RE sIl IENT PROPERTY IN cO E Fu ND 10 Y€¦ · Final 134,93 121,35 255,67 230,71 Volume traded 69,1 million units (2011: 79,0 million units) Value traded R2 995,2 million (2011:

10 Years

www.resilient.co.za

RESILIENT PROPERTY INCOME FUND LIMITED

4th Floor Rivonia Village Rivonia Boulevard Rivonia 2191

PO Box 2555 Rivonia 2128

Tel +27 (0)11 612 6800 Fax +27 (0)11 612 6869 2 0 1 2 I N T E G R A T E D R E P O R T

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>> DIaMOND PavILION >> 32 513m2 >> NORThERN CaPE

R e s i l i e n t P R o P e R t y i n c o m e F u n d 2012 INTEGRATED REPORT

FACT SHEET

company name Resilient Property Income Fund Limited

(Registration number: 2002/016851/06)

Registered address 4th Floor Rivonia Village

Rivonia Boulevard Rivonia 2191

(PO Box 2555 Rivonia 2128)

Website address www.resilient.co.za

Year-end 31 December

chairman of the board JJ Njeke

Board of directors JJ Njeke (chairman); Thembi Chagonda; Jorge da Costa; Des de Beer; Andries de Lange;

Marthin Greyling; Nick Hanekom; Bryan Hopkins; Johann Kriek; David Lewis;

Phumelele Msweli; Spiro Noussis; Umsha Reddy; Barry van Wyk

Independent non-executive 7

Non-independent non-executive 2

Executive 5

14

managing director Des de Beer

company secretary Rajeshree Sookdeyu

corporate advisors Java Capital

External auditors Deloitte & Touche

Date of listing 6 December 2002

units in issue 285 744 070 (2011: 280 536 070) (inclusive of BEE SPV)

Gearing ratio 27,9% (2011: 30,5%)

Investment portfolio Direct property R10 894 million / 74,5% of portfolio

(2011: R9 228 million / 76,9% of portfolio)

listed property securities R3 720 million / 25,5% of portfolio

and associate (2011: R2 769 million / 23,1% of portfolio)

unit price (cents per unit) 2012 year 2011 year High 5 600 High 3 739

Low 3 427 Low 2 710

Closing 5 175 Closing 3 475

Distributions (cents) 2012 2011 Interim 120,74 109,36

Final 134,93 121,35

255,67 230,71

Volume traded 69,1 million units (2011: 79,0 million units)

Value traded R2 995,2 million (2011: R2 486,8 million)

Annual general meeting 26 April 2013 at 14h00

(4th Floor Rivonia Village Rivonia Boulevard Rivonia 2191)

Distribution calendar (final distribution for the 2012 financial year)

Last day to trade cum distribution 22 February 2013

Record date 1 March 2013

Distribution payment 4 March 2013

893687 visual IGNITION 011 888 5511

Photographs on ifc, pages 3, 11 and 13, courtesy of Grant Duncan-Smith www.subiacophotography.co.za

1

2 Chairman’s statement

4 Board of directors

10 Scope of the integrated report

12 Strategy

14 Directors’ report

19 Remuneration report

20 Unit performance

21 Analysis of linked unitholders

22 Risk management and key risk factors

24 Corporate governance review

32 Sustainability reporting

34 Five-year review

35 Portfolio statistics

38 Directors’ responsibility for the

annual financial statements

38 Declaration by company secretary

39 Independent auditors’ report

40 Statements of financial position

41 Statements of comprehensive income

42 Reconciliation of profit for the

year to headline earnings and

distributable income

43 Statements of changes in equity

44 Statements of cash flows

45 Notes to the annual financial

statements

74 Schedule of properties

78 Administrative information

79 Corporate diary

80 Notice of annual general meeting of

shareholders and debenture holders

87 Form of proxy

88 Notes to the form of proxy

89 Fact sheet

CONTENTS


2

ChairmaN’S STaTEmENT

REsIlIENT PROPERTy INcOmE fuND (“REsIlIENT”)

On 6 December 2012 resilient celebrateD its tenth

anniversary as a listeD cOmpany On the JOhannesburg

stOck exchange. the success Of resilient can be

attributeD tO the cOmbinatiOn Of a strOng anD

cOmpetent bOarD Of DirectOrs, as well as a fOrmiDable

management team. in his recently publisheD

biOgraphy, the fOunDing chairman Of resilient,

Dr archie nkOnyeni DescribeD resilient’s management

as “a remarkable team Of entrepreneurially minDeD

prOperty OperatOrs”.

the growth in distributions achieved by Resilient throughout

this period is unmatched by its peers. in addition, Resilient was

instrumental in the listing of new europe Property investments plc

(“nepi”) and Fortress income Fund limited (“Fortress”), both of which

have established themselves as highly successful companies in their

target markets. Resilient owns the asset management company of

capital Property Fund (“capital”), the oldest listed Property unit

trust. When Resilient became involved in the management of

capital in may 2004, it had a market capitalisation of R433 million.

this has since grown to over R17 billion.

during the past year, considerable attention was given by the board to

compliance with King iii. Following the retirement of Rory turner at last

year’s annual general meeting (”AGm”), Jorge da costa and Phumelele

msweli have elected not to stand for re-election at this year’s AGm. Jorge

has served on Resilient’s board since listing. through improvon Property

Group, Jorge is acknowledged as the leading developer of industrial

properties in south Africa. As a board member he has provided invaluable

insight and support, particularly as a member of the investment

committee. Phumelele is approaching her ninth year as a director and

has represented the eagle’s eye Woman’s BBBee grouping on the board.

in addition to her board responsibilities, Phumelele served on the

investment and risk committees.

david lewis, a founding director and head of projects for Resilient who

has, due to family commitments, decided to relocate to durban, will

retire from the board at the AGm. david has accepted a directorship with

Property Fund managers (“PFm”), the manager of capital, and his skills

will not be lost to the group. david deserves a large measure of credit for

Resilient’s record of successful developments that were always opened

on time and within approved budgets.

umsha Reddy and spiro noussis joined the board during the year and will

stand for election at this year’s AGm. Both new members bring additional

skills to the board and have already been appointed to various board

sub-committees.

marthin Greyling, Barry van Wyk and myself have served on the Resilient

board since 2002. As called for by King iii, our independence has been

evaluated by the board and all three of us will again stand for re-election

at the AGm.

mfunDisO JOhnsOn ntabankulu (JJ) nJeke

3

Resilient’s learnership programme for five graduates of the university of

the Witwatersrand from previously disadvantaged groups was completed

successfully by all candidates. i am pleased to report that three of the

candidates were appointed to permanent positions within the group.

i wish to extend thanks to management and staff as well as my fellow

directors for their continued hard work and dedication.

JJ Njeke

Independent non-executive chairman

6 February 2013

>> DiamOnD paviliOn >> 32 513m2 >> nOrthern cape


4

DesmOnD (Des) De beer (52)

Managing director and chief executive

officer

bproc mapDate of appointment: July 2002

des spent the first part of his career

in the banking industry, first with

Barclays Bank in south Africa and

later with syfrets that was merged

into nedcor investment Bank (“niB”).

He was appointed General manager

corporate equity and served on the

bank’s executive committee. He has

served on the boards of a number

of listed property companies and he

is currently a director of nepi and

chairs its investment committee.

mfunDisO JOhnsOn ntabankulu (JJ) nJeke (54)


bcompt (hons), hDip tax, ca(sa)Date of appointment: November 2002

JJ was an audit partner at Pwc

and is the past chairman of

the south African institute of

chartered Accountants (“sAicA”).

in addition to serving on the board

of Resilient, he serves on the boards

of Arcelormittal sA, mmi Holdings

limited, mtn Group limited, sasol

limited and Adcorp Holdings

limited.

INDEPENDENT NON-EXECUTIVE

JJ Njeke (chairman), Jorge da Costa, Marthin Greyling, Bryan Hopkins,

Spiro Noussis, Umsha Reddy, Barry van Wyk

NON-INDEPENDENT NON-EXECUTIVE

Thembi Chagonda, Phumelele Msweli

EXECUTIVE

Des de Beer, Andries de Lange, Nick Hanekom, Johann Kriek, David Lewis

BOard Of dirECTOrS

5

JOse JOrge gOncalves Da cOsta (57)

Independent non-executive director

(Portuguese citizen)

Date of appointment: November 2002

Jorge has been in the property

industry for the past 31 years and

is a founding director of improvon

Property Group, developers of prime

industrial properties across south

Africa.

anDries De lange (39)

Executive director and chief operating

officer

ca(sa), cfaDate of appointment: November 2006

After completing his articles,

Andries joined the industrial

development corporation of south

Africa limited (“idc”) and then

nedbank limited where he gained

experience in debt finance, debt and

equity restructurings and private

equity. He joined the Resilient group

in 2004 and is a director of PFm.

marthin petrus greyling (45)


bcom (acc) (hons), ca(sa)Date of appointment: July 2002

marthin started his career in

financial services in 1993 when he

joined the idc. during his tenure

he was, inter alia, involved in debt

and project finance and business

turnarounds. He joined niB in 2001

and is currently a member of the

nedbank capital Private equity

team.

thembakazi iris (thembi) chagOnDa (42)

Non-independent non-executive director

bsoc sci (rhodes university), Diploma in labour lawDate of appointment: August 2008

thembi’s career has been in

human capital management for

the last 16 years. she is currently

managing director of Global

Business solutions, a labour law,

Bee consultancy and training and

development company.


6

bryan DOuglas hOpkins (65)


bcom (hons) accounting and tax, ca(sa)Date of appointment: May 2011

Bryan is a non-executive director

of Holdsport limited, makalani

Holdings limited and Kagiso Asset

management Proprietary limited.

He was previously an executive

director and chief investment

officer of Abvest Associates and

old mutual Asset managers.

Prior to that, he was professor

of Accounting at the university

of cape town. He served on the

Accounting standards committee

of the sAicA and co-authored with

professor GK everingham “Generally

Accepted Accounting Practice –

A south African Viewpoint”.

JacObus JOhann kriek (47)

Executive director

stanford executive programmeDate of appointment: June 2004

Johann has been involved in

retail property management,

development and letting for

27 years with a strong emphasis

on development and redeveloping

underperforming shopping centres.

DaviD JOhn lewis (46)

Executive director

bsc bldg mgt, nDip (real estate), mba (wits cranfield)Date of appointment: July 2002

david started his career with

Wilson Bayly Holmes-ovcon

limited and was responsible for

a number of retail developments

and refurbishment construction

projects. david then joined Boxer

superstores (now part of the

Pick n Pay group) as projects and

development manager and later

the former niB – corporate equity

division. He is a founding executive

director of Resilient and was the

managing director of diversified

Property Fund limited until its

incorporation into Resilient.

nicOlaas (nick) willem hanekOm (33)

Financial director

bacc (hons), ca(sa)Date of appointment: May 2011

nick completed his articles with

Pwc in Johannesburg where after

he joined Pwc london. on his

return to south Africa in August

2005 he was employed by Resilient

as company secretary.

BOard Of dirECTOrS (CONTiNuEd)

7

spirO nOussis (41)


bcom, bacc, ca (sa)Date of appointment: August 2012

spiro has experience in private

equity and investment management.

He was previously managing

director of an information

technology company providing

business solutions for the financial

services industry. since 2005 he has

been involved in property, focusing

on commercial, industrial and retail

opportunities and is currently an

executive director of lodestone

Properties limited.

umsha reDDy (42)


bsc eng (electrical)Date of appointment: March 2012

umsha’s 19 years of work

experience spans both the

engineering and it environments

across energy, telecommunications,

manufacturing, retail, government

and financial industries. Her longest

tenures were with HP and microsoft,

5 years and 8 years respectively. she

is currently employed at sABmiller

as executive head of programme

management for the Business

information systems division.

barry Daniel van wyk (47)


bcom, bacc, ca(sa)Date of appointment: November 2002

Barry heads up Renlia developments

Proprietary limited, a property

investment and development

company primarily focused on

office, industrial and residential

opportunities. He was previously

an executive director of Group Five

limited and managing director of

Group Five developments.

phumelele paula msweli (44)

Non-independent non-executive

director

bsc (hons), msc real estateDate of appointment: December 2004

Phumelele has a strong research

background in various areas,

including facilities management.

she has worked for both public

and private institutions such as the

council for scientific and industrial

Research (Boutek), Gensec Property

services and the department of

Public Works. Phumelele is the

founder of Zibusiso Property

services.


8

aTTENdaNCE aT BOard aNd SuB-COmmiTTEE mEETiNgS

Director BoardInvestmentcommittee

Auditcommittee

Riskcommittee

Nominationcommittee

Remunerationcommittee

social and ethicscommittee

JJ njeke (chairman of the board and nomination committee) 3/5 3/3

thembi chagonda (chairperson of the remuneration committee) 5/5 3/3 2/2 1/1

Jorge da Costa (chairman of the risk committee) 4/5 4/5 1/1 2/2 1/1

des de Beer 5/5 5/5 1/1

Andries de lange 5/5

marthin Greyling (chairman of the social and ethics committee) 4/5 4/4 3/3 2/2 1/1

nick Hanekom 5/5

Bryan Hopkins (1) (chairman of the audit committee) 5/5 4/4 0/0 1/1 1/1

Johann Kriek 5/5

david lewis 4/5

Phumelele msweli 4/5 5/5 0/1

spiro noussis (2) 1/1 0/0

umsha Reddy (3) 4/4 1/1 1/1 1/1

Rory turner (4) 2/2 2/2

Barry van Wyk (chairman of the investment committee) 5/5 5/5 3/4 0/1

(1) Bryan Hopkins was appointed to the nomination committee, remuneration committee and social and ethics committee on 7 August 2012.(2) spiro noussis was appointed to the board and investment committee on 7 August 2012.(3) umsha Reddy was appointed to the board on 7 march 2012 and to the risk committee, remuneration committee and social and ethics committee on 7 August 2012.(4) Rory turner retired from the board on 16 may 2012.

BOard Of dirECTOrS (CONTiNuEd)

9

BENEfiCial uNiThOldiNg Of dirECTOrS aNd OffiCErS

Direct Indirect Total Percentage of At 31 December 2012 holding holding units held issued units

thembi chagonda – 225 135 225 135 0,1%Jorge da costa – 81 463 81 463 –Des de beer 3 256 000 18 305 570 21 561 570 7,5%andries de lange 639 183 2 689 358 3 328 541 1,2%nick hanekom 600 000 905 000 1 505 000 0,5%bryan hopkins – 45 059 45 059 –Johann kriek 1 890 000 812 196 2 702 196 0,9%David lewis 1 370 822 2 663 025 4 033 847 1,4%phumelele msweli – 270 270 270 270 0,1%JJ njeke 30 500 – 30 500 –rajeshree sookdeyu 36 000 – 36 000 –

7 822 505 25 997 076 33 819 581 11,7% Direct Indirect Total Percentage of At 31 December 2011 holding holding units held issued units

thembi chagonda – 225 135 225 135 0,1%Jorge da costa – 81 463 81 463 – des de Beer 3 256 000 17 029 709 20 285 709 7,2%Andries de lange 639 183 2 639 358 3 278 541 1,2%nick Hanekom 600 000 905 000 1 505 000 0,5%Bryan Hopkins – 25 059 25 059 –Johann Kriek 1 890 000 812 196 2 702 196 1,0%david lewis 1 370 822 2 663 025 4 033 847 1,4%Phumelele msweli – 270 270 270 270 0,1%JJ njeke 30 500 – 30 500 –Rajeshree sookdeyu 25 000 – 25 000 –

7 811 505 24 651 215 32 462 720 11,5%

the unitholding of directors and officers has not changed between the end of the financial year and one month prior to the date of the notice of the AGm, other than as follows: Number of units Direct/ (beneficial Date Director Associate indirect interest)

6 February 2013 des de Beer suni trust indirect 41 9797 February 2013 des de Beer suni trust indirect 125 4727 February 2013 Andries de lange the nano trust indirect 50 0007 march 2013 des de Beer Hollyrood investments (Pty) ltd indirect 500 0007 march 2013 Andries de lange the nano trust indirect 400 0007 march 2013 nick Hanekom eaglelet investments (Pty) ltd indirect 200 0007 march 2013 Johann Kriek Kibera investments (Pty) ltd indirect 150 0007 march 2013 david lewis Wild Break 250 (Pty) ltd indirect 200 0007 march 2013 Rajeshree sookdeyu – direct 25 00011 march 2013 des de Beer Hollyrood investments (Pty) ltd indirect 10 000

R E S I L I E N T P R O P E R T Y I N C O M E F U N D 2012 INTEGRATED REPORT

10

SCOPE OF THE INTEGRATED REPORT

Resilient is pleased to present its second integrated report to stakeholders

in accordance with the King Report on Governance for South Africa

(“King III”). Resilient’s integrated report aims to provide stakeholders with

an understanding of the group’s strategic objectives, challenges to which

Resilient is exposed as well as the group’s governance framework.

The information included in the integrated report has been provided in

accordance with International Financial Reporting Standards (“IFRS”),

the South African Companies Act, 2008, the JSE Listings Requirements,

King III, the guidance provided in the Integrated Reporting Committee of

South Africa’s Framework for Integrated Reporting and the Integrated

Report Discussion Paper (Framework) released on 25 January 2011.

This integrated report covers the financial and non-financial performance

of operating subsidiaries over whose operating policies and practices

Resilient exercises control or significant influence, as indicated in

note 10 on page 55. Resilient’s operations are in South Africa.

In determining what disclosure should be made in the integrated report,

the board considered what stakeholders would consider material.

The sustainability reporting guidelines issued by the Global Reporting

Initiative define materiality as “information in a report that should cover

topics and indicators that reflect the organisation’s significant economic,

environmental, and social impacts or that would substantively influence

the assessments and decisions of stakeholders.” The board has applied

this definition in determining the contents of this integrated report.

STAKEHOLDER PROFILE

Resilient

Property Income

Fund Limited’s

Stakeholders

Employees

Co-owners

ORGANISATIONAL STAKEHOLDERS

Communities

Government

Local authorities

Regulatory bodies

Industry organisations

SOCIETAL STAKEHOLDERS

Tenants

Suppliers

Property managers

Financiers

Investors

ECONOMIC STAKEHOLDERS

11

bOarDwalk >> richarDs bay kwazulu-natal >> 40 700m2 lettable space >> 5 000 parking bays>> bOarDwalk shOpping centre >> 65 891m2 >> kwazulu-natal


12

Our uNiThOldErS

We strive to deliver both capital and distribution growth to our

unitholders.

Our TENaNTS

Resilient’s management team fosters long-term relationships with the

major national retailers and other smaller tenants, recognising that

there is an important symbiotic relationship between their success and

ours.

Our ShOppiNg CENTrES

We oversee the effective management of our shopping centres

through our managing agents ensuring, through our experienced

and dedicated asset managers, that the centres are well maintained

and that tenant issues are handled quickly and professionally. We are

constantly assessing opportunities for upgrades, refurbishments and

redevelopments of our centres.

Our iNvESTmENTS

our management team is constantly investigating potential investments

that will provide sustainable, long-term growth that exceeds industry

norms whether in the form of a potential development, purchase of an

existing property or through investment in listed property stocks.

iNTErNaTiONal divErSifiCaTiON Of Our pOrTfOliO

during the year, the board approved the investment of R600 million

in nigeria via the Resilient Africa structure. Resilient has a substantial

investment in nepi of R1 140 million and an investment of

R222 million in Rockcastle (see note 4 on page 53) both of which provide

exposure to different segments of offshore markets. the intention is to

diversify the geographic spread of the portfolio and to invest in markets

with high growth expectations.

fuNdiNg Our BuSiNESS

We manage our financing costs and concentration risk by utilising

a diversity of funding sources and through hedging our exposure to

interest rate risk.

Our BuSiNESS parTNErS

We enter into developments with reputable partners with whom we

share values and goals.

STraTEgY

13

>> bOarDwalk shOpping centre >> 65 891m2 >> kwazulu-natal


14

dirECTOrS’ rEpOrT

1 uNiT STruCTurE

Resilient’s capital structure comprises of linked units. each linked unit consists of one ordinary share that is indivisibly linked to one subordinated variable rate

debenture.

2 NaTurE Of ThE BuSiNESS

Resilient is an internally asset managed property loan stock company listed on the Jse limited. its strategy is to invest in dominant regional retail centres

tenanted predominantly by national retailers.

3 diSTriBuTaBlE EarNiNgS aNd COmmENTarY ON rESulTS

total distributions for 2012 were 255,67 cents per linked unit, an increase of 10,82% over the distributions for the previous financial year, which is in line with

the forecast growth in distributions of approximately 10%. the distribution for the six month period to december 2012 was 134,93 cents and that of the interim

period was 120,74 cents.

this pleasing performance was achieved mainly due to the strong performance of Resilient’s property portfolio. turnover rentals received increased from

R16,4 million to R22,1 million which reflects increasing trading densities being achieved. this bodes well for rental escalations in the future. Resilient continued

to benefit from the reduction in the cost of borrowings as a result of the expiring interest rate swaps being replaced by new interest rate swaps at lower rates.

the group’s equity investments also performed ahead of budget, particularly the investment in nepi where the Rand depreciated against the euro from the

budgeted rate of R10,00. Resilient does not hedge its currency exposure.

the best performing malls were Brits mall, diamond Pavilion, the Grove, Village mall Kathu and mall of the north, all of which achieved significant growth in

footcount and increases in trading densities. Brits mall and mall of the north are relatively new centres and have continued to establish dominance in their

markets. tzaneng mall and Jabulani mall achieved limited growth. tzaneng mall was affected by the increased dominance of mall of the north and similarly

Jabulani mall by the opening of Protea Glen, a new mall in soweto.

4 prOpErTY dEvElOpmENTS

Secunda Mall

Following the approval of additional rights and due to strong tenant demand, the size of the development was increased to a GlA of 54 000m2 compared with

the 45 000m2 initially planned. the mall will be anchored by checkers Hypermarket, edgars, Game, Pick n Pay and Woolworths and will include all major national

clothing retailers. the mall is scheduled to open in october 2013 and is on target to achieve a yield of 9% on the cost of R262 million for Resilient’s portion.

Resilient has a 40% interest in the property and sasol Pension Fund and local consortiums own 40% and 20% respectively.

Soshanguve Crossing

Resilient has a 55% interest in this retail property in soshanguve, north of Pretoria. the proposed 35 000m2 mall will have four anchors namely edgars, Game,

shoprite and spar and is projected to yield 8% on a budgeted cost of R261 million for Resilient’s portion. earthworks are nearing completion and the mall is

scheduled to open in April 2014. the board has agreed to a reduced initial yield to accommodate a fourth anchor ensuring dominance in the mall’s target market.

Sterkspruit Plaza

this 10 700m2 retail centre anchored by shoprite opened on schedule in october 2012 at its projected return of 8%. the centre performed well during november

and december and a second phase will be considered should this performance continue. Resilient owns 82% of the property with local partners owning the

balance.

Tubatse Crossing

the construction of this 44 500m2 GlA regional mall commenced in may 2012 and the first phase is scheduled to open in may 2013. the mall will be anchored

by edgars, Game, Pick n Pay and shoprite and will include all major national clothing retailers. the development is projected to achieve a yield of 9% at a cost of

R580 million. After losing an application for an interdict against Resilient with costs, the litigation by a competing developer has not yet proceeded.

5 prOpErTY EXTENSiONS

Circus Triangle Mthatha

A 7 100m2 GlA extension to the mall to accommodate edgars and the expansion of shoprite and a number of the national clothing retailers commenced in

July 2012 and is on schedule to open in may 2013. As the extension involves building structured parking, a yield of 8% is projected on the cost of R155 million.

in addition to increasing its offering, the expansion will significantly improve both the horizontal and vertical reticulation of the mall.

The Grove

An 11 600m2 extension to the Grove to introduce additional entertainment (including 8 cinemas and an ice rink) has commenced and is scheduled for completion

in november 2013. the extension is budgeted to achieve a dilutionary yield of 6%. it is anticipated that the increased entertainment offering will result in a

significant increase in footcount and that the resulting higher trading densities will compensate for the initial low yield.

Highveld Mall

the phased extension to Highveld mall opened on schedule in november 2012 within budget at a yield of 9%. Game, HiFi corporation and a number of leading

fashion brands were introduced. incredible connection has been relocated and expanded and the @Home was expanded to an @Homelivingspace concept

store. A number of new brands including earthchild, Factorie, Forever new, Fabiani, Guess and levisons were introduced. A further extension to increase the size

of edgars and truworths has commenced and is scheduled for opening in July 2013. this extension is also projected to yield 9%. Resilient has a 60% interest in

Highveld mall.

