for R12 million or 34% below the March 2014 valuation.

Gross rental receivables (tenant arrears)The value of the property portfolio increased by c.30% from the previous year, mainly through the acquisition of Synergy. Tenant arrears increased from the prior year by R18.6 million to R51.1 million at 31 March 2015 (2014: R32.5 million), which is an indication that certain non-national tenants are being negatively affected by the difficult economic environment and the impact of load shedding. Our property managers, JHI and Broll, report similar trends across the various portfolios they manage.

Impairment allowance – tenant receivablesThe allowance for the impairment of tenant receivables has increased from R11.3 million at 31 March 2014 to R27.4 million at 31 March 2015, which is considered adequate at this stage. The impairment allowance represents 1.5% of property revenue, excluding Synergy (March 2014: 0.81%). A summary of the movement in the impairment allowance of trade receivables is set out below:

R000

Impairment allowance 1 April 2014 11 344 Allowance for receivable impairment for the year 15 834 Receivables written off as uncollectable (3 562)

23 616(1) Synergy’s impairment allowance 31 January 2015 3 763 Impairment allowance 31 March 2015 27 379 Bad debt write-off per the income statement 3 812 (1) This includes the movement of Synergy’s

impairment allowance for the two months ended 31 March 2015.

Asset management businessThe asset management business segment generated a normalised net profit of R16.4 million for the year against R13.5 million in the prior year, if non-recurring sales commission of R66 million earned in the prior year is excluded. This segment’s profit includes a consolidation adjustment of Vukile’s asset management fees of R26.1 million (March 2014: R25.8 million) paid internally. Asset management and other fees received of R48.5 million were in line with the previous year.

Asset management fees are made up as follows:

2015Rm

2014Rm

Asset management fees received from Sanlam 22.4 22.9Asset management fees in respect of the Vukile portfolio(1) 26.1 25.8

48.5 48.7(1) These fees are eliminated on consolidation,

reducing the income earned by the asset management business segment and increasing net profit from property operations.

A contract to sell the asset management business relating to Sanlam’s property portfolio to Sanlam was concluded on 7 November 2014.

The selling price of R167 million was agreed upon together with transfer service fee income from certain ongoing services to be paid by Sanlam to Vukile as follows:

Rm

31 March 2015 731 March 2016 831 March 2017 8

On the assumption that the selling price of R167 million is invested in

properties yielding at least 9.0% and taking the above transfer service fee income into account, the effect on Vukile’s distributable income for the years ending 31 March 2015 to 31 March 2017, based on budgeted asset management income for the same period, will be immaterial. Following the implementation of the sale, Vukile has a simpler structure and a more predictable income stream going forward.

The sale of the asset management business to Sanlam for R167 million together with a discounted value of future fee income of R14.6 million, equates to R181.6 million. Including expenditure incurred in finalising the sale, a loss of R61.6 million was incurred. The asset management business was valued at R242.1 million at 31 March 2014 which valuation was based on, inter alia, certain reinvestment strategies as advised by Sanlam following the sale of East Rand Mall for R2.2 billion. However, during the contractually prescribed independent valuation process undertaken by PwC, Sanlam represented that the R2.2 billion was no longer available for reinvestment due to a change in strategy whereby they were no longer looking to invest in direct property. This effectively reduced the valuation by c.R60 million.

FairvestVukile held 33.9% in Fairvest at year- end, at a cost of R249.7 million. Fairvest is fair valued at 31 March 2015 at R384.8 million, representing a capital appreciation of 54% since the dates of acquisition.

The 187.5% increase in income from Fairvest arises from 12-month distributions versus three months in the prior year, the additional shares acquired in September 2014 and a c.10% increase in distributions.


SynergyVukile acquired an additional 5 625 611 Synergy A units and an additional 93 687 502 Synergy B units during the year through an issue of shares, for a consideration of R362 million.

The increase in income from Synergy arises mainly as a result of the additional shares acquired and income earned on the initial acquisition of 52.3 million shares for a full year as opposed to four months in the previous year.

Group finance costs (excluding Synergy)Group finance costs have increased by R4.3 million, from R256.6 million to R260.9 million. The increase in finance costs is primarily due to additional interest of R4.2 million arising on the extension of swaps by a further 12 months, additional interest on the Encha transaction (12 months versus 8 months) and offset by the interest reduction following the repayment of the R400 million Nedbank facility in September 2014.

Investment and other income has decreased by R24.6 million from R49.4 million to R24.8 million due to the fact that antecedent divestiture of distributions is no longer accounted for as interest income, whereas in the prior year an amount of R25.3 million was classified as interest income.

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

Group corporate administrative expenditure (excluding Synergy)Group corporate administrative expenditure of R38.1 million is R3.2 million higher than the previous year’s expenditure of R34.9 million.

The main contributing factor to this variance comprises R2.8 million costs of acquiring Synergy, which has been included in corporate administrative expenditure.

DistributionThe distribution for the six months ended 31 March 2015 is 77.688

cents per share which represents an 8.4% increase over the comparable six-month period.

The normalised distribution for the full year ended 31 March 2015 increased by 8.13% to 136.77 cents per share (March 2014: normalised 126.49 cents per share).

Summary of group financial performance 2015

March2014

March%

changes

Headline earnings (Rm) 1 008 765 31.8 Net asset value per share (cents) 1 716 1 498 14.6 Normalised distributions (cents) 136.77 126.49 8.1 Special distribution (cents) – 13.83 –Loan to value ratio (%)(I) 29.0 33.10 (12.4) Loan to value ratio net of cash (%)(I) 26.0 30.80 (15.6) Gearing ratio (%)(II) 26.6 29.10 (8.6) (I) Based on directors’ valuations of the group’s portfolio at 31 March 2015.(II) The gearing ratio is calculated by dividing total interest-bearing borrowings by total assets.

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

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Share assurances of R1.1 billion during the year were primarily utilised to acquire control of Synergy (R362 million) and to acquire investment properties (R358 million), resulting in cash on hand at 31 March 2015 of R474 million.



The net asset value of the group increased over the reporting period by 14.6%, from 1 498 cents per share to 1 716 cents per share at 31 March 2015. The change in net asset value per share, based on 572.7 million shares in issue at year-end, is set out in the NAV bridge graph below:

300-

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NAV bridge (cents)

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

StrategyCurrent position

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

100

Spread expiry terms of all interest-bearing debt to less than 25% per annum Achieved

Hedge or fix more than 75% of interest-bearing debt 102% hedged(I)

88% hedged(II)

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

(I) Vukile and its subsidiaries excluding Synergy – excludes development debt and commercial paper.(II) Vukile including Synergy – excludes development debt and commercial paper.

The Global Credit Rating Company (Pty) Ltd (GCR) has recently reaffirmed an “A” corporate rating and an AA (RSA) rating on Vukile’s R5 billion DMTN programme. GCR further accorded an AA+ rating with a stable outlook to the R580 million bond issuance on 8 May 2015.


During March 2015, the company successfully issued R310 million of commercial paper as follows:

Maturity dateTerm

months Rm

Interestrates

%

September 2015 6 169 7.233July 2015 6 85 7.147March 2016 12 56 7.308

310

The table below sets out the debt that has been hedged/fixed.

VUKILESecured variable rate loans

Borrowings R000

Interestrate

hedges/fixed R000

%hedged

DMTN corporate bonds 1 320 000 1 320 000 86DMTN commercial paper(I) 310 000 – 0RMB term facility – East Rand Mall expansion(I) 50 000 – 0ABSA term facility 300 000 300 000 100Nedbank term facility 100 000 81 667 82RMB (R1.5 billion acquisition) 245 000 245 000

133Additional interest rate swap(II) – 81 667SCM (R1.5 billion acquisition) 245 000 245 000 100Standard Bank (Encha acquisition) 184 550 184 550 100RMB (Encha acquisition) 150 000 150 000 100

Vukile (March 2014: R3.0 billion) 2 904 550 2 607 884 84

Synergy 970 570 466 705 48

Group total (March 2014: R3.40 billion) 3 875 120 3 074 589

Less: Development loans and commercial paper (360 000)

Total adjusted loans 3 515 120

% hedged – Vukile and Synergy(I) 88 (I) Excluding development loans and commercial paper. Interest on development loans is capitalised until the development is completed.(II) Additional interest rate swap which replaced a similar swap expiring in April 2015.

It is the policy of the company not to hedge short-term commercial paper (R310 million) and development debt (R50 million).

The company’s borrowing capacity is unlimited in terms of its Memorandum of Incorporation (MOI). The group’s loan to value ratio at 31 March 2015 based on the directors’ valuations of the property portfolio was 29.0% (March 2014: 33.1%) compared to the bank’s covenants of 50%, the DMTN covenants of 40% in respect of those properties mortgaged as security under the DMTN programme and 45% in respect of total group debt as a percentage of the value of total group investment properties. The group has unutilised bank facilities of R771 million at 31 March 2015.


Post-period refinancingCorporate bonds amounting to R580 million were successfully refinanced by way of an auction, which was heavily oversubscribed, in May 2015 as follows:

Termyear Rm

Finance costs

%

VKE 06(1) 3 380 7.370VKE 07(1) 5 200 7.767(1) Based on three-month JIBAR.


The corporate bonds are hedged in terms of the swaps extended during the year.

Valuation of portfolioThe accounting policies of the group require that the directors value the entire portfolio every six months at fair market value. Approximately one-half of the portfolio is valued every six

months, on a rotational basis, by registered independent third-party valuers. The directors have valued the group’s property portfolio at R13.3 billion as at 31 March 2015. This is R3.1 billion or 29.1% higher than the valuation as at 31 March 2014 mainly due to the acquisition of the Synergy portfolio, Tzaneen Maake Plaza (30%), Houghton Estate Oxford Terrace and Sandton Linbro 7 on

Mastiff Business Park. The calculated recurring forward yield for the portfolio is 9.4%.

The external valuations by Quadrant Properties (Pty) Ltd and Knight Frank (Pty) Ltd at 31 March 2015 of 48.3% of the total portfolio are in line with the directors’ valuations of the same properties.


Property portfolio overviewMarket overviewThe South African property market has held up fairly well in light of a struggling economy, however, the sector has shown a slight contraction compared with prior years. According to the SAPOA/IPD South Africa Annual Property Index, the sector delivered a total return for 2014 of 12.9%, significantly lower than the total return of 15.9% generated in calendar year 2013. The drop in the total return can be attributed to lower capital growth of 4.0% compared with the 6.8% recorded in 2013. Income returns were marginally up from 8.6% in 2013 to 8.7% in 2014. Property fundamentals showed signs of improvement over the period. Vacancies have continued on their downward trend across all sectors for the last few years. The most impressive improvement in vacancies was in the office sector where vacancies fell from 10.4% in 2013 to 8.7% in 2014. Retail vacancies also improved somewhat, dropping from 5.1% in 2013 to 4.3% in 2014. Industrial vacancies remained relatively flat at 3.6%. Severe increases in operating costs per square metre per month have stunted bottom-line net income growth over the last five years or so. However, for the period under review, operating costs per square metre per month have seemed to stabilise at around R41.60. It is unlikely that this will remain the case in the foreseeable future as further electricity and rates hikes are expected. Some segments have performed better than others. Small regional, neighbourhood and community shopping centres have outperformed with total returns of 16.2%, 15.7% and 15.1% respectively. Standard units/workshops was the best performing segment in the industrial sector for 2014 with a total return of 15.1%.

The big surprise for 2014 was the underperformance of super regional and regional shopping centres, with subdued total returns of 11.2% and 11.4% in 2014 down from 19.9% and 18.2% in 2013 respectively. City decentralised offices continue to lag behind the rest of the market with a total returns of 11.5% in 2014. Inner city offices have showed some improvement with a total return of 13.5% in 2014. Retail property has shown a considerable contraction in total returns with a year-on-year decline of 4.6%. According to the IPD, shopping centres, however, still delivered a respectable total return of 13.3% in 2014. In terms of capital growth, the retail sector remains the strongest of all the sectors with capital growth of 5.1% (down from 9.4% in 2013). However, in terms of income returns, the retail sector is the weakest with flat income returns of 7.9% in 2014. Occupancy rates of nodally dominant centres, typically super regional and regional centres, remain fairly robust with vacancies around the 3% mark. Vacancies in community and neighbourhood centres have improved year-on-year but remain higher than the sector average of 4.3% at 7.4% and 5.2% respectively. Lower consumer confidence and potential hikes in interest rates are factors that are likely to put pressure on the retail sector. Office property continues to lag behind the rest of the property sector and recorded a total return of 12.1% in 2014 compared with 13.1% in 2013. Its total return comprised 9.5% income return and capital growth of only 2.4%, which is the lowest of all the sectors. Vacancy levels in the office sector have improved noticeably from 10.4% in 2013 to 8.7% in 2014, this has, however, come at the expense of

rental growth which is at 4.3% and is also the lowest of all sectors. Offices in city decentralised nodes and in inner city nodes were the worst hit in terms of capital growth, registering just 2.3%. Inner city offices generated a respectable total return of 13.5% buoyed by strong income growth of 11.0% and improved vacancy levels. Overall vacancies in the office sector are still the highest of all three sectors at 8.7% in 2014. This is, however, a significant improvement from 10.4% in 2013. Base rental growth rates in the office sector have also come under a lot of pressure with basic rental growth at just 4.3% in 2014, again the lowest of all three sectors. The outlook for the office sector still remains fairly grim. Slow economic growth and high unemployment continues to curb the demand for new office space. Industrial property was the star performer for the second year running with a total return of 14.1% in 2014. Its total return comprised 9.9% income return, the highest of all three sectors, and capital growth of 3.9%. Segment wise, standard units and workshops was the top performer with a total return of 15.1%. The industrial sector registered the lowest vacancies of all three sectors at just 3.5% and also registered healthy basic rental growth of 6.7%. The low vacancy rate was not segment specific with all types of industrial property at 4.0% vacant or less. The industrial sector continues to enjoy the lowest operating costs per square metre per month, at R16.70, which bodes well for the sector over the long term considering the current environment of rising operating costs. Although these are good signs for the industrial sector, rentals and vacancies remain highly dependent on the manufacturing sector.

Portfolio review


East Rand Mall*

Durban Phoenix

Plaza

Pretoria Navarre Building

GugulethuSquare

Soweto Dobsonville

Shopping Centre

Cape Town Bellville

Louis LeipoldtPinetown

Pine Crest*Randburg

SquarePretoria

De Bruyn Park

Oshakati Shopping

CentreTotal

top 10

Property

Location Boksburg Durban Pretoria Gugulethu Soweto Bellville Pinetown Randburg Pretoria Oshakati

Sector Retail Retail Sovereign Retail Retail Hospital Retail Retail Sovereign Retail

Rentable area m² 31 494 24 363 47 519 25 322 23 177 22 311 20 056 40 874 41 418 24 632 301 166

Directors’valuation at

31 March 2015 R000

996.3 660.1 446.5 399.1 383.4 363.3 351.6 340.5 334.1 319.7 4 594.6

% of total 7.5 4.9 3.3 3.0 2.9 2.7 2.6 2.6 2.5 2.4 34.4

Valuation R/m² 31 634 27 095 9 396 15 759 16 541 16 282 17 530 8 331 8 065 12 978 15 256

*Represents an undivided 50% share in this property.

Top 10 properties by value

Portfolio review continued

Sectoral pro�le% of gross income

Sectoral pro�le: Vukile portfolio % of gross income

l Retail (56)*

l Of�ces (22)

l Industrial (9)

l Sovereign (10)

l Hospital (2)

l Motor related (1)

l Retail (54)

l Of�ces (23)

l Industrial (10)

l Sovereign (10)

l Hospital (2)

l Motor related (1)

*Only two months of Synergy gross income included.

Sectoral pro�le% of GLA

Sectoral pro�le: Vukile portfolio % of GLA

Retail (51)

l Of�ces (19)

l Industrial (19)

l Sovereign (8)

l Hospital (2)

l Motor related (1)

l Retail (42)

l Of�ces (23)

l Industrial (22)

l Sovereign (10)

l Hospital (2)

l Motor related (1)


East Rand Mall*

Durban Phoenix

Plaza


GugulethuSquare

Soweto Dobsonville

Shopping Centre

Cape Town Bellville

Louis LeipoldtPinetown

Pine Crest*Randburg

SquarePretoria

De Bruyn Park

Oshakati Shopping

CentreTotal

top 10

Property

Location Boksburg Durban Pretoria Gugulethu Soweto Bellville Pinetown Randburg Pretoria Oshakati

Sector Retail Retail Sovereign Retail Retail Hospital Retail Retail Sovereign Retail

Rentable area m² 31 494 24 363 47 519 25 322 23 177 22 311 20 056 40 874 41 418 24 632 301 166

Directors’valuation at

31 March 2015 R000

996.3 660.1 446.5 399.1 383.4 363.3 351.6 340.5 334.1 319.7 4 594.6

% of total 7.5 4.9 3.3 3.0 2.9 2.7 2.6 2.6 2.5 2.4 34.4

Valuation R/m² 31 634 27 095 9 396 15 759 16 541 16 282 17 530 8 331 8 065 12 978 15 256

*Represents an undivided 50% share in this property.

Geographic pro�le% of GLA

Geographic pro�le: Vukile portfolio % of GLA

Geographic pro�le: Synergy portfolio % of GLA

l Gauteng (54)

l KwaZulu-Natal (16)

l Western Cape (10)

l Namibia (5)

l Free State (5)

l Limpopo (3)

l Mpumalanga (3)

l North West (3)

l Eastern Cape (1)

l Gauteng (61)


l Western Cape (7)

l Namibia (6)

l Free State (4)

l Limpopo (3)

l Mpumalanga (2)

l North West (2)

l Eastern Cape (1)

l Gauteng (12)


l Western Cape (26)

l Free State (11)

l Limpopo (9)

l Mpumalanga (12)

l North West (6)

Top four regions account for 85% of exposure.

Geographic pro�le% of gross income

Geographic pro�le: Vukile portfolio % of gross income

Geographic pro�le: Synergy portfolio % of gross income

l Gauteng (56)


l Western Cape (7)

l Namibia (7)

l Free State (4)

l Limpopo (3)

l Mpumalanga (3)

l North West (2)

l Eastern Cape (1)

l Gauteng (13)


l Western Cape (32)

l Free State (11)

Limpopo (8)

l Mpumalanga (10)

l North West (5)

l Gauteng (58)


l Western Cape (6)

l Namibia (7)

l Free State (4)

Limpopo (3)

l Mpumalanga (2)

l North West (2)

l Eastern Cape (1)

Top four regions account for 87% of exposure.



Tenant pro�le% of GLA

Tenant pro�le: Vukile portfolio % of GLA

Tenant pro�le: Synergy portfolio % of GLA

l Large national and listed tenants and major franchises (50)

l Government (11)

l National and listed tenants, franchised and medium to large professional �rms (9)

l Other (30)


l Government (13)


l Other (33)



l Other (17)

Tenant pro�le: Retail portfolio % of GLA

Tenant pro�le: Vukile retail portfolio % of GLA

Tenant pro�le: Synergy portfolio % of GLA



l Other (19)



l Other (19)



l Other (17)

Group property portfolio overviewThe group property portfolio at 31 March 2015 consisted of 93 properties with a total market value of R13.3 billion and gross lettable area of 1 339 090m², with an average value of R143 million per property.

The geographical and sectoral distribution of the group’s portfolio is indicated in the graphs below. The portfolio is well represented in most of the South African provinces and Namibia. Some 88% of the gross income is derived from Gauteng, KwaZulu-Natal, Western Cape and Namibia.

0 -

10 -

20 -

30 -

40 -

50 -

60 -

70 -

80 -

Sectoral pro�le – based on market value (%)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Motor related Hospital Sovereign Industrial Of�ces Retail

64

16

973

53

49

22

10

10

3224

13

32

53

1 1

51

62

5

53

14

16

26

53

15

17

24

54

13

17

25

55

13

16

25

53

14

15

27

52

14

14

29

53

14

14

28


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

Vukile’s tenant concentration risk is considered to be low as the top 10 tenants account for 37.3% of total

GLA. If the Synergy portfolio is excluded, the top 10 tenants account for 35.9% of total GLA. Local, provincial and national government is the single largest tenant, occupying 10.7% of total GLA with Shoprite the second largest at 5.7% of total GLA. If

the Synergy portfolio is excluded, the exposure to government and Shoprite is 12.7% and 5.8% respectively. The Synergy portfolio’s exposure to the top 10 tenants is 45%, with Spar the largest at 19.2% and Massmart at 6.3%.

The 10 largest properties represent 34.4% of the total portfolio:

Sector

Rentable area

m²

Directors’ valuation 31 March

2015 Rm

% of total

Valuation R/m²

Retail 189 918 3 450.7 25.9 18 169Sovereign 88 937 780.6 5.8 8 777Hospital 22 311 363.3 2.7 16 282

Total top 10 properties 301 166 4 594.6 34.4 15 256

The 10 largest retail centres (representing 51% of the total retail portfolio value) reflect 87% exposure to national, listed and franchised tenants.

Top 10 retail centres (based on value)

Directors’ valuation31 March

2015Rm

% total retail

portfolio value

(%)

National, listed and

franchised tenants

(%)

Average annual trading

densityR/m2

Year-on-year growth

in trading density

(%)

Boksburg East Rand Mall* 996.3 11.7 89.9 30 603 1.3Durban Phoenix Plaza 660.1 7.7 78.6 31 520 8.0Gugulethu Square 399.1 4.7 89.7 ∆

Soweto Dobsonville Shopping Centre 383.4 4.5 82.8 30 311 2.9Pinetown Pine Crest* 351.6 4.1 94.1 24 641 3.4Randburg Square 340.5 4.0 83.4 14 852 2.3Oshakati Shopping Centre 319.7 3.8 92.0 27 048 8.5Atlantis City Shopping Centre 310.0 3.6 79.8 ∆

Phuthaditjhaba Setsing Crescent 298.2 3.5 95.7 ∆

Daveyton Shopping Centre# 297.5 3.5 83.6 30 326 1.7

4 356.4 51.1 86.9 27 043 4.0

* Represents an undivided 50% share in this property.# Excluding the trading density of Pick n Pay.∆ Not yet measured.



Property portfolio performanceNew leases and renewals of 250 111m² with a contract value of R871 million were concluded during the year. Some 85% of leases to be renewed during the year ended 31 March 2015 were renewed.

Details of large contracts concluded

Tenant Property Sector

Contractvalue

Rm

Lease duration

years

Mahle Behr South Africa Durban Valley View Industrial Park Industrial 72.5 5 Omnia Group Sandton Bryanston Ascot Offices Offices 38.6 7 Pick n Pay Oshakati Shopping Centre Retail 35.0 10 U Bank Sandton Sunninghill Sunhill Park Offices 19.3 3 Syspro Sandton Sunninghill Place Offices 19.1 4 Zone Fitness Pretoria Arcadia Suncardia Offices 18.0 10 Omnia Group Sandton Bryanston St Andrews Complex Offices 14.8 6 Special Investigating Unit East London Vincent Office Park Offices 14.1 3 Business Systems Group Jhb Houghton Estate Oxford Terrace Offices 12.4 5 A5 Cash & Carry Hammarsdale Junction Retail 9.8 10

The group lease expiry profile graph (% of GLA) reflects that 27.0% of the leases are due for renewal in 2016. Some 33.0% of leases are due to expire in 2019 and beyond (up from 24% in the prior year).

0

5

10

15

20

25

30

4.6

22

27

13

15

8

10

Group lease expiry – % of GLA

Vacant March 2016 March 2017 March 2018 March 2019 March 2020 Beyond March 2020

Cumulative as at March 2015 Cumulative as at March 2014GLA


The group lease expiry profile (% by revenue) is as indicated in the graph below:

0

5

10

15

20

25

30

23

27

16

18

7

9

Group lease expiry pro�le – % by revenue

2016 2017 2018 2019 2020 2021 and beyond


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150-

1-

2-

3-

4-

6-

5-

7-

8-

4.9

3.7

2.9 3.0 3.1

3.9

5.3

6.1

6.8

6.5

4.6


Retail Of�ces Industrial Sovereign Hospital Motor related Total0-

5-

10-

15-

20-

2.7

2

.7 3.4

17

.51

4.0

10

.2

2.8

2.2

1.9

6.2

3.8

5.9

0.0

0.0

0.0

10

.71

4.1

0.0

6.5

5.4

4.6

31 March 2014 30 September 2014 31 March 2015

VacanciesAt 31 March 2015, the portfolio’s vacancy (measured as a percentage of gross rental) was 5.6% compared with 6.7% at 31 March 2014.

On 31 March 2015, the portfolio’s vacancy (measured as a percentage of gross lettable area) was 4.6% compared with 6.5% at 31 March 2014.

If the current development vacancy of 7 412m² at Germiston Meadowdale Mall, East Rand Mall and Cape Town Bellville Barons is included in the 31 March 2015 vacancy, the vacancy on area increases from 4.6% to 5.1%.

If the transaction with the Department of Rural Development and Land Reform to occupy 6 268m² for a period of four years from 1 October 2015 at Pretoria Arcadia Suncardia is taken into account, the office vacancy on area will reduce from 10.2% to 7.8% and the total vacancy on area will reduce from 4.6% to 4.1%.

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

The increase in retail vacancies is due to the Synergy portfolio carrying a higher vacancy than the Vukile retail portfolio. Office vacancies decreased considerably compared with the previous period.



The properties with the highest vacancies are reflected below.

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

Individual properties vacancy pro�le – vacancy > 1 000m2 (% of GLA)

Pretoria Arcadia Suncardia (30%)**

Germiston Meadowdale Mall (13%)*

Pretoria De Bruyn Park (11%)

Cape Town Bellville Tiger Park (9%)

Roodepoort Robertville Industrial Park (13%)

Sandton Bryanston St Andrews Complex (16%)

Sandton Rivonia Tuscany (6%)

Centurion Samrand N1 (0%)

Hartbeespoort Sediba Shopping Centre (20%)

Germiston Meadowdale R24 (3%)

Soweto Dobsonville Shopping Centre (1%)

Johannesburg Dobsonville Shopping Centre (1%)

Johannesburg Isle of Houghton (5%)

Boksburg East Rand Mall (4%)*

Hammanskraal Renbro Shopping Centre (9%)

Atlantis City Shopping Centre (5%)

Roodepoort Ruimsig Shopping Centre (10%)

Pretoria Navarre Building (2%)

Johannesburg Parktown Oakhurst (19%)

Randburg Square (9%)

Midrand Ulwazi Building (10%)

Roodepoort Hillfox Power Centre (4%)

Bloemfontein Plaza (6%)

Centurion 259 West Street (31%)

Midrand IBG (19%)

Pretoria Hat�eld Festival Street Of�ces (52%)

Cape Town Bellville Barons (20%)*

Randburg Trevallyn Industrial Park (0%)

Emalahleni Highland Mews (7%)

Ermelo Game Centre (17%)

Sandton Hyde Park 50 Sixth Road (26%)

Johannesburg Rosettenville Village Main Industrial Park (13%)

Cape Town Bellville Suntyger (16%)

* Development vacancy.** The Department of Rural Development and Land Reform will occupy 6 268m² for a period of four years from 1 October 2015 which will reduce the vacancy at Pretoria Arcadia Suncardia from 8 720m² (30%) to 2 452m² (8.5%).

Vacant area 31 March 2014 Vacant area 31 March 2015


Vukile is engaged in various initiatives to reduce portfolio vacancies including broker focus groups, the publishing of vacancy information directly to brokers and also utilising the Vukile vacancy website, leasing incentives on selected properties, incentives to property management companies and leasing brokers, etc.

GLA summary GLA m²

Balance at 1 April 2014 1 144 841GLA adjustments 1 411Disposals (29 544)Acquisitions and extensions 222 382

Balance at 31 March 2015 1 339 090

Vacancy summary Area m² %

Balance at 31 March 2014 74 185 6.5Less: Properties sold since 31 March 2014 (15 862) (1.4)

Remaining portfolio balance at 31 March 2014 58 323 5.1

Leases expired or terminated early 262 433 –Renewal of expired leases (161 911) –Contracts to be renewed (27 849) –Tenants vacated (70 415) –Development vacancy (7 412)New letting of vacant space 8 185 –

Balance at 31 March 2015 61 354 4.6

Financial performance for the stable portfolio (Rm) 2015 2014%

change

Gross property revenue 1 185.5 1 109.3 6.9 Recurring property expenses 429.6 404.8 6.1

Recurring net property income 755.9 704.5 7.3 Non-recurring property expenses 23.0 18.3 25.7

Net property income (Rm) 732.9 686.2 6.8

Property expense ratios (%)* 36.2 36.5 (0.8)

*Recurring gross cost to property revenue ratios (including rates and taxes and electricity costs; excluding asset management fee).



The weighted average monthly base rental rates per sector, between 31 March 2014 and 31 March 2015, are set out in the graph below. The high increase in the average rental rate per square metre is due to the shift in portfolio structure since 31 March 2014 as the higher exposure to retail properties increases the average rental rate of the portfolio.

Weighted average base rentals – (R/m2)Excluding recoveries

Retail

5.4%

Of�ces

5.6%

Industrial

4.4%

Sovereign

11.6%

Hospital

7.5%

Motor related

9.0%

Total

9.0%

120 -

100 -

80 -

60 -

40 -

20 -

0 -

102.

56

108.

14

86.8

0

91.6

3

40.1

6

41.9

4

83.4

4 93.1

1

89.0

9

95.7

7

104.

50 113.

93

83.3

9 90.9

0

March 2014 March 2015

If sales and acquisitions are excluded from the analysis, the weighted average monthly base rental rates of the stable portfolio compare as follows between 31 March 2014 and 31 March 2015:

Weighted average base rentals – portfolio excluding sales and acquisitions (R/m2)Excluding recoveries

Retail

6.9%

Of�ces

5.1%

Industrial

3.6%

Sovereign

11.6%

Hospital

7.5%

Motor related

15.3%

Total

6.3%

120 -

100 -

80 -

60 -

40 -

20 -

0 -

103.

32

110.

41

86.8

0

91.2

7

40.1

6

41.6

1

83.4

4 93.1

1

89.0

9 95.7

7

98.7

9 113.

93

83.4

8

88.7

2

March 2014 March 2015


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

0 50 100 150 200 250

Weighted average rentals – Retail (R/m2) Excluding recoveries

Boksburg East Rand Mall (50%)

Durban Phoenix Plaza

Durban Workshop

Mbombela Truworths Centre

Windhoek 269 Independence Avenue

Sandton Bryanston Grosvenor Shopping Centre

Oshikango Spar Centre

Pinetown Pine Crest (50%)

Gugulethu Square

Daveyton Shopping Centre

Atlantis City Shopping Centre

Soweto Dobsonville Shopping Centre

Hillcrest Richdens Shopping Centre

Pietermaritzburg The Victoria Centre

Phuthaditjhaba Setsing Crescent

Katutura Shoprite Centre

Oshakati Shopping Centre

Ondangwa Shoprite Centre

Ga-Kgapane Modjadji Plaza (30%)

Newcastle Taxi City Shopping Centre

Welgedacht Van Riebeeckshof Shopping Centre

Hammanskraal Renbro Shopping Centre

Giyani Plaza

Hartbeespoort Sediba Shopping Centre

KwaMashu Shopping Centre

Hammarsdale Junction

Piet Retief Shopping Centre

Ulundi King Senzangakona Shopping Centre

Tzaneen Maake Plaza (30%)

Rustenburg Edgars Building

Monsterlus Moratiwa Crossing (94.50%)

Roodepoort Ruimsig Shopping Centre

Makhado Nzhelele Valley Shopping Centre

Emalahleni Highland Mews

Randburg Square

Ermelo Game Centre

Elim Hubyeni Shopping Centre

Letlhabile Mall

Kokstad Game Centre

Bloemfontein Plaza

Mbombela Shoprite Centre

Roodepoort Hillfox Power Centre

Germiston Meadowdale Mall



0 20 40 60 80 100 120 140

Weighted average rentals – Of�cesExcluding recoveries (R/m2)

Pretoria Hat�eld Festival Street Of�ces

Jhb Houghton Estate Oxford Terrace

Pretoria Lynnwood Sanlynn

Jhb Houghton 1 West Street

Sandton Hyde Park 50 Sixth Road

Cape Town Bellville Suntyger

East London Vincent Of�ce Park

Sandton Sunninghill Place

Cape Town Pinelands Pinepark

Cape Town Parow De Tijger Of�ce Park

Sandton Sunninghill Sunhill Park

Cape Town BellvilleTijger Park

Pretoria Lynnwood Sunwood Park

Jhb Parktown 55 Empire Road

Pretoria Arcadia Suncardia

Midrand Ulwazi Building

Centurion 259 West Street

Midrand IBGPretoria Hat�eld 1166 Francis Baard Street

Jhb Parktown Oakhurst

Sandton Bryanston Ascot Of�ces

Jhb Isle of Houghton

Sandton Rivonia Tuscany

Sandton Rivonia 36 Homestead Road

Sandton Bryanston St Andrews Complex

Pretoria Lynnwood Excel Park

Pretoria High Court Chambers

0 10 20 30 40 50 60 70

Weighted average rentals – IndustrialExcluding recoveries (R/m2)

Sandton Linbro 7 on Mastiff Business Park

Kempton Park Spartan Warehouse

Midrand Sanitary City

Pinetown Richmond Industrial Park

Randburg Tungsten Industrial Park

Centurion Samrand N1

Midrand Allandale Industrial Park

Germiston Meadowdale R24

Pinetown Westmead Kyalami Industrial park

Randburg Trevallyn Industrial Park

Roodepoort Robertville Industrial Park

Cape Town Parow Industrial Park

Jhb Rosettenville Village Main Industrial Park

Durban Valley View Industrial Park

Pretoria Rosslyn Warehouse

0 20 40 60 80 100 120 140 160

Weighted average rentals – otherExcluding recoveries (R/m2)


Pretoria Koedoe Arcade

Pretoria De Bruyn Park

Bloemfontein Fedsure House

Cape Town Bellville Louis Leipoldt

Cape Town Bellville Barons

Sandton Linbro Galaxy Drive Showroom

Sovereign

Hospital

Motor related


Rental escalation – contracted rental escalation pro�le (%) Average annual escalation

TotalMotorrelated

HospitalSovereignIndustrialOf�cesRetail

7.8

10 -

8 -

6 -

4 -

2 -

0 -

7.07.

5

8.9

8.2

7.9

7.6

Leasing activity – lease renewals (%)Escalation on expiry rentals

Retail

10.8

Of�ce

2.5

Industrial

1.3

Average

5.6

12 -

10 -

8 -

6 -

4 -

2 -

0 -

Leasing activity – new leases concluded (%) Rental concluded/budget

Retail Of�ce Industrial Average

105.

2

94.7

91.1 96

.3

120 -

100 -

80 -

60 -

40 -

20 -

0 -

Average contractual rental escalation of 7.8% is slightly lower than the previous year (8.0%).

Positive reversions were achieved across all sectors with retail at 10.8%, offices at 2.5% and industrial at 1.3%. The average escalation on expiry rentals on the total portfolio of 5.6% is very positive against the backdrop of a difficult trading environment.

The low escalation of 2.5% on offices is to be expected during the current oversupply of office space.

Industrial escalations of 1.3% have dropped due to leasing incentives offered at industrial parks in an effort to retain tenants to prevent the vacancy from increasing further. If the renewal of Marley Behr at Durban Valley View Industrial Park, which was concluded at lower rentals, is included, the industrial escalation is 0.3%.

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

New leases were concluded 5.2% above budget in the retail sector, but lower than budget in the office and industrial sectors.

The low percentage reflected for the industrial sector is due to leasing incentives offered to tenants to reduce the vacancies. A few smaller leases were concluded at less than the budgeted rate on the sovereign portfolio which did not impact the overall portfolio trends.



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

The various cost components are reflected in the graph below:

Expense categories and ratios

l Government services (45%)

l Rates and taxes (17%)

l Cleaning and security (11%)

l Property management fee (8%)

l Maintenance contracts (7%)

Asset management fee (6%)

l Bad debt (3%)

l Insurance premiums (2%)

l Sundry expenses (1%)

81% of costs from top four categories

The group continuously evaluates methods of containing costs in the portfolio and the stable portfolio’s recurring gross costs to property revenue ratios (excluding electricity and rates and taxes) have decreased from 17.7% in March 2010 to 16.8% in March 2015 and hence have been well contained.

Ratio of gross recurring cost to property revenue – stable portfolio (%)

March 2007

March 2008

March 2009

March2010

March 2011

March2012

March2013

March2014

March 2015

31.6

18.5

33.0

17.7

30.8

17.2

33.1

16.9

35.3

17.0

36.5

17.6

34.8

16.8

34.2

17.5

30.3

17.8

70-

60-

50-

40-

30-

20-

10-

0-

All recurring expenses All recurring expenses excluding rates and taxes and electricity

* The stable portfolio includes only those properties that have been in the portfolio for the full 12-month period.~ Durban Workshop is excluded from this graph.

Rent collection and arrearsAn important part of protecting the group against the likelihood of tenants defaulting on their lease agreements is our credit vetting process prior to the acceptance of a tenant. We have developed a comprehensive screening process for each applicant, which assesses the tenant according to type (national, government, SMMEs and other), nature of business, main shareholders and other relevant characteristics, and in the case of renewals, payment history.

As such, it is important to closely monitor our arrears book and any changes to tenant payment processes. We measure the effectiveness of our collections process based on the percentage collected by the fifth business day of each month. The collection percentages across current tenants are still in line with our targets. However, we have seen an increase in the number of legal cases mainly among smaller line shops across a number of retail centres as well as isolated industrial tenants.

Portfolio growth, redevelopments and sales Acquisition – R409 millionMini-factory/warehousing complex Linbro Park The 15 070m² mini-factory/ware-housing development at Linbro Park was completed on 1 October 2014. Linbro Park is one of Johannesburg’s prime industrial areas. The development is incorporated into Linbro Business Park, firmly established as a desirable business address, which enjoys excellent accessibility to the N3 and Sandton CBD via Marlboro Road while offering the added benefit of being located


Upgrades/redevelopments – R406 millionAs part of the ongoing strategy to improve the quality of the existing portfolio, the projects as set out hereafter have been completed, or are in progress.

East Rand MallEast Rand Mall (in which the company owns a 50% undivided share with Redefine) is being upgraded and extended at a total cost of R336.5 million. Each co-owner will contribute R168.3 million to the total cost. The projected yield on the income-generating portion of the capex is 7.3%, while the yield on the total capex is 6.8%. East Rand Mall, regarded as one of the top regional malls in South Africa, has a GLA of 62 989m², which will be increased to about 69 299m². The main entrances, malls and toilets will be upgraded while some areas will be reconfigured to allow better utilisation of the available space. The extension of 6 310m² incorporates a relocated Entrance 4 and a youth-oriented mall which will be anchored by a Mr Price emporium, which consists of their Apparel, Sport and Home outlets comprising 3 700m². Cotton On will trade in close proximity to Mr Price on 1 250m².

The refurbishment includes new top-quality tiling throughout the mall, a revamp of all bathroom facilities and a convenient new walkway linking the main mall with the parking area. Natural lighting will remain a top priority inside the mall.

approximately three kilometres from the Gautrain Marlboro Station. The development comprises 22 units with a wide variety of unit sizes ranging from 350m² to 1 870m². The capital expenditure is R125 million at an initial yield of 10% which is underpinned by a one-year income guarantee. Letting of the units is progressing well with 50% (11 of 22) let or under option seven months after completion.

30% interest Maake Plaza Transfer of a 30% undivided share in Maake Plaza’s (15 752m²) was registered during July 2014 at a purchase price of R32 million, with an anticipated initial yield of 11.2%. This centre is located in the rural areas surrounding Tzaneen in the Limpopo province. The centre is anchored by Shoprite and the national tenant composition is 88.0%. Letlhabile MallThe Letlhabile Mall, which was acquired for R194.2 million at a yield of 9.0%, started trading on 1 April 2014. The centre with a GLA of 17 000m², is situated in Letlhabile about 30 kilometres north of Brits in the North West province.

Trading at the centre was initially lower than expected due to the strike action in the mining sector, but has since picked up. Houghton Estate Oxford Terrace “A” grade quality offices were acquired for R58 million in April 2014 situated in Ninth Street, Melrose Estate, within walking distance of the Rosebank Gautrain Station.

Together with the adjacent South Point (previously East Rand Galleria), which is also being upgraded, shoppers will experience a dominant super regional shopping centre with a GLA of 120 000m². The project is scheduled for completion by the end of August 2016. Parow De Tyger: Cure Day ClinicThe existing De Tyger Office Park consists of four separate blocks with a total GLA of 4 118m². The Cure Day Clinic is being built on available land originally earmarked for a fifth office block. The clinic will have a GLA of about 1 130m² and the total capex is R24.7 million.

The Cure Day Clinic Group is based in Pretoria and currently has six day hospitals in Gauteng and the Western Cape. A 10-year lease has been concluded with the group. The initial yield on the transaction is 9.3% and the rental will escalate at 8% per year.

The expected completion date is the end of October 2015.

Durban: The WorkshopAn amount of R55.0 million was approved in October 2012 for the upgrade of The Workshop in Durban. The upgrade was however delayed, as the eTthekwini municipality insisted that the plans should first be approved by Amafa, the KZN Heritage Agency. The plans were eventually approved in January 2015.



An additional amount of R20.0 million was approved in February 2015, bringing the total capex to R75.0 million. This was required as a result of an increase in the scope of the upgrade (the external food court as well as all the toilet blocks were included), the installation of a number of new tenants (Pep Stores, Dunns, Ackermans, KFC and London Pie) and an increase in building costs.

The following areas have been completed or are in process:gg The upgrade of the various ablution facilities has been completed.gg The reconfiguration and upgrade of the food court is in process and will be completed by June 2015. gg Replacement of the shop fronts and mall tiles. gg Installation of new ceilings in selected areas.

Additional lighting in the mall area and the increase of natural light will complement the new flooring and contribute to a new bright and fresh look for the mall.

The upgrade of the food court and addition of a number of food outlets will tie in well with the plans of council to establish an extension to the existing convention centre in close proximity to The Workshop.

In addition, Council intends to redevelop the site to the north of the CBD which will include a new Durban central library, new city museum as well as a new central bus rapid transport main terminal, serving all of Durban’s suburbs and a new municipal office building of 25 000m².

This redevelopment is on the doorstep of Durban Workshop and will boost trade and a current footfall which already is in excess of a million per month.

The anticipated completion date is November 2015.

Pretoria: Sanlynn Office Park The Sanlynn Office Park consists of two office blocks with a total GLA of 8 624m², of which 6 162m² (71%) is let to Sanlam. The Sanlam lease expires in December 2015, but has been renewed for another five years, on condition that the external façades and parking areas are upgraded.

The office park is well located on Lynnwood Road, east of the N1 highway in a popular office and retail node.

The total capex is R14.0 million and the projected completion date is October 2015.

Pretoria: Arcadia Suncardia The Arcadia Suncardia building is made up of a retail section on the first two floors and an office block on top. The total GLA of the building is 28 937m² with retail comprising 37% of the total area. The retail portion will be undergoing an upgrade for both the external façade and the interior to modernise and freshen up the building. The total capex to be spent amounts to R15.0 million and the projected completion date is November 2015.

Germiston: Meadowdale MallIn pursuit of Vukile’s desire to cultivate mutually beneficial partnerships, it entered into a sale and development agreement with the Moolman Group

for the sale of a 33% interest in the centre, and the refurbishing and expansion of the centre by 9 500m².

The centre measures 35 847m² of which Checkers and House and Home occupy 18 000m² retail and 5 100m² office space.

The Checkers and House and Home lease expires at the end of May 2016 and will be renewed for a further 10-year period with the refurbishment and expansion project.

The refurbishment project will entail the upgrading of the external façade, refurbishment of internal ceilings and bulkheads and retiling of the mall area. Reconfiguration of the existing centre is limited in order to minimise the capital expenditure in the areas that will not result in enhanced income during the initial period after construction. The total capital expenditure on the refurbishment at the existing centre is estimated at R40 million for Vukile’s 67% share.

The expansion of the centre presents an excellent investment opportunity and the extension of the centre by 9 500m² is currently under way. The new extension will be anchored by Meat World (1 000m²), Apple Tree (1 840m²), Waltons (900m²), Crazy Plastics (1 000m²) and three fast food outlets, KFC, McDonald’s and Nando’s). This expansion will attract shoppers from the strip centres located on Edendale Road which have deteriorated significantly over the past few years. Completion is scheduled for end October 2015. The anticipated capital expenditure for this extension amounts to R69 million for Vukile’s 67% share with an expected initial yield of 10% when fully let.


Gross property sales concluded during the year – R156 millionIn line with the group’s winnowing strategy, five non-core properties were disposed of during the year as follows:

Property

Sales priceR000

Yield%

Lichtenburg Shopping Centre 48 600 9.9Cape Town Kenilworth Motor Showrooms 34 750 12.2Johannesburg Bedfordview 1 Kramer Road 25 000 VacantDurban Westville Surrey Park 25 000 11.4Pretoria Midtown 22 380 Vacant

Total 155 730

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

Acquisition pipeline – R1 billionMoruleng Mall and Batho PlazaVukile acquired two retail centres from New Africa Developments (Pty) Ltd. Moruleng Mall is a 31 653m² regional shopping centre located in the North West province with a national tenant mix of 88%. Anchor tenants include Shoprite, Pick n Pay, Edcon and the Truworths group. A purchase price of R320 million was agreed to acquire 80% of the centre which equates to an initial yield of 8.68%. The remaining 20% is owned by the Bakgatla-Ba-Kgafela.

Batho Plaza is a 14 000m² centre located in Soshanguve, Gauteng, with a national tenant mix of 80%. Anchor tenants include Shoprite and Cashbuild. A purchase price of R140 million was agreed which equates to an initial yield of 9.52%. Moruleng Mall was transferred in April 2015. The Batho Plaza transaction is unconditional and transfer is expected to be in June 2015.

Nonesi Mall Nonesi Mall is a 27 700m² regional shopping centre located in Queenstown, Eastern Cape with a national tenant mix of 96%. Anchor tenants include Checkers, Pick n Pay, Woolworths, Edcon and Massmart. A purchase price of R371.6 million was agreed which equates to an initial yield of 8.25%. The transaction is unconditional and transfer is expected in June 2015.

Silverton industrial portfolio Vukile has concluded a deal to purchase a distribution warehousing portfolio from the HL group. The portfolio comprises six buildings located in close proximity to each other in the Silverton industrial area. Notable tenants include Massmart, Edcon and Topmed. A purchase price of R100.8 million was agreed at an initial yield of 9.25%. The transaction is unconditional and is expected to transfer in June 2015.

40% of Maake PlazaThe acquisition of a further 40% of Maake Plaza at a consideration of R61.6 million and an initial yield of 9.7% is expected to be finalised during July 2015.


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

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

Currently the property management for the Vukile and Synergy property portfolio is outsourced to Broll Property Group (Pty) Ltd (Broll) for the management of 51 properties with a market value of R5.8 billion, including Pine Crest in which Vukile holds a 50% share, JHI Properties (Pty) Ltd (JHI) for the management of 36 properties with a market value of R6.5 billion, including East Rand Mall in which Vukile holds a 50% interest, and Encha Property Services (Pty) Ltd for the management of four properties with a market value of R1.0 billion. McCormick Property Development (Pty) Ltd manages two properties at a value of R85 million.

The relationship between Vukile and the property managers is managed by service level agreements with specific performance clauses and formalised monthly meetings held with the property managers to

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

Property managersJHI has successfully managed the bulk of the Vukile property portfolio since the inception of the fund in 2004 and currently manages 48.6% of the fund based on value. JHI is an expert in the field of property management with a proven track record in delivering comprehensive service offerings to a wide client base, with property management assets under management of R95 billion. This long-term relationship is based on a solid foundation of shared values and goals. JHI provides insight and expertise in order to add value to the Vukile property portfolio while it is also beneficial to JHI by enhancing the quality and value of the assets under their management. The qualities that set JHI apart, and which initially attracted Vukile’s attention, continue to keep the relationship firmly grounded.

Broll Property Group, with total assets under property management of R104 billion in SA and R17 billion in the rest of Africa, continued to manage a portfolio of properties equal to 43.4% of the fund based on value as at 31 March 2015. This dedicated business unit within Broll has gained an intimate knowledge of the portfolio and shares the same vision as Vukile

for these properties, extracting value with a common value system and working towards the same goals. We are confident that the relationship is growing from strength to strength.

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

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

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

Partnerships


Leasing brokersVukile continues to acknowledge the all-important role of leasing brokers in securing tenants for its commercial and industrial properties and will continue to strengthen the relationship with these brokers. During the year under review, Vukile continued building relationships with brokers nationwide. Our monthly vacancy schedule is distributed via the established Vukile vacancy website (www.vukile.co.za) where registered users can access the latest vacancies for both portfolios under management and download the updated vacancy schedules. Brokers also receive the vacancy schedule directly via email. LinkedIn, Twitter and Google Adwords are also used to maintain the visibility of Vukile in social media and on the internet. Management again hosted a series of broker functions in Johannesburg, Pretoria and Cape Town where brokers were presented with portfolio information and direct exposure to vacant pockets. The “Power to Move” programme ran from April 2014 to March 2015 and included all broker deals concluded on the Vukile portfolios during this period. 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 Vukile broker of the year must have achieved at least R250 000 in cumulative commission on the portfolios during the incentive period to qualify for selection.

The 2015 Gauteng regional winners and 2015 national winners of Vukile’s Power to Move programme are Sherry Brown and Davey Mabotja of Khwela City Property Services (Pty) Ltd. They received a R30 000 prize as regional winners and a R100 000 prize as national winners for a leasing deal concluded in Pretoria.

Sales brokers and auctioneersBrokers and auctioneers play an important role, especially introducing new players in the property market. During the past financial year, brokers/auctioneers were involved in three registered sales transactions to the value of R98.6 million.

Developers Through engagements with property developers a number of development propositions are being introduced to the company. Maintaining these relationships with the property developers is important especially with turnkey developments where the company acquires the development on completion as a letting enterprise.

Vukile’s tenants and their customersVukile’s philosophy remains to offer its tenants best value for money in a specific area, by providing an enhanced shopping or business experience which is aligned with the aspirational needs of its tenants and clients.

The company understands that the success of its tenants’ businesses is closely linked to that of the company. Vukile continuously utilises its financing

facilities and free cash from disposals to invest in the upgrade of its portfolio, thereby providing better facilities for its tenants. In time, improved facilities will attract customers and allow tenants to awaken their full potential, thus improving their overall performance.

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

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

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

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


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

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

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

Energy management During the past financial year, R8 million was invested in independent audits, metering and electricity cost-saving initiatives. The identified projects were approved and implemented with estimated savings of R4 million per annum. Vukile’s energy strategy is to continuously seek opportunities to reduce consumption on large electricity consuming systems and to ensure that energy efficiency is incorporated into new developments. A key basis for Vukile’s energy strategy is measurement. Vukile has devised a measurement strategy with the objective that all energy purchased or supplied must be measured and correctly accounted for. This strategy

Human capital

enables Vukile to report on the portfolio’s carbon footprint and to provide accurate metering for tenants, resulting in the identification of possible savings. For new developments, energy- efficient lighting and energy control with smart meters are standardised. Vukile has identified buildings with the potential for photo-voltaic (PV) systems and included a hybrid solution with full generator backup. This will provide tenants the advantage of trading irrespective of supply interruptions. The operating cost of the backup generator will be reduced with the incorporation of the PV system. For 2015, energy-saving projects estimated to reduce 1.6 million kWh have been identified and approved. These projects have a short implementation period with an average payback period of a year.

Environment, health and safety

Health and safety Health and safety are of paramount importance to the group. In terms of the property management agreement between Vukile and its property managers, they assume responsibility to ensure that all the properties comply with the Occupational Health and Safety (OHS) Act on an ongoing basis. In addition, Vukile has retained the services of specific health and safety consultants to conduct audits on a rotational basis to ensure the highest standard of care and compliance.


Transformation and social responsibility

Our core values are in line with being a responsible corporate citizen and we are intent on taking transformation and social responsibility very seriously by making a positive difference.

TransformationTransformation forms part of Vukile’s seven key points as summarised in our vision statement. Vukile’s aim is to remain a truly empowered company and to improve on its B-BBEE rating year after year.

Vukile embarked on its first B-BBEE verification process with Empowerdex during the 2015 financial year. Our first verification yielded a level 4 B-BBEE rating, with a 100% recognition level according to the property sector charter. This rating further speaks to our commitment to the continued goal of remaining a leader in the transformation space.

The foresight of the transaction that was concluded with Encha Group in August 2013 proved to be a great success for both Vukile and Encha. It contributed further to the alignment of interests between the two parties; with Encha acquiring a further R500 000 000 worth of Vukile shares utilising the pioneering equity tap structure. This improved the black shareholding in Vukile and enhanced the transformation credentials of Vukile.

Through the efforts and dedication of management and our board of directors, Vukile achieved an improved employment equity status as well as a diverse, independent and balanced board of directors. Our full compliance status for enterprise and supplier development further highlights Vukile’s drive to improve the transformation landscape and build confidence in SMMEs.

Our goals and aim for the coming year are to improve on our B-BBEE rating and to comply with the amended property sector codes to be gazetted later in the coming year.

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

Social responsibilityVukile’s two-legged approach to social responsibility for the 2015 year was characterised by a partnership with Afrika Tikkun (www.afrikatikkun.org) and the dedicated engagement with the communities located in close proximity to our retail centres.

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

Our approach focuses on addressing the following areas: gg Holistic educational development and learning programmegg Youth and children developmentgg Poverty and inequality alleviation.

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

The group continues to give support to the projects below.

Phoenix Plaza Bursary Awards The Phoenix Plaza Bursary Awards initiative plays an active role in the advancement of local Grade 12 learners who wish to pursue tertiary education. The programme offers bursaries to learners who have shown outstanding academic achievement, taken active leadership roles within their school and/or community but who have also faced severe financial setbacks. The potential candidates follow a strict application and interview process prior to the appointed external judges making a final decision. The bursaries are funded by the centre and contribute towards the winner’s tertiary

education fees. Over the years, this initiative has seen a number of successful doctors, accountants, engineers and lawyers graduate and move on to become significant contributors to our economy. Hammarsdale JunctionThe two anchor tenants are obliged in terms of their lease to contribute a predetermined amount towards community-based projects. One of which has involved a focus on malnutrition and hunger in the Hammarsdale area, the other focusing on sporting gear for a number of schools in the area. This meaningful contribution brings about a valuable contribution towards improving the quality of life and nutrition of those in most need in the community. Hammarsdale, Phoenix Plaza and The Workshop – NPO supportIn a consolidated effort to provide support to local NPOs and charitable organisations, the centres offer a limited amount of exhibition space at no charge to organisations that fulfil the relevant criteria. This space allows these organisations the opportunity to raise awareness on social issues and give opportunities for the public to get involved. Many organisations rely on this to create exposure for their various initiatives. Some of these organisations include the KZN Blind and Deaf society, Child Welfare, Feedy Needy, SANBS, TAFTA, the Family Federation, the Heart and Stroke Foundation and CANSA, to name a few. The Workshop – Jika SikboneThere is much raw talent within the Durban city centre, a lot of which goes unnoticed. The Jika Sikbone campaign, in partnership with the Mzansi Arts Development Ensemble (MADE) aims to recognise and develop talented individuals through an “open stage” event which takes place at the Durban Workshop once a month. Competitors are judged by industry professionals and are given the opportunity to showcase and market their talents to the centre audience. The winner is also rewarded with a cash prize.


Annual financial statementsVukile Integrated annual report 2015 66

Directors’ responsibility statement

Company secretary’s certification

The audited annual financial statements set out on pages 74 to 149 of this integrated annual report and the directors’ report on pages 68 to 71, are the responsibility of the directors. The directors are responsible for selecting and adopting sound accounting practices, for maintaining an adequate and effective system of accounting records, for the safeguarding of assets, and for developing and maintaining a system of internal controls that, among other things, will ensure the preparation of financial statements that achieve fair presentation. After conducting appropriate procedures, the directors are satisfied that the group will be a going concern for the foreseeable future and have continued to adopt the going-concern basis in preparing the financial statements. The annual financial statements were approved by the directors and are signed on their behalf by:

Anton Botha Laurence RappChairman Chief executive

Melrose Estate26 May 2015

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

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

Johann NeethlingGroup company secretary


The group and separate annual financial statements have been audited by Grant Thornton. The financial director, Mr MJ Potts CA(SA), was responsible for the preparation of these audited annual financial statements. The complete integrated annual reports of the company and the group for the years ended 31 March 2014 and 31 March 2015 may be obtained from the company’s website www.vukile.co.za.


Independent auditor’s report

To the shareholders of Vukile Property Fund LimitedWe have audited the consolidated and separate financial statements of Vukile Property Fund Limited set out on pages 74 to 149, which comprise the statements of financial position as at 31 March 2015, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

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

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

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

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

OPINIONIn our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Vukile Property Fund Limited as at 31 March 2015, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act of South Africa.

OTHER REPORTS REQUIRED BY THE COMPANIES ACTAs part of our audit of the consolidated and separate financial statements for the year ended 31 March 2015, 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 ThorntonChartered Accountants (SA)Registered Auditors

C PretoriusPartnerChartered Accountant (SA)Registered Auditor

26 May 2015

Grant Thornton52 Corlett DriveWanderers Office Park Illovo2196


Directors’ report

The directors have pleasure in submitting the eleventh directors’ report, which forms part of the annual financial statements of the group and company for the year ended 31 March 2015.

Vukile was listed on 24 June 2004 with a market capitalisation of approximately R1.03 billion. The company’s market capitalisation has increased to R11.03 billion as at 31 March 2015 (2014: R8.53 billion).

It is pleasing to announce that the group has performed well over the review period and that profit available for distribution has increased by 11.6%, from R693.9 million to R774.2 million, for the year ended 31 March 2015.

SUMMARY OF FINANCIAL PERFORMANCE AND DISTRIBUTIONSThe information presented for the year ended 31 March 2015 has been prepared in accordance with International Financial Reporting Standards (IFRS) and the group’s accounting policies. The presentation of the results also complies with the relevant sections of the Companies Act (No. 71 of 2008), as amended and the JSE Listings Requirements. The annual financial statements have been audited by Grant Thornton.

The board approved a final distribution on 26 May 2015, of 77.688 cents per share for the six months ended 31 March 2015. This brings the normalised distribution for the year ended 31 March 2015 to 136.77 cents per share compared to the normalised distribution of 126.49 cents per share in 2014, an increase of 8.13% for the year. The increase in distribution is in line with the forecast of 7% to 8% provided to the market at the interim reporting stage in November 2014.

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

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

Capital structureDuring the course of the year the company undertook the conversion of Vukile’s authorised and issued ordinary par value shares to authorised and issued shares of no par value and subsequent to the par value conversion, the conversion of the company’s current share capital structure to an all share structure.

The authorised capital comprises 800 000 000 ordinary shares with no par value. There were 572 747 744 shares in issue at 31 March 2015. The company issued the following shares during the year under review:

Purpose Date of issueNumber of

shares issuedIssue price

cents per share

Share re-investment alternative 25 June 2014 7 808 314 16.25

Accelerated book built to fund various property acquisitions 9 September 2014 36 456 024 16.40 – 16.50

Issue in respect of Synergy acquisition November 2014 –

February 2015 18 910 399 Various prices

based on swap ratios

The group has no unlisted securities in issue.

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

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


Special resolutionsThe following special resolutions were approved by shareholders:

At the AGM held on 26 August 2014:gg Financial assistance to related or inter-related companies.gg Financial assistance to employees for participation in the conditional share plan.gg Financial assistance to executive directors and prescribed officers for participation in the conditional share plan.gg Financial assistance to employees for participation in the share purchase plan.gg Financial assistance to executive directors and prescribed officers for participation in the share purchase plan.gg Financial assistance to Encha SPV and related and inter-related persons.gg Non-executive directors’ remuneration.

At the Capital Conversion Shareholders/Debenture holders combined scheme meeting on 21 January 2015: gg Par value conversion of shares.gg Amendment of the company’s MOI pertaining to the par value conversion.gg Delinking of shares.gg Amendment of the company’s MOI pertaining to the delinking and the approval of written resolutions by shareholders.

DIRECTORSDetails of the directors, providing their full names, ages, qualifications and a brief curriculum vitae, are set out on pages 24 and 25 of this integrated annual report.

In terms of the Memorandum of Incorporation (MOI) of the company, one-third of non-executive and executive directors have to retire annually by rotation. Any new directors that have been appointed during a year also have to retire at the next annual general meeting. All retiring directors will subsequently be eligible for re-election. It is the board’s policy that directors will retire at the annual general meeting following their 70th birthday. The composition of the board of directors and its sub-committees is detailed on the next page. There have been no changes to directors’ interests between the end of the financial year and 26 May 2015, other than as disclosed.

Board of directors

Composition of board

Date of appointment

Audit and risk

committee

Social, ethics and human resources

committeeNomination committee

Property and investment committee

Independent non-executive directorsAD Botha (Chairman) 17 May 2004 Member ChairmanH Ntene 25 October 2013 MemberPS Moyanga 17 May 2004 Member MemberHM Serebro 17 May 2004 ChairmanRD Mokate 11 December 2013 Member MemberNG Payne 20 March 2012 Chairman MemberSEN Sebotsa 16 May 2013 Member MemberSF Booysen 20 March 2012 Member Chairman Member

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


Directors’ report continued

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

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

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

Non-executive directors’ remuneration

RandDirectors’

fees

2015Total

remuneration

2014Total

remuneration

AD Botha 600 700 600 700 564 000PS Moyanga 370 150 370 150 366 100HM Serebro 377 125 377 125 355 100RD Mokate 260 600 260 600 48 225H Ntene 288 725 288 725 114 528SEN Sebotsa 260 600 260 600 134 466NG Payne 508 327 508 327 504 600SF Booysen 458 550 458 550 398 800

Total 3 124 777 3 124 777 2 485 819

Executive directors’ and key management remuneration

Rand Salary

Short-term

bonusDistribution equivalents#

Value of LTI scheme

vested

2015Total

remuneration

2014Total

remuneration

Executive directorsLG Rapp 2 792 750 2 500 000 505 242 3 374 754 9 172 746 5 391 163MJ Potts 1 870 500 1 320 000 253 725 – 3 444 225 5 401 770HC Lopion 1 676 000 1 200 000 227 401 994 262 4 097 663 2 886 068GS Moseneke 1 258 500 600 000 88 472 – 1 946 972 800 000Key management/prescribed officer* 3 449 955 1 693 000 314 744 806 864 6 264 563 4 731 282

Total 11 047 705 7 313 000 1 389 584 5 175 880 24 926 169 19 210 283

*Three highest remunerated employees other than executive directors, including a prescribed officer.#Amount earned in respect of distribution equivalent, paid as a bonus in respect of the Conditional Share Plan.

Directors’ interests in shares

SharesDirect

beneficialIndirect

beneficial2015Total

Non-executive directors – 22 543 22 543

HM Serebro – 22 543 22 543

Executive directors 2 685 713 7 039 954 9 725 667

LG Rapp 1 066 754 185 000 1 251 754MJ Potts 813 186 – 813 186HC Lopion 201 421 – 201 421GS Moseneke 604 352 6 854 954 7 459 306

Total 2 685 713 7 062 497 9 748 210


Movement of directors’ interests in shares

Shares

Held at 1 April

2014

Acquiredduring the

period

Disposed ofduring the

period

Held at 31 March

2015

Non-executive directors 21 590 953 – 22 543

HM Serebro 21 590 953 – 22 543

Executive directors 5 761 541 4 304 082 (339 956) 9 725 667

LG Rapp 1 114 254 355 354 (217 854) 1 251 754MJ Potts 834 806 26 880 (48 500) 813 186HC Lopion 215 311 59 712 (73 602) 201 421GS Moseneke 3 597 170 3 862 136 – 7 459 306

Total 5 783 131 4 305 035 (339 956) 9 748 210

Financial assistanceSince the approval by shareholders of the Share Purchase Plan (SPP), the board of directors, after considering the provisions of section 45 of the Companies Act, 2008, has provided financial assistance in the form of loans to executive directors and prescribed officers eligible for participation under the scheme. The loans awarded to date as well as the shares that have been ceded and pledged as security for the repayment of the loan are set out below.

SPP participant

Amount of financial

assistance obtained

(R)

Number of share held under the

SPP*

Market value of sharesheld as at 31 March

2015 (R)

LG Rapp 17 844 000 1 066 754 20 535 015MJ Potts 5 500 000 335 530 6 458 953HC Lopion 3 000 000 185 186 3 564 831GS Moseneke 10 000 000 604 352 11 633 776J Neethling 1 750 000 102 941 1 981 614

Total 38 094 000 2 294 763 44 174 189

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

Directors’ beneficial interests under the current long-term incentive (LTI) schemeThe following table sets out the directors’ interests in shares through the long-term incentive scheme as at 31 March 2015. The vesting of such shares remain subject to the fulfilment of performance conditions.

Vukile shares GS Moseneke MJ Potts HC Lopion LG Rapp

Balance at 1 April 2014 – 240 539 310 302 911 624Vested during the year – – (58 383) (197 354)Allocated during the year 67 659 100 588 90 106 200 188Distributions reinvested during the year – March – 6 489 9 994 32 006Distributions reinvested during the year – September – 5 065 5 875 18 471

Balance at 31 March 2015 67 659 352 681 357 894 964 935

Market value of shares at 31 March 2015 (Rm) 1 302 436 6 789 113 6 889 454 18 575 007

No changes in directors’ interests occurred between 31 March 2015 and 26 May 2015 other than as disclosed above.


for the year ended 31 March 2015

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 2015.

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

MEMBERSHIP, MEETING ATTENDANCE AND EVALUATIONThe committee consists of three non-executive directors, all of whom are independent. At 31 March 2015, the AR committee comprised the following members:

Director Period served

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

SF Booysen 20 March 2012 – currentPS Moyanga 24 May 2007 – current

The curricula vitae of the members of the AR committee are set out on pages 24 and 25.

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

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

The AR committee attendance is set out on page 28.

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

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

External auditorsgg Considered the independence and objectivity of the external auditor.gg Approved and monitored the non-audit services rendered by the external auditor in accordance with approved non-audit services policy.gg Determined the external auditor’s terms of engagement and fees for 2015.gg Satisfied itself that the external auditor and designated auditor are accredited on the JSE list of auditors and advisers. The AR committee recommends the reappointment of the external auditor and designated auditor at the next annual general meeting (AGM).

Financial statements and accounting practicesgg Reviewed the accounting policies and the annual financial statements of the group for the year ended 31 March 2015 and based on the information provided to it, the AR committee considers that, in all material aspects, both the accounting policies and the annual financial statements are appropriate and comply with the provisions of the Companies Act, International Financial Reporting Standards (IFRS) and the JSE Listings Requirements.gg Reviewed and considered any complaints relating to reporting and accounting practices, internal audit, contents of the group’s financial statements, internal financial controls or any other related matters. The AR committee can confirm that no such complaints have been brought to its attention during the year under review.

Report of the audit and risk committee


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

Integrated reporting gg At its meeting held on 21 May 2015, considered and recommended the integrated annual report for approval by the board.

Going-concern statusgg Considered the going-concern status of the company and the group on the basis of a review of the annual financial statements and the information available to the AR committee and recommended such going-concern status for adoption by the board. The board statement on the going-concern status of the group and company is contained on page 66 in the directors’ report.

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

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

Risk management and combined assurancegg Reviewed the risk management reports presented by management during the course of the year.gg Overseeing compliance with the risk management requirements in accordance with the JSE Listings Requirements in respect of REITs.