15

Jabulani Mall

construction of a 2 350m2 GlA extension to Jabulani mall has commenced and is scheduled for completion in november 2013. this extension is budgeted to cost

R12 million for Resilient’s 55% interest and to achieve a yield of 11%.

Northam Plaza

An 8 300m2 GlA extension to accommodate Game has been approved at a projected yield of 8% on a cost of R103 million. construction has commenced and is

scheduled for completion in october 2013.

Village Mall Kathu

construction of the 7 300m2 GlA extension to introduce Game as a further anchor has commenced. completion is scheduled for november 2013 at a projected

cost of R110 million and a yield of 7%.

Rivonia Village

the 2 200m2 GlA extension to the centre to accommodate checkers commenced in november 2012 and is due for completion in november 2013. A yield of 7%

is projected on the cost of R53 million, however, this excludes income from the additional 64 parking bays being created. the extension will introduce a second

anchor and will improve vertical reticulation.

6 rESiliENT afriCa

the board has committed R600 million to this initiative with standard Bank and shoprite checkers as partners. considerable progress has been made in

establishing the necessary legal structures in mauritius and nigeria to enable the partnership to commence operations. Resilient Africa has entered into

memoranda of understanding with five nigerian land owners.

7 iNvESTmENTS

Dec 2012 dec 2011

Number of carrying value number of carrying value

Investment units/shares (R’000) units/shares (R’000)

capital (cPl) 181 300 000 1 916 341 208 000 000 1 830 400

Fortress B (FFB) 63 000 000 441 000 63 000 000 318 150

nepi (neP) 21 517 635 1 140 434 19 100 000 620 750

Rockcastle (Roc) 22 000 000 222 200 – –

3 719 975 2 769 300

subsequent to the financial year end, Resilient sold the management company of its etF business, Proptrax, to Grindrod Bank limited for R4 million. Resilient will

no longer be involved in the management of the business but will retain a 50% economic interest. the sale is subject to suspensive conditions.

8 vaCaNCiES

Vacancies improved from 1,9% at december 2011 to 1,7% at december 2012. Apart from the Galleria and Arbour crossing, most of the vacancies are planned

vacancies to accommodate extensions and redevelopments.

9 BOrrOWiNgS

Five year secured facilities of R965 million and R800 million were accepted from standard Bank and RmB respectively to repay expiring facilities and fund the

development pipeline.

Resilient has utilised R1,804 billion of its R2 billion unsecured dmtn programme. the intention is to finance 50% of Resilient’s borrowings on an unsecured basis

and the board has approved the increase of the dmtn programme from the current R2 billion to R3 billion.


16

dirECTOrS’ rEpOrT (CONTiNuEd)

10 faCiliTiES aNd iNTErEST raTE dErivaTivES

AmountAveragemargin

facility expiry R’million over Jibar2013 1 555 1,02%2014 575 1,51%2015 165 1,45%2016 1 221 1,62%2017 959 1,80%2018 1 253 1,65%2019 327 1,61%

6 055 1,48%

AmountAverage

swapInterest rate swaps expiry R’million rate2013 300 7,04%2014 650 7,42%2015 600 7,71%2016 600 7,42%2017 600 7,80%2018 600 7,44%2019 600 6,80%2020 120 6,53%

4 070 7,38%

AmountAverage

capInterest rate caps expiry R’million rate2013 50 11,55%2017 400 5,90%

450 6,52%

the all-in weighted average cost of funding of Resilient was 8,62% at 31 december 2012.

11 SummarY Of fiNaNCial pErfOrmaNCE

Dec 2012 Jun 2012 dec 2011 Jun 2011

distribution per linked unit (cents) 134,93 120,74 121,35 109,36units in issue 285 744 070 280 536 070 280 536 070 260 444 832Property operations net asset value* R34,51 R30,55 R29,32 R26,80 Gearing ratio** 26,6% 28,3% 28,8% 27,7%units in issue 285 744 070 280 536 070 280 536 070 260 444 832consolidated net asset value* R33,92 R30,13 R29,17 R26,67 Gearing ratio** 27,9% 29,9% 30,5% 29,7%units in issue 274 933 259 269 725 259 269 725 259 249 634 021

*Net asset value includes total equity attributable to equity holders and linked debentures.**The gearing ratio is calculated by dividing the total interest-bearing borrowings by the total assets.

11.1 to comply with financial reporting requirements the group will account for entities that do not form part of its operations, do not operate under its operating policies and whose businesses, risk profiles and debt levels are not comparable with its own. disclosure under “Property operations” excludes eagle’s eye investments Proprietary limited (“Bee sPV”).

11.2 on 27 June 2006 10 810 811 linked units were issued to Bee sPV and Resilient is standing surety for the funding obligations of Bee sPV in acquiring these units. in terms of iFRs the issue did not take place and the essence of the transaction was that the Bee shareholders received a right/option to acquire linked units in Resilient at a future date at a predetermined price. As a consequence the issue of linked units has been eliminated in the preparation of these financial statements. the right/option the Bee shareholders have acquired has a value of R337 640 000 (2011: R150 350 000). the value of this right/option will be considered on an ongoing basis and changes in its fair value are accounted for through profit and loss.

17

>> the grOve >> 41 475m2 >> gauteng


18

the following table indicates the effect of the Bee transaction on the group financial statements (the column “Property operations” indicates Resilient’s results

had the Bee transaction been accounted for as an issue for value):

Property consolidated BEE sPV operations

Dec 2012 R’000 R’000 R’000statement of comprehensive incomeFair value loss on Bee instrument (187 290) 187 290 –

Finance costs

– interest on borrowings (365 137) 18 315 (346 822)

– interest to linked debenture holders (696 633) (27 640) (724 273)

income tax expense (525 127) 228 (524 899)

statement of financial positioncurrent assets

– trade and other receivables 82 412 (1 751) 80 661

share capital 2 749 108 2 857

share premium 2 712 168 142 270 2 854 438

non-distributable reserves 5 291 797 341 788 5 633 585

non-current liabilities

– linked debentures 1 319 680 51 892 1 371 572

– interest-bearing borrowings (non-current and current) 4 437 502 (214 420) 4 223 082

Bee instrument 337 640 (337 640) –

current liabilities

– trade and other payables 359 021 (336) 358 685

– linked debenture interest payable 370 967 14 587 385 554

11.3 The intangible asset relates to the management contract of PFM, the management company of Capital, and is carried at cost.

12 NET rENTal aNd rElaTEd rEvENuE

net rental and related revenue consists of:

year ended year endedDec 2012 dec 2011

R’000 R’000

Basic contractual income 838 142 640 708

straight-lining of rental revenue adjustment 36 765 32 761

turnover rental 22 052 16 366

net recovery – electricity 14 946 12 911

Recovery – other 27 671 17 820

net refuse, rates, water and sewerage charges (21 108) (13 529)

Repairs and maintenance, cleaning and security costs (61 025) (44 415)

Property management fee (20 987) (18 225)

marketing (8 436) (6 274)

staff costs (13 273) (8 670)

insurance (3 724) (3 707)

letting commission (1 289) (2 120)

tenant installation costs (8 233) (4 598)

tenant arrears written off (2 477) (5 576)

other expenses (19 597) (10 029)

779 427 603 423

13 prOSpECTS

the board is confident that growth in distributions of approximately 10% will be achieved for the 2013 financial year. the growth is based on the assumptions

that a stable macro-economic environment will prevail, no major corporate failures will occur and that tenants will be able to absorb the recovery of rising utility

costs. Budgeted rental income was based on contractual escalations and market related renewals. this forecast has not been audited or reviewed by Resilient’s

auditors.

dirECTOrS’ rEpOrT (CONTiNuEd)


19

rEmuNEraTiON rEpOrT

the remuneration committee determines the remuneration policy of Resilient and is mandated by the board to set the remuneration and incentivisation of all employees, including executive directors. in addition, the remuneration committee recommends directors’ fees payable to non-executive directors and members of board sub-committees for unitholder approval at the AGm. the remuneration committee members are thembi chagonda, Jorge da costa, marthin Greyling, Bryan Hopkins and umsha Reddy. Attendance of directors at the various board and sub-committee meetings is disclosed on page 8.

the remuneration policy is aligned with the strategic objectives of the company to create long-term, sustainable value for stakeholders. Remuneration is a combination of salary, short-term incentivisation and long-term incentivisation in order to attract and retain motivated, high-calibre executives whose interests are aligned with the interests of unitholders.

executive salaries are competitive relative to the market and increases are determined with reference to individual performance, inflation and market-related factors on a total cost-to-company basis. Annual increases are effective 1 January each year. executive directors do not receive directors’ or sub-committee fees. there is no retirement fund for employees or executive directors.

Bonuses based on individual and group performance is an effective means of short-term incentivisation. these are awarded based on the performance of the individual and the group taking into account market conditions.

the aim of long-term incentivisation is to promote sustainable growth in distribution. long-term incentivisation is achieved through the allocation of units to employees through the Resilient unit Purchase trust. the remuneration committee decides on the number of units to be allocated based on individual performance. Resilient Property income Fund issues units to the Resilient unit Purchase trust. on acceptance of the units by the individual, the Resilient unit Purchase trust provides loan financing to acquire the units.

due to the management contract between Resilient and PFm, the management company of capital, Resilient employees are responsible for managing capital.

Remuneration for the top three earning employees has not been disclosed due to the highly competitive market in which Resilient operates and the board does not consider it appropriate for privacy reasons.

rEmuNEraTiON Of NON-EXECuTivE dirECTOrSnon-executive directors’ remuneration consists of an annual fee plus sub-committee membership fees. the non-executive directors’ remuneration is approved by unitholders at the AGm.

for services For servicesas a director as a director

(paid by the company) (paid by the company)Dec 2012 dec 2011

R’000 R’000

JJ njeke (chairman of the board and the nomination committee)& 273 250

thembi chagonda (chairperson of the remuneration committee)&@? 273 250

Jorge da costa (chairman of the risk committee)#@^? 436 400

marthin Greyling (chairman of the social and ethics committee)$&@? 354 325

Bryan Hopkins (chairman of the audit committee)(1)$&@? 305 156sydney malabie(2) – 66Phumelele msweli#^ 354 325spiro noussis(3)# 109 –

umsha Reddy(4)^@? 222 –

Rory turner(5)$ 102 250Barry van Wyk (chairman of the investment committee)$#^ 436 400

2 864 2 422

(1) Bryan Hopkins was appointed to the board and the audit committee on 17 may 2011 and to the nomination committee, remuneration committee and social and ethics committee on 7 August 2012.

(2) sydney malabie retired from the board on 17 may 2011.(3) spiro noussis was appointed to the board and investment committee on 7 August 2012.(4) umsha Reddy was appointed to the board on 7 march 2012 and to the risk committee, remuneration committee and social and ethics committee on 7 August 2012.(5) Rory turner retired from the board on 16 may 2012.$ Member of the audit committee^ Member of the risk committee# Member of the investment committee@ Member of the remuneration committee& Member of the nomination committee? Member of the social and ethics committee

rEmuNEraTiON Of EXECuTivE dirECTOrSRemuneration Bonus Remuneration Bonus

(paid by subsidiariesin the group)

(paid by subsidiaries in the group)

(paid by subsidiariesin the group)

(paid by subsidiaries in the group)

Dec 2012 Dec 2012 dec 2011 dec 2011R’000 R’000 R’000 R’000

des de Beer 2 895 357 2 680 195Andries de lange 2 024 283 1 917 117nick Hanekom(1) 1 368 203 694 72Johann Kriek 2 277 154 1 936 96david lewis 1 987 187 2 082 96

10 551 1 184 9 309 576

(1) nick Hanekom was appointed to the board on 17 may 2011.

the group did not pay any fees or benefits to directors other than the remuneration as disclosed in the tables above.


20

uNiT pErfOrmaNCE

closing price (cents)

2012 5 1752011 3 4752010 3 2452009 2 6002008 2 4002007 2 7002006 1 9402005 1 4002004 9852003 760

ClOSiNg priCE

Value traded (R’million)

2012 2 995,22011 2 486,8 2010 1 991,0 2009 1 837,5 2008 1 583,6 2007 1 440,1 2006 1 018,8 2005 666,4 2004 391,0 2003 (13 months) 361,5

Volume traded (million)

2012 69,12011 79,0 2010 68,3 2009 76,9 2008 74,8 2007 59,4 2006 59,8 2005 59,4 2004 51,1 2003 (13 months) 64,2

rElaTivE pErfOrmaNCE

■ RESILIENT total return ■ RESILIENT price ■ PLS total return ■ PLS price

the board of directors is committed to creating sustainable stakeholder value by managing the portfolio and by maximising returns on the core assets.

the graphs below indicate the unit price performance of Resilient as well as the performance of Resilient units compared to the Jse south African Property loan

stock index on both a price return and total return basis. the performance of the Resilient units are indexed using a base of 100 on 1 January 2003.

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

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5 500

2004 2005 2006 20072003 2008 2009 2010 2011 2012

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1 000

1 200

1 400

1 600

1 800

2 000

2 200

0

2004 2005 2006 20072003 2008 2009 2010 2011 2012

cent

s

0

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1 500

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2 500

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3 500

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2004 2005 2006 20072003 2008 2009 2010 2011 2012

200

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1 000

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2004 2005 2006 20072003 2008 2009 2010 2011 2012

%


21

aNalYSiS Of liNkEd uNiThOldErS

uNiThOldEr SprEad aT 31 dECEmBEr 2012 aS dEfiNEd iN TErmS Of ThE JSE liSTiNgS rEQuirEmENTS

Number of Number of Percentage ofunitholders units held issued units

Public 3 283 234 852 925 82,2%

directors and employees 130 50 891 145 17,8%

3 413 285 744 070 100,0%

Number of Number of Percentage ofsize of holding unitholders units held issued units

up to 2 500 units 1 776 2 099 058 0,7%

2 501 to 10 000 units 938 4 718 758 1,7%

10 001 to 100 000 units 453 14 051 636 4,9%

100 001 to 1 000 000 units 182 64 322 646 22,5%

1 000 001 to 3 500 000 units 49 84 727 283 29,7%

more than 3 500 000 units 15 115 824 689 40,5%

3 413 285 744 070 100,0%

Number of Percentage ofRegistered unitholders owning 5% or more of issued units units held issued units

capital Property Fund 16 200 000 5,7%

16 200 000 5,7%

Number of Percentage ofcontrol of more than 5% of issued units units controlled issued units

stAnliB 39 340 373 13,8%

des de Beer 24 161 570* 8,4%

investec 17 569 775 6,1%

capital Property Fund 16 200 000 5,7%

97 271 718 34,0%

* Includes the 50% non-beneficial holding of Optimprops 3 Proprietary Limited.


22

riSk maNagEmENT aNd kEY riSk faCTOrS

Risk is the volatility of unexpected outcomes. Within the Resilient framework, this would specifically relate to the adverse impact on the value of its assets, equity

or earnings. Risk management is the discipline by which these risks are identified, assessed and prioritised. it is essential to understand the multiple dimension

of risk in order to manage these effectively, with the aim of increasing unitholder value and gaining a competitive advantage.

Risk management is essential for improved performance, growth and sustainable value creation. the process for identifying and managing risks has been set by

the board. the board of directors has overall responsibility for risk management but has delegated the responsibility for monitoring risk management processes

and activities to Resilient’s risk committee. the day-to-day responsibility for risk management, including maintaining an appropriate internal control framework,

remains the responsibility of Resilient’s executive management.

Risk management is an integral part of the group’s strategic management and is the mechanism through which risks associated with the group’s activities are

addressed. the key objectives of the risk management system include:

• the identification, assessment and mitigation of risks on a timely basis;

• the provision of timely information on risk situations and appropriate risk responses;

• the identification of potential opportunities which would result in increasing firm value; and

• the instillation of a culture of risk management throughout the Resilient group.

Risks are monitored via the risk management framework in terms of which management identifies risks, documents these in the risk matrix and assesses

the probability of their occurrence as well as the potential impact of the risk on the organisation. each identified risk is then managed and, where possible,

mitigated. due to the dynamic nature of the economic environment in which Resilient operates, risks, and the impact thereof, change constantly. Accordingly,

risk management is a dynamic and ongoing discipline which is continuously adapted to its environment.

the risk management framework is presented to the risk committee on an annual basis.

Key risk Business impact mitigation of the risksouth Africa is experiencing significant increases

in administered prices including electricity, rates

and municipal levies.

Resilient is bearing the increased cost of utilities

that cannot be recovered from tenants. this

reduces distributable income.

energy saving technologies are being implemented

throughout the portfolio in order to reduce utility

costs.

the ability of tenants to absorb the increasing cost

of occupancy is limited.

the increased cost of occupancy may result in

more tenant business failures and legal action

leading to higher vacancies and increased legal

costs and bad debts.

tenant arrears are closely monitored. Asset

managers meet with tenants on a regular basis in

order to mitigate legal action and bad debts.

local authorities’ service delivery is deteriorating

and many local authorities are not billing correctly.

A number of local authorities no longer read

electricity or water meters timeously.

Resilient is not being billed the correct utility

amounts on a monthly basis.

Resilient has installed its own meters and

employed third party meter readers. Recoveries

from tenants are based on this information rather

than the billings received from local authorities.

the difficult economic climate makes the letting of

vacant space challenging.

Vacant space reduces rental income and expenses

are incurred regardless of whether the property is

tenanted. this results in less distributable income.

Asset managers meet with tenants on a regular

basis to ensure that their concerns are addressed.

Rentals are offered at market related rates and

incentives are offered to brokers in order to let the

vacancies. Buildings are well maintained.

deterioration in the company’s credit profile, a

decline in debt market conditions or a general

rise in interest rates could impact the cost and

availability of funding.

the cost of financing increases substantially

reducing distributable income.

the group monitors its key financial ratios and

seeks to maintain a strong investment grade credit

rating. interest rate risk is mitigated through the

use of interest rate swaps and caps.

development projects fail to deliver expected

returns due to increased costs or delays.

Resilient may suffer reputational damage as well

as financial loss if developments are not completed

timeously and within budget. the majority of

developments are done via joint ventures and

delays may lead to legal disputes.

Resilient has an in-house development team that

closely monitors the progress and costs of each of

its developments. Fixed price contracts are entered

into with reputable construction companies.

the underperformance of property managers

may result in inaccurate recovery of revenue and

incorrect reporting.

inaccurate billing of tenants and reporting. compliance with service level agreements is

monitored regularly. management reviews

monthly reports and meets with the property

managers on a regular basis.

23

Key risk Business impact mitigation of the riskinability to refinance debt at acceptable rates and

over-exposure to a single financial institution.

Higher finance costs result in lower distributable

income.

concentration exposure to one financial

institution is avoided. Resilient has implemented

a dmtn programme which will assist in reducing

concentration.

significant volume of leases expiring in a specific

period

Rental income may be eroded due to new leases

or renewals at lower rentals than previously

achieved. Vacancies may not be let timeously thus

reducing distributable income.

Asset and property managers closely monitor

lease expiries and begin negotiations with

tenants in advance of the expiry. All rentals are

done at market related rates. Resilient actively

markets all vacant space.

Business continuity risk Business interruption may have a severe impact

on the operations of Resilient and may reduce

distributable income.

Resilient has a business continuity plan which

includes the daily backup of data which is tested

regularly. the majority of property management

functions are outsourced to third parties.

Retention of key staff skilled and experienced staff may not be retained. Key staff are remunerated through the

incentivisation scheme as well as ad hoc bonuses.

destruction of assets Buildings destroyed due to force majeure, fire etc

and as a result income cannot be generated from

tenants.

insurance cover is carefully monitored to ensure

that it is sufficient. the insurable amount is

based on replacement valuations obtained from

an independent valuer. Resilient uses reputable

underwriters with sufficient financial backing to

sustain the cover paid for.

Physical deterioration of properties rendering

them untenantable.

Properties that have physically deteriorated will be

untenantable resulting in decreased distributable

income.

Asset managers perform regular property

inspections as do the property managers.


24

COrpOraTE gOvErNaNCE rEviEW

the board of directors endorse the code of corporate practices and

conduct as set out in the King iii report and confirms that the group is

compliant with the provisions thereof. the board has been addressed by

independent consultants to ensure that all directors are fully conversant

with best practice and current thinking with regard to corporate

governance.

COmpOSiTiON Of ThE BOard Of dirECTOrS

the board comprises five executive directors, seven independent non-

executive directors and two non-independent non-executive directors.

All directors serve for a maximum period of three years and are subject

to retirement by rotation and re-election by members in general meeting.

Board appointments are made in terms of the policy on nominations and

appointments, such appointments are transparent and a matter for the

board as a whole.

there are no fixed term contracts for executive directors and the notice

period for termination or resignation is one calendar month. there is no

restraint of trade period for executive directors.

Rory turner retired from the board on 16 may 2012 to focus on his

personal business interests. umsha Reddy and spiro noussis were

appointed to the board on 7 march 2012 and 7 August 2012 respectively.

rOlE Of ThE dirECTOrS

ultimate control of the company rests with the board of directors while

the executive management is responsible for the proper management of

the company. to achieve this, the board is responsible for establishing

the objectives of the company and setting a philosophy for investments,

performance and ethical standards. Although quarterly board meetings

are arranged every year, additional meetings are called should

circumstances require it. Five board meetings were called during the

2012 financial year.

in 2012, the chairman with the assistance of the company secretary, led a

formal review of the effectiveness of the board and its committees. each

director completed a detailed evaluation questionnaire and an analysis

of the findings was presented to the board. there was agreement that

the board was operating effectively. the results were positive and action

plans were agreed upon where required.

fuNCTiONS Of ThE BOard

the board acknowledges that it is responsible for ensuring the following

functions as set out in the board charter:

• good corporate governance and implementation of the code of

corporate practices and conduct as set out in the King III report;

• that the group performs at an acceptable level and that its affairs are

conducted in a responsible and professional manner; and

• the board recognises its responsibilities to all stakeholders.

25

>> mall Of the nOrth >> 76 748m2 >> limpOpO


26

rESpONSiBiliTiES Of ThE BOard

Although certain responsibilities are delegated to committees or management executives, the board acknowledges that it is not discharged from its obligations

in regard to these matters.

the board acknowledges its responsibilities as set out in the board charter in the following areas:

• the adoption of strategic plans and ensuring that these plans are carried out by management;

• monitoring of the operational performance of the business against predetermined budgets;

• monitoring the performance of management at both operational and executive level;

• ensuring that the group complies with all laws, regulations and codes of business practice; and

• ensuring a clear division of responsibilities at board level to ensure a balance of power and authority in terms of group policies.

iNdEpENdENCE Of ThE dirECTOrS

the board of directors’ independence from the executive management team is ensured by the following:

• separation of the roles of chairman and managing director, with the chairman being independent;

• the board being dominated by independent non-executive directors;

• the audit, investment, nomination, risk, remuneration and social and ethics committees having a majority of independent directors;

• non-executive directors not holding service contracts;

• all directors having access to the advice and services of the company secretary; and

• with prior agreement from the chairman, all directors are entitled to seek independent professional advice concerning the affairs of the company at the

company’s expense.

the following non-executive directors chair the various sub-committees of the board:

• Audit Bryan Hopkins (independent)

• Investment Barry van Wyk (independent)

• Nomination JJ Njeke (independent)

• Risk Jorge da Costa (independent)

• Remuneration Thembi Chagonda (non-independent)

• Social and ethics Marthin Greyling (independent)

the independence of the non-executive directors was assessed and seven are considered to be independent in terms of the requirements of King iii. independence

evaluations are done annually.