NG Payne Chairman



at 31 March 2015

Statements of financial position

GROUP Note2015R000

2014R000

ASSETSNon-current assets 13 629 857 10 739 238Investment properties 12 824 122 9 787 413

Investment properties 3 13 105 328 9 989 994Straight-line rental income adjustment 4 (281 206) (202 581)

Other non-current assets 805 735 951 825Straight-line rental income asset 4 281 206 202 581Investments 5 384 800 592 300Deferred capital expenditure 15 849 29 732Goodwill 7 57 058 57 058Furniture fittings, computer equipment and other 8 3 248 4 660Available-for-sale financial asset 10 21 576 20 313Derivative financial instrument 21 – 18 757Long-term loans granted 11 38 110 23 000Deferred taxation assets 22 3 888 3 424Current assets 621 451 626 399Intangible asset 6 – 242 059Trade and other receivables 12 147 429 86 165Current taxation assets 133 –Cash and cash equivalents 34.5 473 889 298 175Non-current assets held for sale 280 019 312 567

Investment properties 277 359 310 400

Investment properties 3 280 019 312 567Straight-line rental income adjustment 4 (2 660) (2 167)

Straight-line rental income asset 4 2 660 2 167

Total assets 14 531 327 11 678 204

EQUITY AND LIABILITIESEquity attributable to owners of the parent 9 830 646 3 108 689Stated capital/share capital 15 5 672 340 5 096Share premium 16 – 76 767Other components of equity 17 3 683 386 2 979 338Retained earnings 474 920 47 488Non-controlling interest 18 516 317 –Non-current liabilities 2 830 180 6 668 564Linked debentures and premium 19 – 4 526 816Other interest-bearing borrowings 20 2 816 088 2 133 878Derivative financial instruments 21 12 919 –Deferred taxation liabilities 22 1 173 7 870Current liabilities 1 354 184 1 900 951Trade and other payables 23 300 880 274 926Borrowings 20 1 051 657 1 256 527Current taxation liabilities 1 647 4 262Linked unitholders for distribution – 365 236

Total equity and liabilities 14 531 327 11 678 204


at 31 March 2015

Statements of financial position

COMPANY Note2015R000

2014R000


Investment properties 3 8 989 553 8 521 755Straight-line rental income adjustment 4 (259 428) (171 923)

Other non-current assets 1 624 173 1 139 743Straight-line rental income asset 4 259 428 171 923Investments 5 105 285 423 291Deferred capital expenditure 15 850 29 732Furniture, fittings, computer equipment and other 8 77 95Investment in subsidiaries 9 1 194 081 462 780Available-for-sale financial asset 10 11 342 10 165Derivative financial instruments 21 – 18 757Long-term loans granted 11 38 110 23 000Current assets 1 139 309 711 543Intangible asset 6 – 242 059Trade and other receivables 12 112 482 72 064Loan to subsidiary 14 448 756 535Taxation 133 –Debenture interest receivable 140 479 123 573Cash and cash equivalents 34.5 437 459 273 312Non-current assets held for sale 147 019 200 359

Investment properties 145 686 199 181Investment properties 3 147 019 200 359Straight-line rental income adjustment 4 (1 333) (1 178)

Straight-line rental income asset 4 1 333 1 178

Total assets 11 640 626 10 401 477

EQUITY AND LIABILITIESEquity attributable to owners of the parent 8 438 870 2 201 755Stated capital/share capital 15 5 672 340 5 096Share premium 16 – 76 767Other components of equity 17 2 311 840 2 090 570Retained earnings 454 690 29 322Non-current liabilities 1 860 513 6 668 564Linked debentures and premium 19 – 4 526 816Borrowings 20 1 847 431 2 133 878Derivative financial instruments 21 11 909 –Deferred taxation liabilities 22 1 173 7 870Current liabilities 1 341 243 1 531 158Trade and other payables 23 212 587 228 005Borrowings 20 1 128 656 857 952Amounts owing to subsidiaries 9 – 77 073Taxation – 2 892Linked unitholders for distribution – 365 236


Total number of shares/linked units in issue at 31 March 572 747 744 509 573 007Weighted average number of shares/linked units in issue 539 547 572 472 371 428Net asset value (cents per share/linked unit) 1 716 1 498



Income statements

GROUP Note2015R000

2014R000

Property revenue 25 1 579 099 1 389 625Straight-line rental income accrual 4 97 315 53 493

Gross property revenue 1 676 414 1 443 118Property expenses 26 (585 372) (516 517)

Net profit from property operations 1 091 042 926 601Income − asset management business 27 24 694 92 654Expenditure − asset management business 27 (34 388) (38 917)Corporate administrative expenses 28 (36 992) (34 964)Investment and other income 30 76 269 64 279

Operating profit before finance costs 1 120 625 1 009 653Finance costs 31 (273 498) (256 605)

Profit before debenture interest 847 127 753 048Debenture interest – (691 667)

Profit before capital items 847 127 61 381(Loss)/profit on sale of investment properties (23 562) 41 201Profit/(loss) on sale of furniture and equipment 6 (4)Fair value gain on investments 5 172 180 17 228Fair value movement of derivative financial instruments 1 527 –Amortisation of debenture premium 19 227 9 959Other capital items (168) –Fair value of fixed loan at date of acquiring control remeasured (290) –Bargain purchase price adjustment 9 178 997 –Goodwill written off on sale of subsidiary/properties by a subsidiary – (6 544)Reversal of impairment of intangible asset 6 – 89 094Costs of acquisition of business combination (2 778) –Loss on sale of intangible asset 6 (61 595) –

Profit before fair value adjustments 1 130 671 212 315Fair value adjustments 379 017 174 784Gross change in fair value of investment properties 476 332 228 277Straight-line rental income adjustment (97 315) (53 493)

Profit before taxation 1 509 688 387 099Taxation 32 (26) (5 678)

Profit for the year 1 509 662 381 421

Attributable to owners of the parent 1 499 995 381 421Attributable to non-controlling interest 9 667 –

Earnings and diluted earnings per share (cents) 33 278.01 229.71



Income statements

COMPANY Note2015R000

2014R000

Property revenue 25 1 276 943 1 152 156Straight-line rental income accrual 4 87 659 55 198

Gross property revenue 1 364 602 1 207 354Property expenses 26 (497 819) (461 293)

Net profit from property operations 866 783 746 061Income − asset management business 27 24 694 92 654Expenditure − asset management business 27 (11 600) (15 936)Corporate administrative expenses 28 (34 915) (34 510)Investment and other income 30 224 251 184 828

Operating profit before finance costs 1 069 213 973 097Finance costs 31 (250 072) (225 252)


Profit before capital items 819 141 56 178(Loss)/profit on sale of investment properties (22 362) 40 720Fair value gain on investments 5 63 554 33 332Amortisation of debenture premium 19 227 9 959Costs of acquisition of business combination (2 778) –Loss on sale of intangible asset 6 (61 595) –Reversal of impairment of intangible asset 6 – 89 094

Profit before fair value adjustments 815 187 229 283Fair value adjustments 184 159 60 822Gross change in fair value of investment properties 271 818 116 020

Straight-line rental income adjustment (87 659) (55 198)

Profit before taxation 999 346 290 105Taxation 32 6 697 (1 710)




Statements of comprehensive income

GROUP2015R000

2014R000

Profit for the year 1 509 662 381 421Other comprehensive incomeItems that will be reclassified subsequently to profit or loss

Cash flow hedges – current period (losses)/gains (30 667) 78 087Available-for-sale financial assets – current period losses (12 169) (11 925)

Other comprehensive (loss)/income for the year (42 836) 66 162

Total comprehensive income for the year 1 466 826 447 583

Attributable to equity holder 1 457 159 447 583Attributable to non-controlling interest 9 667 –

COMPANYProfit for the year 1 006 043 288 395Other comprehensive incomeItems that will be reclassified subsequently to profit or loss

Cash flow hedges – current period (losses)/gains (30 667) 78 087

Available-for-sale financial assets – current period losses (5 581) (6 254)

Other comprehensive (loss)/income for the year (36 248) 71 833

Total comprehensive income for the year 969 795 360 228


Distribution statements

Total First Second(1)

Distributions to Vukile shareholders R000

Cents pershare R000

Cents pershare R000

Cents pershare

for the year ended 31 March 2015Dividend distributions 329 260 59.086 329 260 59.086 – –

Total distributions 329 260 59.086 329 260 59.086 – –(1) Refer note 41.

Total First SecondDistributions to Vukile unitholders R000

Cents perlinked unit R000

Cents perlinked unit R000

Cents perlinked unit

for the year ended 31 March 2014Interest distributions 628 796 126.23 264 303 54.70 364 493 71.53Dividend distributions 1 283 0.26 539 0.11 744 0.15

Normalised distributions 630 079 126.49 264 842 54.81 365 237 71.68Special distribution 63 000 13.83 63 000 13.83 – –

Interest distributions 62 871 13.81 62 871 13.81 – –Dividend distributions 129 0.02 129 0.02 – –

Total distributions 693 079 140.32 327 842 68.64 365 237 71.68

GROUP Note 2015 2014

Headline and diluted headline earnings per share/linked unit (cents) 33 186.81 163.68



Statements of changes in equity

Attributable to owners of the parent

GROUP

Stated capital/

sharecapital

R000

Sharepremium

R000

Other components

of equityR000

Retained earnings

R000

Share-holders’ interest

R000

Non- controlling

interest (NCI)

R000TotalR000

Balance at 31 March 2013 4 310 51 806 2 533 337 36 734 2 626 187 – 2 626 187Issue of share capital 786 24 961 – – 25 747 – 25 747Dividend distribution – – – (1 412) (1 412) – (1 412)

5 096 76 767 2 533 337 35 322 2 650 522 – 2 650 522

Profit for the year – – – 381 421 381 421 – 381 421Change in fair value of investment properties – – 228 277 (228 277) – –

Share-based remuneration – – 10 584 – 10 584 – 10 584Transfer to non-distributable reserves – – 140 978 (140 978) – – –Other comprehensive income/(loss)Revaluation of cash flow hedges – – 78 087 – 78 087 – 78 087Revaluation of available-for-sale financial asset – – (11 925) – (11 925) – (11 925)

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

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

Balance at 31 March 2015 5 672 340 – 3 683 386 474 920 9 830 646 516 317 10 346 963



Statements of changes in equity

COMPANY

Stated capital/

sharecapital

R000

Sharepremium

R000

Other components

of equityR000

Retained earnings

R000TotalR000

Balance at 31 March 2013 4 310 51 806 1 733 102 21 504 1 810 722Issue of share capital 786 24 961 – – 25 747Dividend distribution – – – (1 412) (1 412)

5 096 76 767 1 733 102 20 092 1 835 057Profit for the year – – – 288 395 288 395Change in fair value of investment properties – 116 020 (116 020) –Share-based remuneration – – 6 470 – 6 470Transfer to non-distributable reserves – – 163 145 (163 145) –Other comprehensive income/(loss)Revaluation of cash flow hedges – – 78 087 – 78 087Revaluation of available-for-sale financial asset – – (6 254) – (6 254)

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

5 728 97 815 2 090 570 (299 938) 1 894 175

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

Balance at 31 March 2015 5 672 340 – 2 311 840 454 690 8 438 870



Statements of cash flow

2015 2014

NoteGroupR000

CompanyR000

GroupR000

CompanyR000

Cash flow from operating activities 929 939 722 273 969 578 755 948Profit before taxation 1 509 688 999 346 387 099 290 105Adjustments 34.1 (545 392) (232 402) 542 081 490 003Net changes in working capital 34.2 (24 422) (41 646) 45 004 (24 173)Taxation (paid)/refunded 34.3 (9 935) (3 025) (4 606) 13

Cash flow from investing activities 17 302 220 274 (2 753 714) (2 621 643)Acquisition of business combination 9 11 488 – – –Acquisition of and improvements to investment properties and deferred capital expenditure (358 361) (301 919) (2 733 884) (2 704 561)Acquisition of furniture, fittings, computer equipment and other (317) (21) (1 317) (86)Purchase of available-for-sale financial asset (13 432) (6 758) (12 821) (5 372)Purchase of investments (14 228) (12 348) (592 300) (423 291)Proceeds on sale of intangible asset 166 267 166 267 – –Proceeds on sale of investment properties 149 599 150 799 522 311 326 839Proceeds on sale of furniture, fittings and computer equipment 17 3 18 –Investment and other income 30 76 269 224 251 64 279 184 828

Cash flow from financing activities (771 527) (778 400) 815 007 894 511Interest-bearing borrowings (repaid)/advanced (465 994) (22 024) 456 377 507 599Proceeds from issue of share capital 728 596 728 596 1 287 300 1 287 300Finance costs (273 498) (250 072) (256 605) (225 252)Distributions paid 34.4 (745 521) (694 496) (649 065) (649 065)Movement in loan to subsidiaries – (525 294) – (3 071)Loans from subsidiaries repaid – – – –Long-term loans granted (15 110) (15 110) (23 000) (23 000)

Net increase in cash and cash equivalents 175 714 164 147 (969 129) (971 184)Cash and cash equivalents at the beginning of the year 298 175 273 312 1 267 304 1 244 496

Cash and cash equivalents at the end of the year 34.5 473 889 437 459 298 175 273 312



Notes to the annual financial statements

1 ACCOUNTING POLICIES The annual financial statements have been prepared in accordance with International Financial Reporting Standards, the

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

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

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

Except for the new standards adopted as set out below, all accounting policies applied by the group in the preparation of these financial statements are consistent with those applied by the group in its consolidated financial statements as at and for the year ended 31 March 2014.

The group has adopted the following amendments to standards and new interpretation:gg Amendments to IFRS 10, IFRS 12 and IAS 27 relating to investment entities.gg Amendments of IAS 32 relating to offsetting Financial Assets and Financial Liabilities.gg Amendments to IAS 36 relating to recoverable amount disclosures for non-financial assets.gg Amendment to IAS 39 relating to novation of derivatives and continuation of hedge accounting.gg IFRIC 21 – Levies.

There was no material impact on the group financial statements based on management’s assessment of these amended standards and new interpretation.

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

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

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

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

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


Notes to the annual financial statements continuedfor the year ended 31 March 2015

1 ACCOUNTING POLICIES continued 1.2 Investment properties continued The straight lining of lease income is deducted from investment properties as the discounted value of future rental

cash flows form part of the valuation methodology of investment properties.

Gains or losses on the disposal of investment properties are recognised in net profit or loss, and are calculated as the difference between the net selling price and the fair value of the property as valued in the most recent annual financial statements. Such gains or losses are excluded from the calculation of distributable earnings.

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

1.3 Deferred capital expenditure Property that is being constructed or developed for future use as investment property is classified as deferred

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

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

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

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

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

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

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

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

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

(a) is not a business combination; and (b) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

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

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


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

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

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

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

hedging instruments, are classified into the following categories upon initial recognition:gg loans and receivablesgg financial assets at fair value through profit or loss (FVTPL)gg available-for-sale (AFS) financial assets.

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

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

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

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

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

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

Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. Gains or losses are transferred to a non-distributable reserve in the statement of changes in equity and excluded from the calculation of distributable earnings.

Available-for-sale (AFS) financial assets AFS financial assets are non-derivative financial assets that are designated to this category. The group’s AFS

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



1 ACCOUNTING POLICIES continued 1.5 Financial instruments continued Classification and subsequent measurement of financial liabilities The group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.

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

Derivative financial instruments and hedge accounting The group uses derivative financial instruments including interest rate swaps, swaptions, forward rate agreements

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

In terms of hedge accounting, hedges are either: (a) fair value hedges, which hedge the exposure to changes in the fair value of a recognised asset or liability; or (b) cash flow hedges, which hedge exposure to variability in cash flows.

In the case of fair value hedges, any gains or losses from changes in the fair value of the hedging instrument are recognised immediately in the profit or loss for the period.

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

At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income. However, if a non-financial asset or liability is recognised as a result of the hedged transaction, the gains or losses previously recognised in other comprehensive income are included in the initial measurement of the hedged item.

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

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

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

recognised as a deduction from equity.

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

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

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


1 ACCOUNTING POLICIES continued 1.8 Revenue recognition Revenue comprises dividends, interest operating lease income and expense recoveries charged to tenants,

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

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

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

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

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

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

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

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

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

is included with investment properties.

1.10 Cash and cash equivalents For the purpose of the statement of cash flows, cash and cash equivalents comprise cash on hand, deposits held

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

1.11 Basis of consolidation Subsidiaries are entities over which the group has control.

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

Intercompany balances and transactions are eliminated.

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

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

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

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



1 ACCOUNTING POLICIES continued 1.12 Goodwill Goodwill represents the future economic benefits arising from a business combination that are not individually

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

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

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

Acquisition costs are expensed as incurred.

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

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

If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on bargain purchase) is recognised in profit or loss immediately.

1.14 Accounting for acquisitions of non-controlling interests Acquisitions of non-controlling interests that do not result in a loss of control are accounted for as transactions

with equity holders in their capacity as equity holders and therefore, no goodwill is recognised as a result of such transactions.

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

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

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

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

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

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

same manner.


1 ACCOUNTING POLICIES continued 1.16 Intangible asset (asset management contract) The asset management contract with an indefinite useful life is stated at cost less accumulated impairment losses.

The asset management contract is tested for impairment annually by comparing the recoverable amount with the carrying amount. Useful life is reviewed in each period to determine whether events and circumstances continue to support an indefinite useful life assessment. If they do not, the change in useful life assessment from indefinite to finite is accounted for as a change in estimate.

1.17 Impairment losses At each reporting date the carrying amounts of the tangible and intangible assets are assessed to determine

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

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

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

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

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

1.18 Furniture, fittings, computer equipment and other Furniture, fittings, computer equipment and other are stated at cost less accumulated depreciation and any

impairment losses.

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

The principal useful lives used for this purpose are: Computer equipment 3 years Computer software 2 years Furniture and equipment 6 years Motor vehicles 5 years

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



1 ACCOUNTING POLICIES continued 1.19 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are

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

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

1.20 Share-based payments Services received or acquired in a share-based payment transaction are recognised as the services are received.

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

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

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

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

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

If the share-based payments vest immediately, the services received are recognised immediately in full.

1.21 Leases Group as lessee Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating

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

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

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

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

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

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

properties are measured at their fair values.


1 ACCOUNTING POLICIES continued 1.24 Operating segments The group identifies and presents operating segments based on the information that is provided internally to the

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

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

1.25 New and revised international financial reporting standards not yet adopted At the date of approval of these annual financial statements, certain new accounting standards, amendments and

interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the entity.

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

The following revisions to International Accounting Standards, relevant to the group, have not been early adopted.

Standard Details of amendmentsAnnual periods beginning on or after

IFRS 2 – Share-based payments

gg Annual improvements 2010 – 2012 cycle: amendments added the definitions of performance conditions and service conditions and amended the definitions of vesting conditions and market conditions.

1 July 2014

IFRS 3 –Business Combinations

gg Annual improvements 2010 – 2012 cycle: amendments to the measurement requirements for all contingent consideration assets and liabilities including those accounted for under IFRS 9.

1 July 2014

gg Annual improvements 2011 – 2013 cycle: amendments to the scope paragraph for the formation of a joint arrangement.

1 July 2014

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

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

1 July 2016



1 ACCOUNTING POLICIES continued 1.25 New and revised international financial reporting standards not yet adopted continued


IFRS 7 –Financial Instruments: Disclosures

gg Annual improvements 2012 – 2014 cycle: the amendments provide additional guidance to help entities identify the circumstances under which a servicing contract is considered to be ‘continuing involvement’ for the purposes of applying the disclosure requirements in paragraphs 42E to 42H of IFRS 7. Such circumstances commonly arise when, for example, the servicing fee is dependent on the amount or turning of the cash flows collected from the transferred financial asset or when a fixed fee is not paid in full due to non-performance of that asset.

1 July 2016

gg Annual improvements 2012 – 2014 cycle: these amendments clarify that the additional disclosure required by the recent amendments to IFRS 7 Disclosure – Offsetting Financial Assets and Financial Liabilities is not specifically required for all interim periods. However, the additional disclosure is required to be given in condensed interim financial statements that are prepared in accordance with lAS 34 – Interim Financial Reporting when its inclusion would be necessary in order to meet the general principles of lAS 34.

1 July 2016

IFRS 8 – Operating Segments

gg Annual improvements 2010 – 2012 cycle: amendments to some disclosure requirements regarding the judgements made by management in applying the aggregation criteria, as well as those to certain reconciliations.

1 July 2014

IFRS 9 –Financial Instruments

gg IFRS 9 – ‘Financial Instruments (2014)’ replaces IAS 39 – ‘Financial Instruments: Recognition and Measurement’

1 January 2018

IFRS 10 –Consolidated Financial Statements

gg Amendments to address an acknowledged inconsistency between the requirements in IFRS 10 – ‘Consolidated Financial Statements’ and those in IAS 28 (2011) ‘Investments in Associates’ in dealing with the sale or contribution of a subsidiary.

1 January 2016

gg Amendments confirming that the IFRS 10.4(a) consolidation exemption is also available to parent entities which are subsidiaries of investment entities where the investment entity measures its investments at fair value in terms of IFRS 10.31.

1 January 2016

gg Amendments modifying IFRS 10.32 to state that the consolidation requirement only applies to subsidiaries who are not themselves investment entities and whose main purpose is to provide services which relate to the investment entity’s investment activities.

1 January 2016

gg Amendments providing relief to non-investment entity investors in associates or joint ventures that are investment entities by allowing the non-investment entity investor to retain, when applying the equity method, the fair value measurement applied by the investment entity associates or joint ventures to their interests in subsidiaries.

1 January 2016




IFRS 11 –Joint Arrangements

gg Amendments to provide guidance on the accounting for the acquisition of an interest in a joint operation in which the activity of the joint operation constitutes a business.

1 January 2016

IFRS 13 –Fair Value Measurement

gg Annual improvements 2010 – 2012 cycle: amendments to clarify the measurement requirements for those short-term receivables and payables.

1 July 2014

gg Annual improvements 2011 – 2013 cycle: amendments to clarify that the portfolio exception applies to all contracts within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9.

1 July 2014

IFRS 15 –Revenue from Contracts with Customers

gg New guidance on recognition of revenue that requires recognition of revenue in a manner that depicts the transfer of goods or services to customers at an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.

1 January 2017

IAS 1 –Presentation of Financial Statements

gg Amendments clarifying IAS 1’s specified line items on the statement(s) of profit or loss and other comprehensive income and the statement of financial position can be disaggregated.

1 January 2016

gg Additional requirements of how entities should present subtotals in the statement(s) of profit or loss and other comprehensive income and the statement of financial position.

1 January 2016

gg Clarification that entities have flexibility as to the order in which they present their notes to the financial statements, but also emphasising the need to consider fundamental principles of comparability and understandability in determining the order.

1 January 2016

IAS 16 – Property, Plant and Equipment

gg Annual improvements 2010 – 2012 cycle: amendments to the revaluation method – proportionate restatement of accumulated depreciation.

1 July 2014

gg Amendments to prohibit the use of a revenue-based depreciation method for property, plant and equipment, as well as guidance in the application of the diminishing balance method for property, plant and equipment.

1 January 2016

IAS 19 – Employee Benefits

gg Amendments to Defined Benefit Plans: Employee Contributions whereby the requirements in IAS 19 for contributions from employees or third parties that are linked to service have been amended.

1 July 2014

gg Annual improvements 2012 – 2014 cycle: lAS 19.83 requires that the currency and term of the corporate or government bonds used to determine the discount rate for post-employment benefit obligations must be consistent with the currency and estimated term of the obligations. The amendments clarify that the assessment of the depth of the corporate bond market shall be made at the currency-level rather than the country-level.

1 July 2016





IAS 24 –Related Party Disclosures

gg Clarification of the definition of a related party. 1 July 2014

IAS 27 –Consolidated and Separate Financial Statements

gg Amendments to introducing a third option which allows entities to account for investments in subsidiaries, joint ventures and associates under the equity method in their separate financial statements.

1 January 2016

IAS 28 –Investments in Associates

gg Amendments to address an acknowledged inconsistency between the requirements in IFRS 10 – ‘Consolidated Financial Statements’ and those in IAS 28 (2011) – ‘Investments in Associates’ in dealing with the sale or contribution of a subsidiary. In addition IAS 28 (2011) has been amended to clarify that when determining whether assets that are sold or contributed constitute a business, an entity shall consider whether the sale or contribution of those assets is part of multiple arrangements that should be accounted for as a single transaction.

1 January 2016

IAS 34 –Interim Financial Reporting

gg Annual improvements 2012 – 2014 cycle: the amendments clarify the meaning of disclosure of information elsewhere in the interim financial report and require the inclusion of a cross-reference from the interim financial statements to the location of this information. The amendments specify that this information must be available to users of the interim financial statements on the same terms as the interim financial statements and at the same time, or the interim financial statements will be incomplete.

1 July 2016

IAS 38 –Intangible Assets

gg Annual improvements 2010 – 2012 cycle: amendments to the revaluation method – proportionate restatement of accumulated depreciation.

1 July 2014

gg Amendments present a rebuttable presumption that a revenue-based amortisation method for intangible assets is inappropriate except in two limited circumstances, as well as provide guidance in the application of the diminishing balance method for intangible assets.

1 January 2016

IAS 40 –Investment Properties

gg Annual improvements 2011 – 2013 cycle: amendments to clarify the interrelationship between IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property.

1 July 2014

Management does not expect that any of the above amendments will, at this stage, have any material impact.


2 ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and assumptions are an integral part of financial reporting and as such have an impact on the amounts

reported in the group’s income, expenses, assets and liabilities. Judgement in these areas is based on historical experience and reasonable expectations relating to future events. Actual results may differ from these estimates. Management discusses with the audit committee the development, selection and disclosure of the group’s critical accounting policies and estimates and the application of these policies and estimates.

Information on the key estimations and uncertainties that have had the most significant effect on the amounts recognised in the financial statements are set out in the following notes in the financial statements:gg Accounting policies – notes 1.2, 1.4, 1.5, 1.8, 1.11, 1.12, 1.13, 1.16, 1.17, 1.19 and 1.20.gg Investment property valuation – notes 3 and 13.2.gg Investments – notes 5 and 13.1.2.gg Deferred taxation – note 22.gg Trade and other receivables – note 12.gg Goodwill – notes 1.12 and 7.gg Intangible assets – note 6.gg Available-for-sale financial asset – notes 10 and 13.1.2.

Investment properties The revaluation of investment property requires judgement in the determination of future cash flows from leases and an

appropriate reversionary capitalisation rate. Note 13.2 sets out further details of the fair measurement of investment properties.

Deferred tax and taxation Deferred tax assets are raised to the extent that it is probable that future taxable profit will be available against which the

unused tax losses and unused tax credits can be utilised. Assessment of future taxable profit is performed at every reporting date, in the form of future cash flows using a suitable growth rate.

As the group has obtained REIT status effective 1 April 2013, the group is not liable for capital gains tax on the disposal of directly held properties and local REIT securities. In addition, deferred tax is not calculated on the straight-line rental income accrual as the rental income accrual forms part of the group’s distributions. Given the REIT status, such distributions are fully deductible for tax purposes and hence no tax liability arises on rental income accruals.

Investments Note 5 sets out the rationale behind management’s opinion that the company does not have significant influence over

the investments listed therein and that these investments are not associates in terms of IAS 28.

Impairment of assets and goodwill The group tests whether assets have suffered any impairment in accordance with the accounting policy stated in

notes 1.12 and 1.16. The recoverable amounts of cash-generating units, intangible assets and tangible assets have been determined based on future cash flows discounted to their present value using appropriate rates. Estimates are based on interpretation of generally accepted industry-based market forecasts.

Trade receivables Management identifies impairment of trade receivables on an ongoing basis. Impairment adjustments are raised against

trade receivables when the collectibility is considered to be doubtful. Management believes that the impairment write-off is conservative and that there are no significant trade receivables that are doubtful and have not been written off. In determining whether a particular receivable could be doubtful, the following factors are taken into consideration:gg Agegg Customer current financial statusgg Security held, andgg Disputes with customer.

Business combination versus asset acquisition Management have assessed the properties acquired and have concluded in their view these acquisitions are property

acquisitions in terms of IAS 40 – Investment Property and are therefore accounted for in terms of that standard. In the opinion of management, these properties did not constitute a business as defined in terms of IFRS 3 – Business Combinations, as there were not adequate processes identified within these properties to warrant classification as businesses.



2015 2014Group R000

CompanyR000

Group R000

CompanyR000

3 INVESTMENT PROPERTIESStated at fair valueProperty acquisitions and development costs 9 327 752 6 257 776 6 839 265 6 169 204Capital expenditure and tenant installations 725 314 583 856 588 224 499 122Net gain from fair value adjustment of investment properties 3 292 641 2 270 803 2 848 414 2 031 090

Fair value 13 345 707 9 112 435 10 275 903 8 699 416Lease commissions 39 640 24 137 26 658 22 698

At end of year 13 385 347 9 136 572 10 302 561 8 722 114Less: Fair value of investment properties held for sale (280 019) (147 019) (312 567) (200 359)

13 105 328 8 989 553 9 989 994 8 521 755

3.1 Details of investment propertiesInvestment properties include commercial property in South Africa and Namibia which are owned to earn rentals and for capital appreciation.

Note 13.2 sets out how the fair value of investment properties has been determined.

The group’s properties are mortgaged to the value of R9.3 billion as security for the DMTN debt and bank loans (2014: R7.1 billion) – Refer note 20.

3.2 Movement for the year2015 2014

Group R000

CompanyR000

Group R000

CompanyR000

Investment properties at 1 April 10 302 561 8 722 114 7 712 858 6 078 999Capital expenditure and tenant installations 145 030 92 674 213 117 184 848Acquisitions and development costs 221 688 221 688 2 620 920 2 620 920Acquisitions through business combination 2 399 915 – – –Change in fair value of investment properties 476 332 271 818 228 277 116 020Disposal of investment properties (173 161) (173 161) (480 347) (286 119)Movement in lease commissions 12 982 1 439 7 736 7 446

Investment properties at 31 March 13 385 347 9 136 572 10 302 561 8 722 114

Reflected on the statement of financial position under:

Non-current assets 13 105 328 8 989 553 9 989 994 8 521 755Non-current assets held for sale 280 019 147 019 312 567 200 359

13 385 347 9 136 572 10 302 561 8 722 114

4 STRAIGHT-LINE RENTAL INCOME ADJUSTMENTBalance at 1 April 204 748 173 101 151 255 117 903Synergy balance acquired (18 197) – – –Current year movement 97 315 87 659 53 493 55 198

Balance at 31 March 283 866 260 760 204 748 173 101

Reflected on the statement of financial position under:Non-current portion 281 206 259 428 202 581 171 923Non-current assets held for sale 2 660 1 333 2 167 1 178

283 866 260 761 204 748 173 101


5 INVESTMENTS2015

Fairvest PropertyHoldings

LimitedGROUP

Number of shares held 178 976 540% holding 33.9%Price at 31 March 2015 (cents per share) 215

R000

Fair value – 1 April 2014 220 970Less: Accrued distribution from prior year (4 444)Shares acquired 12 420Less: Pre-acquisition portion of accrued distribution (610)Fair value adjustment 149 602Accrued distribution at year-end 6 862

Total 384 800

Fair value gain on investments 172 180Fairvest 149 602Synergy (Prior to obtaining control) 22 578

2014

GROUP

FairvestProperty

Holdings Limited

Synergy Income

Fund Limited

(B Units)

Number of shares held 169 976 540 52 300 000% holding 32.2% 34.03%Price at 31 March 2014 (cents per shares) 130 710

R000 R000TotalR000

Historical cost 237 942 338 097 576 039Less: Accrued distribution from prior year (91) (13 302) (13 393)Fair value adjustment (21 325) 38 553 17 228Accrued distribution at year-end 4 444 7 810 12 426Adjusted accrual – 172 –

Total 220 970 371 330 592 300

None of the investments are pledged to secure borrowing facilities.



5 INVESTMENTS continued2015

COMPANY

Fairvest PropertyHoldings

Limited

Number of shares held 48 969 659% shares held 9.3%Price at 31 March 2015 (cents per share) 215

R000

Fair value – 1 April 2014 51 961Less: Accrued distribution from prior year (1 340)Shares acquired 12 420Less: Pre-acquisition portion of accrued distribution (610)Fair value adjustment 40 976Accrued distribution at year-end 1 878

Total 105 285

Fair value gain on investments 63 554Fairvest 40 976Synergy (Prior to obtaining control) 22 578

2014

COMPANY

FairvestProperty

Holdings Limited

Synergy Income

Fund Limited

(B Units)

Number of shares held 39 969 659 52 300 000

% shares held 7.6% 34.03%

Price at 31 March 2014 (cents per share) 130 710

R000 R000TotalR000

Historical cost 55 932 338 097 394 029 Less: Pre-acquisition portion of accrued distribution (91) (13 301) (13 392)Fair value adjustment (5 220) 38 552 33 332 Accrued distribution at year-end 1 340 7 982(I) 9 322

Total 51 961 371 330 423 291 (I) Includes adjustment of accrual of R172 000 once final distribution finalised.


5 INVESTMENTS continued

Assessment of whether or not the above investment constitutes an associate as defined in IAS 28Vukile’s shareholding in Fairvest amounts to 33.92%. Fairvest is a listed company with a diverse shareholding base. Vukile does not have the power to participate in Fairvest’s financial and operating policy decisions. The only power Vukile has is the ability to block special resolutions. Vukile does not have board representation in Fairvest, nor has there been an exchange of managerial personnel. Vukile does not have any influence on dividend policies in respect of Fairvest. Vukile has not provided any guarantees of indebtedness or extended any credit to the above companies. On the basis of the above, Fairvest is not considered to fall within the definition of an associate in terms of IAS 28.

In the prior year the shares in Synergy were reflected as an investment.

Refer note 9 which deals with the acquisition of Synergy as a subsidiary.

Designation at fair value through profit or loss Vukile has, on initial recognition, designated its investment in Fairvest at fair value through profit or loss, using the fair value option.

Vukile has indicated that, as part of its growth strategy, it would consider investing in listed property companies that are strategically aligned to and focused on retail properties that serve the lower-income market.

The investment in this listed equity security is considered a long-term, strategic investment. This investment is continuously monitored and voting rights arising therefrom are utilised in the group’s favour.

The group manages its exposure to equity price risk by investing in securities that are listed on a recognised stock exchange and where the directors are satisfied with the overall strategies implemented by such companies.

The chief executive and financial director monitor the financial performance of Fairvest on a regular basis and engage with Fairvest management where acquisitions are being considered to ascertain whether:1. the acquisition/s constitute a good “fit” with Vukile’s original strategy in acquiring a stake in Fairvest; and2. the risk/reward matrices of the acquisition/s are acceptable.

Financial and strategic information relating to the Fairvest investment is communicated to the Vukile board on a regular basis.

2015 2014GroupR000

CompanyR000

Group R000

CompanyR000

6 INTANGIBLE ASSETBalance at 1 April 242 059 242 059 152 965 152 965Reversal of impairment – – 89 094 89 094Loss on sale of intangible asset (61 595) (61 595) – –Net present value of future payments (14 197) (14 197) – –Proceeds on sale of asset management business (166 267) (166 267) – –

Balance at 31 March – – 242 059 242 059



6 INTANGIBLE ASSET continuedA contract to sell the asset management business relating to Sanlam’s property portfolio to Sanlam was concluded on 7 November 2014.

The selling price of R167 million was agreed upon together with transfer service fee income for certain ongoing services, to be paid by Sanlam to Vukile as follows:

Year ending Rm

31 March 2015 7

31 March 2016 8

31 March 2017 8

The sale of the asset management business to Sanlam for R167 million together with a discounted value of future fee income of R14.2 million, equates to R181.6 million. Including expenditure incurred in finalising the sale a loss of R61.6 million was incurred. The asset management business was valued at R242.1 million at 31 March 2014 which valuation was based on, inter alia, certain reinvestment strategies as advised by Sanlam following the sale of East Rand Mall for R2.2 billion. However, during the contractually prescribed independent valuation process undertaken by PwC, Sanlam represented that the R2.2 billion was no longer available for re-investment due to a change in strategy whereby they were no longer looking to invest in direct property. This effectively reduced the valuation by c.R60 million.

2015GroupR000

2014 GroupR000

7 GOODWILLBalance at 1 April 57 058 63 602

Less: Goodwill written off on subsidiaries sold/properties sold by a subsidiary during the year – (6 544)

Balance at 31 March 57 058 57 058

Goodwill arose on the acquisition of 100% of MICC Income Fund Limited (MICC IF Group) and represents a premium paid on the net assets and liabilities on each property purchased. Each operating segment relative to the acquisition is defined as a cash-generating unit. Refer note 36.

Goodwill was tested for impairment by comparing both the estimated combined recoverable amount attributable to MICC IF Group and the valuation per investment property with the respective carrying values.

The recoverable amount attributable to MICC IF Group, which is based on forecast net income over a 20-year period, was calculated using the discounted cash flow method. The discount rate used was based on the government SAGB10 rate at 31 March 2015 plus a risk premium of 4.75%. Details of the judgements and assumptions used to determine the valuation of the relevant investment properties are set out in note 13.2.

Goodwill written off comprises the goodwill allocated to the cash-generating units (investment properties) arising on the acquisition of MICC IF Group in 2006 which have been sold as follows:

2015R000

2014 R000

Mala Plaza – (1 524)Masingita Spar Centre – (1 808)Qualbert Centre – (3 212)

Total – (6 544)

Goodwill of R57.1 million is, therefore, not impaired.


2015 2014GroupR000

CompanyR000

GroupR000

CompanyR000

8 FURNITURE, FITTINGS, COMPUTER EQUIPMENT AND OTHERCost 7 432 179 7 329 179

Accumulated depreciation (4 184) (102) (2 669) (84)

Carrying value 3 248 77 4 660 95

8.1 Movement for the year

Net carrying value at 1 April 4 660 95 5 129 47

Additions 317 21 1 334 86

Disposals/assets scrapped (11) (3) (39) –

Depreciation (1 718) (36) (1 764) (38)

Net carrying value at 31 March 3 248 77 4 660 95

2015Company

R000

2014Company

R000

9 INVESTMENT IN SUBSIDIARIESDirect holdingShares at cost100% holding in MICC Property Income Fund Limited (2014: 100%)(1) 462 780 462 780100% holding in Vukile Real Estate Sales and Leasing (Pty) Ltd (2014: 100%)(1) * *64.61% holding in Synergy Income Fund Limited (2014: 0% – reflected under investments note 5) 731 301 –

Indirect holdingMICC Properties (Pty) Ltd(1)

MICC Properties Namibia (Pty) Ltd(2)

Katatura Properties (Pty) Ltd(2)

Oluno Properties (Pty) Ltd(2)

Oshikango Properties (Pty) Ltd(2)

Super Deca Properties (Pty) Ltd(2)

MICC House Namibia (Pty) Ltd(2)

All the companies are 100% held within the MICC Group

Special purpose entity Vukile Investment Property Securitisation (Pty) Ltd (VIPS)(1) – –

Total investment in subsidiaries 1 194 081 462 780(1) Incorporated in the Republic of South Africa.(2) Incorporated in Namibia.* Amount below R1 000.

2015Company

R000

2014Company

R000

Loans from subsidiariesKatatura Properties (Pty) Ltd(1) – 20 295Oluno Properties (Pty) Ltd(1) – 11 631Oshikango Properties (Pty) Ltd(1) – 160Super Deca Properties (Pty) Ltd(1) – 44 987

Total investment in subsidiaries – 77 073(1) The loans were repaid on 25 February 2015.



9 INVESTMENT IN SUBSIDIARIES continuedAcquisition of subsidiaryAcquisition of Synergy Income Fund Limited (Synergy)In terms of a mandatory offer made to Synergy shareholders by way of a circular dated 5 December 2014 Vukile acquired control of Synergy on 2 February 2015. Vukile’s total investment in Synergy comprises 5 625 611 Synergy A units (11.88%) and 93 687 502 Synergy B (88.1%) units amounting to 64.613% of the total Synergy units issued.

The acquisition was made to acquire retail assets that are an excellent strategic fit with Vukile’s existing portfolio at a price that is earnings enhancing to Vukile.

Synergy contributed revenue of R241 324 416 and loss before tax of R35 811 474 to the group for the year ended 31 March 2015. Had the acquired company been purchased on 1 April 2014, the revenue contribution and profit before tax would have been R316 469 186 and R121 854 433 respectively, for the year ended 31 March 2015.

2015R000

Statement of financial position at 2 February 2015

Assets and liabilities assumed

Investment properties 2 389 315

Straight-line rental income accrual 18 056

Cash and cash equivalent 11 488

Trade and other receivables 24 046

Financial liabilities (936 239)

Derivative financial instruments (2 536)

Trade and other payables (44 255)Debenture interest payable (51 025)

Net fair value of assets and liabilities acquired 1 408 850

Non-controlling interest at its proportionate interest in Synergy at date of acquisition (498 552)Bargain purchase(1) (178 997)

Cost of investment 731 301

Value of investment pre-acquisition 371 330

Less: Accrued distribution (7 809)

Less: Pre-acquisition dividends (16 875)

Add: Fair value adjustment up until date of control obtained 22 578

Shares issued triggering mandatory offer 362 077

Cash inflow on date of acquisition 11 488 (1) The bargain purchase adjustment arose as a result of the Vukile/Synergy A and B swap ratios that were accepted by the Synergy A

and B shareholders, which swap ratios were positive for Vukile’s shareholders.


10 AVAILABLE-FOR-SALE FINANCIAL ASSETThe available-for-sale financial asset comprises the long-term incentive reimbursement right which is legally offset by the long-term employee benefit liability in the statement of financial position. The reimbursement asset of R30.9 million is based on the number of shares held by SCM, valued at the closing share price at year-end (level 1 financial instrument). The liability portion of R9.3 million is determined by the number of shares vesting in future value at the year-end share price weighted at the expected performance achievement and based on the number of days to vesting (level 2 financial instrument).

2015 2014GroupR000

CompanyR000

GroupR000

CompanyR000

Reimbursement right 21 576 11 342 20 313 10 165

Balance at 1 April 20 313 10 165 19 417 11 047Performance and retention long-term incentive scheme awards 13 442 6 758 12 820 5 372

Amortisation of other long-term employee benefits – – (1 684) (1 684)Fair value adjustment of reimbursement right (2 899) (95) (4 034) (1 967)

Total asset 30 856 16 828 26 519 12 768

Liability Movements of executive rights (9 280) (5 486) (6 206) (2 603)

Total reimbursement right 21 576 11 342 20 313 10 165

The terms and conditions of the conditional share plan were approved by shareholders at a general meeting held on 25 April 2013.

Sanlam Capital Markets (SCM) has assumed the obligation to discharge Vukile’s conditional financial obligations towards its executives and management on receipt of the amounts outlined below:

Rm Vesting dates

A Based on 33.33% – 100% CPA target and 66.667% – 0% group performance 1.8 July 2016

B Special award – retention based 3.0 July 2016

C Based on 33.33% CPA targets and 66.667% group performance 6.5 August 2014 – 2016

D Based on 25% CPA targets plus 75% group performance 3.4(1) July 2015

E Based on 40% – 100% CPA targets and 60% – 0% of group performance 4.1 July 2016

F Special award – retention based 0.4 July 2016

G Based on retention criteria 0.4(2) July 2011 – 2016

H Based on 27.5% to 100% CPA targets and 72.5% – 0% of group performance 12.8 June 2016

I Special award – retention based 1.3 June 2017J Based on 27.8% to 100% CPA targets and 72.2% – 0% of group performance 13.4 June 2017(1) MICC IF Group, a subsidiary of Vukile, has paid these amounts to SCM in respect of shares 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.



10 AVAILABLE-FOR-SALE FINANCIAL ASSET continuedThe executive directors have been allocated the following percentages of the schemes:

Scheme LG Rapp MJ Potts HC Lopion GS Moseneke

A 5.79% 70.43%

B 73.0% 27.0%

C 100.0%

D 22.20%

E 26.00%

F 26.0%

G 100%

H 24.92% 12.51% 11.22%J 26.45% 13.29% 11.91% 8.94%

Further details of the existing long-term retention and incentive share scheme are set out on pages 32 and 33 of the integrated annual report.

2015 2014GroupR000

CompanyR000

GroupR000

CompanyR000

11 LONG-TERM LOANS GRANTEDLoans to executive directors to acquire Vukile shares 38 110 38 110 23 000 23 000

Balance at 31 March 38 110 38 110 23 000 23 000

The loans bear interest at the weighted average cost of funding of the group, being 8.4% (2014: 8.2%) at period end. The loans are secured by 2 294 763 Vukile shares (2014: 1 402 590) with a fair value of R44.2 million (2014: R23.5 million). The value of security held for each individual loan exceeds the amount of the related loan. The loans are repayable on the tenth anniversary of the loans being granted or date of retirement, death or resignation, if earlier. Refer to table on page 71 in the directors’ report for further details. The loans were tested for impairment and are considered to be unimpaired at year-end.


2015 2014GroupR000

CompanyR000

GroupR000

CompanyR000

12 TRADE AND OTHER RECEIVABLESGross rental receivables 51 091 32 388 32 530 24 733

Impairment of receivables (27 379) (18 110) (11 344) (8 702)

Prepaid expenses 14 517 13 620 8 207 7 940Sundry debtors 109 200 84 584 56 772 48 093

Total 147 429 112 482 86 165 72 064

Further information on receivables is set out in note 24.

All amounts are short term. The net carrying value of trade and other receivables is considered a reasonable approximation of fair value.

13 FAIR VALUE MEASUREMENT13.1 Fair value measurement of financial instruments

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

gg Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilitiesgg Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectlygg Level 3: unobservable inputs for the asset or liability.

13.1.1 Fair value hierarchy

The following table presents financial assets and liabilities measured at fair value in the statement of financial position in accordance with the fair value hierarchy.

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

The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows:

2015 2014

GROUPLevel 1

R000Level 2

R000TotalR000

Level 1R000

Level 2R000

TotalR000

ASSETSInvestments 384 800 – 384 800 592 300 – 592 300Available-for-sale financial assets(1) 30 856 – 30 856 26 519 – 26 519Derivative financial instruments – – – – 18 757 18 757

Total 415 656 – 415 656 618 819 18 757 637 576

LIABILITIESAvailable-for-sale financial liabilities(1) – (9 280) (9 280) – (6 206) (6 206)Derivative financial instruments – (12 919) (12 919) – – –

Total – (22 199) (22 199) – (6 206) (6 206)

Net fair value 415 656 (22 199) 393 457 618 819 12 551 631 370(1) Net available-for-sale financial assets are R21 576 (2014: R20 313).



13 FAIR VALUE MEASUREMENT continued13.1 Fair value measurement of financial instruments continued13.1.1 Fair value hierarchy continued

2015 2014

COMPANYLevel 1

R000Level 2

R000TotalR000

Level 1R000

Level 2R000

TotalR000

ASSETSInvestments 836 586 – 836 586 423 291 – 423 291Available-for-sale financial assets(1) 16 828 – 16 828 12 768 – 12 768Derivative financial instruments – – – – 18 757 18 757

Total 853 414 – 853 414 436 059 18 757 454 816

LIABILITIESAvailable-for-sale financial liabilities(1) – (5 486) (5 486) – (2 603) (2 603)

Derivative financial instruments – (11 909) (11 909) – – –

Total – (17 395) (17 395) – (2 603) (2 603)

Net fair value 853 414 (17 395) 836 019 436 059 16 154 452 213(1) Net available-for-sale financial assets are R11 342 (2014: R10 165).

There have been no significant transfers between levels 1 and 2 in the reporting period under review. There were no transfers in or out of level 3 in the reporting period under review.

Measurement of fair valueThe methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.

InvestmentsThis comprises shares held in listed property companies at fair value which is determined by reference to quoted closing prices at the reporting date.

Available-for-sale financial assetsThis comprises equity-settled share-based long-term incentive reimbursement rights stated at fair value. Note 10 sets out further details of the relevant inputs utilised.

Derivative financial instrumentsThe fair values of these swap contracts are determined by Absa Capital, Rand Merchant Bank, Standard Bank and Investec Bank Limited using a valuation technique that maximises the use of observable market inputs. Derivatives entered into by the group are included in level 2 and consist of interest rate swap contracts.


13 FAIR VALUE MEASUREMENT continued13.1 Fair value measurement of financial instruments continued

13.1.2 Financial instruments by category – groupNote 1.5 of the group’s accounting policies 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:

31 March 2015

Loans and receivables

R000

Available-for-sale

financial assetR000

Designatedat fair valueR000

Assets per statement of financial position

Cash and cash equivalents 473 889 – –

Investments – – 384 800

Available-for-sale financial asset – 21 576 –

Long-term loans granted 38 110 – –

Trade and other receivables (excluding prepayments) 132 912 – –

31 March 2015

Financialliabilities at amortised

cost R000

Designated at fair valueR000

Liabilities per statement of financial position

Other interest-bearing borrowings 2 816 088 –

Derivative financial instrument – 12 919

Trade and other payables (excluding payroll accruals) 288 075 –

Short-term borrowings 1 051 657 –

31 March 2014


R000

Available-for-sale

financial assetR000






Derivative financial instrument – – 18 757



31 March 2014


cost R000




Linked debenture and premium 4 526 816 –



Linked unitholders for distribution 365 236 –



13 FAIR VALUE MEASUREMENT continued13.1 Fair value measurement of financial instruments continued13.1.3 Financial instruments by category – company

Note 1.5 of the group’s accounting policies 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:

31 March 2015


R000

Available-for-sale

financial assetR000








31 March 2015


cost R000




Derivative financial instrument – 11 909



31 March 2014


R000

Available-for-sale

financial assetR000






Derivative financial instrument – – 18 757



31 March 2014


cost R000




Linked debenture and premium 4 526 816 –


Short-term borrowings 857 952 –

Linked unitholders for distribution 365 236 –


13 FAIR VALUE MEASUREMENT continued

13.2 Fair value measurement of non-financial assets (investment properties)The directors have valued the group’s property portfolio at R13.3 billion as at 31 March 2015 (R10.3 billion: 31 March 2014).

This is R3.1 billion or 29.9% higher than the valuation as at 31 March 2014.

The external valuations performed by Quadrant Properties (Pty) Ltd and Knight Frank Gauteng (Pty) Ltd at 31 March 2015 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 R13.3 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 fair value of commercial buildings are estimated using an income approach which capitalises the estimated rental income stream, net of projected operating costs, using a discount rate derived from market yields. The estimated rental stream takes into account current occupancy levels, estimates of future vacancy levels, the terms of in-place leases and expectations of rentals from future leases over the remaining economic life of the buildings.

The most significant inputs, all of which are unobservable, are the estimated rental value, assumptions regarding vacancy levels, the discount rate and the reversionary capitalisation rate. The estimated fair value increases if the estimated rental increases, vacancy levels decline or if discount rate (market yields) and reversionary capitalisation rate decline. The overall valuations are sensitive to all four assumptions. Management considers the range of reasonable possible alternative assumptions is greatest for reversionary capitalisation rate rental values and vacancy levels and that there is also an interrelationship between these inputs. The inputs used in the valuations at 31 March 2015 were:gg The range of the reversionary capitalisation rates applied to the portfolio are between 8.18% and 17.00% (2014: between 7.47% and 13.81%) with the weighted average being 9.83% (March 2014: 10.04%). gg The discount rates applied range between 12.68% and 19.53% (2014: between 13.3% and 17.81%) with the weighted average being 14.28% (March 2014: 14.52%).

Sensitivity analysisThe effect on the fair value of the portfolio of a 0.25% increase in the discount rate would result in a decrease in the fair value of R350 million (2.6%) (2014: R271 million (2.6%)). The average discount rate on the portfolio would increase from 14.28% (2014: 14.52%) to 14.55% and the average exit capitalisation rate would increase from 9.83% (2014:10.04%) to 10.09% due to the interlinked nature of the rates. The analysis has been prepared on the assumption that all other variables remain constant. The range of discount rates and reversionary capitalisation rates applied to the portfolio are between 12.68% and 19.53% (2014: between 13.3% and 17.81%), and between 8.18% and 17.00% (2014: between 7.47% and 13.81%) respectively, depending on the risk profile of each portfolio asset.

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

The following table reflects the levels within the hierarchy of non-financial assets measured at fair value at 31 March 2015:

2015Level 3

R000

2014Level 3

R000

Investment properties 13 105 328 9 989 994

Investment properties held for sale 280 019 312 567



2015 2014Group R000

CompanyR000

Group R000

CompanyR000

14 LOAN TO SUBSIDIARYVukile Investment Property Securitisation (Pty) Ltd (VIPS) – 535 – 535MICC Property Income Fund Limited – 5 759 – –MICC Properties (Pty) Limited – 442 462 – –

Total – 448 756 – 535

The loan to VIPS comprises the proceeds on the sale of securitised properties. The loan earns interest at market-related deposit rates and is repayable once VIPS is liquidated.

The loan to MICC Property Income Fund Limited and MICC Properties (Pty) Ltd earns interest at market-related deposit rates and is payable before 31 May 2015.

2015 2014Group R000

CompanyR000

Group R000

CompanyR000

15 STATED CAPITAL/SHARE CAPITALAuthorised ordinary shares of no par value (’000) 8 000 8 000 8 000 8 000

Issued ordinary shares of no par value (’000) 5 728 5 728 5 096 5 096

Reconciliation of movement of issued shares:

Issued ordinary shares of no par value (’000) In issue at the beginning of the year – 509 573 007 (2014: 431 040 218) ordinary shares of no par value 5 096 5 096 4 310 4 310Issued during the year 632 632 786 786REIT conversion 5 666 612 5 666 612 – –

Stated capital/share capital at end of year 5 672 340 5 672 340 5 096 5 096

As part of the REIT conversion, Vukile converted the share capital structure to an all-equity capital structure, in order to align the capital structure with the capital structures of international REITs. The restructuring resulted in an increase in stated capital of R5.67 billion.

Shares under control of the directorsAt the AGM held on 26 August 2014 shareholders approved a resolution whereby 10% of the unauthorised shares of the company were placed under the control of the directors. As at 26 May 2015, 78.2% of this authority has been utilised through a combination of an issue for cash and vendor placement. In addition to this facility another R1.0 billion worth of capital is under the control of the directors as a result of resolutions passed by shareholders approving the Encha equity funding platform and matching placement facility.

2015 2014Group R000

CompanyR000

Group R000

CompanyR000

16 SHARE PREMIUMArising on the issues for cash and the acquisition of properties, investments and listed property companies 62 279 62 279 50 697 50 697Arising on the share re-investment alternative 5 508 5 508 3 053 3 053Arising on the acquisition of MICC Property Income Fund Limited 9 662 9 662 9 662 9 662Arising on the acquisition of asset management business 6 935 6 935 6 935 6 935Arising on the acquisition of shares in Synergy 13 431 13 431 6 420 6 420REIT conversion (97 815) (97 815)

Balance at 31 March – – 76 767 76 767


Non-distributable

reserves R000

Revaluation reserves

available-for-sale assets

R000

Cash flow hedge

R000TotalR000

17 OTHER COMPONENTS OF EQUITYGROUPBalance at 31 March 2013 2 628 407 (34 744) (60 326) 2 533 337Change in fair value of investment properties 228 277 – – 228 277Share-based remuneration 10 584 – – 10 584Transfer to non-distributable reserves 140 978 – – 140 978Other comprehensive income/(loss)Revaluation of available-for-sale financial asset – (11 925) – (11 925)Revaluation of cash flow hedges – – 78 087 78 087

Balance at 31 March 2014 3 008 246 (46 669) 17 761 2 979 338Change in fair value of investment properties 468 235 – – 468 235Share-based remuneration 11 678 – – 11 678Transfer to non-distributable reserves 94 791 – – 94 791Revaluation of investments 172 180 – – 172 180Other comprehensive income/(loss)Revaluation of available-for-sale financial asset – (12 169) – (12 169)Revaluation of cash flow hedges – – (30 667) (30 667)

Balance at 31 March 2015 3 755 130 (58 838) (12 906) 3 683 386

COMPANYBalance at 31 March 2013 1 822 522 (29 729) (59 691) 1 733 102Change in fair value of investment properties 116 020 – – 116 020Share-based remuneration 6 470 – – 6 470Transfer to non-distributable reserves 163 145 – – 163 145Other comprehensive income/(loss)Revaluation of available-for-sale financial asset – (6 254) – (6 254)Revaluation of cash flow hedges – – 78 087 78 087

Balance at 31 March 2014 2 108 157 (35 983) 18 396 2 090 570Change in fair value of investment properties 271 818 – – 271 818Share-based remuneration 6 103 – – 6 103Transfer from non-distributable reserves (83 957) – – (83 957)Revaluation of investments 63 554 – – 63 554Other comprehensive income/(loss)Revaluation of available-for-sale financial asset – (5 581) – (5 581)Revaluation of cash flow hedges – – (30 667) (30 667)

Balance at 31 March 2015 2 365 675 (41 564) (12 271) 2 311 840

As part of the REIT conversion, the cumulative debenture fair value adjustments were reversed to stated capital (note 19). In line with Vukile’s objective not to distribute capital profits, all non-distributable items accounted for in profit or loss, such as the fair value adjustments (excluding the NCI’s portion of the fair value adjustments), straight-line lease income adjustments, non-cash charges and capital items were transferred to the non-distributable reserve in the current year.



18 NON-CONTROLLING INTERESTThe non-controlling interest of R516.3 million represents 35.39% (2014: Nil) of the net asset value of Synergy at 31 March 2015.

The following is summarised financial information for Synergy, prepared in accordance with IFRS, adjusted for fair value adjustments on acquisition. The information is before intercompany eliminations with other companies in the group.

March 2015R000

Extracts from the statement of profit or loss and other comprehensive income for the two months ended 31 March 2015Revenue, excluding straight-line lease income adjustment 53 867Profit/(loss) after taxation 211 547Attributable to equity holders 201 880Attributable to non-controlling interest 9 667Other comprehensive income –Total comprehensive income –Attributable to equity holders –Attributable to non-controlling interest –Dividends attributable to non-controlling interest at the end of the year 9 667Extracts from statement of financial positionNon-current assets 2 433 456Current assets 18 899Non-current liabilities (969 666)Current liabilities (41 288)

Net assets 1 441 401

Net assets attributable to non-controlling interests 516 317

Extracts from statement of cash flowsCash flows from operating activities (23 078)Cash flows from investing activities (34 183)Cash flows from financing activities 59 058

Net increase in cash and cash equivalents 1 797

2015 2014Group R000

CompanyR000

Group R000

CompanyR000

19 LINKED DEBENTURES AND PREMIUMIssuedIn issue at beginning of the year (509 573 007 unsecured subordinated variable-rate debentures of 490 cents each) 2 806 464 2 806 464 2 496 908 2 496 908Debenture premium 2 763 439 2 763 439 2 029 908 2 029 908Converted as part of REIT conversion (5 569 903) (5 569 903) – –

Balance at 31 March – – 4 526 816 4 526 816

Linked debentures and premium were converted in terms of a circular issued to Vukile shareholders on 19 December 2014 to an all share structure on 30 March 2015. Refer note 15.


20 BORROWINGSDetails of borrowings

2015

Secured and unsecured variable rate loans

GroupTotal

facilitiesavailable

R000

Group Issuances/

draw downs

R000

CompanyIssuances/

draw downs

R000Term years

Interest rates (1)

%Repayment

dates

DMTN programme 5 000 000

Corporate bonds and commercial paper issuances

SecuredCorporate bonds 580 000 580 000 3 8.58 May 2015Corporate bonds 200 000 200 000 4 8.51 May 2016Corporate bonds 240 000 240 000 5 8.83 May 2017

Total 1 020 000 1 020 000Less: Net debt raising fees offset against borrowings (1 852) (1 852)

1 018 148 1 018 148

UnsecuredCommercial paper 85 000 85 000 0.5 6.38 July 2015Commercial paper 56 000 56 000 1 7.31 March 2016Commercial paper 169 000 169 000 0.5 7.23 September 2015Commercial paper –(II) 77 000 0.5 7.23 September 2015Corporate bonds 200 000 200 000 3 6.82 March 2016Corporate bonds 100 000 100 000 5 7.36 March 2018

Total issuance 610 000 687 000Less: Net debt raising fees offset against borrowings (1 203) (1 203)

608 797 685 797

Total DMTN debt 1 626 945 1 703 945(1) Interest rates incorporate swap rates, where applicable and margins.(II) Issued to Namibian subsidiaries and eliminated on consolidation.



20 BORROWINGS continuedDetails of borrowings continued

2015


GroupTotal

facilitiesavailable

R000

Group Issuances/

draw downs

R000

CompanyIssuances/

draw downs

R000Term years

Interest rates (1)

%Repayment

dates

Secured bank loansAbsa BankAccess 200 000 – – 1 7.56 December 2016Term 100 000 100 000 100 000 3 9.67 March 2018Term 200 000 200 000 200 000 2 8.85 March 2017

500 000 300 000 300 000

Less: Net debt raising fees offset against borrowings (453) (453)

299 547 299 547

RMB/SCM (A)Access 25 000 – – 5 7.04 April 2017Term 163 333 163 333 163 333 3 8.03 April 2015Term 163 333 163 333 163 333 4 8.60 April 2016Term 163 334 163 334 163 334 5 9.07 April 2017

515 000 490 000 490 000Less: Net debt raising fees offset against borrowings (395) (395)

489 605 489 605

NedbankTerm facility 100 000 100 000 100 000 5 8.31 January 2020Less: Net debt raising fees offset against borrowings (242) (242)

99 758 99 758Standard BankTerm 160 000 160 000 160 000 3 8.31 Sept 2016 Access 40 000 – – 3 7.55 Sept 2016Term 160 000 24 550 24 550 5 9.13 Sept 2018Access 40 000 – – 5 7.75 Sept 2018

400 000 184 550 184 550Less: Net debt raising fees offset against borrowings (1 317) (1 317)

183 232 183 232RMBTerm 150 000 150 000 150 000 3 8.99 April 2016Term 150 000 50 000 50 000 5 7.91 April 2018Access 150 000 – – 1 8.23 March 2016

450 000 200 000 200 000Less: Net debt raising fees offset against borrowings – –

200 000 200 000(1) Interest rates incorporate swap rates, where applicable and margins.



2015


GroupTotal

facilitiesavailable

R000

Group Issuances/

draw downs

R000

CompanyIssuances/

draw downs

R000Term years

Interest rates (1)

%Repayment

dates

Secured bank loans continuedSynergyNedbankTerm – Facility A 125 000 126 514 – 5 7.75 Jun 2017Term – Facility B 201 000 201 963 – 5 7.75 Oct 2018

Standard BankTerm – Facility A 122 000 76 163 – 5 8.15 Sept 2019Term – Facility A 19 000 – 5 8.46 Sept 2019Term – Facility B 50 000 50 000 – 3 7.65 Sept 2017

RMBAccess 28 295 30 233 – 5 6.18 May 2017Less: Net debt raising fees offset against borrowings (1 920) –

526 295 501 953 –Total secured and unsecured variable rate loans 3 401 040 2 976 087

Secured variable rate loans 2 792 243 2 290 290Unsecured variable rate loans 608 797 685 797

Secured fixed rate loansSynergyNedbankFixed – Facility A 110 000 60 000 – 7.60 Jun 2017Fixed – Facility A 50 000 – 7.97 Jul 2017Standard BankAccess – Facility A 123 000 80 000 – 9.50 Jun 2017

40 000 – 8.88 Jun 2015RMBAccess 236 705 90 000 – 9.14 May 2017Access 146 705 – 8.36 May 2017

Total secured fixed rate loan 466 705 –

Interest-bearing borrowings 3 867 745 2 976 087

Interest-bearing borrowings non-current 2 816 088 1 847 431

Interest-bearing borrowings – current 1 051 657 1 128 656(1) Interest rates incorporate swap rates, where applicable and margins.




2014


GroupTotal

facilitiesavailable

R000

Group Issuances/

draw downsR000

CompanyIssuances/

draw downsR000

Term years

Interest rates (1)

%Repayment

dates

DMTN programme 5 000 000

Corporate bonds and commercial paper issuancesSecuredCorporate bonds 580 000 580 000 3 8.58 May 2015Corporate bonds 200 000 200 000 4 8.51 May 2016Corporate bonds 240 000 240 000 5 8.83 May 2017

Total 1 020 000 1 020 000Less: Net debt raising fees offset against borrowings (4 801) (4 801)

1 015 199 1 015 199

UnsecuredCommercial paper 75 000 75 000 0.5 6.38 Sept 2014Commercial paper 225 000 225 000 1 6.43 March 2015Corporate bonds 200 000 200 000 3 6.82 March 2016Corporate bonds 100 000 100 000 5 7.36 March 2018

Total issuance 600 000 600 000Less: Net debt raising fees offset against borrowings (1 704) (1 704)

598 296 598 296

Total DMTN debt 1 613 495 1 613 495

Secured bank loansAbsa BankAccess 150 000 9 967 9 967 1 7.28 May 2014Term 150 000 150 000 150 000 1.7 7.71 May 2014Term 140 000 140 000 140 000 1.5 7.60 March 2015


299 636 299 636

RMB/SCM(2)

Access 25 000 – – 5 7.04 April 2017Term 163 333 163 333 163 333 3 8.03 April 2015Term 163 333 163 333 163 333 4 8.60 April 2016Term 163 334 163 334 163 334 5 9.07 April 2017


489 142 489 142

NedbankDevelopment 500 000 185 714 185 714 1.5 7.55 Nov 2014

500 000 185 714 185 714 (1) Interest rates incorporate swap rates, where applicable, margins and amortised debt raising costs.(2) RMB – Rand Merchant Bank, a division of FirstRand Bank Limited, SCM – Sanlam Capital Markets Limited.



2014


GroupTotal

facilitiesavailable

R000

Group Issuances/

draw downsR000

CompanyIssuances/

draw downsR000

Term years

Interest rates (1)

%Repayment

dates

Secured bank loans continuedStandard BankTerm 160 000 160 000 160 000 3 8.31 Sept 2016 Access 40 000 – – 3 7.55 Sept 2016Term 160 000 24 550 24 550 5 9.13 Sept 2018Access 40 000 – – 5 7.75 Sept 2018


182 680 182 680RMBTerm 150 000 150 000 150 000 3 8.27 Sept 2016Term 150 000 – – 5 7.63 Sept 2018Access 150 000 72 271 72 271 1 8.23 Sept 2014


221 163 221 163Total secured and unsecured variable rate loans 2 991 830 2 991 830

Secured variable rate loans 2 393 534 2 393 534Unsecured variable rate loans 598 296 598 296

Secured fixed rate loanNedbankTerm 398 777 398 777 – 3 8.66 Aug 2014Access 51 223 – – 3 7.55 Aug 2014Less: Net debt raising fees offset against borrowings (202) –Total secured fixed rate loan 450 000 398 575 –Interest-bearing borrowings 3 390 405 2 991 830

Interest-bearing borrowings – non-current 2 133 878 2 133 878

Interest-bearing borrowings – current 1 256 527 857 952(1) Interest rates incorporate swap rates, where applicable, margins and amortised debt raising costs.

LTV and ICR Covenants – March 2015The company and its subsidiaries have complied with all DMTN and bank lender covenants during the year ended 31 March 2015.

Borrowing powersThe 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.



21 DERIVATIVE FINANCIAL INSTRUMENTS2015 2014

Group assets/

(liabilities)R000

Companyassets/

(liabilities)R000

Group assets/

(liabilities)R000

Companyassets/

(liabilities)R000

Interest rate swaps – cash flow hedges (12 919) (11 909) 18 757 18 757

Interest rate swapsThe group has entered into interest rate swaps whereby the variable rate loans have been converted to fixed rate debt as follows:

Swap 1 Swap 2 Swap 3 Swap 4 Swap 5 Swap 6 Swap 7 Swap 8

Nominal value (Rm) 179.0 89.0 240.0 50.0 351.0 111.0 100.0 200.0Swap period 5 years 4 years 7 years 5 years 5 years 5.5 years 5 years 3 years

Maturity date May 2017 May 2016 May 2019 Aug 2020 Oct 2020 May 2017 Mar 2020 Mar 2018Rate (NACQ)(1) 6.71% 6.63% 7.31% 7.37% 7.73% 7.18% 7.82% 7.20%

Swaps 1 to 6 cover R1.020 billion DMTN debt and swaps 7 and 8 cover the R300 million Absa term facility.

The following swaps 9 to 14 have been entered into to hedge the long-term loans of R490 million from SCM and RMB in respect of a R1.5 billion acquisition.

Swap 9 Swap 10 Swap 11 Swap 12 Swap 13 Swap 14

Nominal value (Rm) 81.7 81.7 81.7 81.7 81.7 81.7Swap period 2 years 3 years 5 years 4 years 4 years 4 yearsMaturity date April 2017 April 2018 April 2020 Mar 2019 Mar 2019 April 2019Rate (NACQ) 6.73%(1) 7.05% 7.39% 7.37% 7.37% 7.79%

Swaps 15 to 16 below have been entered into to hedge R300 million of the R610 million commercial paper and corporate bonds issued in March 2014 and swaps 17 to 19 to hedge loans drawn down from Standard Bank of R184.5 million and from RMB of R150 million for the Encha acquisition in September 2013. Swap 20 will partly hedge the new R100 million Nedbank facility.

Swap 15 Swap 16 Swap 17 Swap 18 Swap 19 Swap 20

Nominal value (Rm) 200.0 100.0 160.0 24.55 150.0 81.67Swap period 3 years 5 years 4 years 5 years 5 years 1 yearMaturity date Mar 2016 Mar 2018 Sept 2017 Sept 2018 Mar 2020 April 2016Rate (NACQ)(2) 5.44% 5.81% 6.68% 7.10% 7.62% 6.78%

Synergy interest rate swaps

Swap 21 Swap 22 Swap 23 Swap 24

Nominal value (Rm) 60.0 50.0 80.0 40.0Swap period 3 years 3 years 5 years 3 yearsMaturity date June 2015 July 2016 June 2017 June 2015Rate (NACQ)(2) 7.60% 7.97% 9.50% 8.88%(1) This swap contract replaced an existing swap that expired in April 2015.(2) Swap rates exclude note margins and amortised transaction costs.