Jorge da costa, marthin Greyling, JJ njeke and Barry van Wyk have served on the board as independent non-executive directors for ten years. A rigorous

assessment of the independence of these directors has been completed and the criteria used to assess their independence were as set out in King iii as follows:

• whether the director is a representative of a shareholder who has the ability to control or significantly influence management or the board;

• whether the director has a direct or indirect interest in the company (including any parent or subsidiary in a consolidated group with the company) which

exceeds 5% of the group’s total number of shares in issue;

• whether the director has a direct or indirect interest in the company which is less than 5% of the group’s total number of shares in issue, but is material to

the director’s personal wealth;

• whether the director has been employed by the company or the group of which it currently forms part of in any executive capacity, or appointed as the

designated auditor or partner in the group’s external audit firm, or senior legal adviser for the preceding three financial years;

• whether the director is a member of the immediate family of an individual who is or has during the preceding three financial years been employed by the

company or the group in an executive capacity;

• whether the director is a professional adviser to the company or group other than in the capacity as a director;

• whether the director is free from any business or other relationship (contractual or statutory) which could be seen by an objective outsider to interfere

materially with the director’s capacity to act in an independent manner, such as being a director of a material customer or supplier to the company; and

• whether the director receives remuneration contingent upon the performance of the company.

the board assessed the independence of the non-executive directors and all of these four directors complied with the above independence criteria.

the assessments indicated that the independence of character and judgement of Jorge da costa, marthin Greyling, JJ njeke and Barry van Wyk is not impaired or

in any way affected by length of service. independent directors who have served on the board for nine years or longer will stand for re-election on an annual basis.

dirECTOrS’ iNTErESTS

A full list of directors’ interests is maintained and directors certify that the list is correct at each board meeting.

directors recuse themselves from any discussion and decision on matters in which they have a material financial interest.

COrpOraTE gOvErNaNCE rEviEW (CONTiNuEd)

27

audiT COmmiTTEE

the primary role of the audit committee is to ensure the integrity of financial reporting and the audit process. in pursuing these objectives, the audit committee

oversees relations with the external auditors. the committee also assists the board in discharging its duties relating to the safeguarding of assets, the operation

of adequate systems and internal control processes, overseeing the preparation of accurate financial reports and statements in compliance with all applicable

legal requirements and accounting standards, ensuring compliance with good governance practices and nomination of external auditors. the role of the audit

committee has been codified in the audit committee charter which has been approved by the board. this charter has been aligned with the requirements of

King iii and the companies Act.

the audit committee presently comprises: marthin Greyling (appointed 13 november 2002), Bryan Hopkins (chairman) (appointed 17 may 2011) and Barry van

Wyk (appointed 1 december 2010), all of whom are independent non-executive directors. the managing director, financial director and company secretary attend

the committee meetings as invitees. the committee members have unlimited access to all information, documents and explanations required in the discharge

of their duties, as do the external auditors.

the board, in consultation with the audit committee chairman, makes appointments to the committee to fill vacancies. members of the audit committee are subject

to re-election by members in general meeting on an annual basis. the board has determined that the committee members have the skills and experience necessary

to contribute meaningfully to the committee’s deliberations. in addition, the chairman has requisite experience in accounting and financial management.

the committee met four times during the financial year.

the audit committee has satisfied itself that no breakdown in accounting controls, procedures and systems has occurred during the year under review.

in fulfilling its responsibility of monitoring the integrity of financial reports to unitholders, the audit committee has reviewed accounting principles, policies

and practices adopted in the preparation of financial information and has examined documentation relating to the annual integrated report and interim

financial report. the clarity of disclosures included in the financial statements was reviewed by the audit committee, as was the basis for significant estimates

and judgements. the audit committee is further satisfied that the financial director, nick Hanekom, is sufficiently competent and that the finance function has

adequate resources and sufficient expertise.

it is the function of the committee to review and make recommendations to the board regarding interim financial results and the integrated report prior to

approval by the board.

the audit committee has complied with its legal, regulatory and other responsibilities. the audit committee recommended the integrated report to the board for approval.

EXTErNal audiT

A key factor that may impair auditors’ independence is a lack of control over non-audit services provided by the external auditors. in essence, the external

auditors’ independence is deemed to be impaired if the auditors provide a service which:

• results in auditing of own work by the auditors;

• results in the auditors acting as a manager or employee of the group;

• puts the auditors in the role of advocate for the group; or

• creates a mutuality of interest between the auditors and the group.

the company addresses this issue through three primary measures, namely:

• disclosure of the extent and nature of non-audit services;

• the prohibition of selected services; and

• prior approval by the audit committee of non-audit services.

other safeguards encapsulated in the policy include:

• the external auditors are required to assess periodically, in their professional judgement, whether they are independent of the group;

• the audit committee ensures that the scope of the auditors’ work is sufficient and that the auditors are fairly remunerated; and

• the audit committee has primary responsibility for making recommendations to the board on the appointment, re-appointment and removal of the external auditors.

the committee reviews audit plans for external audits and the outcome of the work performed in executing these plans. they further ensure that items identified

for action are followed up. the external auditors report annually to the audit committee to confirm that they are and have remained independent from the

group during the year.

the audit committee considered information pertaining to the balance between fees for audit and non-audit work for the group in 2012 and concluded that

the nature and extent of non-audit fees do not present a threat to the external auditors’ independence. Furthermore, after reviewing a report from the external

auditors on all their relationships with the company that might reasonably have a bearing on the external auditors’ independence and the audit engagement

partner and staff’s objectivity, and the related safeguards and procedures, the committee has concluded that the external auditors’ independence was not

impaired. the audit committee approved the external auditors’ terms of engagement, scope of work, the annual audit and the applicable levels of materiality.

Based on written reports submitted, the committee reviewed, with the external auditors, the findings of their work and confirmed that all significant matters had

been satisfactorily resolved. the committee determined that the 2012 audit was completed without any restriction on its scope.

the audit committee has satisfied itself as to the suitability of the external auditors for re-appointment for the ensuing year.


28

iNTErNal audiT

the company does not have a formalised internal audit department. this is primarily due to the fact that the majority of the

property management functions are outsourced to external property managers who are subjected to annual external audits.

the audit committee continually examines the appropriateness of utilising independent internal auditors to periodically review

activities of the company and service providers and has agreed to engage an external party during 2013 to perform the function.

EThiCal pErfOrmaNCE

the board of directors forms the core of the values and ethics subscribed to by the company through its various bodies and

committees. these values and ethics are sustained by the directors’ standing and reputation in the business community and their

belief in free and fair dealings in utmost good faith and respect for laws and regulations.

Resilient has a code of ethics communicated to all staff. the code of ethics stipulates, among other things, that all stakeholders

are expected to act in good faith, that bribery in any form is not tolerated, all conflicts of interest need to be declared and that

compliance with all legislation is of utmost importance. the code of ethics is reviewed by the social and ethics committee on an

annual basis.

the board is not aware of any transgressions of the code of ethics during the year.

no issues of non-compliance, fines or prosecutions have been levied against Resilient.

iNTErNal fiNaNCial aNd OpEraTiNg CONTrOlS

A framework of financial reporting, internal and operating controls has been established by the board to ensure reasonable

assurance as to accurate and timeous reporting of business information, safeguarding of group assets, compliance with laws and

regulations, financial information and general operation.

the board reviewed and was satisfied with the effectiveness of the internal financial and operating controls, the process of risk

management and the monitoring of legal governance compliance within the company.

iNvESTmENT COmmiTTEE

All acquisitions, disposals and capital expenditure are considered by the investment committee. the investment committee

approves acquisitions, disposals and capital expenditure up to pre-set limits.

the investment committee consists of three independent non-executive directors, one non-independent non-executive director and

one executive director. All members of this committee have extensive experience and technical expertise in the property industry.

the investment committee’s responsibilities and duties are governed by a charter that was reviewed by the board in 2012.

NOmiNaTiON COmmiTTEE

the nomination committee is mandated by the board to identify suitable candidates to be appointed to the board, identify suitable

board candidates in order to fill vacancies, ensure there is a succession plan in place for key management, assess the independence

of non-executive directors and assess the composition of the board sub-committees. the nomination committee recommends the

individuals to the board for appointment.

the nomination committee presently comprises: JJ njeke (chairman), thembi chagonda, marthin Greyling and Bryan Hopkins.

the nomination committee’s responsibilities and duties are governed by a charter that was reviewed by the board in 2012.

rEmuNEraTiON COmmiTTEE

the remuneration committee is mandated by the board to set the remuneration and incentivisation of all employees, including

executive directors. in addition, the remuneration committee recommends directors’ fees payable to non-executive directors and

members of board sub-committees. Further details are provided in the remuneration report on page 19.

the remuneration committee’s responsibilities and duties are governed by a charter that was reviewed by the board in 2012.

riSk COmmiTTEE

the risk committee is mandated by the board to ensure that a sound risk management system is maintained, to assist the board

in discharging its duties relating to the safeguarding of assets, ensuring that the sustainability reporting is comprehensive, timely


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>> secunDa mall >> 54 000m2 >> mpumalanga


30

and relevant and to ensure that the company has implemented an effective plan for risk management that will enhance the company’s ability to achieve its

strategic objectives.

the risk committee consists of three independent non-executive directors, one non-independent non-executive director and one executive director.

the risk committee’s responsibilities and duties are governed by a charter that was reviewed by the board in 2012.

SOCial aNd EThiCS COmmiTTEE

the social and ethics committee is a statutory committee whose focus is to monitor compliance with labour legislation as well as corporate social responsibilities

and corporate citizenship.

the committee was constituted during the current financial year and met once. the social and ethics committee consists of four independent non-executive

directors and one non-independent non-executive director.

the social and ethics committee’s responsibilities and duties are governed by a charter adopted by the board in 2012.

COmpaNY SECrETarY

the board considered the competence, qualifications and experience of the company secretary, Rajeshree sookdeyu, and she is deemed fit to continue in the

role as company secretary for Resilient. Rajeshree is not a director of Resilient and her relationship with the board has been assessed and is considered to be at

arm’s length.

iNfOrmaTiON TEChNOlOgY (“iT”) gOvErNaNCE

the board is ultimately responsible for it governance. the Resilient it function is outsourced to a third party service provider and is governed by a service level

agreement. compliance with the service level agreement is monitored by management and the terms are reviewed on a regular basis. there is a dedicated

member of the Resilient management team who oversees the it function, attends the executive committee meetings and reports to the managing director.

the risks and controls over it assets and data are considered by the risk committee.

dEaliNg iN SECuriTiES BY ThE dirECTOrS

dealing in the company’s securities by directors and company officials is regulated and monitored as required by the Jse listings Requirements. in addition,

Resilient maintains a closed period from the end of a financial period to the date of publication of the financial results.

prOmOTiON Of aCCESS TO iNfOrmaTiON aCT

there were no requests for information lodged with the company in terms of the Promotion of Access to information Act, no 2 of 2000.

SpECial rESOluTiONS paSSEd

Five special resolutions were passed during 2012:

1 approval of directors’ remuneration for their services as directors

it was resolved that in accordance with section 66 of the companies Act, fees to be paid by the company to the non-executive directors for their services as

directors for the financial year ending 31 december 2013 be and are hereby approved, as follows:

year ended 31 December 2013 randchairman 300 000

non-executive director 210 000

Audit committee member (including chairman) 85 000

investment committee member (including chairman) 85 000

Remuneration committee member (including chairman) 85 000

Risk committee member (including chairman) 85 000

2 approval of financial assistance to related or inter-related companies

it was resolved that, to the extent required by the companies Act, the board of directors of the company may, subject to compliance with the requirements of

the company’s memorandum of incorporation, the companies Act and the Jse listings Requirements, each as presently constituted and as amended from time

to time, authorise the company to provide direct or indirect financial assistance in terms of section 45 of the companies Act by way of loans, guarantees, the

provisions of security or otherwise, to any of its present or future subsidiaries and/or any other company or corporation that is or becomes related or inter-

related (as defined in the companies Act) to the company for any purpose or in connection with any matter, such authority to endure until the annual general

meeting of the company to be held in 2013.

A similar special resolution was passed at subsidiary level.


31

3 approval of financial assistance to directors and prescribed officers for the purpose of acquiring securities in capital property fund

it was resolved that, to the extent required by the companies Act, the board of directors of the company may, subject to compliance with the requirements of

the company’s memorandum of incorporation, the companies Act and the Jse listings Requirements, each as presently constituted and as amended from time

to time, authorise the company to provide direct or indirect financial assistance in terms of section 45 of the companies Act by way of loans, guarantees, the

provisions of security or otherwise, to any of its present or future directors or prescribed officers or to any present or future directors or prescribed officers of

any of its present or future subsidiaries and/or of any other company or corporation that is or becomes related or inter-related (as defined in the companies Act)

to the company for the purpose of acquiring securities in capital Property Fund, a collective investment scheme in property, the securities of which are listed on

the Jse under share code ‘cPl’, such authority to endure until the annual general meeting of the company to be held in 2013.

4 approval of the repurchase of linked units

it was resolved that subject to the companies Act, the memorandum of incorporation of the company, the Jse listings Requirements and the restrictions set

out below, the repurchase of linked units of the company, either by the company or by any subsidiary of the company, is hereby authorised, on the basis that:

(a) this authority will only be valid until the company’s next annual general meeting or for 15 months from the date of this resolution, whichever period is shorter;

(b) the number of linked units which may be acquired pursuant to this authority in any financial year may not in the aggregate exceed 20%, or 10% where such

acquisitions are effected by a subsidiary, of the company’s unit capital as at the date of this notice of annual general meeting;

(c) the repurchase of linked units must be effected through the order book operated by the Jse trading system and done without any prior arrangement between

the company and the counter-party;

(d) the repurchase of linked units may not be made at a price greater than 10% above the weighted average of the market value for the linked units for the five

business days immediately preceding the date on which the transaction is effected;

(e) at any point in time, the company will only appoint one agent to effect repurchases on its behalf;

(f) the company or its subsidiary may not repurchase linked units during a prohibited period as defined in paragraph 3.67 of the Jse listings Requirements unless

there is a repurchase programme in place and the dates and quantities of linked units to be repurchased during the prohibited period are fixed and full details

thereof have been disclosed in an announcement over SENS prior to commencement of the prohibited period; and

(g) the company’s sponsor will confirm the adequacy of the company’s working capital, for the purposes of undertaking linked unit repurchases, in writing to

the Jse prior to the repurchase of any linked units.

5 approval of provision of financial assistance for the purchase of linked units

it was resolved that the company, either as lender or as surety or guarantor for a lender, or otherwise, is hereby authorised, from time to time, to provide

financial assistance for the purchase of or subscription for its linked units to any company or trust, the majority of whose shareholders or beneficiaries (directly

or indirectly) are ‘black persons’ as defined in the Broad-based Black economic empowerment Act, 2003 (or any successor thereto) on the following terms:

(a) the maximum additional capital amount (excluding interest, costs, charges, fees and expenses) of any such amounts lent or for which suretyships or

guarantees are given may not exceed R250 million;

(b) the maximum period for the repayment of any loan provided or for which suretyships or guarantees are given in terms hereof may not exceed 10 years; and

(c) the minimum interest rate to be applied to any loan provided may not be less than the prime overdraft rate of interest from time to time publicly quoted as

such by the standard Bank of south Africa limited.

uNiT iSSuES

there was one unit issue during the year: on 2 october 2012, 5 208 000 linked units were issued at R48,00 per linked unit as part of Resilient’s corporate social

responsibility programme.

COmmuNiCaTiONS WiTh STakEhOldErS

Resilient is committed to ensuring timeous, effective and transparent communication with unitholders and other stakeholders through annual integrated and

interim financial reports, presentations to analysts, press releases etc. Resilient’s major stakeholders are presented on page 10.


32

SuSTaiNaBiliTY rEpOrTiNg

At Resilient, our approach to the concept of sustainability relates to the maintenance and enhancement of environmental, social and economic resources, in

order to meet the needs of current and future generations. this is founded in a commitment to being a good corporate citizen, operating in a commercially

sensible and socially responsible manner.

ENvirONmENTal

energy efficiency is foremost in our sustainability endeavours and to this end the need to practically and efficiently measure the use of utilities within our

buildings. We are currently engaged with various service providers on the metering of the buildings to provide us with the metrics to make meaningful and

informed decisions. the results of these metrics have and will continue to inform our approach to new developments, refurbishments and extensions in order

to maximise the return on implemented solutions.

in respect of all works there is a focus on the fundamental architectural principles, one of which is building aspect, which helps to passively address the heat

loads and natural lighting options available in the buildings. since HVAc constitutes the largest percentage of energy consumption, in the region of 60%, in the

majority of buildings new and retrofit systems will incorporate improved standards of insulation, shading, glazing, ventilation and efficient air conditioning plant.

the approach to enhance efficiency will also incorporate dealing with education and adjustment of personal habits of people occupying the buildings, these

include sensor switching, night flushing and changing set points according to seasonal changes. on new and replacement plant we are utilising variable speed

drive compressors and staged units to best balance demand and supply of air conditioned space. Building management systems (Bms) are steadily improving

and are currently used in specific applications where their cost benefit may justify their implementation.

Where possible we are utilising the newer and more efficient lighting systems and incorporating rational design principles to maximise the lighting levels whilst

reducing energy consumption on new works. We will be retrofitting older buildings on a replacement basis with more efficient technologies and these include

cFl, led and t5 replacement lamps. Here too education of users is paramount in adapting to sensor switching systems and reduced ambient lighting when areas

are not occupied.

Water is a precious resource and, in order to manage the utilisation, Resilient is focusing on the comprehensive measurement thereof. Furthermore all new

gardens and landscaping will be done on an indigenous basis to limit the need for irrigation. As standard practice new and refurbishment works are being fitted

with low flushing mechanisms and metered discharge taps to reduce consumption and limit waste. timers on existing geysers and solar geysers are all part of

the arsenal in reducing consumption and more recently the utilisation of heat pumps to reduce energy consumption.

Resilient is engaging with eskom on an ongoing basis in terms of their demand side management programmes and attends the green building conferences

and other forums to remain abreast of international best practice, legal requirements and technical improvements. sAns 204 energy efficiency in buildings

regulations have been released which has a significant impact on new buildings efficiency and hence sustainability into the future.

Resilient systematically conducts audits at its malls to ascertain the lighting efficiency and electric consumption in order to formulate plans to improve our energy

efficiency. We have successfully completed the installation of energy efficient lighting at Brits mall, Highveld mall, Jabulani mall, Rivonia Village and tzaneen mall.

the retrofitting is underway at diamond Pavilion and the Grove. We are working with eskom to take advantage of the rebate programme currently underway.

We continue to investigate the potential for the economic utilisation of photovoltaic installations to further reduce our demand on the eskom grid and make

use of renewable sources.

ECONOmiC

Resilient’s Black economic empowerment (“Bee”) initiatives include the broad based schemes undertaken through eagle’s eye investments Proprietary limited

(“eagle’s eye”), Amber Peek investments Proprietary limited (“Amber Peek”) and the Resilient education trust (formerly the siyakha education trust).

eagle’s eye, which owns 10 810 811 Resilient linked units, has shareholders comprising the Resilient education trust and three women groupings based in

mthatha, Polokwane and Johannesburg, each with a 25% interest. this broad based-Bee scheme matures in three equal tranches in June 2014, June 2015

and June 2016. eagle’s eye is financed with a nedbank loan which is currently supported by a suretyship provided by Resilient in the amount of R235 million.

this initiative has been very successful to date.

Amber Peek, a Resilient group Bee initiative, owns inter alia 10 238 351 linked units in Resilient. the shareholders of Amber Peek are Aquarella investments 553

Proprietary limited (26%), celtic Rose investments 10 Proprietary limited (26%) and the Resilient education trust (48%). Aquarella investments 553 Proprietary

limited is owned by 50 black businesspeople from thohoyandou whilst celtic Rose investments 10 Proprietary limited is owned by nine black businesspeople

from Johannesburg. Amber Peek is financed by the short-selling of government bonds and with loans from Resilient and Fortress.

the Resilient education trust is a charitable trust and is registered as a public benefit organisation. in october 2012, 5 208 000 linked units were issued to

the Resilient education trust. it now owns 5 486 743 Resilient linked units.

Resilient obtained a level five BBBee rating in 2012. the verification was performed by Premier Verification Proprietary limited.

33

We continued our 12 month internship programme that entailed the employment of 5 newly qualified graduates who were given exposure to the property

industry through interaction with both property managers and asset managers.

SOCial

We believe that the best way to empower people is through education. our social initiatives thus centre around the improvement of facilities at various schools

and the provision of education.

Resilient continues to sponsor the saturday school programme at Beaulieu college in Kyalami which is attended by scholars from diepsloot. the saturday school

provides the children with the opportunity to learn from some of Johannesburg’s top teachers and gives them access to the school’s facilities.

the Resilient education trust was established with the exclusive purpose of promoting black education in south Africa. the Resilient education trust grants

bursaries to students from previously disadvantaged backgrounds and communities. it also provides computer equipment and infrastructure, for example

secured computer facilities, to schools in underprivileged communities.

the Resilient education trust paid for the erection and equipping of a state of the art, fully equipped computer laboratory at mpethi mahlatsi High school in

orange Farm and provided the principal and staff with computers and equipment at Amsai Primary school in orange Farm. At modimo o’ moholo, a school in

orange Farm for the mentally and physically disabled, a new toilet block was constructed. in Brits, the computer laboratory was upgraded at malatse motsepe

High school. the Resilient education trust also contributed R100 000 to chabad House for their miracle drive Grow your life project which produces books on

life skills that are distributed to schools throughout south Africa.

in addition to the projects completed in 2012, there are a number of ongoing projects undertaken by the Resilient education trust including the commitment of

R250 000 to the upliftment of selowe Primary school in silvermine, limpopo, where infrastructure is being installed (including the provision of new water tanks

and an office for the principal). A new kitchen, storeroom and toilets are also being planned. the Resilient education trust also joined the Primedia initiative

known as “theatres for learning” where pupils and teachers from disadvantaged schools are bussed to ster Kinekor theatres to receive career guidance and

matric revision with special emphasis on maths and science. the intention is to include the movie theatres situated in Boardwalk shopping centre and mall of

the north in this venture from 2013.

Our EmplOYEES

our employees are as intrinsic to our business as our properties. We strive to create a productive working environment and our success in doing so is evidenced

by our low staff turnover. the remuneration of our employees is elaborated on in the remuneration report on page 19.

As discussed in note 22 to the financial statements, Resilient has a unit purchase trust in terms of which loans are granted to employees to enable them to

purchase units in Resilient. We believe that empowering our employees in this way aligns their interests even closer to those of unitholders.

We maintain open channels of communication with our employees that include weekly meetings with our asset managers and monthly and ad hoc staff

meetings for all employees. our employees have access to Resilient’s policies and procedures via the intranet. none of Resilient’s employees engage in collective

bargaining processes.

Resilient has implemented an employment equity plan. our focus is on developing our employees such that there are suitable internal candidates to lead Resilient

in the future. We encourage our employees to attend job-related training such as industry specific conferences and courses.


34

fivE-YEar rEviEW

2012 2011 2010 2009 2008

R’000 R’000 R’000 R’000 R’000

summARIsED sTATEmENT Of fINANcIAl POsITIONAssETsinvestment property 10 069 746 8 881 736 5 853 648 4 186 416 3 985 389

investment property under development 824 660 346 376 792 810 516 416 1 041 163

investments 3 719 975 2 769 300 2 216 200 707 576 1 178 970

investment in associate companies – – 425 728 1 983 864 192 847

intangible asset 26 422 26 422 26 422 26 422 26 422

Resilient unit Purchase trust loans 374 587 420 320 272 303 265 751 221 793

loans to employees to acquire capital units 245 897 279 249 9 608 – –

loans to Bee partners 415 947 221 632 97 716 97 423 86 311

loans to development partners 137 758 125 250 160 265 307 501 86 645

Property, plant and equipment – – – 1 471 1 870

current assets 83 538 40 183 91 034 137 305 64 454

Total assets 15 898 530 13 110 468 9 945 734 8 230 145 6 885 864

EQuITy AND lIABIlITIEstotal equity attributable to equity holders 8 006 714 6 573 956 5 216 765 4 182 749 3 530 693

linked debentures 1 319 680 1 294 681 1 186 003 1 176 355 1 105 407

interest-bearing borrowings 4 437 502 3 997 222 2 566 839 2 173 532 1 621 563

Bee instrument 337 640 150 350 118 900 65 784 28 310

deferred tax 1 065 688 545 166 411 320 267 465 272 322

linked debenture interest payable 370 967 327 312 274 831 251 495 208 392

current liabilities 360 339 221 781 171 076 112 765 119 177

Total equity and liabilities 15 898 530 13 110 468 9 945 734 8 230 145 6 885 864

net asset value per unit (Rand) 33,92 29,17 25,91 21,87 20,13

Gearing 27,9% 30,5% 25,8% 26,4% 23,6%

Average cost of funding at 31 december 8,62% 8,78% 9,44% 9,65% 9,49%

summARIsED sTATEmENT Of cOmPREHENsIVE INcOmERecoveries and contractual rental revenue 1 140 230 843 738 572 097 530 417 388 918

Property operating expenses (397 568) (273 076) (183 777) (158 411) (116 778)

distributable income from investments 210 718 181 283 161 502 88 656 76 500

Fair value gain on investment property and investments 2 006 665 966 087 1 211 703 395 541 254 136

Administrative expenses (78 616) (71 353) (29 475) (32 846) (24 386)

income from associates – 13 959 56 493 133 174 7 359

Fair value (loss)/gain on Bee instrument (187 290) (31 450) (53 116) (37 474) 28 657

management fees received from PFm 79 065 63 609 32 267 25 617 6 810

Profit on sale of subsidiaries and joint ventures – – 36 868 15 550 –

other – – – – 7 278

Profit before net finance costs 2 773 204 1 692 797 1 804 562 960 224 628 494

net finance costs (1 036 608) (788 702) (661 116) (489 437) (497 788)

Profit before income tax 1 736 596 904 095 1 143 446 470 787 130 706

income tax (525 127) (133 955) (149 587) (74 216) 10 463

Profit for the year attributable to equity holders 1 211 469 770 140 993 859 396 571 141 169

Property expenses as a % of revenue 34,9% 32,4% 32,1% 29,9% 30,0%

uNIT sTATIsTIcslinked units in issue (excluding 10 810 811 units issued

to Bee sPV) 274 933 259 269 725 259 247 084 021 245 074 021 230 293 237

distribution per linked unit (cents) 255,67 230,71 211,83 194,13 169,98

distribution growth 10,82% 8,91% 9,12% 14,21% 18,28%

closing price per Resilient linked unit (cents) 5 175 3 475 3 245 2 600 2 400

total return on units 56,3% 14,2% 33,0% 16,4% (4,8%)

PROPERTy sTATIsTIcstotal number of properties 40 37 35 31 50

total GlA 878 875 853 690 695 975 563 717 613 665

Vacancy % 1,7% 1,9% 3,1% 3,2% 3,2%


35

A large national tenants, large listed tenants and government. these include, inter alia, shoprite checkers, edcon, Pick n Pay, Pepkor, Woolworths, mr Price Group, the Foschini Group, Jd Group and truworths.