2015 2014Group R000

CompanyR000

Group R000

CompanyR000

22 DEFERRED TAXATIONDeferred taxation liabilities comprise the following:Amounts received in advance (7 902) (6 269) (13 021) (11 017)Allowance for bad debt (6 029) (5 071) (1 929) (1 827)Wear and tear on developments 11 458 11 458 11 458 11 458Allowance for future expenditure 1 459 1 044 4 831 4 411Short-term bonus accrual – – (3 575) (1 503)Prepayments 791 – 6 952 6 355Tax loss (2 228) – – –Leave pay provision (264) 11 (270) (7)

(2 715) 1 173 4 446 7 870

MovementBalance at 1 April 4 446 7 870 6 293 9 187Other temporary differences (6 697) (6 697) (2 131) (1 317)Under provision of other temporary differences in prior year (464) – – –Deferred tax asset – normal tax losses arising – – (284) –

Balance at 31 March (2 715) 1 173 4 446 7 870

Reflected on the statement of financial position under:Deferred taxation assets (3 888) – (3 424) –Deferred taxation liabilities 1 173 1 173 7 870 7 870

(2 715) 1 173 4 446 7 870

23 TRADE AND OTHER PAYABLESTrade creditors 74 561 43 769 34 603 29 432Accrued expenses 151 929 117 356 182 086 150 328Tenant deposits 74 390 51 462 58 237 48 245

300 880 212 587 274 926 228 005

All amounts are short-term. The carrying value of trade and other payables are considered to be a reasonable approximation of fair value.

24 FINANCIAL INSTRUMENTS RISK24.1 Financial risk management objectives and policies

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

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

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

The group’s financial instruments consist mainly of interest rate swaps, financial assets, deposits with banks, accounts receivable and payable, long-term borrowings and loans to and from subsidiaries. In respect of financial instruments listed above, the book value approximates fair value. The group purchases or issues financial instruments to finance operations and to manage interest rate risks that may arise from time to time. The group does not actively engage in the trading of financial assets for speculative purposes.



24 FINANCIAL INSTRUMENTS RISK continued24.2 Credit risk analysis

Potential areas of credit risk comprise mainly cash, money market funds, trade receivables and long-term loans granted. In order to minimise any possible risks relating to cash and money market funds, surplus funds can only be invested in the ‘Big Four’ banks and AAA rated money market funds up to pre-determined levels.

Trade receivables consist of a large, widespread tenant base. Management has established a credit policy in terms of which each new tenant is analysed individually for creditworthiness 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 R27.4 million (2014: R11.3 million) net of tenant deposits held as security.

The group held tenant cash deposits amounting to R74.4 million at 31 March 2015 (2014: R58.2 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:

2015 2014Group R000

CompanyR000

Group R000

CompanyR000

Not more than 30 days 7 183 2 697 2 240 1 666More than 30 days but not more than 60 days 1 857 1 455 1 337 924More than 60 days but not more than 90 days 1 526 1 245 852 678More than 90 days 16 813 12 713 6 915 5 434

At 31 March 27 379 18 110 11 344 8 702

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 2015 group trade receivables of R23.7 million (2014: R21.2 million) were past due but not impaired. Company trade receivables of R14.3 million (2014: R16.0 million) were past due but not impaired at 31 March 2015.


24 FINANCIAL INSTRUMENTS RISK continued24.2 Credit risk analysis continued

These related to a number of independent customers for whom there is no recent history of default.

2015 2014Group R000

CompanyR000

Group R000

CompanyR000

The age analysis of these trade receivables is as follows:Not more than 30 days 12 193 6 234 8 600 6 241More than 30 days but not more than 60 days 3 637 3 018 5 151 4 170More than 60 days but not more than 90 days 2 172 1 657 2 195 1 732More than 90 days 5 710 3 369 5 240 3 888

23 712 14 278 21 186 16 031

Movements on the group allowance for impairment of trade receivables are as follows:At 1 April 11 344 8 702 13 653 9 087Allowance for receivables impairment 15 834 12 827 2 550 3 339Receivables written off during the year as uncollectible (3 562) (3 419) (4 859) (3 724)

23 616(1) 18 110 11 344 8 702

Synergy’s impairment allowance 31 January 2015 3 763 – – –

At 31 March 27 379 18 110 11 344 8 702(1) This includes the movement in Synergy’s impairment allowance for the two months ending 31 March 2015.

Allowance for impaired receivables and receivables written off have been included in ‘operating costs’ in note 26 to the annual financial statements. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

The risks regarding long-term loans granted to directors are minimised by a cession of Vukile listed units held by directors in favour of the company.

24.3 Market riskInterest rate risk managementThe group is exposed to market risk through its use of financial instruments, specifically to interest rate risk. The group’s policy is to minimise interest rate cash flow risk exposures on long-term debt by hedging at least 75% of long-term debt through fixed rate loans or by way of interest rate swaps.

At 31 March 2015 the group had interest-bearing borrowings of R3.9 billion (March 2014: R3.4 billion). Eighty-eight percent of term interest-bearing debt, excluding development loans, has been fixed or hedged.



24 FINANCIAL INSTRUMENTS RISK continued24.3 Market risk continued

The group’s interest rate risk management position and maturity analysis of other interest-bearing borrowings are summarised below:

DebtRate(1)

%Amount

RmMaturity

dateInterest

rate

DMTNVariable 8.58 580.0 May 2015 HedgedVariable 8.51 200.0 May 2016 HedgedVariable 8.83 240.0 May 2017 HedgedVariable 85.0 July 2015 FixedVariable 56.0 March 2016 –Variable 169.0 Sept 2015 FixedVariable 6.82 200.0 March 2016 HedgedVariable 7.36 100.0 March 2018 Hedged

RMB/SCMVariable 8.03 163.3 April 2015 HedgedVariable 8.60 163.3 April 2016 HedgedVariable 9.07 163.4 April 2017 Hedged

AbsaVariable 7.71 200.0 March 2017 HedgedVariable 7.60 100.0 May 2018 Hedged

NedbankVariable 100.0 Jan 2020 (R81m hedged)

RMBVariable 8.27 150.0 Sept 2016 HedgedVariable 8.23 50.0 Sept 2016 _

Standard BankVariable 8.31 160.0 Sept 2016 HedgedVariable 9.13 24.6 Sept 2018 Hedged

SynergyVariable Various 503.9 HedgedFixed Various 466.7 Fixed

NedbankVariable Prime less 150 bps 126.5 June 2017 VariableFixed 7.60 60.0 June 2015 FixedFixed 7.97 50.0 June 2016 FixedVariable Prime less 150 bps 202.0 Oct 2018 Variable

Standard BankVariable Various 145.2 Sept 2019 VariableFixed 9.29 120.0 Sept 2017 Fixed

RMB

Variable

1 month JIBAR plus

230 bps 30.2 May 2017 VariableFixed 8.66 236.7 May 2017 Fixed

Total 3 875.2(1) Includes swap rates, where applicable and margins.


24 FINANCIAL INSTRUMENTS RISK continued24.3 Market risk continued

Interest rate sensitivityDebt amounting to R578 million (excluding development debt) is not hedged. It is estimated that for the year ended 31 March 2015 a 1% change in interest rates would have affected the group’s profit before taxation by approximately R5.78 million (March 2014: R3.8 million).

Details of the group’s interest rate swap contracts are set out in note 21 of these annual financial statements.

The exposure to interest rates for the group’s money market funds on deposit is considered immaterial.

Other price sensitivityThe group is exposed to other price risk in respect of its listed equity securities. The group limits its exposure to equity price risk by only investing in securities that are listed on a recognised stock exchange and where the directors are satisfied with the overall strategies implemented by such companies.

The investments in listed equity securities are considered long-term, strategic investments. The investments are continuously monitored and voting rights arising from these equity instruments are utilised in the group’s favour.

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

In effect the group seeks to borrow for as long as possible at the lowest acceptable cost. The group regularly reviews the maturity profile of its financial liabilities and seeks to avoid concentration of maturities through the regular replacement of facilities and by using a selection of maturity dates. The group’s strategy in this regard is to ensure that no more than 25% of debt matures in any one year. The group’s objective in managing liquidity risk is to ensure that it has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions. Forecast cash flows based on anticipated rentals net of operating expenses, finance costs, other income corporate expenditure and capital expenditure are reviewed on a regular basis.

The tables below set out the maturity analysis of the group’s non-derivative financial liabilities based on the undiscounted contractual cash flows.

Current12 months

maturityanalysis

R000

Non-current 1 – 5 years

R000

Non-current> 5 years

R000

Maturity analysisOther interest-bearing borrowings 1 051 657 2 816 088 –Trade and other payables 300 880 – –

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.



24 FINANCIAL INSTRUMENTS RISK continued24.4 Liquidity risk management continued

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 and 45% on a corporate level. 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 20. 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 covenants of 40% and 45%, the company has the following borrowing capacity:

2015 2014GroupR000

GroupR000

Value of property assets 13 345 707 10 275 903

40/45% thereof 5 822 081 4 454 051Nominal value of borrowings utilised at year-end (3 867 745) (3 491 400)

Potential borrowing capacity 1 954 336 962 651

2015 2014Group R000

CompanyR000

Group R000

CompanyR000

25 REVENUEProperty revenue 1 579 099 1 276 943 1 389 625 1 152 156Income from asset management business 24 694 47 482 92 654 92 654

Total revenue 1 603 793 1 324 425 1 482 279 1 244 810

Included in property revenue: Turnover rental 14 242 8 797 12 492 8 286

26 PROPERTY EXPENSESMunicipal fixed charges 112 920 96 157 106 084 91 947Municipal consumption costs 233 405 180 474 214 595 183 896Operating costs 162 303 134 713 125 398 105 994Repairs and maintenance 32 836 27 668 28 437 24 478Asset management fees 5 112 26 945 3 493 24 263Property management fees 38 796 31 862 38 510 30 715

585 372 497 819 516 517 461 293

27 PROFIT FROM ASSET MANAGEMENT BUSINESSIncome 24 694 24 694 92 654 92 654

Income asset management fees(1) 22 382 22 382 22 897 22 897Sales commission 2 305 2 305 67 164 67 164Less: Sales fee paid – – (100) (100)Management and other fees 7 7 2 693 2 693

Expenditure (34 388) (11 600) (38 917) (15 936)

Administration costs (6 308) (11 600) (4 921) (15 936)Depreciation (1 718) – (1 726) –Staff costs (23 947) – (29 856) –Rent paid (2 415) – (2 414) –

(Loss)/profit from asset management business (9 694) 13 094 53 737(1) 76 718(1) This excludes R26.1 million asset management fees charged to the group portfolio for the year ended 31 March 2015 (2014:

R25.8 million), which has been eliminated on consolidation.


2015 2014Group R000

CompanyR000

Group R000

CompanyR000

28 CORPORATE ADMINISTRATIVE EXPENSESAdministration expenses include:Administration costs 9 456 8 037 7 164 6 781Depreciation of furniture, fittings and computer equipment 1 718 36 1 764 38Operating lease: premises 2 415 717 2 414 776Share-based remuneration 11 678 6 103 10 584 6 470Corporate staff and related costs (including directors’ remuneration) 16 032 16 032 14 350 14 350Internal audit fee 886 886 829 829

Share-based remunerationAs reported previously, the shareholders have approved a long-term retention and incentive scheme which is based on individual performance relative to personal critical performance area targets and group’s performance relative to industry benchmarks. Refer to note 10 in this regard together with pages 32 and 33 of this integrated annual report.

The charges to the company income statement for the year ended 31 March 2015 amounted to R6.1 million (March 2014: R6.4 million) and to a subsidiary’s income statement R5.6 million (March 2014: R4.1 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.



2015 2014Group R000

CompanyR000

Group R000

CompanyR000

29 AUDITORS’ REMUNERATIONExternal audit feesCurrent year 1 459 887 1 834 1 144Non-audit services 176 – 69 69

1 635 887 1 903 1 213

30 INVESTMENT AND OTHER INCOMEDebenture interest received from subsidiary – – – 123 546Dividends received from subsidiary – 140 479 – 27Interest and dividends receivable from listed property investments 51 098 40 602 14 862 10 432Interest on deposits and receivables 25 149 40 538 23 957 23 296Management fees received – 2 610 – 2 067

Antecedent divestiture of distribution income – – 25 297 25 297Other income 22 22 163 163

76 269 224 251 64 279 184 828

31 FINANCE COSTSSecured loans 240 290 212 664 206 853 175 703Less: Capitalised interest on developments (1 982) (1 982) (5 954) (5 954)Unsecured loans 28 714 33 110 48 306 48 306Amortisation of debt raising fees 6 476 6 280 6 248 6 045Amortisation interest rate swaption – – 1 152 1 152

273 498 250 072 256 605 225 252

32 TAXATIONNormal taxation 6 733 – 6 852 3 027Normal taxation overprovision in prior year (463) – – –Non-resident shareholders’ tax (NRST) 917 – 673 –

Total normal taxation 7 187 – 7 525 3 027Deferred taxation asset – tax losses arising (464) – – –Deferred taxation on other temporary differences (6 697) (6 697) (1 847) (1 317)

26 (6 697) 5 678 1 710

Reconciliation of tax rate (%)Standard tax rate 28.00 28.00 28.00 28.00Permanent differences (16.30) (11.25) (26.36) (26.96)NRST 0.07 – 0.15 –Assessed loss utilised (0.08) 0.72 (0.10) –Prior year adjustment (0.04) – (0.06) –Namibia rate differential 0.10 – 0.18 –Deferred tax asset not recognised 0.44 – – –REIT distribution (12.19) (18.47) – –

Effective tax rate 0.00 (1.00) 1.81 1.04


2015 2014Group Group

R000

Cents per share R000

Cents pershare

33 RECONCILIATION OF EARNINGS TO HEADLINE EARNINGS AND TO PROFIT AVAILABLE FOR DISTRIBUTIONEarnings per share 1 499 995 278.01 381 421 81.65Adjusted for:Debenture interest – – 691 667 148.06

Earnings per share 1 499 995 278.01 1 073 088 229.71Change in fair value of investment properties (379 017) (70.25) (174 784) (37.42)Bargain purchase price adjustment (178 997) (33.18) – –Write-off of goodwill on sale of subsidiary/properties sold by a subsidiary – – 6 544 1.40Loss/(profit) on sale of investment properties 23 562 4.37 (41 201) (8.82)(Profit)/loss on sale of furniture, fittings and computer equipment (6) – 4 –Loss on sale/(reversal of impairment) of intangible asset 61 595 11.42 (89 094) (19.07)Amortisation of debenture premium (19 227) (3.56) (9 959) (2.12)

Headline earnings of shares 1 007 905 186.81 764 598 163.68Profit/(loss) on sale of furniture, fittings and computer equipment – – (4) –Cost of acquisition of business combination 2 778 0.51 – –Gain on deemed disposal of Synergy previously accounted for under IAS 39 (22 578) (4.19) – –Revaluation of surplus on investments (149 602) (27.73) (17 228) (3.69)Pre-acquisition dividends arising on fair value calculation of Synergy units at date of obtaining control 1 293 0.24 – –Shares issued cum dividend 33 262 6.16 – –Fair value movement of derivative financial instrument (1 527) (0.28) – –Straight-line rental accrual (97 315) (18.04) (53 493) (11.45)

Available for distribution 774 216 143.48 693 873 148.54

Calculation of distributable earnings

Net profit from property operations 993 727 873 108

Investment and other income 76 269 64 279

Net (loss)/income from the asset management business (9 694) 53 737

Administrative expenses(1) (36 992) (34 968)Finance costs (273 498) (256 605)Taxation (excluding deferred tax on timing differences) (26) (5 678)Shares issued cum distribution 33 262 –Less: Adjustments in respect of Synergy acquisition arising on consolidation not included in calculating distributable earnings (458) –Pre-acquisition dividends arising on fair value calculation of Synergy units at date of obtaining control 1 293 –Less: Allocated to non-controlling interest (minority shareholders) (9 667) –

Available for distribution 774 216 693 873 (1) Includes loss on disposal of furniture, fittings and equipment (R4 000).



2015 2014Group R000

CompanyR000

Group R000

CompanyR000

34 STATEMENTS OF CASH FLOWThe following convention applies to figures under “adjustments” below. Inflows of cash are represented by figures in brackets while outflows of cash are represented by figures without brackets.34.1 Adjustments

Gross change in fair value of investment properties (476 332) (271 818) (228 277) (116 020)Finance costs 273 498 250 072 256 605 225 252Debenture interest – – 691 667 691 667Investment and other income (76 269) (224 251) (64 279) (184 828)Share-based remuneration 11 678 6 103 10 584 6 470Amortised debt raising costs and movement in interest rate swaps 6 805 6 280 6 570 6 045Amortised financial asset 1 152 1 152Write-off goodwill on sale of subsidiary/properties sold by a subsidiary 6 544 –Fair value of fixed loan reversed 290 – – –Fair value gain on investments (172 180) (63 554) – –Fair value movement of derivative financial instrument (1 527) – – –Bargain purchase price adjustment (178 997) – – –Profit/(loss) on sale of investment properties 23 562 22 362 (41 201) (40 720)(Profit)/loss on sale of furniture, fittings and computer equipment (6) – 4 –Loss on sale of intangible asset 61 595 61 595 – –(Reversal)/impairment of intangible asset – – (89 094) (89 094)Depreciation on furniture, fittings and equipment 1 718 36 1 765 38Amortisation of debenture premium (19 227) (19 227) (9 959) (9 959)

(545 392) (232 402) 542 081 490 003

34.2 Net changes in working capitalMovement in working capitalIncrease in trade and other receivables (30 167) (26 227) (1 805) (87 654)Increase in trade and other payables 25 954 (15 419) 46 809 63 481NCI – acquisition of working capital (20 209) – – –

(24 422) (41 646) 45 004 (24 173)

34.3 Taxation paidAmount owing/(refundable) at beginning of year 4 262 2 892 1 343 (148)Current taxation 6 270 – 6 852 3 027Non-resident shareholders’ tax 917 – 673 –

11 449 2 892 8 868 2 879Net amount (owing)/refundable at end of year (1 514) 133 (4 262) (2 892)

Tax paid/(refunded) during year 9 935 3 025 4 606 (13)


2015 2014Group R000

CompanyR000

Group R000

CompanyR000

34 STATEMENTS OF CASH FLOW continued34.4 Distribution to shareholders

Distribution to shareholders owing at beginning of year 365 236 365 236 321 222 321 222Debenture interest per income statement – – 691 667 691 667Dividends declared 338 927 329 260 1 412 1 412NCI portion of distribution (9 667) – – –NCI dividend payable acquired 51 025 – – –Distribution to shareholders owing at end of year – – (365 236) (365 236)

Distribution paid during the year 745 521 694 496 649 065 649 065

34.5 Cash and cash equivalentsHeld on deposit for tenants 60 152 49 914 56 183 46 439Held on short-term interest-bearing deposits 182 607 177 000 39 574 39 574Cash on hand 231 130 210 545 202 418 187 299

473 889 437 459 298 175 273 312

35 RELATED-PARTY TRANSACTIONS

2015 2014

Type of transaction

Amount paid/

(received)R000

Amounts owed to/(by)

related parties

R000

Amount paid/

(received)R000

Amounts owed to/(by)

related parties R000

Intergroup transactionsMICC Property Income Fund (MICC IF) Asset management fees(1) 38 214 – 42 280 –MICC Properties Corporate administration

recovery(2) (2 610) – (2 067) –MICC Namibian subsidiaries Interest paid(3) 4 529 – 5 010 –(1) Fees paid by Vukile for the management of the group’s and Sanlam’s property portfolios by MICC IF.(2) Allocation of corporate and administration costs attributable to the MICC group paid to Vukile.(3) Market-related interest paid by Vukile on loans advanced by its Namibian subsidiaries.

Related parties comprise the company’s subsidiaries and key management.

Key management comprises the executive, non-executive directors and key personnel (including the public officer).

Details of directors’ emoluments and related share incentive schemes are set out in the directors’ report. Refer pages 32 and 33.



36 OPERATING SEGMENT REPORT

Properties owned by the groupAt 31 March 2015 Region Town

Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition

Directors’ valuation

at 31 March

2015R000

Property revenue

R000

Property expen-ditureR000

GoodwillR000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Retail – VukileBloemfontein Plaza Free State Bloemfontein 38 400 45 726 Apr 2004 230 474 47 008 22 679 97 959 66 794 76.30 6.00 Daveyton Shopping Centre Gauteng Daveyton 17 795 49 883 Apr 2004 297 497 33 885 12 376 126 445 86 218 122.48 5.60 Dobsonville Shopping Centre Gauteng Soweto, Dobsonville 23 177 56 118 Apr 2004 383 381 42 654 16 340 162 949 111 108 114.97 0.70 Durban Workshop** KwaZulu-Natal Durban 19 987 133 400 Apr 2012 183 804 46 922 28 633 78 122 53 269 149.61 2.00 East Rand Mall (50%) Gauteng Boksburg 31 494 1 111 816 Apr 2013 996 276 115 239 34 012 423 445 288 731 234.02 – Germiston Meadowdale Land Gauteng Germiston, Meadowdale – – Oct 2003 16 650 – – 7 077 4 825 – – Giyani Plaza Limpopo Giyani 9 487 68 250 Jul 2011 123 212 13 909 3 850 52 369 35 708 103.10 9.20 Grosvenor Crossing Shopping Centre Gauteng Sandton, Bryanston 4 578 31 381 Apr 2004 57 330 11 808 5 047 24 367 16 615 130.14 – Hammarsdale Junction** KwaZulu-Natal Hammarsdale 19 476 194 194 Jul 2013 203 389 30 757 12 190 86 447 58 945 101.14 5.10 Hillfox Power Centre Gauteng Roodepoort 38 245 62 098 Oct 2003 262 108 36 929 18 356 8 239 111 404 75 962 60.25 3.80 269 Independence Avenue Namibia Windhoek 12 828 110 803 Jul 2007 152 659 22 535 5 389 64 885 44 242 133.25 1.70 Katutura Shoprite Centre** Namibia Katutura 10 593 41 157 Oct 2003 126 319 19 685 8 140 5 613 53 690 36 609 106.62 – Letlhabile Mall Northwest Letlhabile 17 000 192 878 Mar 2014 153 504 20 591 9 694 65 244 44 487 83.13 – Maake Plaza (30%) Limpopo Tzaneen 4 725 32 410 Aug 2014 48 166 4 782 1 879 20 472 13 959 93.48 1.00 Mbombela Shoprite Centre Mpumalanga Mbombela 14 015 39 963 Sept 2010 86 748 18 071 10 330 36 871 25 141 73.35 0.50 Mbombela Truworths Centre Mpumalanga Mbombela 1 920 7 336 Apr 2004 30 038 3 351 472 12 767 8 705 139.09 – Meadowdale Mall Gauteng Germiston, Meadowdale 35 847 66 170 Oct 2003 198 106 35 471 17 084 8 716 84 201 57 413 42.56 – Modjadji Plaza (30%) Limpopo Ga-Kgapane 2 953 29 713 Mar 2014 37 173 5 242 2 180 15 800 10 773 105.76 0.30 Moratiwa Crossing (94.50%) Limpopo Monsterlus 12 058 61 540 Nov 2007 131 075 17 639 6 191 55 711 37 987 92.13 3.50 Ondangwa Shoprite Centre Namibia Ondangwa 5 908 17 959 Oct 2003 63 444 7 495 1 169 2 390 26 966 18 387 105.90 – Oshakati Shopping Centre Namibia Oshakati 24 632 76 929 Oct 2003 319 662 42 388 16 475 10 425 135 866 92 642 105.92 – Oshikango Spar Centre Namibia Oshikango 9 163 19 542 Oct 2003 139 998 14 157 1 400 2 751 59 504 40 573 128.76 – Phoenix Plaza KwaZulu-Natal Durban, Phoenix 24 363 189 140 Apr 2004 660 122 81 086 29 513 280 572 191 311 214.07 – Piet Retief Shopping Centre Mpumalanga Piet Retief 7 541 20 818 Oct 2003 115 598 10 885 1 572 2 726 49 133 33 502 99.45 0.50 Pine Crest Centre (50%) KwaZulu-Natal Pinetown 20 056 99 338 Apr 2004 351 576 41 805 13 242 149 431 101 891 128.31 2.30 Randburg Square Gauteng Randburg 40 874 66 343 Apr 2004 340 515 55 170 30 706 144 729 98 685 85.54 8.80 Rustenburg Edgars Building Northwest Rustenburg 9 784 83 750 Sept 2010 149 102 13 672 1 184 63 373 43 212 92.68 – The Victoria Centre KwaZulu-Natal Pietermaritzburg 11 016 55 685 Oct 2003 124 783 15 938 4 851 7 358 53 037 36 164 107.51 1.70

467 915 2 964 340 5 982 709 809 074 314 954 48 218 2 542 836 1 733 858 111.03 2.60

** Leasehold property.


36 OPERATING SEGMENT REPORT


Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000


GoodwillR000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Retail – VukileBloemfontein Plaza Free State Bloemfontein 38 400 45 726 Apr 2004 230 474 47 008 22 679 97 959 66 794 76.30 6.00 Daveyton Shopping Centre Gauteng Daveyton 17 795 49 883 Apr 2004 297 497 33 885 12 376 126 445 86 218 122.48 5.60 Dobsonville Shopping Centre Gauteng Soweto, Dobsonville 23 177 56 118 Apr 2004 383 381 42 654 16 340 162 949 111 108 114.97 0.70 Durban Workshop** KwaZulu-Natal Durban 19 987 133 400 Apr 2012 183 804 46 922 28 633 78 122 53 269 149.61 2.00 East Rand Mall (50%) Gauteng Boksburg 31 494 1 111 816 Apr 2013 996 276 115 239 34 012 423 445 288 731 234.02 – Germiston Meadowdale Land Gauteng Germiston, Meadowdale – – Oct 2003 16 650 – – 7 077 4 825 – – Giyani Plaza Limpopo Giyani 9 487 68 250 Jul 2011 123 212 13 909 3 850 52 369 35 708 103.10 9.20 Grosvenor Crossing Shopping Centre Gauteng Sandton, Bryanston 4 578 31 381 Apr 2004 57 330 11 808 5 047 24 367 16 615 130.14 – Hammarsdale Junction** KwaZulu-Natal Hammarsdale 19 476 194 194 Jul 2013 203 389 30 757 12 190 86 447 58 945 101.14 5.10 Hillfox Power Centre Gauteng Roodepoort 38 245 62 098 Oct 2003 262 108 36 929 18 356 8 239 111 404 75 962 60.25 3.80 269 Independence Avenue Namibia Windhoek 12 828 110 803 Jul 2007 152 659 22 535 5 389 64 885 44 242 133.25 1.70 Katutura Shoprite Centre** Namibia Katutura 10 593 41 157 Oct 2003 126 319 19 685 8 140 5 613 53 690 36 609 106.62 – Letlhabile Mall Northwest Letlhabile 17 000 192 878 Mar 2014 153 504 20 591 9 694 65 244 44 487 83.13 – Maake Plaza (30%) Limpopo Tzaneen 4 725 32 410 Aug 2014 48 166 4 782 1 879 20 472 13 959 93.48 1.00 Mbombela Shoprite Centre Mpumalanga Mbombela 14 015 39 963 Sept 2010 86 748 18 071 10 330 36 871 25 141 73.35 0.50 Mbombela Truworths Centre Mpumalanga Mbombela 1 920 7 336 Apr 2004 30 038 3 351 472 12 767 8 705 139.09 – Meadowdale Mall Gauteng Germiston, Meadowdale 35 847 66 170 Oct 2003 198 106 35 471 17 084 8 716 84 201 57 413 42.56 – Modjadji Plaza (30%) Limpopo Ga-Kgapane 2 953 29 713 Mar 2014 37 173 5 242 2 180 15 800 10 773 105.76 0.30 Moratiwa Crossing (94.50%) Limpopo Monsterlus 12 058 61 540 Nov 2007 131 075 17 639 6 191 55 711 37 987 92.13 3.50 Ondangwa Shoprite Centre Namibia Ondangwa 5 908 17 959 Oct 2003 63 444 7 495 1 169 2 390 26 966 18 387 105.90 – Oshakati Shopping Centre Namibia Oshakati 24 632 76 929 Oct 2003 319 662 42 388 16 475 10 425 135 866 92 642 105.92 – Oshikango Spar Centre Namibia Oshikango 9 163 19 542 Oct 2003 139 998 14 157 1 400 2 751 59 504 40 573 128.76 – Phoenix Plaza KwaZulu-Natal Durban, Phoenix 24 363 189 140 Apr 2004 660 122 81 086 29 513 280 572 191 311 214.07 – Piet Retief Shopping Centre Mpumalanga Piet Retief 7 541 20 818 Oct 2003 115 598 10 885 1 572 2 726 49 133 33 502 99.45 0.50 Pine Crest Centre (50%) KwaZulu-Natal Pinetown 20 056 99 338 Apr 2004 351 576 41 805 13 242 149 431 101 891 128.31 2.30 Randburg Square Gauteng Randburg 40 874 66 343 Apr 2004 340 515 55 170 30 706 144 729 98 685 85.54 8.80 Rustenburg Edgars Building Northwest Rustenburg 9 784 83 750 Sept 2010 149 102 13 672 1 184 63 373 43 212 92.68 – The Victoria Centre KwaZulu-Natal Pietermaritzburg 11 016 55 685 Oct 2003 124 783 15 938 4 851 7 358 53 037 36 164 107.51 1.70

467 915 2 964 340 5 982 709 809 074 314 954 48 218 2 542 836 1 733 858 111.03 2.60




36 OPERATING SEGMENT REPORT continued


Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000


GoodwillR000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Retail – SynergyAtlantis City Shopping Centre Western Cape Atlantis 22 115 302 612 Feb 2015 310 001 7 136 3 626 131 760 89 842 118.08 5.10 Ermelo Game Centre Mpumalanga Ermelo 6 639 57 356 Feb 2015 58 141 1 104 631 24 712 16 850 84.05 16.90 Gugulethu Square Western Cape Gugulethu 25 322 393 147 Feb 2015 399 061 8 504 3 823 169 613 115 653 123.67 0.60 Hubyeni Shopping Centre Limpopo Elim 12 685 108 559 Feb 2015 109 974 2 713 1 192 46 742 31 872 83.13 2.50 Highland Mews Mpumalanga Emalahleni 17 032 209 612 Feb 2015 210 859 4 329 250 89 622 61 109 86.18 7.20 King Senzangakona Shopping Centre KwaZulu-Natal Ulundi 22 325 232 755 Feb 2015 235 224 4 810 1 656 99 978 68 171 94.80 1.00 KwaMashu Shopping Centre KwaZulu-Natal KwaMashu 11 204 106 121 Feb 2015 107 239 2 927 1 368 45 580 31 079 100.37 6.10 Nzhelele Valley Shopping Centre Limpopo Makhado 5 309 54 669 Feb 2015 55 696 1 380 648 23 673 16 141 90.90 5.70 Renbro Shopping Centre Gauteng Hammanskraal 13 308 163 821 Feb 2015 167 786 3 881 1 791 71 314 48 626 103.52 9.30 Richdens Shopping Centre KwaZulu-Natal Hillcrest 10 270 111 983 Feb 2015 113 511 2 641 1 087 48 246 32 897 112.47 8.10 Ruimsig Shopping Centre Gauteng Roodepoort 11 179 116 100 Feb 2015 117 466 2 955 1 384 49 927 34 043 91.45 9.70 Sediba Shopping Centre North West Hartbeespoort 10 887 121 086 Feb 2015 122 920 2 916 969 52 245 35 624 101.21 20.20 Setsing Crescent Shopping Centre Free State Phuthaditjhaba 21 538 289 690 Feb 2015 298 226 5 747 2 092 126 755 86 429 107.54 2.30 Taxi City Shopping Centre KwaZulu-Natal Newcastle 5 006 52 680 Feb 2015 53 348 1 158 395 22 675 15 461 105.31 2.30 Van Riebeeckshof Shopping Centre Western Cape Welgedacht 5 181 61 667 Feb 2015 62 535 1 665 771 26 579 18 123 103.91 –

200 000 2 381 858 2 421 987 53 866 21 683 – 1 029 421 701 920 103.07 5.60

Offices1 West Street Gauteng Johannesburg, Houghton 4 415 33 504 Sept 2007 62 191 9 044 3 366 26 433 18 024 120.63 –

36 Homestead Road Gauteng Sandton, Rivonia 2 459 8 660 Apr 2004 22 869 4 099 1 999 9 720 6 628 77.55 – 50 Sixth Road Gauteng Sandton, Hyde Park 4 108 56 573 Sept 2006 46 442 7 291 2 807 19 739 13 459 119.83 9.30 55 Empire Road Gauteng Johannesburg, Parktown 5 960 43 400 Apr 2012 41 998 7 804 3 077 17 850 12 172 90.74 12.00 1166 Francis Baard Street Gauteng Pretoria, Hatfield 2 871 13 469 Apr 2004 15 095 4 002 1 963 6 416 4 375 87.95 51.50 Bellville Suntyger Western Cape Cape Town, Bellville 6 344 67 200 Apr 2012 48 799 10 314 3 962 20 741 14 143 118.55 – Bellville Tijger Park Western Cape Cape Town, Bellville 20 221 194 200 Apr 2012 242 979 26 399 11 492 103 274 70 418 92.52 9.00 De Tijger Office Park Western Cape Parow 4 118 25 856 Oct 2003 22 929 6 414 2 723 9 746 6 645 94.20 8.80 Excel Park Gauteng Pretoria, Lynnwood 3 529 34 174 Mar 2008 15 630 4 018 2 609 6 643 4 530 68.99 25.70 Festival Street Offices Gauteng Pretoria, Hatfield 5 358 41 875 Sept 2010 50 899 8 624 3 446 21 634 14 751 137.80 – Isle of Houghton Gauteng Johannesburg, Houghton 28 070 230 100 Apr 2012 266 509 42 001 14 852 113 275 77 237 84.56 5.20 Midrand IBG Gauteng Midrand 8 515 80 700 Apr 2012 61 249 11 204 4 306 26 033 17 751 88.73 18.50 Midrand IBG undeveloped land Gauteng Midrand – 10 500 Mar 2014 10 500 – – 4 463 3 043 – – Midrand Ulwazi Building Gauteng Midrand 15 634 78 238 Apr 2004 84 224 23 671 9 604 35 798 24 409 89.81 10.40 Oxford Terrace Gauteng Johannesburg, Houghton 2 588 58 345 Jul 2014 46 957 2 469 1 334 19 958 13 609 130.27 15.50 Pretoria Arcadia Suncardia Gauteng Pretoria, Arcadia 28 937 179 600 Apr 2012 163 001 33 815 20 072 69 280 47 240 90.92 30.10 Pretoria High Court Chambers Gauteng Pretoria 12 093 54 712 Apr 2004 132 405 20 213 7 813 56 276 38 373 68.93 – Sanlynn Gauteng Pretoria, Lynnwood 8 624 108 000 Apr 2012 101 632 17 686 5 869 43 197 29 454 127.52 – Sunwood Park Gauteng Pretoria, Lynnwood 6 412 55 464 Sept 2010 54 711 9 106 3 648 23 254 15 856 90.23 7.20