B national tenants, listed tenants, franchisees and medium to large professional firms. these include, inter alia, tekkie town, KFc, nando’s and Flight centre.

c other (this comprises 677 tenants).

pOrTfOliO STaTiSTiCS

rentable area■ vacant 1,7%■ Dec 13 17,2%■ Dec 14 15,3%■ Dec 15 12,4%■ Dec 16 15,8%■ Dec 17 10,7%■ > Dec 2017 26,9%

gross rentals■ vacant –■ Dec 13 16,9%■ Dec 14 17,2%■ Dec 15 15,5%■ Dec 16 17,0%■ Dec 17 13,9%■ > Dec 2017 19,5%

the total portfolio consists of retail assets.

lease expiry prOfile

2012100%0% 100%0%

geOgraphical prOfile

rentable area■ eastern cape 4,5%■ free state 1,9%■ gauteng 15,3%■ kwazulu-natal 14,7%■ limpopo 29,7%■ mpumalanga 13,9%■ north west 12,2%■ northern cape 7,8%

gross rentals■ eastern cape 3,9%■ free state 1,7%■ gauteng 16,6%■ kwazulu-natal 14,8%■ limpopo 30,6%■ mpumalanga 15,2%■ north west 10,4%■ northern cape 6,8%

2012100%0% 100%0%

property value■ eastern cape 3,7%■ free state 1,2%■ gauteng 16,0%■ kwazulu-natal 15,3%■ limpopo 29,2%■ mpumalanga 18,6%■ north west 10,1%■ northern cape 5,9%

100%0%

gross rentals■ a 68,1%■ b 18,6%■ c 13,3%

rentable area■ a 77,8%■ b 12,7%■ c 9,5%

tenant prOfile

2012100%0% 100%0%


36

pOrTfOliO STaTiSTiCS (CONTiNuEd)

OThEr iNfOrmaTiON

the weighted average rental escalation by rentable area is 7,3% for 2013.

the average annualised property yield is 7,9% at 31 december 2012.

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NaTiONal TENaNT grOupS aS a pErCENTagE Of rENTaBlE arEa aNd grOSS rENTalS aS aT 31 dECEmBEr 2012


37

10 Years

aNNual fiNaNCial STaTEmENTSfor the year ended 31 December 2012

38 Directors’ responsibility for the annual financial statements

38 Declaration by company secretary

39 Independent auditors’ report

40 Statements of financial position

41 Statements of comprehensive income

42 Reconciliation of profit for the year to headline earnings and distributable income

43 Statements of changes in equity

44 Statements of cash flows

45 Notes to the annual financial statements

CONTENTS

R E S I L I E N T P R O P E R T Y I N C O M E F U N D 2012 INTEGRATED REPORT

38

DIRECTORS’ RESPONSIBILITY FOR THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 December 2012

The directors are responsible for the preparation and fair presentation of the group annual financial statements and annual financial statements of Resilient

Property Income Fund Limited (“the company”), comprising the statements of financial position at 31 December 2012, the statements of comprehensive

income, the statements of changes in equity and statements of cash flows for the year then ended, and the notes to the financial statements, which include

a summary of significant accounting policies and other explanatory notes, as well as the directors’ report, in accordance with IFRS and in the manner

required by the JSE Listings Requirements, the Companies Act of South Africa and Collective Investment Schemes Control Act of South Africa.

The directors’ responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of these

financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies;

and making accounting estimates that are reasonable in the circumstances.

The directors’ responsibility also includes maintaining adequate accounting records and an effective system of risk management, as well as the preparation

of the supplementary schedules included in these financial statements.

The directors have made an assessment of the group and company’s ability to continue as a going concern and there is no reason to believe that the

businesses will not be going concerns in the year ahead.

The auditor is responsible for reporting on whether the group annual financial statements and annual financial statements of the company are fairly

presented in accordance with the applicable financial reporting framework.

APPROVAL OF GROUP ANNUAL FINANCIAL STATEMENTS AND ANNUAL FINANCIAL STATEMENTS OF THE COMPANY

The group annual financial statements and annual financial statements of the company were approved by the board of directors on 6 February 2013 and

signed on its behalf by:

Des de BeerManaging director

Nick HanekomFinancial director

In terms of section 33(1) of the Companies Act, 2008, as amended, I certify that the company has lodged with the Registrar of Companies all

such returns as are required of a public company in terms of this Act and that all such returns are true, correct and up to date.

Rajeshree SookdeyuCompany secretary6 February 2013

DECLARATION BY COMPANY SECRETARY


39

iNdEpENdENT audiTOrS’ rEpOrT

TO ThE uNiThOldErS Of rESiliENT prOpErTY iNCOmE fuNd limiTEdWe have audited the consolidated and separate financial statements of Resilient Property Income Fund Limited set out on pages 40 to 73, which comprise the statements of financial position as at 31 December 2012, 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 the Collective Investment Schemes Controls Act 45 of 2002, 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 misstatement, 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 Resilient Property Income Fund Limited as at 31 December 2012, and its consolidated and separate financial performance and its 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 and Collective Investments Scheme Act 45 of 2002.

OThEr rEpOrTS rEQuirEd BY ThE COmpaNiES aCTAs part of our audit of the consolidated and separate financial statements for the year ended 31 December 2012, we have read the directors’ report, the audit committee’s report and the 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.

Deloitte & Touche Registered Auditors

Per: Patrick Kleb Partner

6 February 2013

Deloitte & ToucheRegistered Auditors Audit – JohannesburgBuildings 1 and 2Deloitte PlaceThe WoodlandsWoodlands DriveWoodmead Sandton Docex 10 JohannesburgTel: +27 (0)11 806 5000Fax: +27 (0)11 806 5111www.deloitte.com

National Executive: LL Bam Chief Executive AE Swiegers Chief Operating Officer GM Pinnock Audit DL Kennedy Risk Advisory NB Kader Tax TP Pillay Consulting K Black Clients & Industries JK Mazzocco Talent & Transformation CR Beukman Finance M Jordan Strategy S Gwala Special Projects TJ Brown Chairman of the Board MJ Comber Deputy Chairman of the Board

A full list of partners and directors is available on request

B-BBEE rating: Level 2 contributor in terms of the Chartered Accountancy Profession Sector Code

Member of Deloitte Touche Tohmatsu Limited

Private Bag X6Gallo Manor 2052South Africa


40

STaTEmENTS Of fiNaNCial pOSiTiONat 31 December 2012

grOup cOmpany2012 2011 2012 2011

Note R’000 R’000 R’000 R’000

AssETsNon-current assets 15 810 690 13 063 400 749 360 1 061 544

Investment property 3 9 896 272 8 759 377

Straight-lining of rental revenue adjustment 3 173 474 122 359

Investment property under development 3 824 660 346 376

Investments 4 3 719 975 2 769 300

Intangible asset 5 26 422 26 422

Resilient Unit Purchase Trust loans 6 374 587 420 320 373 951 419 688

Loans to employees to acquire Capital units 7 245 897 279 249

Loans to BEE partners 8 415 947 221 632

Loans to development partners 9 133 456 118 365

Interest in subsidiaries and joint ventures 10 375 409 641 856

current assets 87 840 47 068 5 513 034 4 487 302

Loans to development partners 9 4 302 6 885

Trade and other receivables 11 82 412 36 357

Amounts owing by subsidiaries and joint ventures 10 5 513 034 4 487 302

Cash and cash equivalents 1 126 3 826

Total assets 15 898 530 13 110 468 6 262 394 5 548 846

EQuITy AND lIABIlITIEsTotal equity attributable to equity holders 8 006 714 6 573 956 2 376 733 2 342 734

Share capital 12 2 749 2 697 2 749 2 697

Share premium 12 2 712 168 2 490 931 2 712 168 2 490 931

Non-distributable reserves 13 5 291 797 4 080 328 (338 184) (150 894)

Retained earnings – – – –

Total liabilities 7 891 816 6 536 512 3 885 661 3 206 112

Non-current liabilities 5 677 981 4 680 213 2 701 228 2 026 325

Linked debentures 14 1 319 680 1 294 681 1 319 680 1 294 681

Interest-bearing borrowings 15 2 954 973 2 690 016 1 043 908 581 294

BEE instrument 16 337 640 150 350 337 640 150 350

Deferred tax 17 1 065 688 545 166

current liabilities 2 213 835 1 856 299 1 184 433 1 179 787

Trade and other payables 18 359 021 220 905 986 343

Linked debenture interest payable 370 967 327 312 370 967 327 312

Income tax payable 1 318 876

Amounts owing to subsidiaries and joint ventures 10 33 213 10 426

Interest-bearing borrowings 15 1 482 529 1 307 206 779 267 841 706

Total equity and liabilities 15 898 530 13 110 468 6 262 394 5 548 846

41


STATEMENTS OF COMPREHENSIVE INCOMEfor the year ended 31 December 2012

Group Company2012 2011 2012 2011

Note R’000 R’000 R’000 R’000

Net rental and related revenue 793 777 603 423

Recoveries and contractual rental revenue 1 140 230 843 738

Straight-lining of rental revenue adjustment 51 115 32 761

Rental revenue 1 191 345 876 499

Property operating expenses (397 568) (273 076)

Distributable income from investments 210 718 181 283

Fair value gain on investment property and investments 1 955 550 933 326

Fair value gain on investment property 1 061 731 568 696

Adjustment resulting from straight-lining of rental revenue (51 115) (32 761)

Fair value gain on investments 944 934 397 391

Fair value loss on BEE instrument (187 290) (31 450) (187 290) (31 450)

Management fees received from PFM 79 065 63 609

Administrative expenses (78 616) (71 353) (5 180) (3 942)

Distributable income from associate – 13 959

Profit/(loss) before net finance costs/income 2 773 204 1 692 797 (192 470) (35 392)

Net finance (costs)/income (1 036 608) (788 702) 5 180 3 942

Finance income 93 479 99 793 801 441 664 199

Interest from loans 75 975 70 935 34 502 28 955

Fair value adjustment on interest rate derivatives 13 910 8 064

Interest on linked units issued cum distribution 3 594 20 794 3 594 20 794

Interest received from group companies 763 345 614 450

Finance costs (1 130 087) (888 495) (796 261) (660 257)

Interest on borrowings (365 137) (289 089) (99 628) (59 946)

Capitalised interest 37 697 43 396

Fair value adjustment on interest rate derivatives (106 014) (42 491)

Interest to linked debenture holders

– interim (325 666) (272 999) (325 666) (272 999)

– final (370 967) (327 312) (370 967) (327 312)

Profit/(loss) before income tax expense 19 1 736 596 904 095 (187 290) (31 450)

Income tax expense 20 (525 127) (133 955)

Profit/(loss) for the year attributable to equity holders 1 211 469 770 140 (187 290) (31 450)

Total comprehensive income/(loss) for the year 1 211 469 770 140 (187 290) (31 450)

Basic earnings per share (cents) 444,85 296,57

Basic earnings per linked unit (cents) 700,66 527,75

Diluted earnings per share (cents) 427,87 284,72

Diluted earnings per linked unit (cents) 673,91 506,65

42


RECONCIlIATION OF PROFIT FOR THE yEAR TO HEAdlINE EARNINgS ANd dISTRIbuTAblE INCOMEfor the year ended 31 December 2012

Group2012 2011

R’000 R’000

Basic earnings (shares) - profit for the year attributable to equity holders 1 211 469 770 140

– interest to linked debenture holders 696 633 600 311

Basic earnings (linked units) 1 908 102 1 370 451

Adjusted for: (661 218) (451 076)

– fair value gain on investment property (1 010 616) (535 935)

– income tax effect 349 398 84 859

Headline earnings (linked units) 1 246 884 919 375

Straight-lining of rental revenue adjustment (51 115) (32 761)

Fair value gain on investments (944 934) (397 391)

Fair value loss on BEE instrument 187 290 31 450


Interest paid by BEE SPV (refer note 16) 18 315 21 057

Income received by BEE SPV (refer note 16) (27 640) (24 942)

Income tax effect 175 729 49 096

Distributable income 696 633 600 311

Less: distribution declared (696 633) (600 311)

Income not distributed – –

Headline earnings per share (cents) 202,05 122,87

Headline earnings per linked unit (cents) 457,86 354,04

Diluted headline earnings per share (cents) 194,34 117,96

Diluted headline earnings per linked unit (cents) 440,38 339,89

Basic earnings per share, basic earnings per linked unit, headline earnings per share and headline earnings per linked unit are based on the weighted

average of 272 329 259 (2011: 259 679 640) shares/linked units in issue during the year.

Diluted earnings per share, diluted earnings per linked unit, diluted headline earnings per share and diluted headline earnings per linked unit are based on

the weighted average of 283 140 070 (2011: 270 490 451) shares/linked units in issue during the year.

This is calculated as follows: Group

2012 2011

Weighted average number of shares and linked units in issue for basic earnings per share and

linked unit calculation 272 329 259 259 679 640

Potential dilutionary impact of the BEE transaction

(right to acquire shares in future at a predetermined price (refer note 16)) 10 810 811 10 810 811

283 140 070 270 490 451

43


STATEMENTS OF CHANgES IN EQuITyfor the year ended 31 December 2012

Non-Share Share distributable Retained

capital premium reserves earnings TotalGroup R’000 R’000 R’000 R’000 R’000

Balance at 31 December 2010 2 471 1 904 106 3 310 188 – 5 216 765

Issue of units 226 586 825 587 051

Total comprehensive income for the year 770 140 770 140

Transfer to non-distributable reserves 770 140 (770 140) –

Balance at 31 December 2011 2 697 2 490 931 4 080 328 – 6 573 956 Issue of 5 208 000 units on 2 October 2012 52 221 237 221 289 Total comprehensive income for the year 1 211 469 1 211 469 Transfer to non-distributable reserves 1 211 469 (1 211 469) –Balance at 31 December 2012 2 749 2 712 168 5 291 797 – 8 006 714

Non-Share Share distributable Retained

capital premium reserves earnings TotalCompany R’000 R’000 R’000 R’000 R’000

Balance at 31 December 2010 2 471 1 904 106 (119 444) – 1 787 133

Issue of units 226 586 825 587 051

Total comprehensive loss for the year (31 450) (31 450)

Transfer to non-distributable reserves (31 450) 31 450 –

Balance at 31 December 2011 2 697 2 490 931 (150 894) – 2 342 734 Issue of 5 208 000 units on 2 October 2012 52 221 237 221 289 Total comprehensive loss for the year (187 290) (187 290)Transfer to non-distributable reserves (187 290) 187 290 –Balance at 31 December 2012 2 749 2 712 168 (338 184) – 2 376 733

44


STATEMENTS OF CASH FlOWSfor the year ended 31 December 2012

Group Company2012 2011 2012 2011

Note R’000 R’000 R’000 R’000

Operating activitiesCash generated from operations 21.1 957 512 814 294 758 808 610 034

Interest received on loans 75 975 70 935 34 502 28 955

Interest paid on borrowings (365 137) (289 089) (99 628) (59 946)

Interest paid to linked debenture holders 21.2 (652 978) (547 830) (652 978) (547 830)

Income tax paid 21.3 (4 163) (896)

Cash inflow from operating activities 11 209 47 414 40 704 31 213

Investing activitiesDevelopment and improvement of investment property (570 592) (1 083 595)

Acquisition of investment property – (370 487)

Unit purchase trust loans advanced – (202 877) – (202 877)

Unit purchase trust loans repaid 45 733 54 860 45 737 38 455

Loans advanced to employees to acquire units in Capital Property Fund – (294 135)

Loans to employees to acquire units in Capital Property Fund repaid 33 352 24 494

Loans advanced to BEE partners (194 315) (123 916)

Development partner loans repaid – 35 015

Development partner loans advanced (12 508) –

Investment property and related assets and liabilities acquired

not included in additions to investment property or

financing activities 21.4 – (4 263) – (1 591)

Acquisition of investments (603 154) (90 000)

Proceeds on disposal of investments 597 413 373 978

Increase in loans to subsidiaries (1 530 496) (841 029)

Decrease in loans to subsidiaries 793 998 –

Cash outflow from investing activities (704 071) (1 680 926) (690 761) (1 007 042)

Financing activitiesIncrease in interest-bearing borrowings 440 280 1 430 383 400 175 773 306

Raising of linked unit capital 249 882 202 523 249 882 202 523

Cash inflow from financing activities 690 162 1 632 906 650 057 975 829

Decrease in cash and cash equivalents (2 700) (606) – –

Cash and cash equivalents at beginning of year 3 826 4 432 – –

Cash and cash equivalents at end of year 1 126 3 826 – –

Cash and cash equivalents consist of:Current accounts 1 126 3 826 – –

The group has a total of R4 251 million (2011: R3 101 million) in secured property finance facilities, nil (2011: R410 million) in unsecured facilities and a

commercial note programme of R1 804 million (2011: R1 000 million). Utilised facilities total R4 223 million (2011: R3 775 million). This disclosure excludes

BEE SPV.

45


NOTES TO THE ANNuAl FINANCIAl STATEMENTSfor the year ended 31 December 2012

REPORTINg ENTITyResilient Property income Fund limited (the “company”) is a company domiciled in south Africa. the consolidated financial statements of the company for the year ended 31 december 2012 comprise the company, its subsidiaries, joint ventures, associates, the Resilient unit Purchase trust and Bee sPV (together referred to as the “group”). the financial statements were authorised for issue by the directors on 6 February 2013.

bASIS OF PREPARATIONBasis of measurementthe consolidated and separate financial statements (financial statements) are prepared on the historical-cost basis, except for investment property, derivative financial instruments and financial instruments, designated as financial instruments at fair value through profit or loss, which are measured at fair value.

Statement of compliancethe annual financial statements have been consistently prepared in accordance with iFRs and its interpretations adopted by the independent Accounting standards Board, the sAicA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements and the requirements of the Companies Act, 2008 (“the Act”) of South Africa.

The accounting policies are consistent with those applied in the prior periods.

This report was compiled under the supervision of Nick Hanekom CA(SA), the financial director. these financial statements have been audited in compliance with all applicable requirements of the Act.

FuNCTIONAl ANd PRESENTATION CuRRENCythe financial statements are presented in rand, which is also the functional currency of the group, rounded to its nearest thousand (R’000) unless otherwise indicated.

uSE OF ESTIMATES ANd judgEMENTSthe preparation of financial statements in conformity with iFRs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. the estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under circumstances, the results of which form the basis of making judgements about carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

the estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of iFRs that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are set out in note 29.

1 ACCOuNTINg POlICIES the accounting policies set out below have been applied in preparing the financial statements for the year ended 31 december 2012 and the

comparative information presented in these financial statements for the year ended 31 december 2011.

1.1 Basis of consolidation Subsidiaries subsidiaries are those entities over which the group has the ability, either directly or indirectly, to govern the financial and operating policies so as to obtain

benefits from their activities.

in assessing control, potential voting rights that are presently exercisable are taken into account.

the group financial statements incorporate the assets, liabilities, operating results and cash flows of the company and its subsidiaries. the results of subsidiaries acquired or disposed of during the period are included from the effective dates of acquisition and up to the effective dates of disposal.

the accounting policies of the subsidiaries are consistent with those of the holding company.

in the company’s separate financial statements, investments in subsidiaries are stated at cost less accumulated impairment losses.

Special purpose entities the group has established special purpose entities (sPe’s) for Bee and staff incentivisation purposes. the group does not have any direct or indirect shareholdings

in these entities. An sPe is consolidated if, based on an evaluation of the substance of its relationship with the group and the sPe’s risks and rewards, the group concludes that it controls the sPe. sPe’s controlled by the group were established under terms that impose strict limitations on the decision-making powers of the sPe management and that result in the group being exposed to risks incident to the sPe’s activities, and retaining the majority of the residual or ownership risks related to the sPe or its assets.

Associates Associates are those entities in which the group has significant influence, but not control, over the financial and operating policies. significant influence is

presumed to exist when the group holds between 20 and 50 percent of the voting power of another entity. Associates are accounted for using the equity method and are initially recognised at cost. the group’s investment includes goodwill identified on acquisition, net of any accumulated impairment losses.

the consolidated financial statements include the group’s share of the income and expenses and equity movements of equity-accounted investees, after adjustments to align the accounting policies with those of the group, from the date that significant influence commences until the date that significant influence ceases. When the group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the group has an obligation or has made payments on behalf of the investee.

46


NOTES TO THE ANNuAl FINANCIAl STATEMENTS (CONTINuEd)for the year ended 31 December 2012

Joint ventures Joint ventures are those entities over whose activities the group has joint control, established by contractual agreement. The consolidated financial

statements include the group’s share of the assets and liabilities and total recognised gains and losses of jointly controlled entities on a proportionately consolidated basis.

Transactions eliminated on consolidation Intragroup balances and any unrealised gains and losses arising from intragroup transactions are eliminated in preparing the consolidated financial

statements.

1.2 Investment property Investment property Investment properties are those held either to earn rental income or for capital appreciation or both but not for sale in the ordinary course of business

or for administration purposes.

The cost of investment property comprises the purchase price and directly attributable expenditure. Subsequent expenditure relating to investment property is capitalised when it is probable that there will be future economic benefits from the use of the asset. All other subsequent expenditure is recognised as an expense in the period in which it is incurred.

After initial recognition, investment properties are measured at fair value. Fair values are determined annually by external independent professional valuers with appropriate and recognised professional qualifications and recent experience in the location and category of property being valued. Valuations are done on the open market value basis and the valuers use either the discounted cash flow method or the capitalisation of net income method or a combination of the methods. Gains or losses arising from changes in the fair values are included in profit or loss for the period in which they arise. Unrealised gains, net of deferred tax, are transferred to a non-distributable reserve in the statement of changes in equity. Unrealised losses, net of deferred tax, are transferred to a non-distributable reserve to the extent that the decrease does not exceed the amount held in the non-distributable reserve.

Immediately prior to disposal of investment property the investment property is revalued to the net sales proceeds and such revaluation is recognised in profit or loss during the period in which it occurs.

When the group redevelops an existing investment property for continued future use as investment property, the property remains classified as investment property. The investment property is not reclassified as investment property under development during the redevelopment.

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

construction or development is complete, at which time it is reclassified and subsequently accounted for as investment property. To the extent that developments can be accurately fair valued, developments are carried at fair value.

All costs directly associated with the purchase and construction of a property, and all subsequent capital expenditures for the development qualifying as acquisition costs, are capitalised.

Borrowing costs are capitalised to the extent that they are directly attributable to the acquisition, construction or production of a qualifying asset. Capitalisation of borrowing costs commences when the activities to prepare the asset are in progress and expenditures and borrowing costs are being incurred. Capitalisation of borrowing costs may continue until the assets are substantially ready for their intended use. If the resulting carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognised. The capitalisation rate is arrived at by reference to the actual rate payable on borrowings for development purposes or, with regard to that part of development cost financed out of general funds, the weighted average cost of borrowings.

Investment property held for sale Immediately before classification as held for sale, the measurement of the investment property is brought up to date in accordance with applicable

IFRS. Then, on initial classification as held for sale, the investment property continues to be recognised at fair value.

Leased property Leases in terms of which the group assumes substantially all the risks of ownership are classified as finance leases. The property acquired by way of

finance lease is stated at an amount equal to the lower of its fair value and the present value of the minimum lease payments at inception of the lease.

The property held under finance leases and leased out under operating leases is classified as investment property and stated at fair value.

Leases in terms of which the group does not assume substantially all the risks and rewards of ownership are classified as operating leases.

1.3 Financial instruments Financial instruments include cash and cash equivalents, investments in listed property securities, trade and other receivables, trade and other

payables and interest-bearing borrowings.

Recognition Financial instruments are initially measured at fair value which, except for financial instruments measured at fair value through profit and loss, include

directly attributable transaction costs.

47

Subsequent to initial recognition, financial instruments are measured as follows: Cash and cash equivalents – Carried at amortised cost. Investments – Carried at fair value, being the quoted bid price at the statement of financial position date, through profit

and loss. Loans – Stated at amortised cost using the effective interest method net of impairment losses. Trade and other receivables – Stated at amortised cost using the effective interest method net of impairment losses. Trade and other payables – Carried at amortised cost using the effective interest method. Interest-bearing borrowings – Carried at amortised cost using the effective interest method.

Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where: – the contractual rights to receive cash flows from the asset have expired; – the group or company has transferred its rights to receive cash flows from the asset and either has transferred substantially all the risks and rewards

of the asset, or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

Offset Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position when the group and/or company

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

1.4 Derivative financial instruments The group uses derivative financial instruments to hedge its exposure to interest rate risks arising from financing activities. In accordance with its

treasury policy, the group does not hold or issue derivative financial instruments for trading purposes. Derivatives used as hedges which do not qualify as such in terms of hedge accounting rules, are accounted for as trading instruments.

In addition, the issue of shares to the BEE SPV has been classified as an option and dealt with as such in the financial statements (refer note 16).

Derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, derivative financial instruments are measured at fair value, and changes therein are accounted for through profit or loss. Directly attributable transaction costs are recognised in profit and loss when incurred.

The fair value of derivatives is the estimated amount that the group would receive or pay to terminate the derivative at the statement of financial position date, taking into account the current relevant market conditions.

1.5 Intangible assets Intangible assets with finite useful lives are stated at cost less accumulated amortisation and accumulated impairment losses. Amortisation is

recognised in profit and loss on a straight-line basis over the estimated useful lives from the date they are available for use.

Intangible assets with an indefinite useful life are stated at cost less accumulated impairment losses and are tested for impairment annually.

1.6 Goodwill All business combinations are accounted for by applying the purchase method. Goodwill represents amounts arising on acquisition of subsidiaries or

businesses and comprises the difference between the cost of the acquisition and the fair value of the net identifiable assets, liabilities and contingent liabilities acquired.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is tested annually for impairment. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Negative goodwill arising on acquisition is recognised directly in profit or loss.

Expenditure on internally generated goodwill and brands is recognised in profit or loss as incurred.

1.7 Impairment Non-financial assets The carrying amounts of the group’s non-financial assets, other than investment property and deferred tax assets, are reviewed at each statement of

financial position date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

The recoverable amount is estimated at each statement of financial position date for goodwill and intangible assets that have an indefinite useful life and intangible assets that are not yet available for use.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount and is recognised in profit or loss.

Impairment losses recognised are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then to reduce the carrying amounts of the other assets in the unit on a pro rata basis.

48


The recoverable amount of an asset or a cash generating unit is the greater of their fair value less cost to sell and their value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using the original effective pre-tax discount rate. For any asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and there is an indication that the impairment loss no longer exists.

An impairment loss is reversed only to the extent that the carrying amount of the asset does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Financial assets A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated

future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit characteristics.

All impairment losses are recognised in profit and loss.

An impairment loss is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

1.8 Cash and cash equivalents Cash and cash equivalents include cash balances, call deposits and short-term, highly liquid investments that are readily convertible to known amounts

of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts that are repayable on demand and form an integral part of the group’s cash management, are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

1.9 Share capital and share premium Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares are shown as a deduction in equity from the

proceeds.

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity. Repurchased shares are classified as treasury shares and presented as a deduction from total equity.

1.10 Linked debentures Linked debentures are designated as financial liabilities measured at amortised cost and are initially recognised at fair value.

1.11 Provisions Provisions are recognised when the group has legal or constructive obligations arising from past events, from which outflows of economic benefits

are probable, and where reliable estimates can be made of the amounts of the obligations. Where the effect of discounting is material, provisions are discounted. The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

1.12 Revenue Revenue comprises rental revenue and recovery of expenses, excluding VAT. Rental revenue from investment property is recognised in profit or loss on

a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental revenue over the lease period.

1.13 Expenses Service costs and property operating expenses Service costs for service contracts entered into and property operating expenses are expensed as incurred.

Lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are

recognised in profit or loss as an integral part of the total lease expense on a straight-line basis.

Payments under finance leases are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the periods in which they are incurred.

1.14 Finance income and finance costs Finance income comprises interest received on funds invested and loans advanced and is recognised in profit or loss as it accrues, taking into account

the effective yield on the asset.

Finance costs comprise interest payable on borrowings calculated using the effective interest method.

1.15 Dividend/distribution income Dividend/distribution income is recognised in the statement of comprehensive income on the date the group’s or company’s right to receive payment

is established, which in the case of quoted securities is usually the ex-dividend date.


49

1.16 Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that

it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the statement of financial position method, based on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the statement of financial position date.

The following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

1.17 Segmental reporting A segment is a distinguishable component of the group that is engaged either in providing services (business segment), or in providing services within

a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments. The group’s primary segment is based on business segments. There are no secondary segments. The business segments are determined based on the group’s management and internal reporting structure.

On a primary basis, the group operates in the retail segment.

The group will from time to time invest in/divest from certain primary segments, in which case segmental reporting will be adjusted to reflect only the relevant operating segments.

Segment results include revenue and expenses directly attributable to a segment and the relevant portion of group revenue and expenses that can be allocated on a reasonable basis to a segment. Segmental assets comprise those assets that are directly attributable to the segment or can be allocated to the segment on a reasonable basis.

1.18 Employee benefits The cost of all short-term employee benefits is recognised during the period in which the employee renders the related service on an undiscounted

basis. The accrual for employee entitlements to salaries and annual leave represent the amount which the group has a present obligation to pay as a result of employees’ services provided to the statement of financial position date. The group does not provide any retirement or post-retirement benefits.

1.19 Related parties Related parties in the case of the group include any shareholder who is able to exert a significant influence on the operating policies of the group.

Directors, their close family members and any employee who is able to exert significant influence on the operating policies of the group are also considered to be related parties. In the case of the company, related parties would also include subsidiaries, the BEE SPV and The Resilient Unit Purchase Trust.

1.20 Earnings per share and per linked unit The group presents basic and diluted earnings per share and per linked unit. It also presents headline and diluted headline earnings per share and per

linked unit.

Basic earnings per share is calculated by dividing profit for the year attributable to equity holders by the weighted average number of shares in issue during the year.

Basic earnings per linked unit is calculated by dividing profit for the year attributable to equity holders plus interest paid to linked debenture holders by the weighted average number of units in issue during the year.

Headline earnings per share is calculated by dividing headline earnings minus interest paid to linked debenture holders by the weighted average number of linked units in issue during the year.

Headline earnings per linked unit is calculated by dividing headline earnings by the weighted average number of linked units in issue during the year.

Diluted earnings per share is calculated by dividing profit for the year attributable to equity holders by the weighted average number of shares in issue, adjusted for the potential dilutive impact of outstanding shareholder options.

Diluted earnings per linked unit is calculated by dividing profit for the year attributable to equity holders plus interest paid to linked debenture holders by the weighted average number of linked units in issue, adjusted for the potential dilutive impact of outstanding shareholder options.

Diluted headline earnings per share is calculated by dividing headline earnings minus interest paid to linked debenture holders by the weighted average number of linked units in issue, adjusted for the potential dilutive impact of outstanding shareholder options.

Diluted headline earnings per linked unit is calculated by dividing headline earnings by the weighted average number of linked units in issue, adjusted for the potential dilutive impact of outstanding shareholder options.

1.21 Accounting for Black Economic Empowerment (BEE) transactions Where equity instruments are issued in terms of BEE transactions and the fair value of the equity instruments granted is greater than the fair value of

cash and other assets acquired, the difference between the fair value of the equity instruments and the fair value of cash and other assets received is recognised in profit and loss.

50


2 FINANCIAl RISk MANAgEMENT The group has exposure to the following risks from its use of financial instruments: – credit risk – liquidity risk – market risk

This note presents information about the group’s exposure to each of the above risks, the group’s objectives, policies and processes for measuring and managing risk, and the group’s management of capital. Further quantitative disclosures are included throughout these financial statements.

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

Credit risk Credit risk is the risk of financial loss to the group if a tenant or counterparty to a financial instrument fails to meet its contractual obligations, and

arises principally from the group’s receivables from tenants, loans, loans to development partners, investment securities and cash and cash equivalents.

Trade and other receivables The group’s exposure to credit risk is influenced mainly by the individual characteristics of each tenant. The group’s wide-spread customer base reduces

credit risk.

The majority of rental revenue is derived from retail properties situated in Gauteng, KwaZulu-Natal, Limpopo and Mpumalanga but there is no concentration of credit risk.

Management has established a credit policy under which each new customer is analysed individually for creditworthiness before the group’s standard payment terms and conditions are offered. When available, the group’s review includes external ratings.

Trade and other receivables relate mainly to the group’s tenants and deposits with municipalities. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, industry, size of business and existence of previous financial difficulties.

The group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. The main components of this allowance are a specific loss component that relates to individually significant exposures.

Resilient Unit Purchase Trust loans and loans to employees to acquire Capital units The group’s exposure to credit risk is influenced by the security provided for the loan and also the characteristics of each borrower who are employees

of the group.

The group establishes an allowance for impairment that represents its estimate of specific losses to be incurred in the event of the borrowers’ inability to meet their commitments.

Loans to development partners In reducing credit risk attributable to loans to development partners, the group will register bonds over the properties as security for the development

partners’ outstanding loans.

Investments The group limits its exposure to credit risk by only investing in liquid securities and only with counterparties that are listed on a recognised stock

exchange.

Cash and cash equivalents The group’s exposure to credit risk is limited through the use of financial institutions of good standing for investment and cash handling purposes.

Sureties The group’s policy is to provide sureties with regards to subsidiaries to the extent required in the normal course of business. Such sureties are provided

to enable the subsidiaries to obtain the funding necessary to enable them to acquire investment property or investments. The company provided a surety to the financiers of BEE SPV (refer note 16).

Liquidity risk Liquidity risk is the risk that the group will not be able to meet its financial obligations comprising linked debentures, interest-bearing borrowings and

trade and other payables, as they fall due. The group’s approach to managing liquidity is to ensure, as far as possible, that it always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group’s reputation.

The group receives rental on a monthly basis and uses it to reduce its borrowings. Typically the group ensures that it has sufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.


51

Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the group’s income

or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The group enters into derivatives and also incurs financial liabilities in order to manage market risks. All such transactions are carried out within the guidelines set by the risk committee.

Currency risk The group is indirectly exposed to currency risk through its investments in Nepi and Rockcastle Global Real Estate Company Limited (“Rockcastle”). This

exposure is not hedged as the currency position is considered to be long-term in nature.

Interest rate risk The group is exposed to interest rate risk on its interest-bearing borrowings and cash and cash equivalents.

Interest-bearing borrowings and cash and cash equivalents bear interest at rates linked to prime/jibar. However, the group adopts a policy of ensuring that at least 80% of its exposure to interest rates on borrowings is hedged. This is achieved by entering into interest rate swaps and caps.

Equity price risk The group is exposed to equity price risk on its investments. It limits its exposure to equity price risk by only investing in liquid securities that are listed

on a recognised stock exchange and where the directors are in agreement with the business strategy implemented by such companies.

Fair values A number of the group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and

liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Investment property An external, independent valuation company, having appropriate recognised professional qualifications and recent experience in the location and

category of property being valued, values the group’s investment property portfolio every year. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the estimated cash flows expected to be received from renting out the property. A yield that reflects the specific risks inherent in the net cash flows is then applied to the net annual cash flows to arrive at the property valuation.

Valuations reflect, when appropriate: the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting vacant accommodation, and the market’s general perception of their creditworthiness; the allocation of maintenance and insurance responsibilities between the group and the lessee; and the remaining economic life of the property.

Investments The fair value of financial assets at fair value through profit or loss is determined by reference to their quoted closing bid price at the reporting date.

Trade and other receivables The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the

reporting date.

Derivatives The fair value of derivates is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on

the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date.

Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted

at the market rate of interest at the reporting date.

Capital management The group considers both the equity attributable to equity holders and linked debentures as the permanent capital of the group.

The board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The board of directors also monitors the level of distributions to unitholders. The board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. There were no changes in the group’s approach to capital management during the year. With the exception of PFM and Proptrax, which have minimum capital adequacy requirements as determined by the Financial Services Board, neither the company nor any of its subsidiaries are subject to externally imposed capital requirements.

52


Group2012 2011

R’000 R’000

3 INVESTMENT PROPERTy, STRAIgHT-lININg OF RENTAl REVENuE AdjuSTMENT ANd INVESTMENT PROPERTy uNdER dEVElOPMENT

Investment in property comprises:Investment property 9 896 272 8 759 377


10 069 746 8 881 736

Investment property under development 824 660 346 376

Total investment property 10 894 406 9 228 112

Details of the investment property are as follows:At cost 5 982 878 5 850 774

Cumulative revaluation 3 913 394 2 908 603


Investment property at fair value 10 069 746 8 881 736

Movement in investment property is as follows:Carrying amount at beginning of year 8 881 736 5 853 648

Additions – 1 553 336

Transfer from investment property under development 126 279 906 056

Revaluation adjustment 1 010 616 535 935


10 069 746 8 881 736

Details of investment property under development are as follows:Carrying amount at beginning of year 346 376 792 810

Cost capitalised 566 866 367 696

Additions – 44 259

Additions (refer note 21.4) – 4 271

Interest capitalised 37 697 43 396

Transfer to investment property (126 279) (906 056)

824 660 346 376

A register of investment property is available for inspection at the registered office of the company (refer pages 74 to 77).

There are no restrictions on the ability of the group to realise its investment property.

Investment property with a market value of R9 146 million (2011: R7 192 million) is mortgaged to secure borrowing facilities (refer note 15).

Commitments in respect of property developments and extensions are set out in note 23.

Investment properties were externally valued by Peter Parfitt of Quadrant Properties (Pty) Ltd, a professional associated valuer (Dip Val MIV (SA)).

The valuations were done on an open-market basis and with consideration to the future earnings potential and an appropriate capitalisation rate for

each property. The fair value of all investment property determined is supported by market evidence.


53

Fortress RockcastleCapital Income New Europe Global Real

Property Fund Property EstateFund (B units) Investments Company Total

4 INVESTMENTS

Group 2012Holding 11,28% 21,03%# 14,91% 15,71%Price at 31 December (cents per unit) 1 057 700 5 300 1 010

R'000 R'000 R'000 R'000 R'000Historical cost 985 837 63 153 542 778 186 724 1 778 492 Revaluation 861 176 369 770 571 360 29 978 1 832 284 Accrued distribution 69 328 8 077 26 296 5 498 109 199

1 916 341 441 000 1 140 434 222 200 3 719 975

Group 2011Holding 12,94% 22,04%# 18,58% –Price at 31 December (cents per unit) 880 505 3 250

R'000 R'000 R'000 R'000 R'000Historical cost 1 133 598 63 153 442 460 – 1 639 211 Revaluation 624 125 249 289 160 681 – 1 034 095 Accrued distribution 72 677 5 708 17 609 – 95 994

1 830 400 318 150 620 750 – 2 769 300

#The effective voting rights in Fortress are 10,51% (2011: 11,02%) in Fortress B units.

None of the investments are pledged to secure borrowing facilities.

Group2012 2011

R’000 R’000

5 INTANgIblE ASSET

Management contract

Cost 26 422 26 422

The intangible asset relates to the management contract of PFM, the management company of Capital Property Fund, and has an indefinite useful life.

Group Company2012 2011 2012 2011

R’000 R’000 R’000 R’000

6 RESIlIENT uNIT PuRCHASE TRuST lOANS

Unit purchase trust loans (refer note 22) 374 587 420 320 373 951 419 688

The unit purchase trust loans bear interest at the weighted average cost of funding of the group, being 8,62% (2011: 8,78%) at year end.

The loans are secured by 13 809 400 (2011: 16 653 000) linked units in Resilient with a fair value of R712,4 million (2011: R578,7 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.

54


Group2012 2011

R’000 R’000

7 lOANS TO EMPlOyEES TO ACQuIRE CAPITAl uNITS

Loans to employees to acquire Capital units 245 897 279 249

The loans bear interest at the weighted average cost of funding of the group, being 8,62% (2011: 8,78%) at year end. The loans are secured by

35 943 420 (2011: 41 173 820) units in Capital with a fair value of R379,9 million (2011: R362,3 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.

Details of loans granted to directors as at 31 December 2012 are as follows:

Numberof Capital

Loan granted

units R'000

Andries de Lange 914 400 6 888

Nick Hanekom 1 461 500 10 050 Johann Kriek 2 523 000 16 065 David Lewis 2 523 000 16 065

49 068

Group2012 2011

R’000 R’000

8 lOANS TO bEE PARTNERS

Loan to Amber Peek Investments (Pty) Ltd (BEE vehicle) 99 541 171 707

Loan to The Resilient Education Trust (BEE charitable trust) 316 406 49 925

415 947 221 632

The loan to Amber Peek Investments (Pty) Ltd (BEE vehicle) bears interest at prime minus 1%, is unsecured and is repayable on 30 June 2019.

The loan to The Resilient Education Trust (BEE charitable trust) bears interest at prime, is unsecured and R61,1 million (2011: R49,9 million) is repayable

on 30 June 2019 with the balance of R255,3 million (2011: nil) being repayable on 1 October 2022.

9 lOANS TO dEVElOPMENT PARTNERS

Loans to development partners 137 758 125 250

Current portion included in current assets (4 302) (6 885)

133 456 118 365

The amounts owing by development partners are secured by mortgage bonds over investment property. The loans bear interest at rates of between

prime less 1,5% (2011: prime less 1,5%) and prime plus 3% (2011: prime plus 2%).


55

Effective interest Investment Amount owing by/(to)

2012 2011 2012 2011 2012 2011R’000 R’000 R’000 R’000

10 INTEREST IN SubSIdIARIES ANd jOINT VENTuRES

SubsidiariesDiversified Properties (Pty) Ltd# 100% 100%

Diversified Properties 2 (Pty) Ltd 100% 100% 353 264 353 264 745 876 645 201

Diversified Property Fund Ltd ## 100% – 266 447 – 504 764

Fortress Asset Managers (Pty) Ltd 100% 100% 1 1 (33 213) (10 426)

Indian Gold Investments (Pty) Ltd# 100% 100%

Property Fund Managers Ltd 100% 100% 3 687 3 687 – –

Property Index Tracker Managers (Pty) Ltd 100% 100% 1 261 1 261 – –

Quick Leap Investments 281 (Pty) Ltd 100% 100% 15 605 15 605 – –

Resilient Capital (Pty) Ltd# 100% 100%

Resilient Properties (Pty) Ltd 100% 100% * * 4 474 596 3 044 775

Resilient Properties 2 (Pty) Ltd 100% 100% * * 292 562 292 562

373 818 640 265 5 479 821 4 476 876

Joint venturesCasadobe Props 73 (Pty) Ltd# 10% 10%

Great Force Investments 112 (Pty) Ltd# 70% 70%

Maphumulo Investments (Pty) Ltd# 55% 55%Pure Diamond Investments (Pty) Ltd 60% 60% 1 591 1 591 – –

Southern Palace Investments 19 (Pty) Ltd# 66% 66%

1 591 1 591 – –

375 409 641 856 5 479 821 4 476 876

# Share capital held through Resilient Properties (Pty) Ltd, a wholly-owned subsidiary. ##Diversified Property Fund Ltd was liquidated during the year (refer note 21.5). * Less than R1 000

During 2011 the company acquired an additional 5% interest in Pure Diamond Investments (Pty) Ltd (refer note 21.4).

The amounts owing by/(to) subsidiaries are unsecured, bear interest at rates agreed from time to time and the terms of repayment have not been

determined.

The company’s share of profits and losses of subsidiaries after tax amounts to R1 402,2 million (2011: R807,7 million) and R3,4 million

(2011: R4,9 million) respectively.

Group Company2012 2011 2012 2011

R’000 R’000 R’000 R’000

11 TRAdE ANd OTHER RECEIVAblES

Trade and other receivables include the following:

Tenant arrears 8 454 5 496

Fair value of interest rate derivatives 14 140 230

Other receivables 40 202 28 407

62 796 34 133 – –

Unamortised interest rate derivative premium 18 290 –

VAT receivable 1 326 2 224

82 412 36 357 – –

56


Group Company2012 2011 2012 2011

R’000 R’000 R’000 R’000

12 SHARE CAPITAl ANd SHARE PREMIuM

Authorised

400 000 000 (2011: 400 000 000) ordinary shares of 1 cent each 4 000 4 000 4 000 4 000

Issued

274 933 259* (2011: 269 725 259*) ordinary shares of 1 cent each 2 749 2 697 2 749 2 697

*Excludes 10 810 811 shares issued to BEE SPV (refer note 16).

Share premium 2 712 168 2 490 931 2 712 168 2 490 931

Each share is linked to a debenture, which together comprise a linked unit (see note 14).

Group Company2012 2011 2012 2011

Shares Shares Shares Shares

Reconciliation of movement in issued shares:

Balance at beginning of year 269 725 259 247 084 021 269 725 259 247 084 021

Issued as consideration for investment property – 16 211 238 – 16 211 238

Issued to The Resilient Unit Purchase Trust – 6 430 000 – 6 430 000

Issued to The Resilient Education Trust (BEE charitable trust) 5 208 000 – 5 208 000 –

274 933 259 269 725 259 274 933 259 269 725 259

13 NON-dISTRIbuTAblE RESERVES

Group

Non-distributable reserves comprise those profits and losses that are not distributable to unitholders and are made up of revaluation adjustments

on investment property, investment property held for sale and investments, the share of post-acquisition reserves of associates, straight-lining

adjustments and other non-distributable balances.

CompanyNon-distributable reserves comprise those profits and losses that are not distributable or that will reduce future distributable profits to unitholders.

Group Company2012 2011 2012 2011

R’000 R’000 R’000 R’000

14 lINkEd dEbENTuRES

Subordinated variable rate debentures of R4,80 each 1 371 572 1 346 573 1 371 572 1 346 573

Debentures issued to BEE SPV eliminated (refer note 16) (51 892) (51 892) (51 892) (51 892)

1 319 680 1 294 681 1 319 680 1 294 681

Group Company2012 2011 2012 2011

Debentures Debentures Debentures Debentures

Total debentures in issue 285 744 070 280 536 070 285 744 070 280 536 070

Debentures issued to BEE SPV eliminated (refer note 16) (10 810 811) (10 810 811) (10 810 811) (10 810 811)

274 933 259 269 725 259 274 933 259 269 725 259

The debentures bear interest at a rate of not less than 99% of the net profit as defined in the Debenture Trust Deed. Interest is payable six monthly.

The debentures are redeemable:

– After 25 years from date of allotment subject to a special resolution with redemption taking place five years after the date of the special resolution;

– At the option of the company subject to compliance with statutes and the requirements of the JSE Ltd, as applicable; or

– Immediately at the option of the trustee if the company fails to adhere to the terms of the debenture trust deed, commits an act of insolvency or

disposes of, or attempts to dispose of the whole or substantially the whole of its undertaking.

The rights of debenture holders to repayment are subordinated in favour of the claims of other creditors.

Each debenture is indivisibly linked to one ordinary share in the share capital of the company.


57

15 INTEREST-bEARINg bORROWINgS

The group has entered into the following loan agreements, which together with linked unitholder capital, are used to fund its investment activities.