Vincent Office Park Eastern Cape East London 9 040 59 236 Apr 2004 78 549 11 999 3 671 33 386 22 764 96.44 –




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000


GoodwillR000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Retail – SynergyAtlantis City Shopping Centre Western Cape Atlantis 22 115 302 612 Feb 2015 310 001 7 136 3 626 131 760 89 842 118.08 5.10 Ermelo Game Centre Mpumalanga Ermelo 6 639 57 356 Feb 2015 58 141 1 104 631 24 712 16 850 84.05 16.90 Gugulethu Square Western Cape Gugulethu 25 322 393 147 Feb 2015 399 061 8 504 3 823 169 613 115 653 123.67 0.60 Hubyeni Shopping Centre Limpopo Elim 12 685 108 559 Feb 2015 109 974 2 713 1 192 46 742 31 872 83.13 2.50 Highland Mews Mpumalanga Emalahleni 17 032 209 612 Feb 2015 210 859 4 329 250 89 622 61 109 86.18 7.20 King Senzangakona Shopping Centre KwaZulu-Natal Ulundi 22 325 232 755 Feb 2015 235 224 4 810 1 656 99 978 68 171 94.80 1.00 KwaMashu Shopping Centre KwaZulu-Natal KwaMashu 11 204 106 121 Feb 2015 107 239 2 927 1 368 45 580 31 079 100.37 6.10 Nzhelele Valley Shopping Centre Limpopo Makhado 5 309 54 669 Feb 2015 55 696 1 380 648 23 673 16 141 90.90 5.70 Renbro Shopping Centre Gauteng Hammanskraal 13 308 163 821 Feb 2015 167 786 3 881 1 791 71 314 48 626 103.52 9.30 Richdens Shopping Centre KwaZulu-Natal Hillcrest 10 270 111 983 Feb 2015 113 511 2 641 1 087 48 246 32 897 112.47 8.10 Ruimsig Shopping Centre Gauteng Roodepoort 11 179 116 100 Feb 2015 117 466 2 955 1 384 49 927 34 043 91.45 9.70 Sediba Shopping Centre North West Hartbeespoort 10 887 121 086 Feb 2015 122 920 2 916 969 52 245 35 624 101.21 20.20 Setsing Crescent Shopping Centre Free State Phuthaditjhaba 21 538 289 690 Feb 2015 298 226 5 747 2 092 126 755 86 429 107.54 2.30 Taxi City Shopping Centre KwaZulu-Natal Newcastle 5 006 52 680 Feb 2015 53 348 1 158 395 22 675 15 461 105.31 2.30 Van Riebeeckshof Shopping Centre Western Cape Welgedacht 5 181 61 667 Feb 2015 62 535 1 665 771 26 579 18 123 103.91 –

200 000 2 381 858 2 421 987 53 866 21 683 – 1 029 421 701 920 103.07 5.60

Offices1 West Street Gauteng Johannesburg, Houghton 4 415 33 504 Sept 2007 62 191 9 044 3 366 26 433 18 024 120.63 –

36 Homestead Road Gauteng Sandton, Rivonia 2 459 8 660 Apr 2004 22 869 4 099 1 999 9 720 6 628 77.55 – 50 Sixth Road Gauteng Sandton, Hyde Park 4 108 56 573 Sept 2006 46 442 7 291 2 807 19 739 13 459 119.83 9.30 55 Empire Road Gauteng Johannesburg, Parktown 5 960 43 400 Apr 2012 41 998 7 804 3 077 17 850 12 172 90.74 12.00 1166 Francis Baard Street Gauteng Pretoria, Hatfield 2 871 13 469 Apr 2004 15 095 4 002 1 963 6 416 4 375 87.95 51.50 Bellville Suntyger Western Cape Cape Town, Bellville 6 344 67 200 Apr 2012 48 799 10 314 3 962 20 741 14 143 118.55 – Bellville Tijger Park Western Cape Cape Town, Bellville 20 221 194 200 Apr 2012 242 979 26 399 11 492 103 274 70 418 92.52 9.00 De Tijger Office Park Western Cape Parow 4 118 25 856 Oct 2003 22 929 6 414 2 723 9 746 6 645 94.20 8.80 Excel Park Gauteng Pretoria, Lynnwood 3 529 34 174 Mar 2008 15 630 4 018 2 609 6 643 4 530 68.99 25.70 Festival Street Offices Gauteng Pretoria, Hatfield 5 358 41 875 Sept 2010 50 899 8 624 3 446 21 634 14 751 137.80 – Isle of Houghton Gauteng Johannesburg, Houghton 28 070 230 100 Apr 2012 266 509 42 001 14 852 113 275 77 237 84.56 5.20 Midrand IBG Gauteng Midrand 8 515 80 700 Apr 2012 61 249 11 204 4 306 26 033 17 751 88.73 18.50 Midrand IBG undeveloped land Gauteng Midrand – 10 500 Mar 2014 10 500 – – 4 463 3 043 – – Midrand Ulwazi Building Gauteng Midrand 15 634 78 238 Apr 2004 84 224 23 671 9 604 35 798 24 409 89.81 10.40 Oxford Terrace Gauteng Johannesburg, Houghton 2 588 58 345 Jul 2014 46 957 2 469 1 334 19 958 13 609 130.27 15.50 Pretoria Arcadia Suncardia Gauteng Pretoria, Arcadia 28 937 179 600 Apr 2012 163 001 33 815 20 072 69 280 47 240 90.92 30.10 Pretoria High Court Chambers Gauteng Pretoria 12 093 54 712 Apr 2004 132 405 20 213 7 813 56 276 38 373 68.93 – Sanlynn Gauteng Pretoria, Lynnwood 8 624 108 000 Apr 2012 101 632 17 686 5 869 43 197 29 454 127.52 – Sunwood Park Gauteng Pretoria, Lynnwood 6 412 55 464 Sept 2010 54 711 9 106 3 648 23 254 15 856 90.23 7.20

Vincent Office Park Eastern Cape East London 9 040 59 236 Apr 2004 78 549 11 999 3 671 33 386 22 764 96.44 –





Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000


GoodwillR000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Offices continuedAscot Offices Gauteng Sandton, Bryanston 5 539 49 100 Apr 2012 44 600 8 854 3 823 18 956 12 926 84.67 – Randburg Square Office Tower Gauteng Randburg 10 453 4 325 Apr 2004 22 200 8 707 7 470 9 436 6 434 68.14 – Sandton Rivonia Tuscany Gauteng Sandton, Rivonia 11 088 114 700 Apr 2012 71 937 11 920 5 355 30 575 20 848 81.06 5.60 Sandton Sunninghill Sunhill Park Gauteng Sandton, Sunninghill 14 790 143 500 Apr 2012 164 534 24 587 7 934 69 932 47 684 92.57 – St Andrews Complex Gauteng Sandton, Bryanston 9 908 76 805 Sept 2010 74 687 10 319 5 386 31 744 21 645 77.35 15.50 Sunninghill Place Gauteng Sandton, Sunninghill 8 774 73 986 Sept 2010 68 947 11 368 2 445 29 305 19 982 95.82 10.00

239 848 1 896 222 2 016 473 335 928 141 026 – 857 064 584 400 91.95 9.60

IndustrialAllandale Industrial Park Gauteng Midrand 21 344 23 175 Apr 2004 98 898 15 225 1 043 42 035 28 662 46.43 1.20 Centurion Samrand N1 Gauteng Centurion, Samrand 11 413 12 990 Apr 2004 45 506 5 644 2 137 19 341 13 188 46.79 – Durban Valley View Industrial Park KwaZulu-Natal Durban 30 790 53 795 Apr 2004 124 869 13 365 3 044 53 073 36 189 34.51 – Germiston Meadowdale R24 Gauteng Germiston, Meadowdale 35 016 53 520 Apr 2004 186 169 23 845 7 163 79 128 53 954 46.41 2.90 7 On Mastiff Linbro Business Park Gauteng Sandton 15 070 126 801 Oct 2014 120 278 6 182 294 51 122 34 858 65.07 – Parow Industrial Park Western Cape Parow 19 834 28 059 Apr 2004 70 606 9 596 2 299 30 010 20 462 36.99 – Richmond Industrial Park KwaZulu-Natal Pinetown 7 940 10 800 Apr 2004 40 395 6 144 2 412 17 169 11 707 49.64 – Robertville Industrial Park Gauteng Roodepoort, Robertville 28 225 15 983 Oct 2003 88 538 15 352 4 831 2 120 37 631 25 659 37.97 13.10 Rosslyn Warehouse Gauteng Pretoria, Rosslyn 7 541 25 500 Apr 2012 30 278 2 948 780 12 869 8 775 27.02 – Sanitary City Gauteng Midrand 6 342 15 277 Apr 2004 54 718 4 123 575 23 257 15 858 51.32 – Spartan Warehouse Gauteng Johannesburg, Spartan 5 241 5 807 Apr 2004 23 197 4 665 1 052 9 859 6 723 60.68 – Trevallyn Industrial Park Gauteng Randburg, Kya Sands 32 006 48 324 Apr 2004 130 456 18 339 6 554 55 448 37 808 38.69 – Tungsten Industrial Park Gauteng Randburg, Strijdompark 10 365 13 336 Oct 2003 47 490 7 119 2 126 1 769 20 185 13 763 46.80 – Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown, Westmead 16 914 59 390 Sept 2010 90 851 10 398 3 176 38 614 26 330 45.03 –

248 041 492 757 1 152 249 142 945 37 486 3 889 489 741 333 936 42.17 2.00

SovereignDe Bruyn Park Gauteng Pretoria 41 418 372 000 Aug 2013 334 050 54 355 19 084 141 982 96 812 86.32 11.30 Fedsure House Free State Bloemfontein 10 866 52 300 Aug 2013 77 153 11 594 4 790 32 792 22 360 74.04 5.50 Koedoe Arcade Gauteng Pretoria 13 402 125 317 Aug 2013 136 223 21 696 7 066 57 899 39 479 91.11 3.20 Pretoria Navarre Building Gauteng Pretoria 47 519 495 144 Aug 2013 446 487 65 645 15 612 189 771 129 397 102.66 2.10

113 205 1 044 761 993 913 153 290 46 552 – 422 444 288 048 93.11 5.90

HospitalLouis Leipoldt Western Cape Cape Town, Bellville 22 311 106 937 Apr 2004 363 277 28 507 3 450 154 404 105 282 95.77 –

22 311 106 937 363 277 28 507 3 450 – 154 404 105 282 95.77 –




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000


GoodwillR000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Offices continuedAscot Offices Gauteng Sandton, Bryanston 5 539 49 100 Apr 2012 44 600 8 854 3 823 18 956 12 926 84.67 – Randburg Square Office Tower Gauteng Randburg 10 453 4 325 Apr 2004 22 200 8 707 7 470 9 436 6 434 68.14 – Sandton Rivonia Tuscany Gauteng Sandton, Rivonia 11 088 114 700 Apr 2012 71 937 11 920 5 355 30 575 20 848 81.06 5.60 Sandton Sunninghill Sunhill Park Gauteng Sandton, Sunninghill 14 790 143 500 Apr 2012 164 534 24 587 7 934 69 932 47 684 92.57 – St Andrews Complex Gauteng Sandton, Bryanston 9 908 76 805 Sept 2010 74 687 10 319 5 386 31 744 21 645 77.35 15.50 Sunninghill Place Gauteng Sandton, Sunninghill 8 774 73 986 Sept 2010 68 947 11 368 2 445 29 305 19 982 95.82 10.00

239 848 1 896 222 2 016 473 335 928 141 026 – 857 064 584 400 91.95 9.60

IndustrialAllandale Industrial Park Gauteng Midrand 21 344 23 175 Apr 2004 98 898 15 225 1 043 42 035 28 662 46.43 1.20 Centurion Samrand N1 Gauteng Centurion, Samrand 11 413 12 990 Apr 2004 45 506 5 644 2 137 19 341 13 188 46.79 – Durban Valley View Industrial Park KwaZulu-Natal Durban 30 790 53 795 Apr 2004 124 869 13 365 3 044 53 073 36 189 34.51 – Germiston Meadowdale R24 Gauteng Germiston, Meadowdale 35 016 53 520 Apr 2004 186 169 23 845 7 163 79 128 53 954 46.41 2.90 7 On Mastiff Linbro Business Park Gauteng Sandton 15 070 126 801 Oct 2014 120 278 6 182 294 51 122 34 858 65.07 – Parow Industrial Park Western Cape Parow 19 834 28 059 Apr 2004 70 606 9 596 2 299 30 010 20 462 36.99 – Richmond Industrial Park KwaZulu-Natal Pinetown 7 940 10 800 Apr 2004 40 395 6 144 2 412 17 169 11 707 49.64 – Robertville Industrial Park Gauteng Roodepoort, Robertville 28 225 15 983 Oct 2003 88 538 15 352 4 831 2 120 37 631 25 659 37.97 13.10 Rosslyn Warehouse Gauteng Pretoria, Rosslyn 7 541 25 500 Apr 2012 30 278 2 948 780 12 869 8 775 27.02 – Sanitary City Gauteng Midrand 6 342 15 277 Apr 2004 54 718 4 123 575 23 257 15 858 51.32 – Spartan Warehouse Gauteng Johannesburg, Spartan 5 241 5 807 Apr 2004 23 197 4 665 1 052 9 859 6 723 60.68 – Trevallyn Industrial Park Gauteng Randburg, Kya Sands 32 006 48 324 Apr 2004 130 456 18 339 6 554 55 448 37 808 38.69 – Tungsten Industrial Park Gauteng Randburg, Strijdompark 10 365 13 336 Oct 2003 47 490 7 119 2 126 1 769 20 185 13 763 46.80 – Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown, Westmead 16 914 59 390 Sept 2010 90 851 10 398 3 176 38 614 26 330 45.03 –

248 041 492 757 1 152 249 142 945 37 486 3 889 489 741 333 936 42.17 2.00


113 205 1 044 761 993 913 153 290 46 552 – 422 444 288 048 93.11 5.90


22 311 106 937 363 277 28 507 3 450 – 154 404 105 282 95.77 –





Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000


GoodwillR000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Motor relatedBarons Bellville Western Cape Bellville 6 778 70 000 Apr 2012 104 416 8 202 852 44 380 30 261 138.49 – Sandton Linbro Galaxy Drive Showroom Gauteng Sandton 2 840 14 264 Apr 2004 30 664 2 905 488 13 033 8 887 72.26 –

9 618 84 264 135 080 11 107 1 340 – 57 413 39 148 113.93 –

Held for sale259 West Street* Gauteng Centurion 5 359 17 979 Apr 2004 30 350 4 908 2 436 12 900 8 796 89.69 30.80 Kokstad Game Centre* KwaZulu-Natal Kokstad 12 867 37 666 Oct 2003 133 000 13 906 3 160 4 951 56 529 38 545 81.51 –

Parktown Oakhurst* Gauteng Johannesburg, Parktown 9 065 34 400 Mar 2006 71 000 11 023 5 943 30 177 20 577 85.88 19.20 Pinelands Pinepark* Western Cape Cape Town, Pinelands 2 804 13 347 Apr 2004 18 420 4 249 1 282 7 829 5 338 95.23 –

Rosettenville Village Main Industrial Park* GautengJohannesburg, Rosettenville 8 057 5 400 Apr 2004 27 249 4 920 2 672 11 582 7 897 35.63 –

38 152 108 792 280 019 39 006 15 493 4 951 119 017 81 153 73.72 9.00

* Investment property held for sale.

Total group 1 339 090 9 079 931 13 345 707 1 573 723 581 984 57 058 5 672 340 3 867 745 90.92 4.60

Lease commissions 39 640

Group total (excluding sold properties) 13 385 347 1 573 723 581 984 57 058 5 672 340 3 867 745

Sold properties 5 376 3 388

Group total – Property management 1 579 099 585 372

Income from asset management business 24 694 Expenditure – asset management business 34 388 ASSETS R000

Directors’ valuation at 31 March 2015 13 385 347

Add excluded items:

Deferred capital expenditure 15 849

Investments 384 800

Furniture, fittings, computer equipment and other 3 248

Available-for-sale financial asset 21 576

Goodwill 57 058

Long-term loans granted 38 110

Deferred taxation assets 3 888

Trade and other receivables 147 429

Taxation refundable 133

Cash and cash equivalents 473 889

Total assets 14 531 327




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000


GoodwillR000

Stated capital

R000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Motor relatedBarons Bellville Western Cape Bellville 6 778 70 000 Apr 2012 104 416 8 202 852 44 380 30 261 138.49 – Sandton Linbro Galaxy Drive Showroom Gauteng Sandton 2 840 14 264 Apr 2004 30 664 2 905 488 13 033 8 887 72.26 –

9 618 84 264 135 080 11 107 1 340 – 57 413 39 148 113.93 –

Held for sale259 West Street* Gauteng Centurion 5 359 17 979 Apr 2004 30 350 4 908 2 436 12 900 8 796 89.69 30.80 Kokstad Game Centre* KwaZulu-Natal Kokstad 12 867 37 666 Oct 2003 133 000 13 906 3 160 4 951 56 529 38 545 81.51 –

Parktown Oakhurst* Gauteng Johannesburg, Parktown 9 065 34 400 Mar 2006 71 000 11 023 5 943 30 177 20 577 85.88 19.20 Pinelands Pinepark* Western Cape Cape Town, Pinelands 2 804 13 347 Apr 2004 18 420 4 249 1 282 7 829 5 338 95.23 –

Rosettenville Village Main Industrial Park* GautengJohannesburg, Rosettenville 8 057 5 400 Apr 2004 27 249 4 920 2 672 11 582 7 897 35.63 –

38 152 108 792 280 019 39 006 15 493 4 951 119 017 81 153 73.72 9.00

* Investment property held for sale.

Total group 1 339 090 9 079 931 13 345 707 1 573 723 581 984 57 058 5 672 340 3 867 745 90.92 4.60





Income from asset management business 24 694 Expenditure – asset management business 34 388 ASSETS R000

LIABILITIES R000

Stated capital 5 672 340 Interest-bearing borrowings 3 867 745 Add excluded items: Equity and reserves 4 158 306 Non-controlling interest 516 317 Deferred taxation 1 173 Financial liability at amortised cost 12 919 Trade and other payables 300 880 Taxation payable 1 647

Total liabilities 14 531 327





Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Retail 269 Independence Avenue Namibia Windhoek 12 828 110 803 Jul 2007 155 870 20 430 4 619 68 665 51 427 123.62 2.50 Bloemfontein Plaza Free State Bloemfontein 38 465 45 726 Apr 2004 180 113 44 814 25 581 79 345 59 426 70.52 3.10 Daveyton Shopping Centre Gauteng Daveyton 17 795 49 883 Apr 2004 230 805 31 008 10 207 101 676 76 151 112.41 3.70 Dobsonville Shopping Centre Gauteng Soweto, Dobsonville 23 177 56 118 Apr 2004 301 901 41 012 15 373 132 996 99 608 107.05 6.50 Durban Workshop** KwaZulu-Natal Durban 20 129 133 400 Apr 2012 145 141 42 714 25 518 63 939 47 887 137.21 2.50 East Rand Mall (50%) Gauteng Boksburg 31 258 1 111 816 Apr 2013 1 029 059 107 884 32 413 453 325 339 526 228.68 1.20 Germiston Meadowdale Land Gauteng Germiston, Meadowdale – – Oct 2003 16 650 0 0 7 335 5 493 – – Giyani Plaza Limpopo Giyani 9 442 68 250 Jul 2011 100 068 12 531 3 219 44 083 33 016 93.33 0.50 Grosvenor Crossing Shopping Centre Gauteng Sandton, Bryanston 4 578 31 381 Apr 2004 66 929 10 168 4 565 29 484 22 082 121.50 1.20 Hammarsdale Junction** KwaZulu-Natal Hammarsdale 19 428 194 194 Jul 2013 181 264 23 531 9 543 79 852 59 806 91.53 – Hillfox Power Centre Gauteng Roodepoort 38 171 62 098 Oct 2003 159 477 24 852 5 172 8 239 70 254 52 617 55.17 7.30 Katutura Shoprite Centre** Namibia Katutura 10 593 41 157 Oct 2003 116 067 18 335 7 208 5 613 51 131 38 295 99.48 – Letlhabile Mall North West Letlhabile 17 079 192 878 Mar 2014 194 200 0 0 85 550 64 074 92.78 – Mbombela Shoprite Centre Mpumalanga Mbombela 14 014 39 963 Sept 2010 83 070 16 663 10 641 36 595 27 408 68.46 0.80 Mbombela Truworths Centre Mpumalanga Mbombela 1 920 7 336 Apr 2004 39 149 3 318 391 17 246 12 917 130.02 – Meadowdale Mall Gauteng Germiston, Meadowdale 35 339 66 170 Oct 2003 156 234 32 833 16 335 8 716 68 825 51 547 43.17 1.50 Modjadji Plaza (30%) Limpopo Ga-Kgapane 2 935 29 713 Mar 2014 29 700 431 179 13 084 9 799 100.24 – Moratiwa Crossing (94.50%) Limpopo Monsterlus 11 686 61 540 Nov 2007 117 672 16 192 5 624 51 838 38 824 88.49 – Ondangwa Shoprite Centre Namibia Ondangwa 5 908 17 959 Oct 2003 57 766 6 482 977 2 390 25 447 19 059 99.04 – Oshakati Shopping Centre Namibia Oshakati 24 632 76 929 Oct 2003 253 472 38 775 15 633 10 425 111 661 83 630 94.62 0.50 Oshikango Spar Centre Namibia Oshikango 9 163 19 542 Oct 2003 130 479 12 832 1 249 2 751 57 480 43 050 118.43 0.80 Piet Retief Shopping Centre Mpumalanga Piet Retief 7 542 20 818 Oct 2003 102 506 9 804 1 593 2 726 45 157 33 821 93.53 – Pine Crest Centre (50%) KwaZulu-Natal Pinetown 20 056 99 338 Apr 2004 310 330 39 820 12 800 136 709 102 389 124.72 4.60 Phoenix Plaza KwaZulu-Natal Durban, Phoenix 24 363 189 140 Apr 2004 587 176 74 877 27 021 258 667 193 731 200.06 1.00 Randburg Square Gauteng Randburg 51 328 70 668 Apr 2004 332 174 63 617 37 502 146 332 109 597 77.61 5.10 Rustenburg Edgars Building Northwest Rustenburg 9 784 83 750 Sept 2010 116 282 13 069 1 178 51 225 38 366 86.62 – The Victoria Centre KwaZulu-Natal Pietermaritzburg 11 016 55 685 Oct 2003 133 793 14 992 4 622 7 358 58 939 44 143 106.35 7.40

472 629 2 936 255 5 327 347 720 984 279 163 48 218 2 346 840 1 757 689 104.10 2.72





Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Retail 269 Independence Avenue Namibia Windhoek 12 828 110 803 Jul 2007 155 870 20 430 4 619 68 665 51 427 123.62 2.50 Bloemfontein Plaza Free State Bloemfontein 38 465 45 726 Apr 2004 180 113 44 814 25 581 79 345 59 426 70.52 3.10 Daveyton Shopping Centre Gauteng Daveyton 17 795 49 883 Apr 2004 230 805 31 008 10 207 101 676 76 151 112.41 3.70 Dobsonville Shopping Centre Gauteng Soweto, Dobsonville 23 177 56 118 Apr 2004 301 901 41 012 15 373 132 996 99 608 107.05 6.50 Durban Workshop** KwaZulu-Natal Durban 20 129 133 400 Apr 2012 145 141 42 714 25 518 63 939 47 887 137.21 2.50 East Rand Mall (50%) Gauteng Boksburg 31 258 1 111 816 Apr 2013 1 029 059 107 884 32 413 453 325 339 526 228.68 1.20 Germiston Meadowdale Land Gauteng Germiston, Meadowdale – – Oct 2003 16 650 0 0 7 335 5 493 – – Giyani Plaza Limpopo Giyani 9 442 68 250 Jul 2011 100 068 12 531 3 219 44 083 33 016 93.33 0.50 Grosvenor Crossing Shopping Centre Gauteng Sandton, Bryanston 4 578 31 381 Apr 2004 66 929 10 168 4 565 29 484 22 082 121.50 1.20 Hammarsdale Junction** KwaZulu-Natal Hammarsdale 19 428 194 194 Jul 2013 181 264 23 531 9 543 79 852 59 806 91.53 – Hillfox Power Centre Gauteng Roodepoort 38 171 62 098 Oct 2003 159 477 24 852 5 172 8 239 70 254 52 617 55.17 7.30 Katutura Shoprite Centre** Namibia Katutura 10 593 41 157 Oct 2003 116 067 18 335 7 208 5 613 51 131 38 295 99.48 – Letlhabile Mall North West Letlhabile 17 079 192 878 Mar 2014 194 200 0 0 85 550 64 074 92.78 – Mbombela Shoprite Centre Mpumalanga Mbombela 14 014 39 963 Sept 2010 83 070 16 663 10 641 36 595 27 408 68.46 0.80 Mbombela Truworths Centre Mpumalanga Mbombela 1 920 7 336 Apr 2004 39 149 3 318 391 17 246 12 917 130.02 – Meadowdale Mall Gauteng Germiston, Meadowdale 35 339 66 170 Oct 2003 156 234 32 833 16 335 8 716 68 825 51 547 43.17 1.50 Modjadji Plaza (30%) Limpopo Ga-Kgapane 2 935 29 713 Mar 2014 29 700 431 179 13 084 9 799 100.24 – Moratiwa Crossing (94.50%) Limpopo Monsterlus 11 686 61 540 Nov 2007 117 672 16 192 5 624 51 838 38 824 88.49 – Ondangwa Shoprite Centre Namibia Ondangwa 5 908 17 959 Oct 2003 57 766 6 482 977 2 390 25 447 19 059 99.04 – Oshakati Shopping Centre Namibia Oshakati 24 632 76 929 Oct 2003 253 472 38 775 15 633 10 425 111 661 83 630 94.62 0.50 Oshikango Spar Centre Namibia Oshikango 9 163 19 542 Oct 2003 130 479 12 832 1 249 2 751 57 480 43 050 118.43 0.80 Piet Retief Shopping Centre Mpumalanga Piet Retief 7 542 20 818 Oct 2003 102 506 9 804 1 593 2 726 45 157 33 821 93.53 – Pine Crest Centre (50%) KwaZulu-Natal Pinetown 20 056 99 338 Apr 2004 310 330 39 820 12 800 136 709 102 389 124.72 4.60 Phoenix Plaza KwaZulu-Natal Durban, Phoenix 24 363 189 140 Apr 2004 587 176 74 877 27 021 258 667 193 731 200.06 1.00 Randburg Square Gauteng Randburg 51 328 70 668 Apr 2004 332 174 63 617 37 502 146 332 109 597 77.61 5.10 Rustenburg Edgars Building Northwest Rustenburg 9 784 83 750 Sept 2010 116 282 13 069 1 178 51 225 38 366 86.62 – The Victoria Centre KwaZulu-Natal Pietermaritzburg 11 016 55 685 Oct 2003 133 793 14 992 4 622 7 358 58 939 44 143 106.35 7.40

472 629 2 936 255 5 327 347 720 984 279 163 48 218 2 346 840 1 757 689 104.10 2.72






Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Offices 1 West Street Gauteng Johannesburg, Houghton 4 415 33 504 Sept 2007 67 726 8 604 3 342 29 835 22 345 111.15 – 36 Homestead Road Gauteng Sandton, Rivonia 2 459 8 660 Apr 2004 30 533 2 771 1 712 13 451 10 074 71.15 – 50 Sixth Road Gauteng Sandton, Hyde Park 4 101 56 573 Sept 2006 44 748 6 767 3 500 19 713 14 764 111.41 25.80 55 Empire Road Gauteng Johannesburg, Parktown 5 960 43 400 Apr 2012 50 179 8 156 2 524 22 105 16 556 82.84 10.30 259 West Street Gauteng Centurion 5 180 17 979 Apr 2004 29 118 4 815 1 937 12 827 9 607 88.86 33.90 1166 Francis Baard Street Gauteng Pretoria, Hatfield 2 871 13 469 Apr 2004 21 681 4 660 1 249 9 551 7 153 104.27 3.70 Ascot Offices Gauteng Sandton, Bryanston 5 539 49 100 Apr 2012 42 271 7 694 3 129 18 622 13 947 79.01 6.60 Bellville Suntyger Western Cape Cape Town, Bellville 6 344 67 200 Apr 2012 43 691 9 905 3 573 19 247 14 415 118.31 15.80 Bellville Tijger Park Western Cape Cape Town, Bellville 20 221 194 200 Apr 2012 213 158 25 341 10 440 93 902 70 329 90.61 21.70 De Tijger Office Park Western Cape Parow 4 118 25 856 Oct 2003 27 913 5 039 1 986 12 296 9 210 91.21 9.20 Excel Park Gauteng Pretoria, Lynnwood 3 480 34 174 Mar 2008 23 037 1 893 2 080 10 148 7 601 63.88 30.20 Festival Street Offices Gauteng Pretoria, Hatfield 5 358 41 875 Sept 2010 42 093 6 668 2 522 18 543 13 888 69.29 0.80 Isle of Houghton Gauteng Johannesburg, Houghton 28 074 230 100 Apr 2012 244 248 40 581 14 458 107 598 80 587 81.07 4.20 Jhb Parktown Oakhurst Gauteng Johannesburg, Parktown 9 138 34 400 Mar 2006 68 354 9 808 4 600 30 112 22 553 91.05 41.10 Midrand IBG Gauteng Midrand 8 515 80 700 Apr 2012 71 268 11 567 3 792 31 395 23 514 86.58 12.00 Midrand IBG undeveloped land Gauteng Midrand 0 10 500 Mar 2014 10 500 0 0 4 626 3 464 – – Midrand Ulwazi Building Gauteng Midrand 15 634 78 238 Apr 2004 116 304 22 594 7 709 51 235 38 373 85.27 20.70 Pretoria Arcadia Suncardia Gauteng Pretoria, Arcadia 28 722 179 600 Apr 2012 174 303 33 299 17 722 76 785 57 509 82.12 11.00 Pretoria High Court Chambers Gauteng Pretoria 12 093 54 712 Apr 2004 127 238 19 348 7 309 56 052 41 981 63.81 – Sanlynn Gauteng Pretoria, Lynnwood 8 624 108 000 Apr 2012 107 814 16 652 5 364 47 495 35 572 115.94 – Sandton Rivonia Tuscany Gauteng Sandton, Rivonia 11 088 114 700 Apr 2012 107 879 15 132 6 424 47 524 35 593 89.29 25.10 Sandton Sunninghill Place Gauteng Sandton, Sunninghill 8 774 73 986 Sept 2010 63 657 14 777 6 126 28 043 21 003 92.23 2.30 Sandton Sunninghill Sunhill Park Gauteng Sandton, Sunninghill 14 790 143 500 Apr 2012 158 676 25 281 9 654 69 901 52 353 85.59 – St Andrews Complex Gauteng Sandton, Bryanston 9 908 76 805 Sept 2010 84 287 10 781 5 735 37 131 27 809 83.20 36.00 Sunwood Park Gauteng Pretoria, Lynnwood 6 391 55 464 Sept 2010 55 694 7 390 3 033 24 535 18 376 86.77 10.50 Vincent Office Park Eastern Cape East London 9 040 59 236 Apr 2004 81 660 11 393 3 317 35 973 26 943 90.32 –

240 837 1 885 931 2 108 030 330 916 133 237 – 928 645 695 519 86.80 12.61




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Offices 1 West Street Gauteng Johannesburg, Houghton 4 415 33 504 Sept 2007 67 726 8 604 3 342 29 835 22 345 111.15 – 36 Homestead Road Gauteng Sandton, Rivonia 2 459 8 660 Apr 2004 30 533 2 771 1 712 13 451 10 074 71.15 – 50 Sixth Road Gauteng Sandton, Hyde Park 4 101 56 573 Sept 2006 44 748 6 767 3 500 19 713 14 764 111.41 25.80 55 Empire Road Gauteng Johannesburg, Parktown 5 960 43 400 Apr 2012 50 179 8 156 2 524 22 105 16 556 82.84 10.30 259 West Street Gauteng Centurion 5 180 17 979 Apr 2004 29 118 4 815 1 937 12 827 9 607 88.86 33.90 1166 Francis Baard Street Gauteng Pretoria, Hatfield 2 871 13 469 Apr 2004 21 681 4 660 1 249 9 551 7 153 104.27 3.70 Ascot Offices Gauteng Sandton, Bryanston 5 539 49 100 Apr 2012 42 271 7 694 3 129 18 622 13 947 79.01 6.60 Bellville Suntyger Western Cape Cape Town, Bellville 6 344 67 200 Apr 2012 43 691 9 905 3 573 19 247 14 415 118.31 15.80 Bellville Tijger Park Western Cape Cape Town, Bellville 20 221 194 200 Apr 2012 213 158 25 341 10 440 93 902 70 329 90.61 21.70 De Tijger Office Park Western Cape Parow 4 118 25 856 Oct 2003 27 913 5 039 1 986 12 296 9 210 91.21 9.20 Excel Park Gauteng Pretoria, Lynnwood 3 480 34 174 Mar 2008 23 037 1 893 2 080 10 148 7 601 63.88 30.20 Festival Street Offices Gauteng Pretoria, Hatfield 5 358 41 875 Sept 2010 42 093 6 668 2 522 18 543 13 888 69.29 0.80 Isle of Houghton Gauteng Johannesburg, Houghton 28 074 230 100 Apr 2012 244 248 40 581 14 458 107 598 80 587 81.07 4.20 Jhb Parktown Oakhurst Gauteng Johannesburg, Parktown 9 138 34 400 Mar 2006 68 354 9 808 4 600 30 112 22 553 91.05 41.10 Midrand IBG Gauteng Midrand 8 515 80 700 Apr 2012 71 268 11 567 3 792 31 395 23 514 86.58 12.00 Midrand IBG undeveloped land Gauteng Midrand 0 10 500 Mar 2014 10 500 0 0 4 626 3 464 – – Midrand Ulwazi Building Gauteng Midrand 15 634 78 238 Apr 2004 116 304 22 594 7 709 51 235 38 373 85.27 20.70 Pretoria Arcadia Suncardia Gauteng Pretoria, Arcadia 28 722 179 600 Apr 2012 174 303 33 299 17 722 76 785 57 509 82.12 11.00 Pretoria High Court Chambers Gauteng Pretoria 12 093 54 712 Apr 2004 127 238 19 348 7 309 56 052 41 981 63.81 – Sanlynn Gauteng Pretoria, Lynnwood 8 624 108 000 Apr 2012 107 814 16 652 5 364 47 495 35 572 115.94 – Sandton Rivonia Tuscany Gauteng Sandton, Rivonia 11 088 114 700 Apr 2012 107 879 15 132 6 424 47 524 35 593 89.29 25.10 Sandton Sunninghill Place Gauteng Sandton, Sunninghill 8 774 73 986 Sept 2010 63 657 14 777 6 126 28 043 21 003 92.23 2.30 Sandton Sunninghill Sunhill Park Gauteng Sandton, Sunninghill 14 790 143 500 Apr 2012 158 676 25 281 9 654 69 901 52 353 85.59 – St Andrews Complex Gauteng Sandton, Bryanston 9 908 76 805 Sept 2010 84 287 10 781 5 735 37 131 27 809 83.20 36.00 Sunwood Park Gauteng Pretoria, Lynnwood 6 391 55 464 Sept 2010 55 694 7 390 3 033 24 535 18 376 86.77 10.50 Vincent Office Park Eastern Cape East London 9 040 59 236 Apr 2004 81 660 11 393 3 317 35 973 26 943 90.32 –