The Memorandum of Incorporation of the company allows the group to have borrowings of up to 60% of total asset value.

Interest-bearing loans and borrowings are measured at amortised cost. The group’s exposure to interest rate, foreign currency and liquidity risk is

discussed in note 28. 2012 2011Fair Carrying Fair Carrying

Nominal Date of value amount value amountGroup interest rate maturity R’000 R’000 R’000 R’000

Old Mutual 6,50% On demand 251 380 251 380

DMTN programme: 3 months 3-month Jibar plus 0,30% February 2012 277 125 277 125

Standard Bank (1) 1-month Jibar plus 1,61% March 2012 133 000 133 000

Standard Bank (1) 1-month Jibar plus 1,74% March 2012 332 500 332 500

DMTN programme: 1 year 3-month Jibar plus 0,86% October 2012 151 983 151 983

Rand Merchant Bank 3-month Jibar plus 1,55% November 2012 161 218 161 218

DMTN programme: 3 months 3-month Jibar plus 0,23% January 2013 253 731 253 731 – –

DMTN programme: 3 months (7) 3-month Jibar plus 0,22% February 2013 251 741 251 741 – –

Standard Bank (1) 1-month Jibar plus 1,60% March 2013 390 000 390 000 390 000 390 000

Standard Bank (1) 1-month Jibar plus 1,61% March 2013 120 250 120 250 120 250 120 250

Standard Bank (1) Prime less 1,80% March 2013 193 012 193 012 70 801 70 801

Standard Bank (6) Prime less 1,50% March 2013 – – 12 598 12 598

DMTN programme: 1 year 3-month Jibar plus 0,69% October 2013 273 795 273 795 – –

DMTN programme: 3 years 3-month Jibar plus 1,45% June 2014 226 175 226 175 226 170 226 170

DMTN programme: 3 years 3-month Jibar plus 1,55% October 2014 354 765 354 765 355 124 355 124

DMTN programme: 3 years 3-month Jibar plus 1,45% August 2015 166 239 166 239 – –

Nedbank (4) Prime less 2,30% February 2016 109 972 109 972 111 944 111 944

Rand Merchant Bank (2) 3-month Jibar plus 1,69% March 2016 524 279 524 279 756 534 756 534

Nedbank (5) Prime less 1,80% June 2016 166 044 166 044 3 483 3 483

Rand Merchant Bank (2) 3-month Jibar plus 1,60% September 2016 267 750 267 750 267 750 267 750

Standard Bank (1) Prime less 1,65% March 2017 432 250 432 250 – –

DMTN programme: 5 years (7) 3-month Jibar plus 1,70% November 2017 296 729 296 729 – –

Standard Bank (6) Prime less 1,50% February 2018 35 477 35 477 – –

Nedbank (3) Prime less 2,30% December 2018 52 980 52 980 52 980 52 980

Nedbank (3) Prime less 2,30% April 2019 74 160 74 160 74 160 74 160

Nedbank (3) Prime less 1,75% September 2019 69 353 69 353 69 422 69 422

Nedbank (3) Prime less 1,75% October 2019 178 800 178 800 178 800 178 800

4 437 502 4 437 502 3 997 222 3 997 222

Current portion included in current liabilities (1 482 529) (1 482 529) (1 307 206) (1 307 206)

2 954 973 2 954 973 2 690 016 2 690 016

58


Investmentproperty Investments Total

R’000 R’000 R’000

15 INTEREST-bEARINg bORROWINgS (CONTINuEd)

Interest-bearing borrowings are secured by the following:

Group 2012Standard Bank (1) 3 489 800 – 3 489 800 Nedbank (3), (4) 1 502 370 – 1 502 370 Rand Merchant Bank (2) 4 153 650 – 4 153 650

9 145 820 – 9 145 820

Group 2011Standard Bank (1) 3 255 400 – 3 255 400

Nedbank (3), (4) 1 348 430 – 1 348 430

Rand Merchant Bank (2) 2 588 390 – 2 588 390

7 192 220 – 7 192 220 The financial assets have been pledged under the following terms:

(1) – The total overall consolidated debt may not exceed 50% of total consolidated assets.

– Earnings before interest, tax, depreciation and amortisation (“EBITDA”) to gross interest payable in respect of all debt on a consolidated basis

may not be less than 2 times.

– The loan-to-value (“LTV”) ratio may not exceed 60%.

– EBITDA from the properties serving as security for the loan, to gross interest payable in respect of the loan facility, may not be less than 1,3

times.

(2) – The interest-bearing debt to asset ratio may not exceed 55%.

– The facility outstanding mortgaged asset value ratio may not exceed 50%.

– The total interest cover ratio may not be less than 2 times.

– The facility interest cover ratio may not be less than 1,75 times.

– A net asset value of R3,5 billion must be maintained at all times.

(3) – The LTV ratio may not exceed 60%.

– EBITDA, excluding revaluation gains on investment property, to net interest, excluding debenture interest, may not be less than 1,3 times.


– EBITDA to net interest, excluding debenture interest, may not be less than 1,35 times.


(6) – General banking facility.



59

Group2012 2011

Capital repayment

Capitalrepayment

R’000 R’000

Interest-bearing borrowings are repayable as follows:

2012 (1 307 206)

2013 (1 482 529) (593 649)

2014 (580 940) (581 294)

2015 (166 239) –

2016 (1 068 045) (1 139 711)

2017 (728 979) –

2018 (88 457) (52 980)

2019 (322 313) (322 382)

(4 437 502) (3 997 222)

2012 2011Fair Carrying Fair Carrying

Nominal Date of value amount value amountCompany interest rate maturity R’000 R’000 R’000 R’000

Old Mutual 6,50% On demand 251 380 251 380

DMTN programme: 3 months 3-month Jibar plus 0,30% February 2012 277 125 277 125

DMTN programme: 1 year 3-month Jibar plus 0,86% October 2012 151 983 151 983

Rand Merchant Bank 3-month Jibar plus 1,55% November 2012 161 218 161 218

DMTN programme: 3 months 3-month Jibar plus 0,23% January 2013 253 731 253 731 – –

DMTN programme: 3 months (1) 3-month Jibar plus 0,22% February 2013 251 741 251 741 – –

DMTN programme: 1 year 3-month Jibar plus 0,69% October 2013 273 795 273 795 DMTN programme: 3 years 3-month Jibar plus 1,45% June 2014 226 175 226 175 226 170 226 170

DMTN programme: 3 years 3-month Jibar plus 1,55% October 2014 354 765 354 765 355 124 355 124

DMTN programme: 3 years 3-month Jibar plus 1,45% August 2015 166 239 166 239 – –

DMTN programme: 5 years (1) 3-month Jibar plus 1,70% November 2017 296 729 296 729 – –

1 823 175 1 823 175 1 423 000 1 423 000

Current portion included in current liabilities (779 267) (779 267) (841 706) (841 706)

1 043 908 1 043 908 581 294 581 294

The loans are unsecured.

The financial assets have been pledged under the following terms:


60


16 bEE INSTRuMENT

On 27 June 2006 10 810 811 linked units were issued to Eagle’s Eye Investments (Pty) Ltd (“BEE SPV”) and Resilient is standing surety for the funding

obligations of BEE SPV in acquiring these units. In terms of IFRS the issue did not take place and the essence of the transaction was that the BEE

shareholders received a right/option to acquire linked units in Resilient at a future date at a predetermined price. As a consequence, the issue of linked

units has been eliminated in the preparation of these financial statements.

Group Company

2012 2011 2012 2011R’000 R’000 R’000 R’000

As at 31 December the option was valued at 337 640 150 350 337 640 150 350

The value of the option was calculated using the Black-Scholes call option valuation method (to price a European option) and was based on the

following assumptions:

– Option expiry date of 30 June 2014 (one third), 30 June 2015 (one third) and 30 June 2016 (one third).

– Volatility estimate of 3,95% (2011: 7,15%) per annum based on historic volatility of Resilient.

– Dividend assumption of 0%.

– The strike price was calculated using an interest rate of prime less 1,8% (2011: 1,8%) on the funding component.

The following table indicates the effect of the BEE transaction on the group financial statements (the column “Property operations” indicates Resilient’s

results had the BEE transaction been accounted for as an issue for value):Property

Consolidated BEE SPV operationsR’000 R’000 R’000

Group 2012Statement of comprehensive incomeFair value loss on BEE instrument (187 290) 187 290 –Finance costs– Interest on borrowings (365 137) 18 315 (346 822)– Interest to linked debenture holders (696 633) (27 640) (724 273)Income tax expense (525 127) 228 (524 899)Statement of financial positionCurrent assets – Trade and other receivables 82 412 (1 751) 80 661 Share capital 2 749 108 2 857 Share premium 2 712 168 142 270 2 854 438 Non-distributable reserves 5 291 797 341 788 5 633 585 Non-current liabilities– Linked debentures 1 319 680 51 892 1 371 572 – Interest-bearing borrowings (non-current and current) 4 437 502 (214 420) 4 223 082 BEE instrument 337 640 (337 640) –Current liabilities– Trade and other payables 359 021 (336) 358 685 – Linked debenture interest payable 370 967 14 587 385 554

Group 2011Statement of comprehensive incomeFair value loss on BEE instrument (31 450) 31 450 –Finance costs– Interest on borrowings (289 089) 21 057 (268 032)– Interest to linked debenture holders (600 311) (24 942) (625 253)Statement of financial positionCurrent assets – Trade and other receivables 36 357 (1 353) 35 004 Share capital 2 697 108 2 805 Share premium 2 490 931 142 270 2 633 201 Non-distributable reserves 4 080 328 163 595 4 243 923 Non-current liabilities– Linked debentures 1 294 681 51 892 1 346 573 – Interest-bearing borrowings (non-current and current) 3 997 222 (221 739) 3 775 483 BEE instrument 150 350 (150 350) –Current liabilities– Trade and other payables 220 905 (248) 220 657 – Linked debenture interest payable 327 312 13 119 340 431

The above has no effect on the group’s cash flow or the distribution payable to linked unit holders in terms of the Debenture Trust Deed.


61

Group Company2012 2011 2012 2011

R’000 R’000 R’000 R’000

17 dEFERREd TAx

Deferred tax comprises the following:

– Revaluation of investment property 780 941 434 072

– Revaluation of investments 341 684 142 242

– Revaluation of interest rate derivatives (56 937) (31 148)

1 065 688 545 166 – –

Carrying amount at beginning of year 545 166 411 320

Charged to the statement of comprehensive income during the year 520 522 133 846

Carrying amount at end of year 1 065 688 545 166 – –

Deferred tax is provided at 18,6% (2011: 14%) on investment property, at 28% (2011: 28%) on interest rate derivatives and at 18,6% (2011: 14%) on

investments.

There are no unrecognised deferred tax assets and liabilities.

18 TRAdE ANd OTHER PAyAblES

Trade and other payables include the following:

Accrued expenses 112 782 82 388 986 343

Fair value of interest rate derivatives 217 487 111 473

Tenant deposits 20 927 18 705

Prepaid rentals 5 681 4 168

VAT payable 2 144 4 171

359 021 220 905 986 343

19 PROFIT/(lOSS) bEFORE INCOME TAx ExPENSE

Profit/(loss) before income tax expense is stated after charging:

Auditors’ remuneration

– audit fee (910) (855) (46) (46)

– other services (17) (25)

Directors’ remuneration

– services as director (non-executive) (2 864) (2 422) (2 864) (2 422)

– other services (executive) (11 735) (9 885)

Amortisation of tenant installation (3 511) (2 720)

Amortisation of letting commission (215) (71)

Property administration fees (20 987) (18 225)

Employee cost (excluding executive directors) (50 511) (44 885)

20 INCOME TAx ExPENSE

South African normal tax– current tax current year (4 605) (109)

– deferred tax current year (520 522) (133 846)

(525 127) (133 955) – –

Reconciliation of tax rateStandard tax rate 28,00% 28,00% 28,00% 28,00%

Capital gains tax rate differential (16,00%) (15,77%)

Capital gains tax rate differential – change in tax rate 15,80% –

Prior deferred tax assets raised – 0,42%

BEE option 3,02% 0,97% (28,00%) (28,00%)

Permanent differences (0,87%) (0,42%)

Other 0,29% 1,62% – –

Effective tax rate 30,24% 14,82% – –

62


Group Company2012 2011 2012 2011

R’000 R’000 R’000 R’000

21 NOTES TO THE STATEMENTS OF CASH FlOWS

21.1 Cash generated from operationsProfit/(loss) before income tax expense 1 736 596 904 095 (187 290) (31 450)

Adjusted for:

Fair value gain on investment property (1 061 731) (568 696)

Fair value gain on investments (944 934) (397 391)

Fair value loss on BEE instrument 187 290 31 450 187 290 31 450

Distributable income from associate – (13 959)

Interest received on loans (75 975) (70 935) (34 502) (28 955)


Interest on linked units issued cum distribution (3 594) (20 794) (3 594) (20 794)

Interest paid on borrowings 365 137 289 089 99 628 59 946

Capitalised interest (37 697) (43 396)

Interest to linked debenture holders 696 633 600 311 696 633 600 311

Amortisation of tenant installation 3 511 2 720

Amortisation of letting commission 215 71

957 555 746 992 758 165 610 508

Changes in working capital

(Increase)/decrease in trade and other receivables (32 145) 47 328 – –

Increase/(decrease) in trade and other payables 32 102 19 974 643 (474)

957 512 814 294 758 808 610 034

21.2 Interest paid to linked debenture holdersLinked debenture interest payable at beginning of year (327 312) (274 831) (327 312) (274 831)

Charged to statement of comprehensive income during the year (696 633) (600 311) (696 633) (600 311)

Linked debenture interest payable at end of year 370 967 327 312 370 967 327 312

(652 978) (547 830) (652 978) (547 830)

21.3 Income tax paidIncome tax payable at beginning of year (876) (1 663)

Charged to statement of comprehensive income during the year (4 605) (109)

Income tax payable at end of year 1 318 876

(4 163) (896)

21.4 Investment property and related assets and liabilities acquired not

included in additions to investment property or financing activitiesInvestment property – (4 271) – –

Investment in subsidiary – (1 591)

Trade and other payables – 8 – –

Cash flow effect – (4 263) – (1 591)

During 2011 the company acquired an additional 5% interest in Pure Diamond Investments (Pty) Ltd.

21.5 Liquidation of subsidiaryLiquidation proceeds received 266 447 –

Decrease in loans to subsidiaries (266 447) –

– –

Diversified Property Fund Ltd was liquidated during the year.


63

22 THE RESIlIENT uNIT PuRCHASE TRuST

Unitholders adopted The Resilient Unit Purchase Trust (“the Trust”) Deed at a special meeting on 2 June 2004. In terms of the rules of the Trust, the

maximum number of linked units which may be granted to the participants shall be limited to 30 000 000 (2011: 22 000 000) linked units.

2012 2011

% of issued Number of % of issued Number of linked units linked units linked units linked units

Maximum linked units available to the Trust in terms of the Trust Deed 10,5% 30 000 000 7,8% 22 000 000

Issued to the Trust through loan account 5,8% (16 653 000) 5,9% (16 653 000)

Previously issued to the Trust, repaid and not available for reissue 1,8% (5 238 800) 1,9% (5 238 800)

Units available but unissued 8 108 200 108 200

The participants in the Trust carry the risk associated with the linked units issued to them.

This disclosure includes all units issued since 2004.

Details of the linked units granted to directors as at 31 December 2012 are as follows:Employee

asset asNumber Date Issue recorded inof units of price the Trust

issued issue Rand R’000

Des de Beer 265 000 12 Sep 08 20,05 5 313 500 000 11 May 09 22,04 11 020 500 000 8 Mar 10 25,18 12 590 400 000 9 Mar 11 28,80 11 520 600 000 10 Nov 11 33,36 20 016

Andries de Lange 35 000 20 Apr 07 21,61 756 93 000 21 Sep 07 22,90 2 130 80 000 12 Sep 08 20,05 1 604 75 000 11 May 09 22,04 1 653

200 000 8 Mar 10 25,18 5 036 250 000 9 Mar 11 28,80 7 200 500 000 10 Nov 11 33,36 16 680

Nick Hanekom 13 500 21 Sep 07 22,90 309 75 000 11 May 09 22,04 1 653

200 000 8 Mar 10 25,18 5 036 200 000 9 Mar 11 28,80 5 760 350 000 10 Nov 11 33,36 11 676

Johann Kriek 175 000 20 Apr 07 21,61 3 782 200 000 21 Sep 07 22,90 4 580 100 000 12 Sep 08 20,05 2 005 125 000 11 May 09 22,04 2 755 100 000 8 Mar 10 25,18 2 518 250 000 9 Mar 11 28,80 7 200 20 000 10 Nov 11 33,36 667

David Lewis 250 000 21 Sep 07 22,90 5 725 250 000 12 Sep 08 20,05 5 013 125 000 11 May 09 22,04 2 755 100 000 8 Mar 10 25,18 2 518 250 000 9 Mar 11 28,80 7 200 175 000 10 Nov 11 33,36 5 838

64


Group Company2012 2011 2012 2011

R’000 R’000 R’000 R’000

23 CAPITAl COMMITMENTS

Approved and contracted for 884 387 100 893 – –Approved and not contracted for 522 707 696 000 – –

The expenditure relates to property developments and extensions to properties and will be funded by borrowings and the disposal of investments.

24 CONTINgENT lIAbIlITIES

There are no contingent liabilities.

Group2012 2011

R’000 R’000

25 OPERATINg lEASE RENTAlS

Contractual rental revenue from tenants can be analysed as follows:Within one year 799 877 717 893 Within two to five years 1 966 319 1 746 158 More than five years 660 692 648 538

3 426 888 3 112 589

Corporate Retail TotalR’000 R’000 R’000

26 SEgMENTAl REPORTINg

Segmental statement of financial position at 31 December 2012Investment property and investment property under development - 10 894 406 10 894 406 Investments 3 719 975 3 719 975 Intangible asset 26 422 26 422 Resilient Unit Purchase Trust loans 374 587 374 587 Loans to employees to acquire Capital units 245 897 245 897 Loans to BEE partners 415 947 415 947 Loans to development partners 137 758 137 758 Trade and other receivables 73 958 8 454 82 412 Cash and cash equivalents 390 736 1 126 Total assets 4 994 934 10 903 596 15 898 530

Due to the pooling of funds, disclosure of segmental liabilities will all be included under corporate.

Segmental statement of comprehensive income for the year ended 31 December 2012Recoveries and contractual rental revenue – 1 140 230 1 140 230 Straight-lining of rental revenue adjustment 51 115 51 115 Segment revenue – 1 191 345 1 191 345 Property operating expenses (397 568) (397 568)Net rental and related revenue – 793 777 793 777 Distributable income from investments 210 718 210 718 Fair value gain on investment property net of adjustment resulting from straight-lining of rental revenue – 1 010 616 1 010 616 Fair value gain on investments 944 934 944 934 Fair value loss on BEE instrument (187 290) (187 290)Management fees received from PFM 79 065 79 065 Administrative expenses (78 616) (78 616)Total segment result 968 811 1 804 393 2 773 204

Segmental capital expenditure – 566 866 566 866


65

Corporate Retail TotalR’000 R’000 R’000

Segmental statement of financial position at 31 December 2011Investment property and investment property under development – 9 228 112 9 228 112

Investments 2 769 300 2 769 300

Intangible asset 26 422 26 422

Resilient Unit Purchase Trust loans 420 320 420 320

Loans to employees to acquire Capital units 279 249 279 249

Loans to BEE partners 221 632 221 632

Loans to development partners 125 250 125 250

Trade and other receivables 30 861 5 496 36 357

Cash and cash equivalents 1 639 2 187 3 826

Total assets 3 874 673 9 235 795 13 110 468

Due to the pooling of funds, disclosure of segmental liabilities will all be included under corporate.

Segmental statement of comprehensive income for the year ended 31 December 2011Recoveries and contractual rental revenue – 843 738 843 738


Segment revenue – 876 499 876 499

Property operating expenses (273 076) (273 076)

Net rental and related revenue – 603 423 603 423

Distributable income from investments 181 283 181 283

Fair value gain on investment property net of adjustment

resulting from straight-lining of rental revenue – 535 935 535 935

Fair value gain on investments 397 391 397 391

Fair value loss on BEE instrument (31 450) (31 450)

Management fees received from PFM 63 609 63 609

Administrative expenses (71 353) (71 353)

Income from associate 13 959 13 959

Total segment result 553 439 1 139 358 1 692 797

Segmental capital expenditure – 1 969 562 1 969 562

27 SubSEQuENT EVENTS

The directors are not aware of any other events subsequent to 31 December 2012, not arising in the normal course of business, which are likely to have

a material effect on the financial information contained in this report, other than as disclosed in the directors’ report.

66


Group Company2012 2011 2012 2011

R’000 R’000 R’000 R’000

28 FINANCIAl INSTRuMENTS

28.1 Credit riskThe carrying amount of financial assets represents the maximum credit

exposure. The maximum exposure to credit risk at the reporting date was:

Resilient Unit Purchase Trust loans 374 587 420 320 373 951 419 688

Loans to employees to acquire Capital units 245 897 279 249 – –

Loans to BEE partners 415 947 221 632 – –

Loans to development partners 137 758 125 250 – –

Trade and other receivables 62 796 34 133 – –

Cash and cash equivalents 1 126 3 826 – –

1 238 111 1 084 410 373 951 419 688

The maximum exposure to credit risk for loans at the reporting date was:

Resilient Unit Purchase Trust loans 374 587 420 320 373 951 419 688

Loans to employees to acquire Capital units 245 897 279 249 – –

Linked units pledged as security (1 092 349) (941 021) (712 427) (578 692)

Net exposure – – – –

Loans to BEE partners 415 947 221 632 – –

Loans to development partners 137 758 125 250 – –

Net exposure total loans 553 705 346 882 – –

None of the borrowers to whom loans were granted were in breach of their obligations.

No impairment allowance is necessary in respect of loans as the fair value of the security provided exceeds the value of the loans.

The maximum exposure to credit risk for trade and other receivables at the reporting date by segment was:

Corporate 54 342 28 637 – –

Retail 8 454 5 496 – –

Trade receivables 62 796 34 133 – –

Tenant deposits (limited to tenant arrears) (8 454) (5 496) – –

54 342 28 637 – –

The aging of all trade receivables at the reporting date was less than 90 days.

The group believes that no impairment allowance is necessary in respect of trade receivables as a comprehensive analysis of outstanding amounts are

performed on a regular basis and impairment losses are accounted for timeously.

There are no significant concentrations of credit risk.

Gross receivables:

Not past due 54 342 28 637 – –

Past due not impaired 8 454 5 496 – –

62 796 34 133 – –

Tenant arrears of R2,5 million (2011: R5,6 million) was written off as irrecoverable during the year. No impairment adjustment is required against the

balance of the receivables.


67

Carrying Contractual More thanvalue outflows 1-12 months 2-5 years 5 years

R’000 R’000 R’000 R’000 R’000

28.2 Liquidity riskThe following are the contractual maturities of financial liabilities, excluding interest payments and excluding the impact of netting agreements:

Group 2012Non-derivative financial liabilities

Linked debentures 1 319 680 1 319 680 – – 1 319 680 Interest-bearing borrowings - capital 4 437 502 4 437 502 1 482 529 2 544 203 410 770 Trade and other payables 351 196 351 196 351 196 – –

Group 2011Non-derivative financial liabilities

Linked debentures 1 294 681 1 294 681 – – 1 294 681

Interest-bearing borrowings - capital 3 997 222 3 997 222 1 307 206 2 314 654 375 362

Trade and other payables 212 566 212 566 212 566 – –

Company 2012Non-derivative financial liabilities

Linked debentures 1 319 680 1 319 680 – – 1 319 680 Interest-bearing borrowings - capital 1 823 175 1 823 175 779 267 1 043 908 –Trade and other payables 986 986 986 – –Amounts owing to subsidiaries and joint ventures 33 213 33 213 33 213 – –

Company 2011Non-derivative financial liabilities

Linked debentures 1 294 681 1 294 681 – – 1 294 681

Interest-bearing borrowings - capital 1 423 000 1 423 000 841 706 581 294 –

Trade and other payables 343 343 343 – –

Amounts owing to subsidiaries and joint ventures 10 426 10 426 10 426 – –

Cash flows are monitored on a regular basis to ensure that cash resources are adequate to meet funding requirements.