240 837 1 885 931 2 108 030 330 916 133 237 – 928 645 695 519 86.80 12.61





Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

IndustrialAllandale Industrial Park Gauteng Midrand 21 344 23 175 Apr 2004 76 634 13 965 7 182 33 759 25 284 43.58 0.60 Centurion Samrand N1 Gauteng Centurion, Samrand 11 413 12 990 Apr 2004 56 371 7 240 2 306 24 833 18 599 50.71 22.70 Durban Valley View Industrial Park KwaZulu-Natal Durban 30 790 53 795 Apr 2004 110 087 13 238 2 116 48 496 36 322 34.93 – Germiston Meadowdale R24 Gauteng Germiston, Meadowdale 35 016 53 520 Apr 2004 177 996 22 599 6 566 78 412 58 728 44.01 4.90 Parow Industrial Park Western Cape Parow 19 834 28 059 Apr 2004 68 949 8 502 2 097 30 374 22 749 34.56 – Richmond Industrial Park KwaZulu-Natal Pinetown 7 940 10 800 Apr 2004 37 116 5 666 1 847 16 351 12 246 46.03 – Robertville Industrial Park Gauteng Roodepoort, Robertville 28 225 15 983 Oct 2003 103 764 16 259 6 316 2 120 45 711 34 236 36.21 –

Rosslyn Warehouse Gauteng Pretoria, Rosslyn 7 541 25 500 Apr 2012 33 155 2 121 655 14 606 10 939 25.49 – Sanitary City Gauteng Midrand 6 342 15 277 Apr 2004 51 161 3 821 448 22 538 16 880 47.52 – Spartan Warehouse Gauteng Johannesburg, Spartan 5 241 5 807 Apr 2004 37 505 4 478 1 063 16 522 12 374 56.19 – Trevallyn Industrial Park Gauteng Randburg, Kya Sands 32 006 48 324 Apr 2004 136 311 17 959 7 964 60 049 44 974 38.44 4.00 Tungsten Industrial Park Gauteng Randburg, Strijdompark 10 364 13 336 Oct 2003 50 287 6 481 2 876 1 769 22 153 16 592 45.83 – Village Main Industrial Park Gauteng Johannesburg, Rosettenville 8 057 5 400 Apr 2004 29 818 4 407 2 453 13 136 9 838 35.49 12.90 Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown, Westmead 16 914 59 390 Sept 2010 91 334 8 733 2 033 40 235 30 135 43.32 –

241 027 371 356 1 060 488 135 469 45 922 3 889 467 175 349 896 40.16 2.81


113 204 1 044 761 1 010 906 94 879 27 356 – 445 332 333 535 83.44 6.16


22 311 106 937 328 287 26 393 2 784 – 144 619 108 314 89.09 –




Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

IndustrialAllandale Industrial Park Gauteng Midrand 21 344 23 175 Apr 2004 76 634 13 965 7 182 33 759 25 284 43.58 0.60 Centurion Samrand N1 Gauteng Centurion, Samrand 11 413 12 990 Apr 2004 56 371 7 240 2 306 24 833 18 599 50.71 22.70 Durban Valley View Industrial Park KwaZulu-Natal Durban 30 790 53 795 Apr 2004 110 087 13 238 2 116 48 496 36 322 34.93 – Germiston Meadowdale R24 Gauteng Germiston, Meadowdale 35 016 53 520 Apr 2004 177 996 22 599 6 566 78 412 58 728 44.01 4.90 Parow Industrial Park Western Cape Parow 19 834 28 059 Apr 2004 68 949 8 502 2 097 30 374 22 749 34.56 – Richmond Industrial Park KwaZulu-Natal Pinetown 7 940 10 800 Apr 2004 37 116 5 666 1 847 16 351 12 246 46.03 – Robertville Industrial Park Gauteng Roodepoort, Robertville 28 225 15 983 Oct 2003 103 764 16 259 6 316 2 120 45 711 34 236 36.21 –

Rosslyn Warehouse Gauteng Pretoria, Rosslyn 7 541 25 500 Apr 2012 33 155 2 121 655 14 606 10 939 25.49 – Sanitary City Gauteng Midrand 6 342 15 277 Apr 2004 51 161 3 821 448 22 538 16 880 47.52 – Spartan Warehouse Gauteng Johannesburg, Spartan 5 241 5 807 Apr 2004 37 505 4 478 1 063 16 522 12 374 56.19 – Trevallyn Industrial Park Gauteng Randburg, Kya Sands 32 006 48 324 Apr 2004 136 311 17 959 7 964 60 049 44 974 38.44 4.00 Tungsten Industrial Park Gauteng Randburg, Strijdompark 10 364 13 336 Oct 2003 50 287 6 481 2 876 1 769 22 153 16 592 45.83 – Village Main Industrial Park Gauteng Johannesburg, Rosettenville 8 057 5 400 Apr 2004 29 818 4 407 2 453 13 136 9 838 35.49 12.90 Westmead Kyalami Industrial Park KwaZulu-Natal Pinetown, Westmead 16 914 59 390 Sept 2010 91 334 8 733 2 033 40 235 30 135 43.32 –

241 027 371 356 1 060 488 135 469 45 922 3 889 467 175 349 896 40.16 2.81


113 204 1 044 761 1 010 906 94 879 27 356 – 445 332 333 535 83.44 6.16


22 311 106 937 328 287 26 393 2 784 – 144 619 108 314 89.09 –





Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Motor relatedBarons Bellville Western Cape Bellville 6 778 70 000 Apr 2012 93 157 7 256 1 054 41 038 30 736 115.17 20.00 Sandton Linbro Galaxy Drive Showroom Gauteng Sandton 2 840 14 264 Apr 2004 35 122 2 746 484 15 472 11 588 67.53 –

9 618 84 264 128 279 10 002 1 538 – 56 510 42 324 98.79 14.12

Held for sale1 Kramer Road* Gauteng Johannesburg, Bedfordview 6 759 26 396 Apr 2004 37 054 4 268 2 470 16 323 12 226 98.40 Kenilworth Motor Showrooms*, ** Western Cape Cape Town 3 100 24 025 Apr 2004 34 750 4 720 477 15 308 11 465 119.72 – Kokstad Game Centre* KwaZulu-Natal Kokstad 12 867 37 666 Oct 2003 112 208 13 143 2 787 4 951 49 431 37 022 76.03 – Lichtenburg Shopping Centre* Northwest Lichtenburg 8 423 18 706 Apr 2004 48 600 6 873 2 494 21 410 16 035 57.23 5.40 Pinelands Pinepark* Western Cape Cape Town, Pinelands 2 804 13 347 Apr 2004 27 603 3 854 1 295 12 160 9 107 88.18 – Pretoria Midtown Building* Gauteng Pretoria 8 086 34 947 Apr 2004 27 787 2 314 2 443 12 241 9 168 100.00

Westville Surrey Park* KwaZulu-Natal Durban, Westville 3 176 22 600 Apr 2012 24 565 3 775 1 878 10 822 8 105 85.70 21.10

45 215 177 687 312 567 38 947 13 844 4,951 137 695 103 128 77.73 35.43

* Investment property held for sale.** Leasehold property.

Total group 1 144 841 6 607 191 10 275 904 1 357 590 503 844 57 058 4 526 816 3 390 405 83.39 6.48





Income from asset management business 92 654Expenditure – asset management business 38 917

ASSETS R000

Directors’ valuation at 31 March 2014 10 302 561Add excluded items: Intangible asset 242 059Deferred capital expenditure 29 732Investments 592 300Furniture, fittings, computer equipment and other 4 660

Available-for-sale financial asset 20 313Derivative financial instrument 18 757Goodwill 57 058Long-term loans granted 23 000Deferred taxation assets 3 424Trade and other receivables 86 165Cash and cash equivalents 298 175





Gross lettable

aream2

Purchase priceR000

Effective date of

acquisition


at 31 March

2015R000

Property revenue

R000

Property expen-

ditureR000

GoodwillR000

Stated capitalR000

Interest-bearing

borrowingsR000

Weighted average

rentalR/m² pm

Vacancy on area

%

Motor relatedBarons Bellville Western Cape Bellville 6 778 70 000 Apr 2012 93 157 7 256 1 054 41 038 30 736 115.17 20.00 Sandton Linbro Galaxy Drive Showroom Gauteng Sandton 2 840 14 264 Apr 2004 35 122 2 746 484 15 472 11 588 67.53 –

9 618 84 264 128 279 10 002 1 538 – 56 510 42 324 98.79 14.12

Held for sale1 Kramer Road* Gauteng Johannesburg, Bedfordview 6 759 26 396 Apr 2004 37 054 4 268 2 470 16 323 12 226 98.40 Kenilworth Motor Showrooms*, ** Western Cape Cape Town 3 100 24 025 Apr 2004 34 750 4 720 477 15 308 11 465 119.72 – Kokstad Game Centre* KwaZulu-Natal Kokstad 12 867 37 666 Oct 2003 112 208 13 143 2 787 4 951 49 431 37 022 76.03 – Lichtenburg Shopping Centre* Northwest Lichtenburg 8 423 18 706 Apr 2004 48 600 6 873 2 494 21 410 16 035 57.23 5.40 Pinelands Pinepark* Western Cape Cape Town, Pinelands 2 804 13 347 Apr 2004 27 603 3 854 1 295 12 160 9 107 88.18 – Pretoria Midtown Building* Gauteng Pretoria 8 086 34 947 Apr 2004 27 787 2 314 2 443 12 241 9 168 100.00

Westville Surrey Park* KwaZulu-Natal Durban, Westville 3 176 22 600 Apr 2012 24 565 3 775 1 878 10 822 8 105 85.70 21.10

45 215 177 687 312 567 38 947 13 844 4,951 137 695 103 128 77.73 35.43

* Investment property held for sale.** Leasehold property.

Total group 1 144 841 6 607 191 10 275 904 1 357 590 503 844 57 058 4 526 816 3 390 405 83.39 6.48





Income from asset management business 92 654Expenditure – asset management business 38 917

LIABILITIES R000

Linked debentures and premium 4 526 816Interest-bearing borrowings 3 390 405Add excluded items: Equity and reserves 3 108 689Deferred taxation liabilities 7 870Trade and other payables 274 926Taxation payable 4 262Linked holders for distribution 365 236

Total liabilities 11 678 204



37 CAPITAL MANAGEMENTThe group’s capital management objectives are:gg To ensure the group’s ability to continue as a going concern. gg To provide an adequate return to shareholders by pricing services commensurately with the level of risk.

The group monitors capital on the basis of the carrying amount of equity less cash equivalents as presented in the statement of financial position and cash flow hedges recognised in other comprehensive income.

Capital for the reporting periods under review is summarised as follows:

2015GroupR000

2014GroupR000

Total equity 9 830 646 7 635 505

Cash flow hedges 12 919 (17 761)Cash and cash equivalents (473 889) (298 175)

Capital 9 369 676 7 319 569

Total equity 9 830 646 7 635 505Borrowings 3 867 745 3 390 405

Overall financing 13 698 391 11 025 910

Capital-to-overall financing ratio 0.68 0.66

Management assesses the group’s capital requirements in order to maintain an efficient overall financing structure which avoids excessive leverage. The group manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characterises of the underlying assets. In order to maintain or adjust the capital structure, the group may issue new shares or sell assets to reduce debt.

The board’s policy is to maintain a strong capital base comprising its shareholders’ interest so as to maintain investor creditor and market confidence, and to sustain future development of the business. It is the group’s stated purpose to deliver long-term sustainable growth in distributions per share.

There were no changes in the group’s approach to capital management during the year. Neither the company nor any of its subsidiaries are subject to externally imposed capital requirements. The group has complied with its bank and corporate bond covenants.


2015GroupR000

2014GroupR000

38 JOINT OPERATIONSStatement of profit or loss and other comprehensive income– Revenue 184 707 164 327– Property expenses (57 504) (51 016)

Property operating profit 127 203 113 311Straight-line lease income adjustment 12 457 6 942Fair value adjustments 42 763 (38 738)

Operating profit 182 423 81 515

Statement of financial positionOpening fair value of property assets 1 486 760 381 604Acquisitions 32 410 1 141 425Capital expenditure 2 332 2 469Net fair value adjustments 42 763 (38 738)Straight-line lease income adjustment 12 457 6 942

Fair value of investment property for accounting purposes 1 576 722 1 493 702Straight-line lease income adjustment (12 457) (6 942)

Closing fair value of property assets 1 564 265 1 486 760Current assets 18 850 19 831

Total assets 1 583 115 1 506 591

Owners’ equity 822 445 647 208Other non-current liabilities 746 695 843 935Current liabilities 13 975 15 448


Joint operations comprise the following properties:East Rand Mall (50%)Pine Crest Centre (50%)Moratiwa Crossing (94.50%)Maake Plaza (30%)Modjadji Plaza (30%)

The above operations are classified as joint operations whereby the group recognises its share of the assets and liabilities and income and expenses.

2015 2014Group R000

CompanyR000

Group R000

CompanyR000

39 FUTURE MINIMUM LEASE INCOMEReceivable within one year 1 207 632 837 126 914 167 771 935Receivable between one and five years 2 410 150 1 657 959 2 041 836 1 780 080Receivable after five years 796 788 659 815 612 082 525 676

Total future contractual lease revenue 4 414 570 3 154 900 3 568 085 3 077 691

Rental straight-line adjustment already accrued (283 866) (260 761) (204 748) (173 101)

Future straight-line lease revenue 4 130 704 2 894 139 3 363 337 2 904 590



2015 2014Group R000

CompanyR000

Group R000

CompanyR000

40 COMMITMENTSFinancial lease commitmentsPremisesPayable within one year 2 486 2 486 2 280 2 280Payable between one and five years 4 370 4 370 6 856 6 856

6 856 6 856 9 136 9 136

OtherPayable within one year – – 240 –Payable between one and five years – – – –

– – 240 –

Capital commitmentsAuthorised and contracted 283 600 193 749 180 473 160 258

Authorised but not contracted 122 400 107 388 88 046 73 206

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.


41 POST-YEAR-END EVENTS Moruleng Mall and Batho PlazaVukile acquired two retail centres from New Africa Developments (Pty) Ltd. Moruleng Mall is a 31 653m² regional shopping centre located in the North West Province with a national tenant mix of 88%. Anchor tenants include Shoprite, Pick n Pay, Edcon and the Truworths group. A purchase price of R320 million was agreed to acquire 80% of Clidet 1011 (Pty) Ltd, the company the owns the centre at an initial yield of 8.68%. The remaining 20% of the company is owned by the Bakgatla-Ba-Kgafela. Batho Plaza is a 14 000m² centre located in Soshanguve, Gauteng, with a national tenant mix of 80%. Anchor tenants include Shoprite and Cashbuild. A purchase price of R140 million was agreed which equates to an initial yield of 9.52%. Moruleng Mall was transferred in April 2015. The Batho Plaza transaction is unconditional and transfer is expected to be in June 2015. At the date of signing this report, the initial accounting for the business combination is currently being processed.

R1.1 billion equity capital raise In April 2015 Vukile concluded a very successful equity capital raise of R1.1 billion. The offer was heavily oversubscribed. Shares were issued to the market at a price of 1 900cpu. Encha took up R250 million of the offer in terms of the Encha equity tap structure. Pursuant to this capital raise, Encha now owns 8.15% of Vukile. Proceeds from the capital raise will be used to fund existing deals that are due to transfer during June 2015, as well as future developments as listed below.

Successful DMTN refinance of R580 millionIn May 2015 Vukile successfully refinanced R580 million of notes under its DMTN programme. This was the first successful issue of corporate notes in the property sector this year. The offer was heavily oversubscribed and pricing achieved was well within guidance range. The notes enjoy an AA+ rating from GCR.

Acquisition of Synergy’s management companyAs of 1 May 2015, Vukile acquired control of the management company of Synergy, namely Capital Land Asset Management (CLAM), for R106 million. As the majority shareholder in Synergy, holding 65% of the equity, together with control of CLAM, Vukile will now actively engage with the Synergy board and shareholders to evaluate various strategic opportunities for the growth and future direction of the fund. Vukile director Sedise Moseneke has assumed the role of interim CEO of Synergy while these options are being evaluated. At the date of signing this report, the initial accounting for the business combination is currently being processed.

Declaration of dividend after reporting dateIn line with IAS 10 – Events after the Reporting Period, the declaration of the dividend of R445 million in respect of the six-month period to 31 March 2015 occurred after the end of the reporting period, resulting in a non-adjusting event that is not recognised in the financial statements. In the prior period, the distribution consisted mainly of debenture interest which accrued on a daily basis, as well as a dividend.


Shareholders’ informationVukile Integrated annual report 2015 152

as at 31 March 2015Shareholders’ analysis

Holders% of

shareholdersNumber

of shares

% of total issued share

capital

ANALYSIS OF SHAREHOLDINGS1 − 1 000 624 11.65 340 027 0.061 001 − 10 000 3 209 59.90 13 986 415 2.4410 001 − 100 000 1 141 21.30 33 181 358 5.79100 001 − 1 000 000 292 5.45 88 244 907 15.411 000 001 and more 91 1.70 436 995 037 76.30

Total 5 357 100.00 572 747 744 100.00

MAJOR BENEFICIAL SHAREHOLDERS – – 238 517 999 41.65

Government Employees Pension Fund – – 95 579 362 16.69Sanlam Group – – 38 083 077 6.65Liberty Group – – 36 062 631 6.30Old Mutual Group – – 34 598 373 6.04Stanlib – – 34 194 556 5.97

MAJOR INSTITUTIONAL SHAREHOLDERS – – 249 871 777 43.63

Public Investment Corporation – – 98 280 932 17.16Stanlib Asset Management – – 45 217 009 7.89Old Mutual Investment Group – – 39 904 745 6.97Prudential Portfolio Management – – 36 426 573 6.36Sanlam Investment Management – – 30 042 518 5.25

SHAREHOLDER SPREADNon-public 10 0.19 98 472 618 17.19

Directors 8 – 2 893 256 0.50Holdings >10% of issued capital 2 – 95 579 362 16.69

Public 5 347 99.81 474 275 126 82.81

Total 5 357 100.00 572 747 744 100.00

DISTRIBUTION OF SHAREHOLDERSCollective investment schemes 213 3.98 226 342 311 39.52Retirement benefit funds 202 3.77 177 495 168 30.99Private companies 87 1.62 40 881 524 7.14Retail shareholders 3 802 70.98 38 030 008 6.64Assurance and insurance companies 43 0.80 22 402 751 3.91Trusts 685 12.79 18 175 583 3.17Custodians 36 0.67 14 875 803 2.60Organs of state and public entities 2 0.04 9 097 745 1.59Scrip lending 9 0.17 7 283 811 1.27Foundations and charitable funds 144 2.69 7 220 721 1.26Stockbrokers and nominees 20 0.37 4 935 024 0.86Investment partnerships and managed funds 34 0.63 2 192 715 0.38Medical aid funds 16 0.30 1 252 762 0.22Close corporations 48 0.90 1 195 885 0.21Public companies 6 0.11 907 546 0.16Hedge funds 4 0.07 458 367 0.08Control accounts 6 0.11 20 0.00

Total 5 357 100.00 572 747 744 100.00



Shareholders’ diary

Financial year-end 31 March 2015

Publication of abridged financial statements 26 May 2015

Financial report and notice of AGM posted by 30 June 2015

AGM 25 August 2015

Interim period-end 30 September 2015


Condensed annual financial statements

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITIONas at 31 March 2015

GROUP2015R000

2014R000


Investment properties 13 105 328 9 989 994Straight-line rental income adjustment (281 206) (202 581)

Other non-current assets 805 735 951 825Straight-line rental income asset 281 206 202 581Investments (Fairvest) (2014: Fairvest and Synergy) 384 800 592 300Deferred capital expenditure 15 849 29 732Furniture fittings, computer equipment and other 3 248 4 660Available-for-sale financial asset 21 576 20 313Goodwill 57 058 57 058Derivative financial instruments – 18 757Deferred taxation assets 3 888 3 424Long-term loans granted 38 110 23 000

Current assets 621 451 626 399Intangible asset – 242 059Trade and other receivables 147 429 86 165Taxation 133 –Cash and cash equivalents 473 889 298 175

Investment properties held-for-sale 280 019 312 567

Total assets 14 531 327 11 678 204

EQUITY AND RESERVES 9 830 646 3 108 689Non-controlling interest 516 317 –

10 346 963 3 108 689Non-current liabilities 2 830 180 6 668 564Linked debentures and premium – 4 526 816Other interest-bearing borrowings 2 816 088 2 133 878Derivative financial instruments 12 919 –Deferred taxation liabilities 1 173 7 870

Current liabilities 1 354 184 1 900 951Trade and other payables 300 880 274 926Short-term borrowings 1 051 657 1 256 527Current taxation liabilities 1 647 4 262Shareholders for distribution – 365 236


Net asset value (cents per share) 1 716 1 498


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 31 March 2015

GROUP2015R000

2014R000

Property revenue 1 579 099 1 389 625Straight-line rental income accrual 97 315 53 493

Gross property revenue 1 676 414 1 443 118Property expenses (585 372) (516 517)

Net profit from property operations 1 091 042 926 601Net income from asset management business 24 694 53 737Expenditure – asset management business (34 388) –Corporate administrative expenses (36 992) (34 964)Investment and other income 76 269 64 279

Operating profit before finance costs 1 120 625 1 009 653Finance costs (273 498) (256 605)


Profit before capital items 847 127 61 381Bargain purchase price 178 997 –(Loss)/profit on sale of investment properties (23 562) 41 201Fair value movement of derivative financial instruments 1 527 –Amortisation of debenture premium 19 227 9 959Goodwill written-off on sale of subsidiary/properties by a subsidiary – (6 544)Reversal of impairment of intangible asset – 89 094Fair value of fixed loan at date of acquiring control remeasured (290) –Loss on sale of intangible asset (61 595) –Profit/(loss) on sale of furniture, fittings and equipment 6 (4)Fair value gain on investments 172 180 17 228Cost of acquisition of business combination (2 778) –Other capital items (168) –

Profit before fair value adjustments 1 130 671 212 315Fair value adjustments 379 017 174 784Gross change in fair value of investment properties 476 332 228 277Straight-line rental income adjustment (97 315) (53 493)

Profit before taxation 1 509 688 387 099Taxation (26) (5 678)


Profit attributable to:Owners of the parent 1 499 995 381 421Non-controlling interest 9 667 –

Other comprehensive incomeItems that will be reclassified subsequently to profit or lossCash flow hedges (30 667) 78 087Available-for-sale financial assets – current period loss (12 169) (11 925)

Other comprehensive (loss)/income for the period (42 836) 66 162

Total comprehensive income for the period 1 466 826 447 583

Total comprehensive income attributable to:Owners of the parent 1 457 159 447 583Non-controlling interest 9 667 –

Earnings and diluted earnings per share (cents) 278.01 229.71Number of shares in issue 572 747 744 509 573 007Weighted number of shares in issue 539 547 572 512 996 395


RECONCILIATION OF EARNINGS TO HEADLINE EARNINGS AND TO PROFIT AVAILABLE FOR DISTRIBUTIONfor the year ended 31 March 2015

2015 2014GroupR000

Cents per share

GroupR000

Cents per share

Attributable profit to owners of parent 1 499 995 278.01 381 421 81.65Adjusted for:Debenture interest – – 691 667 148.06

Earnings per share 1 499 995 278.01 1 073 088 229.71Change in fair value of investment properties (379 017) (70.25) (174 784) (37.42)Bargain purchase price (178 997) (33.18) – –Write-off of goodwill on sale of subsidiary/properties sold by a subsidiary – – 6 544 1.40Loss/(profit) on sale of investment properties 23 562 4.37 (41 201) (8.82)(Profit)/loss on sale of furniture, fittings and equipment (6) – 4 –Loss on sale/(reversal of impairment) of intangible asset 61 595 11.42 (89 094) (19.07)Amortisation of debenture premium (19 227) (3.56) (9 959) (2.12)

Headline earnings of shares 1 007 905 186.81 764 598 163.68Loss on sale of furniture, fittings and computer equipment – – (4) –Cost of acquisition of business combination 2 778 0.51 – –Revaluation surplus on investments (149 602) (27.73) (17 228) (3.69)Gain on deemed disposal of Synergy previously accounted for under IAS 39 (22 578) (4.19) – –Fair value movement of derivative financial instruments (1 527) (0.28) – –Straight-line rental accrual (97 315) (18.04) (53 493) (11.45)Shares issued cum dividend 33 262 6.16 – –Pre-acquisition dividends arising on fair value calculation of Synergy units at date of obtaining control 1 293 0.24 – –

Profit available for distribution 774 216 143.48 693 873 148.54

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWfor the year ended 31 March 2015

2015 GroupR000

2014 GroupR000

Cash flow from operating activities 929 939 969 578Cash flow from investing activities 17 302 (2 753 714)Cash flow from financing activities (771 527) 815 007

Net increase/(decrease) in cash and cash equivalents 175 714 (969 129)Cash and cash equivalents at the beginning of the year 298 175 1 267 304

Cash and cash equivalents at the end of the year 473 889 298 175

Condensed annual financial statements continued


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the year ended 31 March 2015

GROUP

Share capital

and sharepremium

R000

Non-distributable

reservesR000

Retainedearnings

R000

Non-controlling

interest (NCI)

R000TotalR000

Balance at 31 March 2013 56 116 2 533 337 36 734 – 2 626 187Issue of share 25 747 – – – 25 747Dividend distribution – – (1 412) – (1 412)

81 863 2 533 377 35 322 2 650 522Profit for the year – – 381 421 – 381 421Change in fair value of investment properties – 228 277 (228 277) – –Share-based remuneration – 10 584 – – 10 584Transfer to non-distributable reserves – 140 978 (140 978) – –Other comprehensive income/(loss)Revaluation of available-for-sale financial asset – (11 925) – – (11 925)Revaluation of cash flow hedges – 78 087 – – 78 087

Balance at 31 March 2014 81 863 2 979 338 47 488 – 3 108 689Issue of share capital 21 680 21 680Dividend distribution – – (329 260) – (329 260)

103 543 2 979 338 (281 772) – 2 801 109Profit for the year – – 1 499 995 9 667 1 509 662Change in fair value of investment properties – 468 235 (476 332) 8 097 –Conversion of debentures to ordinary share capital 5 568 797 – – – 5 568 797Share-based remuneration – 11 678 – – 11 678Transfer to non-distributable reserve – 94 791 (94 791) – –NCI recognised in respect of Synergy acquisition – – – 498 553 498 553Revaluation of investments – 172 180 (172 180) – –Other comprehensive lossesRevaluation of available-for-sale financial asset – (12 169) – – (12 169)Revaluation of cash flow hedges – (30 667) – – (30 667)

Balance at 31 March 2015 5 672 340 3 683 386 474 920 516 317 10 346 963


1. MEASUREMENTS OF FAIR VALUE 1.1 Financial instruments

The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows:

2015 2014

GROUPLevel 1

R000Level 2

R000TotalR000

Level 1R000

Level 2R000

TotalR000

ASSETSInvestments 384 800 – 384 800 592 300 – 592 300 Available-for-sale financial assets 30 856 – 30 856 26 519 – 26 519 Derivative financial instruments – – – – 18 757 18 757

Total 415 656 – 415 656 618 819 18 757 637 576

LIABILITIESDerivative financial instruments – (12 919) (12 919) – – –Available-for-sale financial liabilities – (9 280) (9 280) – (6 206) (6 206)

Total – (22 199) (22 199) – (6 206) (6 206)

Net fair value 415 656 (22 199) 393 457 618 819 12 551 631 370

Measurement of fair valueThe methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.

InvestmentsThis comprises shares held in listed property companies at fair value which is determined by reference to quoted closing prices at the reporting date.

Available-for-sale financial assetsThis comprises equity-settled share-based long-term incentive reimbursement 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 instrumentsThe fair values of these swap contracts are determined by Absa Capital, Rand Merchant Bank, Standard Bank and Investec Bank Limited using a valuation technique that maximises the use of observable market inputs. Derivatives entered into by the group are included in Level 2 and consist of interest rate swap contracts.

1.2 Non-financial assetsThe following table reflects the levels within the hierarchy of non-financial assets measured at fair value at 31 March 2015:

2015Level 3

R000

2014Level 3

R000

ASSETSInvestment properties 13 105 328 9 989 994

Investment properties held-for-sale 280 019 312 567


Notes to the condensed financial statements


1.2 Non-financial assets continued Fair value measurement of non-financial assets (investment properties)The fair value of commercial buildings are estimated using an income approach which capitalises the estimated rental income stream, net of projected operating costs, using a discount rate derived from market yields. The estimated rental stream takes into account current occupancy levels, estimates of future vacancy levels, the terms of in-place leases and expectations of rentals from future leases over the remaining economic life of the buildings.

The most significant inputs, all of which are unobservable, are the estimated rental value, assumptions regarding vacancy levels, the discount rate and the reversionary capitalisation rate. The estimated fair value increases if the estimated rental increases, vacancy levels decline or if discount rates (market yields) and reversionary capitalisation rates decline. The overall valuations are sensitive to all four assumptions. Management considers the range of reasonable possible alternative assumptions is greatest for reversionary capitalisation rate rental values and vacancy levels and that there is also an interrelationship between these inputs. The inputs used in the valuations at 31 March 2015 were:gg The range of the reversionary capitalisation rates applied to the portfolio are between 8.18% and 17.00% (2014: between 7.47% and 13.81%) with the weighted average being 9.83% (March 2014: 10.04%).gg The discount rates applied range between 12.68% and 19.53% (2014: between 13.3% and 17.81%) with the weighted average being 14.28% (March 2014: 14.52%).

Sensitivity analysisThe effect on the fair value of the portfolio of a 0.25% increase in the discount rate would result in a decrease in the fair value of R350 million (2.6%) (2014: R271 million (2.6%)). The average discount rate on the portfolio would increase from 14.28% (2014: 14.52%) to 14.55% and the average exit capitalisation rate would increase from 9.83% (2014: 10.04%) to 10.09% due to the interlinked nature of the rates. The analysis has been prepared on the assumption that all other variables remain constant. The range of discount rates and reversionary capitalisation rates applied to the portfolio are between 12.68% and 19.53% (2014: between 13.3% and 17.81%), and between 8.18% and 17.00% (2014: between 7.47% and 13.81%) respectively, depending on the risk profile of each portfolio asset.

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


Operating segments analysis

GROUP

Retail– Vukile

R000

Retail– Synergy

R000Offices

R000Industrial

R000Sovereign

R000Hospital

R000

Motor related

R000TotalR000

Asset management

businessR000

Total groupR000

Group income for the year ended 31 March 2015Property revenue 823 663 53 866 360 774 147 865 153 290 28 507 11 134 1 579 099 24 694 1 603 793 Straight-line rental income accrual 49 445 3 152 20 305 10 547 10 453 2 454 959 97 315 97 315

873 108 57 018 381 079 158 412 163 743 30 961 12 093 1 676 414 24 694 1 701 108 Property expenses (318 753) (21 683) (153 426) (40 164) (46 552) (3 450) (1 344) (585 372) (34 388) (619 760)

Profit from property and other operations 554 355 35 335 227 653 118 248 117 191 27 511 10 749 1 091 042 (9 694) 1 081 348

Group statement of financial position at 31 March 2015

ASSETSInvestment properties 5 982 709 2 421 987 2 016 473 1 152 249 993 913 363 277 135 080 13 065 688 13 065 688 Add: Lease commissions 39 640 39 640

13 105 328 13 105 328 Goodwill 53 169 3 889 57 058 57 058 Investment properties held-for-sale 133 000 119 770 27 249 280 019 280 019

6 168 878 2 421 987 2 136 243 1 183 387 993 913 363 277 135 080 13 442 405 13 442 405 Add: Excluded itemsDevelopment expenditure 15 849 Investments 384 800 Furniture, fittings and computer equipment 3 248 Available-for-sale financial asset 21 576 Loans to directors 38 110 Deferred taxation assets 3 888 Trade and other receivables 147 429 Taxation refundable 133 Cash and cash equivalents 473 889


EQUITY AND LIABILITIESStated capital 2 599 365 1 029 421 907 970 501 323 422 444 154 404 57 413 5 672 340 5 672 340 Interest-bearing borrowings 1 772 403 701 920 619 111 341 833 288 048 105 282 39 148 3 867 745 3 867 745

4 371 768 1 731 341 1 527 081 843 156 710 492 259 686 96 561 9 540 085 9 540 085 Add: Excluded itemsOther components of equity and retained earnings 4 158 306 Non-controlling interest 516 317 Deferred taxation liabilities 1 173 Derivative financial instruments 12 919 Trade and other payables 300 880 Current taxation liabilities 1 647

Total equity and liabilities 14 531 327



GROUP

Retail– Vukile

R000

Retail– Synergy

R000Offices

R000Industrial

R000Sovereign

R000Hospital

R000

Motor related

R000TotalR000

Asset management

businessR000

Total groupR000

Group income for the year ended 31 March 2015Property revenue 823 663 53 866 360 774 147 865 153 290 28 507 11 134 1 579 099 24 694 1 603 793 Straight-line rental income accrual 49 445 3 152 20 305 10 547 10 453 2 454 959 97 315 97 315

873 108 57 018 381 079 158 412 163 743 30 961 12 093 1 676 414 24 694 1 701 108 Property expenses (318 753) (21 683) (153 426) (40 164) (46 552) (3 450) (1 344) (585 372) (34 388) (619 760)

Profit from property and other operations 554 355 35 335 227 653 118 248 117 191 27 511 10 749 1 091 042 (9 694) 1 081 348

Group statement of financial position at 31 March 2015

ASSETSInvestment properties 5 982 709 2 421 987 2 016 473 1 152 249 993 913 363 277 135 080 13 065 688 13 065 688 Add: Lease commissions 39 640 39 640

13 105 328 13 105 328 Goodwill 53 169 3 889 57 058 57 058 Investment properties held-for-sale 133 000 119 770 27 249 280 019 280 019

6 168 878 2 421 987 2 136 243 1 183 387 993 913 363 277 135 080 13 442 405 13 442 405 Add: Excluded itemsDevelopment expenditure 15 849 Investments 384 800 Furniture, fittings and computer equipment 3 248 Available-for-sale financial asset 21 576 Loans to directors 38 110 Deferred taxation assets 3 888 Trade and other receivables 147 429 Taxation refundable 133 Cash and cash equivalents 473 889


EQUITY AND LIABILITIESStated capital 2 599 365 1 029 421 907 970 501 323 422 444 154 404 57 413 5 672 340 5 672 340 Interest-bearing borrowings 1 772 403 701 920 619 111 341 833 288 048 105 282 39 148 3 867 745 3 867 745

4 371 768 1 731 341 1 527 081 843 156 710 492 259 686 96 561 9 540 085 9 540 085 Add: Excluded itemsOther components of equity and retained earnings 4 158 306 Non-controlling interest 516 317 Deferred taxation liabilities 1 173 Derivative financial instruments 12 919 Trade and other payables 300 880 Current taxation liabilities 1 647




Operating segment analysis continued

GROUP

Retail– Vukile

R000Offices

R000Industrial

R000Sovereign

R000Hospital

R000

Motor related

R000Total

R000

Asset management

businessR000

Total groupR000

Group income for the year ended 31 March 2014Property revenue 773 328 349 151 135 872 94 879 26 393 10 002 1 389 625 92 654 1 482 279 Straight-line rental income accrual 29 299 12 580 5 512 4 137 1 446 519 53 493 53 493

802 627 361 731 141 384 99 016 27 839 10 521 1 443 118 92 654 1 535 772 Property expenses (295 105) (143 827) (45 908) (27 356) (2 784) (1 538) (516 518) (38 917) (555 435)

Profit from property and other operations 507 522 217 904 95 476 71 660 25 055 8 983 926 600 53 737 980 337

Group statement of financial position at 31 March 2014ASSETSInvestment properties 5 327 347 2 108 030 1 060 488 1 010 906 328 287 128 279 9 963 337 9 963 337 Add: Lease commissions 26 657 26 657

9 989 994 9 989 994 Goodwill 53 169 3 889 57 058 57 058 Intangible asset 242 059 242 059 Investment properties held-for-sale 195 558 117 009 – 312 567 312 567

5 576 074 2 225 039 1 064 377 1 010 906 328 287 128 279 10 359 619 242 059 10 601 678 Add: Excluded itemsDevelopment expenditure 29 732 Investments 592 300 Furniture, fittings and computer equipment 4 660 Available-for-sale financial asset 20 313 Financial asset at amortised cost 18 757 Loans to directors 23 000 Trade and other receivables 86 165 Cash and cash equivalents 298 175


EQUITY AND LIABILITIESLinked debentures and premium 2 432 990 980 189 467 175 445 332 144 619 56 510 4 526 815 4 526 815 Interest-bearing borrowings 1 822 213 734 124 349 896 333 535 108 314 42 324 3 390 406 3 390 406

4 255 203 1 714 313 817 071 778 867 252 933 98 834 7 917 221 7 917 221 Add: Excluded itemsOther components of equity and retained earnings 3 108 689 Deferred taxation 6 121 Trade and other payables 274 926 Current taxation liabilities 2 587 Shareholders for distribution 365 236



GROUP

Retail– Vukile

R000Offices

R000Industrial

R000Sovereign

R000Hospital

R000

Motor related

R000Total

R000

Asset management

businessR000

Total groupR000

Group income for the year ended 31 March 2014Property revenue 773 328 349 151 135 872 94 879 26 393 10 002 1 389 625 92 654 1 482 279 Straight-line rental income accrual 29 299 12 580 5 512 4 137 1 446 519 53 493 53 493

802 627 361 731 141 384 99 016 27 839 10 521 1 443 118 92 654 1 535 772 Property expenses (295 105) (143 827) (45 908) (27 356) (2 784) (1 538) (516 518) (38 917) (555 435)

Profit from property and other operations 507 522 217 904 95 476 71 660 25 055 8 983 926 600 53 737 980 337

Group statement of financial position at 31 March 2014ASSETSInvestment properties 5 327 347 2 108 030 1 060 488 1 010 906 328 287 128 279 9 963 337 9 963 337 Add: Lease commissions 26 657 26 657

9 989 994 9 989 994 Goodwill 53 169 3 889 57 058 57 058 Intangible asset 242 059 242 059 Investment properties held-for-sale 195 558 117 009 – 312 567 312 567

5 576 074 2 225 039 1 064 377 1 010 906 328 287 128 279 10 359 619 242 059 10 601 678 Add: Excluded itemsDevelopment expenditure 29 732 Investments 592 300 Furniture, fittings and computer equipment 4 660 Available-for-sale financial asset 20 313 Financial asset at amortised cost 18 757 Loans to directors 23 000 Trade and other receivables 86 165 Cash and cash equivalents 298 175


EQUITY AND LIABILITIESLinked debentures and premium 2 432 990 980 189 467 175 445 332 144 619 56 510 4 526 815 4 526 815 Interest-bearing borrowings 1 822 213 734 124 349 896 333 535 108 314 42 324 3 390 406 3 390 406

4 255 203 1 714 313 817 071 778 867 252 933 98 834 7 917 221 7 917 221 Add: Excluded itemsOther components of equity and retained earnings 3 108 689 Deferred taxation 6 121 Trade and other payables 274 926 Current taxation liabilities 2 587 Shareholders for distribution 365 236



Notice of annual general meeting

VUKILE PROPERTY FUND LIMITED(Incorporated in the Republic of South Africa) (Registration number 2002/027194/06)ISIN: ZAE000180865 • JSE share code: VKE • NSX share code: VKNGranted REIT status with the JSE(Vukile or the company)

Notice is hereby given that the 11th annual general meeting (AGM) of the shareholders of Vukile Property Fund Limited (Vukile or the company) will be held in the main boardroom, One-on-Ninth, Corner Glenhove Road and Ninth Street, Melrose Estate, 2196 at 08:00 on Tuesday, 25 August 2015 for the purposes of:gg considering and adopting the directors’ report, the annual financial statements, the social and ethics statement and the audit and risk committee report of the company for the year ended 31 March 2015 contained in the integrated annual report;gg transacting any other business as may be transacted at an AGM of shareholders of a company; andgg considering and, if deemed fit, adopting with or without modification, the shareholder special and ordinary resolutions set out below, which AGM is to be:gg participated in and voted at by shareholders as at the record date of Friday, 14 August 2015 in terms of section 62(3)(a), read with section 59, of the Companies Act, 71 of 2008, as amended (the Companies Act or Act).

IMPORTANT DATES TO NOTEgg Record date to receive this notice: Friday, 19 June 2015.gg Last day to trade in order to be eligible to participate in and vote at the AGM: Thursday, 6 August 2015.gg Record date to vote at the AGM (voting record date): Friday, 14 August 2015.

SECTION 63(1) OF THE COMPANIES ACT: IDENTIFICATION OF MEETING PARTICIPANTSKindly note that meeting participants (including proxies) are required to provide reasonably satisfactory identification before being entitled to attend or participate in a meeting. In this regard, all Vukile shareholders recorded in the register of the company on the record date for participating in and voting at the AGM will be required to provide identification satisfactory to the chairman of the AGM. Forms of identification include valid identity documents, driving licences and passports.

SECTION 62(3)(E) OF THE COMPANIES ACTIn terms of section 62(3)(e) of the Companies Act:gg a shareholder who is entitled to attend and vote at the AGM is entitled to appoint a proxy or two or more proxies to attend, participate in and vote at the meeting in the place of the shareholder; andgg a proxy need not be a shareholder of the company.

A summarised form of the annual financial statements is set out on pages 154 to 163.


1 SPECIAL RESOLUTION NUMBER 1 Non-executive director remuneration “Resolved that the company be and is authorised, in terms of section 66 of the Companies Act, to pay remuneration to

its directors for their services as directors for a period of two years from the passing of this resolution; and with effect of 1 April 2015, that annual retainers and meeting fees payable to non-executive directors be and are fixed as follows:

Retainers 1.1 Non-executive director R138 650 per annum 1.2 Chairman of the board (all-inclusive fee) R638 225 per annum 1.3 Chairman of the audit and risk committee R156 775 per annum 1.4 Chairman of the social, ethics and human resources committee R93 925 per annum 1.5 Chairman of the property and investment committee R93 925 per annum

Attendance fees 1.6 Board (excluding the chairman) R19 925 per meeting attended 1.7 Audit and risk committee R24 125 per meeting attended 1.8 Social, ethics and human resources committee R19 925 per meeting attended 1.9 Property and investment committee R19 925 per meeting attended.”

In order for this special resolution number 1 to be adopted, the support of at least 75% of the total number of votes which the shareholders present or represented by proxy at this meeting are entitled to cast, is required.

Reason for and effect of special resolution number 1 Vukile has strong governance practices and in line with this the company aims to attract and retain high-quality non-

executive directors which are considered to be truly independent. As a result, Vukile’s non-executive remuneration practice is more aligned with the JSE mid-cap sector rather than the REIT sector.

A general increase in non-executive directors’ remuneration for the year equal to 6.25% was approved by the board and is recommended to shareholders. Special board and committee meetings are remunerated at 50% of the normal attendance fee after consultation with the chairman of the board or committee regarding the specific circumstance of the meeting. The chairman of the board is not paid any meeting attendance fees, since he receives an all-inclusive fee.

2 SPECIAL RESOLUTION NUMBER 2 Repurchase of shares “Resolved that the company or any of its subsidiaries be and are hereby authorised by way of a general authority to

acquire ordinary shares issued by the company, in terms of sections 46 and 48 of the Companies Act, and in terms of the JSE Listings Requirements (the Listings Requirements) of the JSE Limited (the JSE) being that:gg any such acquisition of shares shall be implemented through the order book of the JSE and without any prior arrangement;gg this general authority shall be valid until the company’s next AGM, provided that it shall not extend beyond 15 months from the date of passing this special resolution;gg an announcement will be published as soon as the company or any of its subsidiaries have acquired shares constituting, on a cumulative basis, 3% of the number of shares in issue prior to the acquisition pursuant to which the aforesaid 3% threshold is reached, and for each 3% in aggregate acquired thereafter, containing full details of such acquisitions;gg acquisitions of shares in aggregate in any one financial year may not exceed 20% (or 10% where the acquisitions are effected by a subsidiary) of the company’s issued ordinary share capital as at the date of passing of this special resolution;


Notice of annual general meeting continued

gg in determining the price at which shares issued by the company are acquired by it or any of its subsidiaries in terms of this general authority, the maximum premium at which such shares may be acquired will be 10% of the weighted average of the market value at which such shares are traded on the JSE over the five business days immediately preceding the date of repurchase of such shares;gg the company (or a subsidiary) is duly authorised by its Memorandum of Incorporation (MOI) to acquire shares issued by it;gg at any point in time, the company may only appoint one agent to effect any repurchase on the company’s behalf; gg the board of directors of the company must resolve that the repurchase is authorised, the company and its subsidiaries have passed the solvency and liquidity test, as set out in section 4 of the Companies Act, and since the test was performed, there have been no material changes to the financial position of the group; andgg repurchases may not take place during a prohibited period (as defined in paragraph 3.67 of the JSE Listings Requirements) unless a repurchase programme is in place (where the dates and quantities of shares to be repurchased during the prohibited period are fixed) and full details thereof has been submitted to the JSE in writing prior to commencement of the prohibited period.”

In order for this special resolution number 2 to be adopted, the support of at least 75% of the total number of votes which the shareholders present or represented by proxy at this meeting are entitled to cast, is required.

Reason for and the effect of special resolution number 2 In accordance with the JSE Listings Requirements, the directors record that although there is no immediate intention to

effect a repurchase of the shares of the company, the directors will utilise this general authority to repurchase shares as and when suitable opportunities present themselves, which opportunities may require expeditious and immediate action.

The directors undertake that, having considered the effects of a repurchase of the maximum number of shares allowed for under this general authority and the price at which the repurchases may take place pursuant to the repurchase general authority, for a period of 12 (twelve) months after the date of the notice of AGM:gg the company and the group will be able, in the ordinary course of business, to pay its debts;gg the consolidated assets of the company and the group, fairly valued in accordance with International Financial Reporting Standards, will exceed the consolidated liabilities of the company and the group; and gg the company and the group’s ordinary share capital, reserves and working capital will be adequate for ordinary business purposes.

The following additional information, some of which may appear elsewhere in the integrated annual report of which this notice forms part, is provided in terms of the JSE Listings Requirements for purposes of the general authority:gg Major beneficial shareholders – page 152gg Share capital of the company – page 110.

Directors’ responsibility statement The directors, whose names appear on pages 24 and 25 of the integrated annual report collectively and individually

accept full responsibility for the accuracy of the information pertaining to this special resolution and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the special resolution contains all information required by the Companies Act and the Listings Requirements.


Material changes Other than the facts and developments reported on in this integrated annual report of which this notice forms part, there

have been no material changes in the affairs or financial position of the company and its subsidiaries since the date of signature of the audit report and up to the date of this notice.

3 ORDINARY RESOLUTION NUMBER 1 Adoption of annual financial statements “Resolved that the annual financial statements for the year ended 31 March 2015, including the reports of the directors,

the social and ethics statement and the audit and risk committee be and are hereby received and adopted.”

In order for this ordinary resolution number 1 to be adopted, the support of more than 50% of the total number of votes, which the shareholders present or represent by proxy at this meeting are entitled to cast, is required.

4 ORDINARY RESOLUTION NUMBER 2 Re-appointment of auditors “Resolved to re-appoint Grant Thornton (with the designated registered auditor being C Pretorius) as auditors of the

company from the conclusion of this AGM.”

The audit and risk Committee has evaluated the performance and independence of Grant Thornton and C Pretorius and recommend their re-appointment as auditors of the company under section 90 of the Companies Act.

In order for this ordinary resolution number 2 to be adopted, the support of more than 50% of the total number of votes, which the shareholders present or represented by proxy at this meeting are entitled to cast, is required.

5 ORDINARY RESOLUTION NUMBER 3 Re-election of directors Directors The following directors retire in terms of Article 16 of the company’s MOI, namely:

gg Mr AD Botha; gg Dr SF Booysen; gg Mr MJ Potts; gg Mr LG Rapp; andgg Mr HM Serebro.

The nominations committee has considered the past performance and contribution to the company of each of the directors listed above and recommends that they be re-elected as directors of the company.

“Resolved that the following retiring directors, who are to retire in terms of Article 16.3.2 of the company’s MOI, but being eligible, offer themselves for re-election, be and are hereby re-elected each on a separate (and not collective) basis:

3.1 Mr AD Botha, who is to retire by rotation; 3.2 Dr SF Booysen, who is to retire by rotation; 3.3 Mr MJ Potts, who is to retire by rotation; 3.4 Mr LG Rapp, who is to retire by rotation; and 3.5 Mr HM Serebro, who is to retire by rotation.”



Brief CVs of all the directors appear on pages 24 and 25 of this integrated annual report of which this notice forms part.

In order for ordinary resolutions numbers 3.1, 3.2, 3.3, 3.4 and 3.5 to be adopted, the support of more than 50% of the total number of votes, which the shareholders present or represented by proxy at this meeting are entitled to cast, is required.

6 ORDINARY RESOLUTION NUMBER 4 Election of members of audit and risk committee “Resolved that the following directors, who meet the requirements of section 94(4) of the Companies Act, be and are

hereby elected on a separate (and not collective) basis as members of the audit and risk committee in terms of section 94(2) of the Companies Act until the next AGM:

4.1 Dr SF Booysen; 4.2 Mr PS Moyanga; and 4.3 Mr NG Payne.”

Brief CVs of all the proposed members of the audit and risk committee appear on pages 24 and 25 of this integrated annual report of which this notice forms part.

In order for ordinary resolutions numbers 4.1, 4.2 and 4.3 to be adopted, the support of more than 50% of the total number of votes, which the shareholders present or represented by proxy at this meeting are entitled to cast, is required.

7 ORDINARY RESOLUTION NUMBER 5 Unissued shares “Resolved that the authorised but unissued shares of the company be and are hereby placed under the control of the

directors of the company until the next AGM, who are authorised to allot or issue any such shares at their discretion, subject at all times to the provisions of the Companies Act, the company’s MOI and the JSE Listings Requirements and provided further that the total aggregate number of shares issued may not exceed:gg 10%* of the total number of shares in issue at the date of the integrated annual report, being 633 813 751 shares; plusgg that number of shares required to be issued under the company’s distribution reinvestment scheme.”


* For the avoidance of doubt it is highlighted that the 10% number referred to above includes any shares issued under the general authority to issue shares for cash as set out in ordinary resolution number 6 below.

8 ORDINARY RESOLUTION NUMBER 6 General authority to issue shares for cash “Resolved that, subject to the restrictions set out below, the directors be and are hereby authorised, pursuant, inter alia,

to the company’s MOI and subject to the provisions of the Companies Act and the JSE Listings Requirements, until this authority lapses which shall be at the next AGM or 15 months from the date hereof, whichever is the earliest, to allot and issue shares of the company for cash on the following basis: gg The allotment and issue of shares must be made to persons qualifying as public shareholders and not to related parties, as defined in the JSE Listings Requirements;gg The shares which are the subject of the issue for cash must be of a class already in issue or, where this is not the case, must be limited to such shares or rights that are convertible into a class already in issue;gg The total aggregate number of shares which may be issued for cash in terms of this authority may not exceed 63 381 375 shares, being 10% of the company’s issued shares as at the date of notice of this AGM. Accordingly, any shares issued under this authority prior to this authority lapsing shall be deducted from the


63 381 375 shares the company is authorised to issue in terms of this authority for the purpose of determining the remaining number of shares that may be issued in terms of this authority;gg In the event of a sub-division or consolidation of shares prior to this authority lapsing, the existing authority shall be adjusted accordingly to represent the same allocation ratio; gg The maximum discount at which the shares may be issued is 5% (five percent) of the weighted average traded price of such shares measured over the 30 business days prior to the date that the price of the issue is agreed between the company and the party subscribing for the shares; andgg After the company has issued shares for cash which represent, on a cumulative basis, within the period that this authority is valid, 5% (five percent) or more of the number of shares in issue prior to that issue, the company shall publish an announcement containing full details of the issue, including the number of shares issued, the average discount to the weighted average trade price of the shares over the 30 days prior to the date that the issue is agreed in writing and an explanation, including supporting documentation, if any, of the intended use of the funds.”

In order for this ordinary resolution number 6 to be adopted, the support of at least 75% of the total number of votes, which the shareholders present or represented by proxy at this meeting are entitled to cast, is required.

9 ORDINARY RESOLUTION NUMBER 7 Remuneration policy “Resolved that, through a non-binding advisory vote, the company’s remuneration policy and its implementation, as set

out on pages 31 to 33 of this integrated annual report be and is hereby approved.”


10 ORDINARY RESOLUTION NUMBER 8 Implementation of resolutions “Resolved that any director of the company, and where applicable the secretary of the company, be and is hereby

authorised to do all such things, sign all such documents and take all actions as may be necessary to implement the above ordinary and special resolutions.”


GENERAL INSTRUCTIONS FOR SHAREHOLDERS Shareholders are encouraged to attend, speak and vote at the AGM.

Electronic participation The company has made provision for Vukile shareholders or their proxies to participate electronically in the AGM by way

of telephone conferencing. Should you wish to participate in the AGM by telephone conference call as aforesaid, you, or your proxy, will be required to advise the company thereof by no later than 08:00 on Monday, 17 August 2015 by submitting by email to the company secretary at [email protected], for the attention of Johann Neethling, relevant contact details, including an email address, cellular number and landline as well as full details of the Vukile shareholder’s title to securities issued by the company and proof of identity, in the form of copies of identity documents and share certificates (in the case of materialised Vukile shares) and (in the case of dematerialised Vukile shares) written confirmation from the Vukile shareholder’s CSDP confirming the Vukile shareholder’s title to the dematerialised Vukile shares. Upon receipt of the required information, the Vukile shareholder concerned will be provided with a secure code



and instructions to access the electronic communication during the AGM. Vukile shareholders must note that access to the electronic communication will be at the expense of the Vukile shareholders who wish to utilise the facility. Vukile shareholders and their appointed proxies attending by conference call will not be able to cast their votes at the AGM through this medium.

Proxies and authority for representatives to act A form of proxy is attached for the convenience of any Vukile shareholder holding certificated shares, who cannot attend

the AGM but wishes to be represented thereat.

The attached form of proxy is only to be completed by those shareholders who are:gg holding shares in certificated form; or gg recorded on the company’s sub-register in dematerialised electronic form with “own name” registration.

All other beneficial owners who have dematerialised their shares through a central securities depository participant (CSDP) or broker and wish to attend the AGM, must instruct their CSDP or broker to provide them with the necessary letter of representation, or they must provide the CSDP or broker with their voting instructions in terms of the relevant custody agreement entered into between them and the CSDP or broker. These shareholders must not use a form of proxy. Forms of proxy must be deposited at the transfer secretaries, Link Market Services South Africa (Pty) Ltd at 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein 2001 (PO Box 4844, Johannesburg, 2000) to be received no later than 08:00 on Friday, 21 August 2015. Alternatively, the form of proxy may be handed to the chairman of the AGM at any time prior to the commencement of the AGM. Any shareholder who completes and lodges a form of proxy will nevertheless be entitled to attend, speak and vote in person at the AGM should the shareholder decide to do so.

A company that is a shareholder, wishing to attend and participate at the AGM should ensure that a resolution authorising a representative to so attend and participate at the AGM on its behalf is passed by its directors. Resolutions authorising representatives in terms of section 57(5) of the Companies Act must be lodged with the company’s transfer secretaries prior to the AGM.

By order of the board

Johann NeethlingGroup company secretary

Registered OfficeOne-on-NinthCnr Glenhove Road and Ninth StreetMelrose Estate, 2196

Transfer secretaries Link Market Services South Africa (Pty) Ltd 13th Floor, Rennie House19 Ameshoff StreetBraamfontein, 2001


Form of proxy

VUKILE PROPERTY FUND LIMITED(Incorporated in the Republic of South Africa) (Registration number 2002/027194/06)ISIN: ZAE000180865 • JSE share code: VKE • NSX share code: VKNGranted REIT status with the JSE(Vukile or the company)This form of proxy is for use by:gg registered shareholders who have not yet dematerialised their Vukile shares; andgg registered shareholders who have already dematerialised their Vukile shares and which shares 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 08:00 on Tuesday, 25 August 2015.I/we (BLOCK LETTERS PLEASE)of (address) being the registered holder of Vukile shareshereby appoint:1 of or failing him/her2 of or failing him/herthe 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 AbstainSpecial resolution 1 Authorisation to pay of directors Special resolution 1.1 Non-executive directors’ retainerSpecial resolution 1.2 Chairman’s retainer – board (all-inclusive fee)Special resolution 1.3 Chairman’s retainer – audit and risk committeeSpecial resolution 1.4 Chairman’s retainer – social, ethics and human resources committeeSpecial resolution 1.5 Chairman’s retainer – property and investment committeeSpecial resolution 1.6 Attendance fees – board (excluding the chairman)Special resolution 1.7 Attendance fees – audit and risk committeeSpecial resolution 1.8 Attendance fees – social, ethics and human resources committeeSpecial resolution 1.9 Attendance fees – property and investment committeeSpecial resolution 2 Repurchase of sharesOrdinary resolution 1 Adoption of annual financial statementsOrdinary resolution 2 Re-appointment of auditorsOrdinary resolution 3 Re-election of directors:Ordinary resolution 3.1 Mr AD Botha Ordinary resolution 3.2 Dr SF Booysen Ordinary resolution 3.3 Mr MJ Potts Ordinary resolution 3.4 Mr LG Rapp Ordinary resolution 3.5 Mr HM Serebro Ordinary resolution 4 Election of members of the audit and risk committeeOrdinary resolution 4.1 Dr SF BooysenOrdinary resolution 4.2 Mr PS MoyangaOrdinary resolution 4.3 Mr NG PayneOrdinary resolution 5 Unissued sharesOrdinary resolution 6 General authority to issue shares for cashOrdinary resolution 7 Remuneration policyOrdinary 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 2015Signature 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 08:00 on Friday, 21 August 2015. Alternatively the form of proxy may be handed to the chairman of the AGM at any time prior to the commencement of the AGM.

Please read the notes on the reverse side hereof.


Notes to form of proxy

1. Only shareholders who are registered in the register of the company under their own name on the date on which shareholders must be recorded as such in the register maintained by the transfer secretaries, Link Market Services South Africa (Pty) Ltd, being 14 August 2015 (voting record date) may complete a form of proxy or attend the annual general meeting (AGM). This includes shareholders who have not dematerialised their shares or who have dematerialised their shares with “own name” registration. The person whose name stands first on the form of proxy and who is present at the AGM will be entitled to act as proxy to the exclusion of those whose names follow. A proxy need not be a shareholder of the company.

2. Certificated shareholders wishing to attend the AGM have to ensure beforehand with the transfer secretaries of the company (being Link Market Services South Africa (Pty) Ltd) that their shares are registered in their own name.

3. Beneficial shareholders whose shares are not registered in their “own name”, but in the name of another, for example, a nominee, may not complete a form of proxy, unless a form of proxy is issued to them by a registered shareholder and they should contact the registered shareholder for assistance in issuing instruction on voting their shares, or obtaining a proxy to attend, speak and, on a poll, vote at the AGM.

4. Dematerialised shareholders who have not elected “own name” registration in the register of the company through a central securities depository participant (CSDP) and who wish to attend the AGM, must instruct the CSDP or broker to provide them with the necessary authority to attend.

5. Dematerialised shareholders who have not elected “own name” registration in the register of the company through a CSDP and who are unable to attend, but wish to vote at the AGM, must timeously provide their CSDP or broker with their voting instructions in terms of the custody agreement entered into between that shareholder and the CSDP or broker.

6. A shareholder may insert the name of a proxy or the names of two or more alternative proxies of the shareholder’s choice in the space, with or without deleting “the chairman of the AGM”. The person whose name stands first on the form of proxy and who is present at the AGM will be entitled to act as proxy to the exclusion of those whose names follow.

7. The completion and lodging of this form will not preclude the relevant shareholder from attending the AGM and speaking and voting in person thereat to the exclusion of any proxy appointed, should such shareholder wish to do so. In addition to the aforegoing, a shareholder may revoke the proxy appointment by (i) cancelling it in writing, or making a later inconsistent appointment of a proxy; and (ii) delivering a copy of the revocation instrument to the proxy, and to the company.

8. The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of the relevant shareholder as of the later of the date:

8.1 stated in the revocation instrument, if any; or 8.2 upon which the revocation instrument is delivered to the proxy and the

relevant company as required in section 58(4)(c)(ii) of the Companies Act, 71 of 2008, as amended (the Companies Act).

9. Should the instrument appointing a proxy or proxies have been delivered to the company, as long as that appointment remains in effect, any notice that is required by the Companies Act or the company’s Memorandum of Incorporation (MOI) to be delivered by the company to the shareholder must be delivered by the company to:

9.1 the shareholder; or 9.2 the proxy or proxies if the shareholder has in writing directed the relevant

company to do so and has paid any reasonable fee charged by the company for doing so.

10. A proxy is entitled to exercise, or abstain from exercising, any voting right of the relevant shareholder without direction, except to the extent that the MOI of the company or the instrument appointing the proxy provide otherwise.

11. If the company issues an invitation to shareholders to appoint one or more persons named by the company as a proxy, or supplies a form of instrument for appointing a proxy:

11.1 such invitation must be sent to every shareholder who is entitled to receive notice of the meeting at which the proxy is intended to be exercised;

11.2 the company must not require that the proxy appointment be made irrevocable; and

11.3 the proxy appointment remains valid only until the end of the relevant meeting at which it was intended to be used, unless revoked as contemplated in section 58(5) of the Companies Act.

12. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies. A deletion of any printed matter and the completion of any blank space(s) need not be signed or initialled.

13. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form unless previously recorded by the transfer secretaries of the company or waived by the chairman of the AGM.

14. A minor must be assisted by his/her parent/guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the transfer secretaries.

15. A company holding shares in the company that wishes to attend and participate at the AGM should ensure that a resolution authorising a representative to act is passed by its directors. Resolutions authorising representatives in terms of section 57(5) of the Companies Act must be lodged with the company’s transfer secretaries prior to the AGM.

16. Where there are joint holders of shares, any one of such persons may vote at any meeting in respect of such shares as if he were solely entitled thereto; but if more than one of such joint holders be present or represented at the meeting, that one of the said persons whose name appears first in the register of shareholders of such shares or his proxy, as the case may be, shall alone be entitled to vote in respect thereof.

17. On a show of hands, every shareholder of the company present in person or represented by proxy shall have one vote only. On a poll a shareholder who is present in person or represented by a proxy shall be entitled to that proportion of the total votes in the company which the aggregate amount of the nominal value of the shares held by him bears to the aggregate amount of the nominal value of all the shares of the relevant class issued by the company.

18. The chairman of the AGM may reject or accept any proxy which is completed and/or received other than in accordance with the instructions, provided that he shall not accept a proxy unless he is satisfied as to the matter in which a shareholder wishes to vote.

19. A proxy may not delegate his/her authority to act on behalf of the shareholder to another person.

20. A shareholder’s instruction to the proxy must be indicated by the insertion of the relevant number of shares to be voted on behalf of that shareholder in the appropriate space provided. Failure to comply with the above will be deemed to authorise the chairperson of the AGM, if the chairperson is the authorised proxy, to vote in favour of the resolutions at the AGM or other proxy to vote or to abstain from voting at the AGM as he/she deems fit, in respect of the shares concerned. A shareholder or the proxy is not obliged to use all the votes exercisable by the shareholder or the proxy, but the total of votes cast in respect whereof abstention is recorded may not exceed the total of the votes exercisable by the shareholder or the proxy.

21. It is requested that this form of proxy be lodged or posted or faxed to the transfer secretaries, Link Market Services South Africa (Pty) Ltd at 13th floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001 (PO Box 4844, Johannesburg, 2000) to be received by the company no later than 08:00 on Friday, 21 August 2015.

22. A quorum for the purposes of considering the ordinary and special resolutions shall comprise 25% of all the voting rights that are entitled to be exercised by shareholders in respect of each matter to be decided at the AGM. In addition, a quorum shall consist of three shareholders of the company personally present or represented by proxy (and if the shareholder is a body corporate, it must be represented) and entitled to vote at the AGM.

23. This form of proxy may be used at any adjournment or postponement of the AGM, including any postponement due to a lack of quorum, unless withdrawn by the shareholder.

24. The aforegoing notes contain a summary of the relevant provisions of section 58 of the Companies Act, as required in terms of that section.


Corporate information

BASTION GRAPHICS

DIRECTORSAnton Dirk Botha(e,h) (Chairman)Laurence Gary Rapp(a,g) (Chief executive)Michael John Potts(a) (Financial director)Hermina Christina Lopion(a,g) (Executive director: asset management)Gabaiphiwe Sedise Moseneke(a) (Executive director)Stefanes Francois Booysen(c,d,i) Renosi Denise Mokate(e,h) Peter Sipho Moyanga(c,g) Hatla Ntene(g) Nigel George Payne(b,g) Sonja Emilia Ncumisa Sebotsa(e,i) Hymie Mervyn Serebro(f)

(a) Executive(b) Chairman of audit and risk committee(c) Member of audit and risk committee(d) Chairman of social, ethics and human resources committee(e) Member of social, ethics and human resources committee(f) Chairman of property and investment committee(g) Member of property and investment committee(h) Chairman of nominations committee(i) Member of nominations committee

GROUP SECRETARY AND REGISTERED OFFICEJohann NeethlingOne-on-Ninth PO Box 2234Corner Glenhove Road and Ninth Street ParklandsMelrose Estate 21212196

SPONSORSSouth AfricaJava Capital6A Sandown Valley Crescent PO Box 2087Sandown, ParklandsSandton 21212146

NAMIBIAIJG GroupFirst Floor PO Box 186Heritage Square Windhoek100 Robert Mugabe AvenueWindhoek

LISTING INFORMATIONVukile was listed on the JSE Limited on 24 June 2004 and on the Namibian Stock Exchange on 11 July 2007.JSE share code VKENSX share code VKNISIN ZAE000180865 SECTOR Financial – Retail REITs

TRANSFER SECRETARIESLink Market Services South Africa (Pty) Ltd13th Floor PO Box 4844Rennie House Johannesburg19 Ameshoff Street 2000Braamfontein2001

AUDITORSGrant ThorntonWanderers Office Park Private Bag X552 Corlett Drive NorthlandsIllovo 2116Johannesburg2196

PRINCIPAL BANKERSAbsa Bank LimitedThird Floor Absa Towers East PO Box 7335160 Main Street JohannesburgJohannesburg 20002001

INVESTOR AND MEDIA RELATIONS Marketing concepts10th Floor, Fredman Towers,13 Fredman Drive, SandtonJohannesburgSouth AfricaTelephone +27 11 783 0700Fax +27 11 783 3702

www.vukile.co.za

www.vukile.co.za

Documents

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