Group2012 2011

R’000 R’000

Permitted borrowings for the group

Total assets 15 898 530 13 110 468

60% of total assets 9 539 118 7 866 281

Total borrowings (4 437 502) (3 997 222)

Unutilised borrowing capacity 5 101 616 3 869 059

Group Company2012 2011 2012 2011

R’000 R’000 R’000 R’000

28.3 Market risk28.3.1 Interest rate risk

Interest-bearing instruments comprise:

Variable rate instruments

Resilient Unit Purchase Trust loans (374 587) (420 320) (373 951) (419 688)

Loans to employees to acquire Capital units (245 897) (279 249) – –

Loans to BEE partners (415 947) (221 632) – –

Loans to development partners (137 758) (125 250) – –

Cash and cash equivalents (1 126) (3 826) – –

Interest-bearing borrowings 4 437 502 3 997 222 1 823 175 1 423 000

3 262 187 2 946 945 1 449 224 1 003 312

The group adopts a policy of ensuring that at least 80% of its exposure to interest rates is hedged.

68


Nominal Average FairSwap amount swap value

maturity R’000 rate R’000

28 FINANCIAl INSTRuMENTS (CONTINuEd)

28.3 Market risk (continued)28.3.1 Interest rate risk (continued)

Details of existing interest rate derivatives are:

Group 2012 2013 300 000 7,04% (3 369)2014 650 000 7,42% (21 287)2015 600 000 7,71% (36 269)2016 600 000 7,42% (39 186)2017 600 000 7,80% (50 728)2018 600 000 7,44% (43 660)2019 600 000 6,80% (21 835)2020 120 000 6,53% (1 153)

4 070 000 7,38% (217 487)

Nominal Average FairCap amount cap value


2013 50 000 11,55% –2017 400 000 5,90% 14 140

450 000 6,52% 14 140

Nominal Average FairSwap amount swap value


Group 2011 2012 400 000 7,82% (6 546)

2013 400 000 7,22% (8 603)

2014 650 000 7,42% (20 712)

2015 600 000 7,71% (26 092)

2016 600 000 7,42% (17 220)

2017 600 000 7,80% (23 018)

2018 500 000 7,54% (9 057)

3 750 000 7,57% (111 248)

Nominal Average FairCap amount cap value


2013 50 000 11,55% 5

Effective interest rates and repricing

The effective interest rates at the statement of financial position date and the periods in which the borrowings reprice are reflected in note 15.


69

Cash flow sensitivity analysis for variable rate instrumentsInterest

A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) distribution by the amounts shown below.

This analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2011.

DistributionIncrease Decrease

R’000 R’000

Group 2012Loans to BEE partners 4 159 (4 159)Loans to development partners 1 378 (1 378)Cash and cash equivalents 11 (11)Interest-bearing borrowings (44 375) 44 375 Interest rate derivatives 40 700 (40 700)Cash flow sensitivity (net) 1 873 (1 873)

Company 2012Interest-bearing borrowings (18 232) 18 232

Group 2011Loans to BEE partners 2 216 (2 216)

Loans to development partners 1 253 (1 253)

Cash and cash equivalents 38 (38)

Interest-bearing borrowings (39 972) 39 972

Interest rate derivatives 37 500 (37 500)

Cash flow sensitivity (net) 1 035 (1 035)

Company 2011Interest-bearing borrowings (14 230) 14 230

Group Company2012 2011 2012 2011

R’000 R’000 R’000 R’000

28.3.2 Equity price risk

The carrying amount of financial assets represents the

maximum equity price risk exposure. The maximum exposure

to equity price risk at the reporting date was:

Investments 3 719 975 2 769 300 – –

A one percent change in the market value of investments would have increased/(decreased) equity and profit and loss by the amounts shown

below.

This analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2011.

Profit or loss and equity1% increase 1% decrease

R’000 R’000

Group 2012Investments 37 200 (37 200)

Group 2011Investments 27 693 (27 693)

70


28 FINANCIAl INSTRuMENTS (CONTINuEd)

28.4 Fair valuesThe fair values of all financial instruments with the exception of linked debentures are substantially the same as the carrying amounts reflected on the statement of financial position.

Designated at fair value

Loans and

receivablesAmortised

cost

Total carrying amount

Fair value

R’000 R’000 R’000 R’000 R’000

Group 2012Investments (level 1) 3 719 975 3 719 975 3 719 975 Resilient Unit Purchase Trust loans 374 587 374 587 374 587 Loans to employees to acquire Capital units 245 897 245 897 245 897 Loans to BEE partners 415 947 415 947 415 947 Loans to development partners 137 758 137 758 137 758 Trade and other receivables 48 656 48 656 48 656 Interest rate derivatives debtor (level 2) 14 140 14 140 14 140 Cash and cash equivalents 1 126 1 126 1 126 Linked debentures (1 319 680) (1 319 680) (1 319 680)Interest-bearing borrowings (4 437 502) (4 437 502) (4 437 502)BEE instrument (337 640) (337 640) (337 640)Trade and other payables (133 709) (133 709) (133 709)Interest rate derivatives creditor (level 2) (217 487) (217 487) (217 487)Linked debenture interest payable (370 967) (370 967) (370 967)

3 178 988 1 223 971 (6 261 858) (1 858 899) (1 858 899)Group 2011Investments (level 1) 2 769 300 2 769 300 2 769 300 Resilient Unit Purchase Trust loans 420 320 420 320 420 320 Loans to employees to acquire Capital units 279 249 279 249 279 249 Loans to BEE partners 221 632 221 632 221 632 Loans to development partners 125 250 125 250 125 250 Trade and other receivables 33 903 33 903 33 903 Interest rate derivatives debtor (level 2) 230 230 230 Cash and cash equivalents 3 826 3 826 3 826 Linked debentures (1 294 681) (1 294 681) (1 294 681)Interest-bearing borrowings (3 997 222) (3 997 222) (3 997 222)BEE instrument (150 350) (150 350) (150 350)Trade and other payables (101 093) (101 093) (101 093)Interest rate derivatives creditor (level 2) (111 473) (111 473) (111 473)Linked debenture interest payable (327 312) (327 312) (327 312)

2 507 707 1 084 180 (5 720 308) (2 128 421) (2 128 421)

Company 2012Resilient Unit Purchase Trust loans 373 951 373 951 373 951 Linked debentures (1 319 680) (1 319 680) (1 319 680)Interest-bearing borrowings (1 823 175) (1 823 175) (1 823 175)BEE instrument (337 640) (337 640) (337 640)Trade and other payables (986) (986) (986)Linked debenture interest payable (370 967) (370 967) (370 967)Amounts owing to subsidiaries and joint ventures (33 213) (33 213) (33 213)

(337 640) 340 738 (3 514 808) (3 511 710) (3 511 710)Company 2011Resilient Unit Purchase Trust loans 419 688 419 688 419 688 Linked debentures (1 294 681) (1 294 681) (1 294 681)Interest-bearing borrowings (1 423 000) (1 423 000) (1 423 000)BEE instrument (150 350) (150 350) (150 350)Trade and other payables (343) (343) (343)Linked debenture interest payable (327 312) (327 312) (327 312)Amounts owing to subsidiaries and joint ventures (10 426) (10 426) (10 426)

(150 350) 409 262 (3 045 336) (2 786 424) (2 786 424)

Level 1 financial instruments are all investments in listed equities. Interest rate derivatives have been classified as level 2 financial instruments and have been fair valued externally.


71

29 ACCOuNTINg ESTIMATES ANd judgEMENTS

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.

Investment property

The revaluation of investment property requires judgement in the determination of future cash flows from leases and an appropriate capitalisation rate

which may vary between 7,50% and 9,00% (2011: 7,75% and 9,00%). Changes in the capitalisation rate attributable to changes in market conditions

can have a significant impact on property valuations.

Impairment of assets

The group tests whether assets have suffered any impairment in accordance with the accounting policy stated in note 1. The recoverable amounts of

cash generating units and intangible assets have been determined based on future cash flows discounted to their present value using appropriate rates.

Estimates are based on interpretation of generally accepted industry based market forecasts.

Trade receivables

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

collectability is considered to be doubtful. Management believes that the impairment write-off is conservative and 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:

– age;

– customer current financial status;

– security held; and

– disputes with customer.

30 RElATEd PARTy TRANSACTIONSParent entity

The holding company is Resilient Property Income Fund Limited.

Identity of related parties with whom material transactions have occurredThe subsidiaries and directors are related parties. The subsidiaries of the company are identified in note 10. The directors are set out on pages 4 to 7.

Material related party transactions

Loans to/from subsidiaries are set out in note 10.

Interest received from subsidiaries is set out in the statements of comprehensive income.

Remuneration paid to directors is set out on page 19 and in note 19.

Loans by The Resilient Unit Purchase Trust to directors are set out in note 22.

Interest paid by directors to The Resilient Unit Purchase Trust amounts to R27 201 000 (2011: R14 608 000).

Loans to directors to acquire units in Capital Property Fund are set out in note 7.

Interest paid by directors on loans to acquire units in Capital Property Fund amounts to R5 028 000 (2011: R3 328 000).

Directors’ interestThembi Chagonda and Phumelele Msweli have indirect holdings in Resilient through their holdings in BEE SPV.

72


31 STANdARdS ANd INTERPRETATIONS NOT yET EFFECTIVE

Statement of compliance with IFRS

The group applies all applicable IFRS as issued by the International Accounting Standards Board (“IASB”) in preparation of the financial statements.

Consequently, all IFRS statements that were effective at the date of issuing this report and are relevant to Resilient’s operations have been applied.

At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective:

IFRS 1 First-time Adoption of International Financial Reporting Standards

– Amendments for government loan with a below-market rate of interest when

transitioning to IFRSs

Annual periods beginning on or after 1 January 2013

IFRS 1 First-time Adoption of International Financial Reporting Standards

– Amendments resulting from Annual Improvements 2009-2011 Cycle

(repeat application, borrowing costs)


IFRS 7 Financial Instruments: Disclosures

– Amendments related to the offsetting of assets and liabilities


and interim periods within those periods

IFRS 7 Financial Instruments: Disclosures

– Deferral of mandatory effective date of IFRS 9 and amendments to transition

disclosures


IFRS 9 Financial Instruments

– Original issue (Classification and measurement of financial assets)


(Effective date subsequently deferred, see below)


– Reissue to include requirements for the classification and measurement of

financial liabilities and incorporate existing derecognition requirements


(Effective date subsequently deferred, see below)


– Deferral of mandatory effective date of IFRS 9 and amendments to transition

disclosures


IFRS 10 Consolidated Financial Statements

– Original issue



– Amendments to transitional guidance



– Amendments for investment entities


IFRS 11 Joint Arrangements

– Original issue


IFRS 11 Joint Arrangements



IFRS 12 Disclosure of Interests in Other Entities

– Original issue








IFRS 13 Fair value measurement Annual periods beginning on or after 1 January 2013

IAS 1 Presentation of Financial Statements

– Amendments to revise the way other comprehensive income is presented

Annual periods beginning on or after 1 July 2012

IAS 1 Presentation of Financial Statements


(comparative information)



73

IAS 16 Property, plant and equipment


(servicing equipment)


IAS 19 Employee Benefits

– Amended Standard resulting from the post-employment benefits and

termination benefits projects


IAS 27 Separate Financial Statements

– Reissued as IAS 27 Separate Financial Statements (as amended in 2011)


IAS 27 Separate Financial Statements



IAS 28 Investments in Associates

– Reissued as IAS 28 Investments in Associates and Joint Ventures

(as amended in 2011)


IAS 32 Financial Instruments: Presentation

– Amendments relating to the offsetting of assets and liabilities


IAS 32 Financial Instruments: Presentation


(tax effect of equity distributions)


IAS 34 Interim Financial Reporting


(interim reporting of segment assets)


Management is assessing the impact that the adoption of these standards and interpretations will have on the financial statements.

74


SCHEdulE OF PROPERTIES

GrossWeighted

average Purchase Primary Geographical lettable rate per Acquisition price Valuation

No Property name use location area (m2) Vacancy m2 (R) date R’000 R’000 Address

1 Boardwalk Shopping Centre Retail KwaZulu-Natal 65 891 0,8% 121,91 1 Dec 11 1 028 347 1 263 000 Krugerrand Road Richards Bay

2 Mall of the North (Resilient has a 60% interest) Retail Limpopo 76 748 0,9% 139,04 20 Apr 07 633 878 940 800 Cnr future N1 (Ringroad) and R81 Modjadjis Kloof Road Bendor Polokwane

3 Highveld Mall (Resilient has a 60% interest) Retail Mpumalanga 63 720 1,3% 141,05 26 Apr 07 331 819 860 101 Cnr President Avenue and N4 Highway Witbank

4 The Grove Retail Gauteng 41 475 3,4% 138,60 20 Sep 06 626 924 770 000 Cnr Simon Vermooten Road and Lynnwood Road Equestria

5 Tzaneng Mall Retail Limpopo 40 924 3,3% 107,24 23 Dec 03 196 457 600 000 24 - 26 Danie Joubert Street (cnr Danie Joubert and Agatha Roads) Tzaneen

6 I’langa Mall (Resilient has a 70% interest) Retail Mpumalanga 49 222 0,7% 111,60 6 Sep 07 444 114 539 000 Cnr N4 and Graniet Street Nelspruit

7 Brits Mall (Resilient has a 93% interest) Retail North West 36 876 1,5% 100,28 22 Jan 08 360 333 451 050 Cnr Hendrik Verwoerd Avenue (R511) and Marthinus Ras Street Brits

8 Diamond Pavilion Retail Northern Cape 32 513 3,1% 110,19 21 Jul 05 305 172 446 000 Cnr Oliver Road and MacDougall Street Monument Heights Kimberley

9 Jabulani Mall (Resilient has a 55% interest) Retail Gauteng 44 314 0,4% 127,70 1 Nov 06 214 727 442 750 2189 Bolani Road Jabulani Soweto

10 Limpopo Mall and Taxi Centre Polokwane Retail Limpopo 27 803 – 141,46 1 Dec 02 110 464 429 800 Rissik Market Church Devenish and President Kruger Streets Polokwane

11 Mvusuludzo Mall Thohoyandou Retail Limpopo 20 952 – 120,77 2 Dec 04 139 105 370 000 Tshanduko Street Thohoyandou

12 Rivonia Village Retail Gauteng 22 591 3,4% 109,73 30 Jun 08 146 109 318 000 Cnr Rivonia Boulevard and Mutual Road Rivonia

13 Circus Triangle Mthatha Retail Eastern Cape 20 717 2,7% 104,28 1 Dec 10 225 948 301 534 Cnr Chatham Elliot and Sutherland Streets Mthatha

14 Nelspruit Plaza Retail Mpumalanga 18 525 – 116,71 27 Nov 03 96 386 295 000 Cnr Henshall and Bester Streets Nelspruit

15 Northam Plaza Retail Limpopo 20 026 – 94,15 20 Oct 05 96 026 266 700 Cnr Provincial Road P16 – 2 and Provincial Road P1235 Northam

16 Rustenburg Plaza Retail North West 12 188 – 127,19 1 Dec 02 50 771 249 000 34 Fatima Bhayat Street Rustenburg

17 The Crossing Mokopane Retail Limpopo 18 733 1,4% 93,24 24 Oct 03 93 577 235 500 56 Thabo Mbeki Drive Mokopane

18 Murchison Mall Retail KwaZulu-Natal 17 992 – 84,37 1 Mar 05 71 236 214 000 Cnr Murchison and Lyell Streets Ladysmith

19 Mafikeng Mall (Resilient has a 66% interest) Retail North West 22 896 0,4% 95,76 31 Jul 07 137 268 205 920 Cnr Carney and Carrington Streets Mafikeng

20 Village Mall Kathu Retail Northern Cape 18 454 0,4% 81,62 26 Nov 08 134 266 202 000 Cnr De Ben and Hendrik van Eck Streets Kathu

21 Tzaneen Crossing Retail Limpopo 14 303 4,2% 94,05 1 Dec 02 41 358 173 600 12 Lydenburg Road Tzaneen

22 Pick n Pay Hypermarket Klerksdorp Retail North West 18 926 – 68,23 1 Dec 02 57 028 166 000 91 Buffelsdoorn Avenue (cnr Buffelsdoorn Road and Tom Avenue) Wilkoppies Klerksdorp

23 New Redruth Village Retail Gauteng 12 028 2,0% 93,36 30 Jun 08 106 522 143 000 St Austell Street New Redruth Alberton

24 Central Park Bloemfontein Retail Free State 12 753 9,4% 98,65 29 Oct 10 74 012 135 000 Cnr Fichardt and Hanger Streets Bloemfontein

25 The Galleria (Resilient has a 10% interest) Retail KwaZulu-Natal 88 443 12,2% 133,75 30 Nov 04 122 434 133 750 Cnr N2 Highway and Chamberlain Road Umbogintwini

26 Sterkspruit Plaza (Resilient has an 82% interest) Retail Eastern Cape 10 696 1,9% 90,03 30 Jun 08 86 647 87 330 Cnr Zastron and Voyizana Roads Sterkspruit

27 Tzaneen Lifestyle Centre (Resilient has a 70% interest) Retail Limpopo 9 380 – 105,11 5 Sep 08 76 000 84 000 Cnr Voortrekker and the P43–3 Road Tzaneen

28 Arbour Crossing (Resilient has a 10% interest) Retail KwaZulu-Natal 39 786 8,5% 85,66 30 Nov 04 38 877 40 300 Cnr N2 Highway and Chamberlain Road Umbogintwini

Total direct property investment 878 875 1,7%* 113,90* 6 045 805 10 363 135

75

GrossWeighted



1 Boardwalk Shopping Centre Retail KwaZulu-Natal 65 891 0,8% 121,91 1 Dec 11 1 028 347 1 263 000 Krugerrand Road Richards Bay

2 Mall of the North (Resilient has a 60% interest) Retail Limpopo 76 748 0,9% 139,04 20 Apr 07 633 878 940 800 Cnr future N1 (Ringroad) and R81 Modjadjis Kloof Road Bendor Polokwane

3 Highveld Mall (Resilient has a 60% interest) Retail Mpumalanga 63 720 1,3% 141,05 26 Apr 07 331 819 860 101 Cnr President Avenue and N4 Highway Witbank

4 The Grove Retail Gauteng 41 475 3,4% 138,60 20 Sep 06 626 924 770 000 Cnr Simon Vermooten Road and Lynnwood Road Equestria

5 Tzaneng Mall Retail Limpopo 40 924 3,3% 107,24 23 Dec 03 196 457 600 000 24 - 26 Danie Joubert Street (cnr Danie Joubert and Agatha Roads) Tzaneen

6 I’langa Mall (Resilient has a 70% interest) Retail Mpumalanga 49 222 0,7% 111,60 6 Sep 07 444 114 539 000 Cnr N4 and Graniet Street Nelspruit

7 Brits Mall (Resilient has a 93% interest) Retail North West 36 876 1,5% 100,28 22 Jan 08 360 333 451 050 Cnr Hendrik Verwoerd Avenue (R511) and Marthinus Ras Street Brits

8 Diamond Pavilion Retail Northern Cape 32 513 3,1% 110,19 21 Jul 05 305 172 446 000 Cnr Oliver Road and MacDougall Street Monument Heights Kimberley

9 Jabulani Mall (Resilient has a 55% interest) Retail Gauteng 44 314 0,4% 127,70 1 Nov 06 214 727 442 750 2189 Bolani Road Jabulani Soweto

10 Limpopo Mall and Taxi Centre Polokwane Retail Limpopo 27 803 – 141,46 1 Dec 02 110 464 429 800 Rissik Market Church Devenish and President Kruger Streets Polokwane

11 Mvusuludzo Mall Thohoyandou Retail Limpopo 20 952 – 120,77 2 Dec 04 139 105 370 000 Tshanduko Street Thohoyandou

12 Rivonia Village Retail Gauteng 22 591 3,4% 109,73 30 Jun 08 146 109 318 000 Cnr Rivonia Boulevard and Mutual Road Rivonia

13 Circus Triangle Mthatha Retail Eastern Cape 20 717 2,7% 104,28 1 Dec 10 225 948 301 534 Cnr Chatham Elliot and Sutherland Streets Mthatha

14 Nelspruit Plaza Retail Mpumalanga 18 525 – 116,71 27 Nov 03 96 386 295 000 Cnr Henshall and Bester Streets Nelspruit

15 Northam Plaza Retail Limpopo 20 026 – 94,15 20 Oct 05 96 026 266 700 Cnr Provincial Road P16 – 2 and Provincial Road P1235 Northam

16 Rustenburg Plaza Retail North West 12 188 – 127,19 1 Dec 02 50 771 249 000 34 Fatima Bhayat Street Rustenburg

17 The Crossing Mokopane Retail Limpopo 18 733 1,4% 93,24 24 Oct 03 93 577 235 500 56 Thabo Mbeki Drive Mokopane

18 Murchison Mall Retail KwaZulu-Natal 17 992 – 84,37 1 Mar 05 71 236 214 000 Cnr Murchison and Lyell Streets Ladysmith

19 Mafikeng Mall (Resilient has a 66% interest) Retail North West 22 896 0,4% 95,76 31 Jul 07 137 268 205 920 Cnr Carney and Carrington Streets Mafikeng

20 Village Mall Kathu Retail Northern Cape 18 454 0,4% 81,62 26 Nov 08 134 266 202 000 Cnr De Ben and Hendrik van Eck Streets Kathu

21 Tzaneen Crossing Retail Limpopo 14 303 4,2% 94,05 1 Dec 02 41 358 173 600 12 Lydenburg Road Tzaneen

22 Pick n Pay Hypermarket Klerksdorp Retail North West 18 926 – 68,23 1 Dec 02 57 028 166 000 91 Buffelsdoorn Avenue (cnr Buffelsdoorn Road and Tom Avenue) Wilkoppies Klerksdorp

23 New Redruth Village Retail Gauteng 12 028 2,0% 93,36 30 Jun 08 106 522 143 000 St Austell Street New Redruth Alberton

24 Central Park Bloemfontein Retail Free State 12 753 9,4% 98,65 29 Oct 10 74 012 135 000 Cnr Fichardt and Hanger Streets Bloemfontein

25 The Galleria (Resilient has a 10% interest) Retail KwaZulu-Natal 88 443 12,2% 133,75 30 Nov 04 122 434 133 750 Cnr N2 Highway and Chamberlain Road Umbogintwini

26 Sterkspruit Plaza (Resilient has an 82% interest) Retail Eastern Cape 10 696 1,9% 90,03 30 Jun 08 86 647 87 330 Cnr Zastron and Voyizana Roads Sterkspruit

27 Tzaneen Lifestyle Centre (Resilient has a 70% interest) Retail Limpopo 9 380 – 105,11 5 Sep 08 76 000 84 000 Cnr Voortrekker and the P43–3 Road Tzaneen

28 Arbour Crossing (Resilient has a 10% interest) Retail KwaZulu-Natal 39 786 8,5% 85,66 30 Nov 04 38 877 40 300 Cnr N2 Highway and Chamberlain Road Umbogintwini

Total direct property investment 878 875 1,7%* 113,90* 6 045 805 10 363 135

76


SCHEdulE OF PROPERTIES (CONTINuEd)

GrossWeighted



29 Tubatse Crossing Vacant land Mpumalanga n/a n/a n/a 17 Jul 07 215 786 # 215 786 Intersection Polokwane and Steelpoort Roads Burgersfort

30 Secunda Mall (Resilient has a 40% interest) Vacant land Mpumalanga n/a n/a n/a 7 Mar 12 77 595 # 77 595 Cnr PDP Kruger and OR Tambo Streets Secunda

31 Tzaneen Lifestyle Centre land (Resilient has a 70% interest) Vacant land Limpopo n/a n/a n/a 5 Sep 08 48 124 # 48 124 Cnr Voortrekker and the P43–3 Road Tzaneen

32 Checkers Burgersfort Vacant land Mpumalanga n/a n/a n/a 16 Jul 07 39 537 # 39 537 Lydenburg Road Burgersfort

33 Polokwane Value Centre (Resilient has a 60% interest) Vacant land Limpopo n/a n/a n/a 15 Mar 07 32 351 # 32 351 R81 Modjadjis Kloof Road Bendor Polokwane

34 The Grove additional land Vacant land Gauteng n/a n/a n/a 13 Oct 08 31 595 # 31 595 Cnr Simon Vermooten Road and Lynnwood Road Equestria

35 The Grove additional land Vacant land Gauteng n/a n/a n/a 6 Jul 10 29 718 # 29 718 Cnr Simon Vermooten Road and Lynnwood Road Equestria

36 Sterkspruit Plaza land (Resilient has an 82% interest) Vacant land Eastern Cape n/a n/a n/a 30 Jun 08 13 450 # 13 450 Cnr Zastron and Voyizana Roads Sterkspruit

37 The Village Klerksdorp (Resilient has a 50% interest) Vacant land North West n/a n/a n/a 10 Nov 06 12 781 # 12 781 Buffelsdoorn Avenue Klerksdorp

38 Brits Mall land Vacant land North West n/a n/a n/a 10 Aug 11 11 461 # 11 461 Cnr Hendrik Verwoerd Avenue (R511) and Marthinus Ras Street Brits

39 Arbour Town precinct land (Resilient has a 10% interest) Vacant land KwaZulu-Natal n/a n/a n/a 30 Nov 04 10 378 # 10 378 Cnr N2 Highway and Chamberlain Road Umbogintwini

40 Soshanguve Crossing (Resilient has a 55% interest) Vacant land Gauteng n/a n/a n/a 7 Jan 08 8 495 # 8 495 Ruth First Street (K–4) Soshanguve

Total developments and vacant land 531 271 # 531 271

Total property investment 878 875 1,7%* 113,90 * 6 577 076 10 894 406

*Based on Resilient’s pro rata interests.#Purchase price includes capitalised costs to date.

77

GrossWeighted



29 Tubatse Crossing Vacant land Mpumalanga n/a n/a n/a 17 Jul 07 215 786 # 215 786 Intersection Polokwane and Steelpoort Roads Burgersfort

30 Secunda Mall (Resilient has a 40% interest) Vacant land Mpumalanga n/a n/a n/a 7 Mar 12 77 595 # 77 595 Cnr PDP Kruger and OR Tambo Streets Secunda

31 Tzaneen Lifestyle Centre land (Resilient has a 70% interest) Vacant land Limpopo n/a n/a n/a 5 Sep 08 48 124 # 48 124 Cnr Voortrekker and the P43–3 Road Tzaneen

32 Checkers Burgersfort Vacant land Mpumalanga n/a n/a n/a 16 Jul 07 39 537 # 39 537 Lydenburg Road Burgersfort

33 Polokwane Value Centre (Resilient has a 60% interest) Vacant land Limpopo n/a n/a n/a 15 Mar 07 32 351 # 32 351 R81 Modjadjis Kloof Road Bendor Polokwane

34 The Grove additional land Vacant land Gauteng n/a n/a n/a 13 Oct 08 31 595 # 31 595 Cnr Simon Vermooten Road and Lynnwood Road Equestria

35 The Grove additional land Vacant land Gauteng n/a n/a n/a 6 Jul 10 29 718 # 29 718 Cnr Simon Vermooten Road and Lynnwood Road Equestria

36 Sterkspruit Plaza land (Resilient has an 82% interest) Vacant land Eastern Cape n/a n/a n/a 30 Jun 08 13 450 # 13 450 Cnr Zastron and Voyizana Roads Sterkspruit

37 The Village Klerksdorp (Resilient has a 50% interest) Vacant land North West n/a n/a n/a 10 Nov 06 12 781 # 12 781 Buffelsdoorn Avenue Klerksdorp

38 Brits Mall land Vacant land North West n/a n/a n/a 10 Aug 11 11 461 # 11 461 Cnr Hendrik Verwoerd Avenue (R511) and Marthinus Ras Street Brits

39 Arbour Town precinct land (Resilient has a 10% interest) Vacant land KwaZulu-Natal n/a n/a n/a 30 Nov 04 10 378 # 10 378 Cnr N2 Highway and Chamberlain Road Umbogintwini

40 Soshanguve Crossing (Resilient has a 55% interest) Vacant land Gauteng n/a n/a n/a 7 Jan 08 8 495 # 8 495 Ruth First Street (K–4) Soshanguve

Total developments and vacant land 531 271 # 531 271

Total property investment 878 875 1,7%* 113,90 * 6 577 076 10 894 406

78


AdMINISTRATIVE INFORMATION

COMPANy dETAIlS

Resilient Property Income Fund Limited


Share code: RES

ISIN: ZAE000043642

4th Floor, Rivonia Village,

Rivonia Boulevard, Rivonia, 2191

(PO Box 2555, Rivonia, 2128)

COMMERCIAl bANkERS

The Standard Bank of South Africa Limited


Corporate and Investment Banking

7th Floor, 3 Simmonds Street,

Johannesburg, 2001

(PO Box 61029, Marshalltown, 2107)

TRANSFER SECRETARIES

Link Market Services South Africa Proprietary Limited


13th Floor, Rennie House,

19 Ameshoff Street, Braamfontein, 2001

(PO Box 4844, Johannesburg, 2000)

SECRETARy ANd REgISTEREd OFFICE

Rajeshree Sookdeyu

4th Floor, Rivonia Village,

Rivonia Boulevard, Rivonia, 2191

(PO Box 2555, Rivonia, 2128)

ExTERNAl AudITORS

Deloitte & Touche

Deloitte Place

Woodlands Office Park,

20 Woodlands Drive,

Woodmead, 2052

(Private Bag X6, Gallo Manor, 2052)

TRuSTEES FOR dEbENTuRE HOldERS

Edward Nathan Proprietary Limited


3rd Floor, Corporate Law,

150 West Street, Sandown,

Sandton, 2196

(PO Box 783347, Sandton, 2146)

SPONSOR

Java Capital Trustees and Sponsors Proprietary Limited


2 Arnold Road, Rosebank, 2196

(PO Box 2087, Parklands, 2121)

79


CORPORATE dIARy

FINAl 2012

Financial year-end Monday 31 December 2012

Publication of abridged results SENS Wednesday 6 February 2013

Press Thursday 7 February 2013

Last day to trade units inclusive of distribution (cum distribution) Friday 22 February 2013

Units trade ex distribution from Monday 25 February 2013

Last day to update unit register for distribution (record date) Friday 1 March 2013

Distribution payment Monday 4 March 2013

Financial report and notice of annual general meeting posted on Thursday 28 March 2013

Annual general meeting Friday 26 April 2013 at 14h00

INTERIM 2013

Interim period ends Sunday 30 June 2013

Announcement of interim results Tuesday 6 August 2013

Payment of interim distribution Monday 2 September 2013

80


NOTICE OF ANNuAl gENERAl MEETINg OF SHAREHOldERS ANd dEbENTuRE HOldERS (“members”)

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION


(Incorporated in the Republic of South Africa)


Share Code: RES ISIN: ZAE000043642

(“Resilient” or “the company”)

If you are in any doubt as to what action you should take arising from the following resolutions, please consult your stockbroker, banker, attorney,

accountant or other professional advisor immediately.

notice is given of the eleventh annual general meeting of members of resilient property Income Fund Limited at the company’s registered office,

4th Floor, rivonia Village, rivonia Boulevard, rivonia, 2191, on Friday, 26 april 2013 at 14h00 for the purpose of presenting the audited company and

group financial statements for the year ended 31 December 2012 together with the reports of the directors, the audit committee and the auditors

and transacting the following business:

1 Re-electing the following director, who retire in terms of article 15.1 of the company’s Memorandum of Incorporation and who offer himself for re-

election:

Andries de Lange (39)

Executive director and chief operating officer

CA(SA), CFA


After completing his articles, Andries joined the IDC and then Nedbank Limited where he gained experience in debt finance, debt and equity

restructurings and private equity. He joined the Resilient group in 2004 and is a director of PFM.

2 Re-electing the following directors, who were appointed by the board during the course of the year and who accordingly retire and offer themselves

for re-election, all in terms of article 13.2 of the company’s Memorandum of Incorporation:

2.1 Spiro Noussis (41)


BCom, BAcc, CA (SA)

Date of appointment: August 2012

Spiro has experience in private equity and investment management. He was previously managing director of an information technology company

providing business solutions for the financial services industry. Since 2005 he has been involved in property, focusing on commercial, industrial and

retail opportunities and is currently an executive director of Lodestone Properties Limited.

2.2 Umsha Reddy (42)


BSc Eng (Electrical)

Date of appointment: March 2012

Umsha’s 19 years of work experience spans both the Engineering and IT environments across energy, telecommunications, manufacturing, retail,

government and financial industries. Her longest tenures were with HP and Microsoft, 5 years and 8 years respectively. She is currently employed at

SABMiller as executive head of programme management for the Business Information Systems division.

3 Re-electing the following directors who have served on the board for more than nine years and who voluntarily retire and offer themselves for re-

election:

3.1 Marthin Petrus Greyling (45)


BCom (Acc) (Hons), CA(SA)

Date of appointment: July 2002

Marthin started his career in financial services in 1993 when he joined the IDC. During his tenure he was, inter alia, involved in debt and project

finance and business turnarounds. He joined NIB in 2001 and is currently a member of the Nedbank Capital Private Equity team.

81

3.2 Mfundiso Johnson Ntabankulu (JJ) Njeke (54)


BCompt (Hons), HDip Tax, CA(SA)


JJ was an audit partner at PwC and is the past chairman of the SAICA. In addition to serving on the board of Resilient, he serves on the boards of

ArcelorMittal SA, MMI Holdings Limited, MTN Group Limited, Sasol Limited and Adcorp Holdings Limited.

3.3 Barry Daniel van Wyk (47)


BCom, BAcc, CA(SA)


Barry heads up Renlia Developments Proprietary Limited, a property investment and development company primarily focused on office, industrial and

residential opportunities. He was previously an executive director of Group Five Limited and managing director of Group Five Developments.

Members are advised that Jorge da Costa, David Lewis and Phumelele Msweli will be retiring upon closing of this annual general meeting.

4 Re-electing all the members of the audit committee, who offer themselves for re-election, in terms of Section 94(2) of the Companies Act, namely:

4.1 Marthin Petrus Greyling

4.2 Bryan Douglas Hopkins

4.3 Barry Daniel van Wyk

5 Re-appointing Deloitte & Touche as auditors of the group with Mr P Kleb currently being the designated audit partner.

6 Authorising the directors to determine the remuneration of the group’s auditors.

as special business to consider and, if deemed fit, pass with or without modification, which modification is capable of being substantive in

nature, the following resolutions:

7 Consider as ordinary resolution number 7

“RESOLVED THAT the authorised but unissued linked unit capital be and is hereby placed under the control and authority of the directors of the

company which directors are hereby authorised and empowered to allot, issue and otherwise dispose of such linked unit capital to such person or

persons on such terms and conditions and at such times as the directors of the company may from time to time and in their discretion deem fit,

provided that:

– such allotment, issue or disposal shall not in aggregate be in excess of 10% (ten percent) of the company’s current issued linked unit capital;

– is subject to a maximum discount of 5% (five percent) of the weighted average traded price on the JSE of those linked units over the 10 (ten)

business days prior to the date of allotment, issue or disposal as the case may be; and

– subject further to the provisions of the Companies Act, any debenture trust deed entered into by the company, the Memorandum of Incorporation

of the company and the JSE Listings Requirements.”

8 Consider as ordinary resolution number 8

“RESOLVED THAT the directors of the company be and are hereby authorised by way of a general authority, to issue linked units in the capital of the

company for cash, as and when they in their discretion deem fit, subject to the Companies Act, the Memorandum of Incorporation of the company,

the JSE Listings Requirements, when applicable, and the following limitations, namely that:

– the linked units which are the subject of the issue for cash must be of a class already in issue, or where this is not the case, must be limited to such

securities or rights that are convertible into a class already in issue;

– any such issue will be made to “public shareholders” and not “related parties”, all as defined in the JSE Listings Requirements, unless the JSE

otherwise agrees; and

– the number of linked units issued for cash shall not in aggregate in any one financial year exceed 5% (five percent) of the company’s issued linked

unit capital.

82


NOTICE OF ANNuAl gENERAl MEETINg OF SHAREHOldERS ANd dEbENTuRE HOldERS (“members”) (CONTINuEd)

The number of linked units which may be issued shall be based on the number of linked units in issue, added to those that may be issued in future

(arising from the conversion of options/convertibles) at the date of such application, less any linked units issued, or to be issued in future arising from

options/convertible linked units issued during the current financial year; plus any linked units to be issued pursuant to a rights issue which has been

announced, is irrevocable and is fully underwritten, or an acquisition which has had final terms announced:

– this authority shall be valid until the company’s next annual general meeting, provided that it shall not extend beyond 15 (fifteen) months from the

date that this authority is given;

– a paid press announcement giving full details, including the impact on net asset value per linked unit, net tangible asset value per linked unit,

earnings per linked unit, headline earnings per linked unit and, if applicable, diluted earnings and headline earnings per linked unit, will be published

at the time of any issue representing, on a cumulative basis within 1 (one) financial year, 5% (five percent) of the number of linked units in issue

prior to the issue; and

– in determining the price at which an issue of linked units may be made in terms of this authority, the maximum discount permitted will be 5% (five

percent) of the weighted average traded price on the JSE of those linked units over the 10 (ten) business days prior to the date that the price of the

issue is determined or agreed to by the directors of the company.”

Ordinary resolution number 8 is required, under the JSE Listings Requirements, to be passed by achieving a 75% majority of the votes cast in favour

of such resolution by all members present or represented by proxy and entitled to vote at the annual general meeting.

9 Consider as special resolution number 1: approval of directors’ remuneration for their services as directors

“RESOLVED THAT, as a special resolution, in accordance with section 66 of the Companies Act, fees to be paid by the company to the non-executive

directors for their services as directors be and are hereby approved, as follows:

For the year ended For the year ended

31 December 2013 31 December 2014

rand rand

Chairman * 325 000

Non-executive director * 225 000

Audit committee member (including chairman) * 100 000

Investment committee member (including chairman) * 100 000

Remuneration committee member (including chairman) * 100 000

Nomination committee member (including chairman) 45 000 50 000

Risk committee member (including chairman) * 50 000

Social and ethics committee member (including chairman) 45 000 50 000

* Fees were approved at the annual general meeting of 16 May 2012.

“

The reason for and effect of special resolution number 1

To obtain member approval by way of a special resolution in accordance with section 66(9) of the Companies Act for the payment by the company

of remuneration to each of the non-executive directors of the company for services as a non-executive director for the financial years ending

31 December 2013 and 31 December 2014 in the amounts set out under special resolution number 1.

10 Consider as special resolution number 2: approval of financial assistance to related or inter-related companies

“RESOLVED THAT, to the extent required by the Companies Act, the board of directors of the company may, subject to compliance with the requirements

of the company’s Memorandum of Incorporation, the Companies Act and the JSE Listings Requirements, each as presently constituted and as amended

from time to time, authorise the company to provide direct or indirect financial assistance in terms of section 45 of the Companies Act by way of

loans, guarantees, the provisions of security or otherwise, to any of its present or future subsidiaries and/or any other company or corporation that is

or becomes related or inter-related (as defined in the Companies Act) to the company for any purpose or in connection with any matter, such authority

to endure until the annual general meeting of the company to be held in 2014.”


The company provided loans to and/or guarantees loans or other obligations of subsidiaries. The company believes it necessary that it continues to

have the ability to provide financial assistance to, inter alia, ensure that the company’s subsidiaries and other related and inter-related companies and

corporations have access to financing and/or financial backing from the company (as opposed to banks) and is accordingly proposing special resolution

number 2.

83

Therefore, the reason for, and effect of, special resolution number 2 is to permit the company to provide direct or indirect financial assistance (within

the meaning attributed to that term in section 45) to the entities referred to in special resolution number 2 above.

In terms of section 45, if the resolution is adopted, the board of directors will only be entitled to authorise such financial assistance if it is satisfied

that the terms under which the financial assistance is proposed to be given are fair and reasonable to the company and, immediately after providing

the financial assistance, the company would satisfy the solvency and liquidity test contemplated in the Companies Act.

11 Consider as special resolution number 3: approval of financial assistance to directors and prescribed officers for the purpose of acquiring securities in

Capital Property Fund

“RESOLVED THAT, to the extent required by the Companies Act, the board of directors of the company may, subject to compliance with the requirements

of the company’s Memorandum of Incorporation, the Companies Act and the JSE Listings Requirements, each as presently constituted and as amended

from time to time, authorise the company to provide direct or indirect financial assistance in terms of section 45 of the Companies Act by way of loans,

guarantees, the provisions of security or otherwise, to any of its present or future directors or prescribed officers or to any present or future directors

or prescribed officers of any of its present or future subsidiaries and/or of any other company or corporation that is or becomes related or inter-related

(as defined in the Companies Act) to the company for the purpose of acquiring securities in Capital Property Fund, a collective investment scheme in

property, the securities of which are listed on the JSE under share code ‘CPL’, such authority to endure until the annual general meeting of the company

to be held in 2014. This authority is further subject to a maximum of R15 million per such person.”


The company owns Property Fund Managers Limited, the appointed management company of Capital Property Fund, and accordingly certain of

Resilient’s directors and prescribed officers and/or directors and prescribed officers of its subsidiaries are responsible for the management of Capital

Property Fund. As part of its incentive arrangements, the company or its subsidiaries intends to periodically provide loans to such persons to acquire

Capital Property Fund units.

The company believes it is necessary to provide such financial assistance to, inter alia, ensure that its executives responsible for the management of

Capital Property Fund are appropriately incentivised and is accordingly proposing special resolution number 3.

Therefore, the reason for, and effect of, special resolution number 3 is to permit the company to provide direct or indirect financial assistance (within

the meaning attributed to that term in section 45 of the Companies Act) to the directors and prescribed officers and for the purposes referred to in

special resolution number 3 above.

In terms of section 45, if the resolution is adopted, the board of directors will only be entitled to authorise such financial assistance if it is satisfied

that the terms under which the financial assistance is proposed to be given are fair and reasonable to the company and, immediately after providing

the financial assistance, the company would satisfy the solvency and liquidity test contemplated in the Companies Act.

In accordance with section 45(5)(a) of the Companies Act members are advised that the total value of all loans, debts, obligations or assistance

contemplated in special resolutions 2 and 3 is likely to exceed one tenth of one percent of the company’s net worth.

12 Consider as special resolution number 4: approval of the repurchase of linked units

“RESOLVED THAT subject to the Companies Act, the Memorandum of Incorporation of the company, the JSE Listings Requirements and the restrictions

set out below, the repurchase of linked units of the company, either by the company or by any subsidiary of the company, is hereby authorised, on the

basis that:

(1) this authority will only be valid until the company’s next annual general meeting or for 15 months from the date of this resolution, whichever

period is shorter;

(2) the number of linked units which may be acquired pursuant to this authority in any financial year may not in the aggregate exceed 20%, or 10%

where such acquisitions are effected by a subsidiary, of the company’s unit capital as at the date of this notice of annual general meeting;

(3) the repurchase of linked units must be effected through the order book operated by the JSE trading system and done without any prior arrangement

between the company and the counter-party;

(4) the repurchase of linked units may not be made at a price greater than 10% above the weighted average of the market value for the linked units

for the five business days immediately preceding the date on which the transaction is effected;

(5) at any point in time, the company will only appoint one agent to effect repurchases on its behalf;

(6) the company or its subsidiary may not repurchase linked units during a prohibited period as defined in paragraph 3.67 of the JSE Listings

Requirements unless there is a repurchase programme in place and the dates and quantities of linked units to be repurchased during the prohibited

period are fixed and full details thereof have been disclosed in an announcement over SENS prior to commencement of the prohibited period;

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(7) a resolution by the board of directors is passed that the board of directors of the company authorises the repurchase, that the company and

the relevant subsidiaries have passed the solvency and liquidity test as set out in section 4 of the Companies Act and that, since the test was

performed, there have been no material changes to the financial position of the group; and

(8) the company’s sponsor will confirm the adequacy of the company’s working capital, for the purposes of undertaking linked unit repurchases, in

writing to the JSE prior to the repurchase of any linked units.”

In accordance with the JSE Listings Requirements, the directors record that:

Although there is no immediate intention to effect a repurchase of linked units of the company, the directors would utilise the general authority to

repurchase securities as and when suitable opportunities present themselves, which opportunities may require expeditious and immediate action.

The directors, after considering the effect of maximum repurchase, are of the opinion that for a period of 12 months after the date of the notice of

annual general meeting:

(a) the company and the group will be able, in the ordinary course of business, to pay its debts;

(b) the assets of the company and the group will be in excess of the liabilities of the company and the group;

(c) the linked unit capital and reserves of the company and the group will be adequate for ordinary business purposes; and

(d) the working capital of the company and the group will be adequate for ordinary business purposes.

After the company has cumulatively repurchased 3% of the initial number of linked units (the number of linked units in issue at the time that the

general authority from unitholders is granted) and for each 3% in aggregate of the initial number of that class acquired thereafter, an announcement

will be made in terms of the JSE Listings Requirements.

Reason for and effect of special resolution number 4

The reason for special resolution number 4 is to afford the company or a subsidiary of the company, a general authority to effect a repurchase of the

company’s linked units on the JSE. The effect of the resolution will be that the directors will have the authority, subject to the Rules and Requirements

of the JSE and the Companies Act, to effect repurchases of the company’s linked units on the JSE, either through the company or through any

subsidiary of the company.

The following additional information, which appears elsewhere in the integrated report to which this notice of annual general meeting forms part, is

provided in terms of paragraph 11.26/11.30 of the JSE Listings Requirements for purposes of special resolution number 4:

Directors and management – pages 4 to 7

Major linked unitholders – page 21

Directors’ interests in securities/shares/linked units – page 9

Share capital of the company – page 56

Material changes

Other than the facts and developments reported on in the integrated report, there have been no material changes in the affairs or financial position of

the company and its subsidiaries between the date of signature of the audit report for the year ended 31 December 2012 and the date of this notice

of annual general meeting.

Litigation statement

The directors, whose names appear on pages 4 to 7 of the integrated report of which this notice forms part, are not aware of any legal or arbitration

proceedings, including proceedings that are pending or threatened, that may have or have had in the recent past (being at least the previous 12

months) a material effect on the group’s financial position.

Directors’ responsibility statement

Directors, whose names appear on pages 4 to 7 of the integrated 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 in terms of the JSE Listings Requirements.

85

13 Consider as special resolution number 5: approval of provision of financial assistance for the purchase of linked units

“RESOLVED THAT the company, either as lender or as surety or guarantor for a lender, or otherwise, is hereby authorised, from time to time, to provide

financial assistance for the purchase of or subscription for its linked units to any company or trust, the majority of whose shareholders or beneficiaries

(directly or indirectly) are ‘black persons’ as defined in the Broad-based Black Economic Empowerment Act, 2003 (or any successor thereto) on the

following terms:

(1) the maximum additional capital amount (excluding interest, costs, charges, fees and expenses) of any such amounts lent or for which suretyships

or guarantees are given may not exceed R500 million;

(2) the maximum period for the repayment of any loan provided or for which suretyships or guarantees are given in terms hereof may not exceed 10

years; and

(3) the minimum interest rate to be applied to any loan provided may not be less than the prime overdraft rate of interest from time to time publicly

quoted as such by The Standard Bank of South Africa Limited.”

Reason for and effect of special resolution number 5

The reason for special resolution number 5 is to afford the company authority to provide financial assistance for the purchase of its linked units in

terms of section 44 of the Companies Act for the purposes of effecting Black Economic Empowerment. The effect of the resolution will be that the

directors will have the authority, subject to the Rules and Requirements of the JSE and the Companies Act, to grant financial assistance on the terms

set out in this special resolution.

14 Consider as ordinary resolution 9

“RESOLVED THAT any director of the company or the company secretary be and is hereby authorised to do all such things and sign all such documents

as may be required to give effect to special resolutions numbers 1 to 5.”

unless otherwise stated, in order for ordinary resolutions to be adopted, the support of more than 50% of the total number of votes exercisable

by members, present in person or by proxy, is required and in order for special resolutions to be adopted, the support of at least 75% of the total

number of votes exercisable by members, present in person or by proxy, is required to pass such resolution.

Important dates to note:

Record date for receipt of notice purposes Wednesday, 20 March 2013

Last day to trade in order to be eligible to vote Friday, 12 April 2013

Record date for voting purposes (“voting record date”) Friday, 19 April 2013

Statement in terms of section 62(3)(e) of the Companies Act

Members holding certificated linked units and members holding linked units in dematerialised form in “own name”:

– may attend and vote at the general meeting; alternatively

– may appoint an individual as a proxy (who need not also be a member of the company) to attend, participate in and speak and vote in your place at

the general meeting by completing the attached form of proxy (blue) and returning it to the registered office of Resilient or to the transfer secretaries,

by no later than 14h00 on Wednesday, 24 April 2013. Alternatively, the form of proxy may be handed to the chairman of the annual general meeting

at the annual general meeting or at any time prior to the commencement of the annual general meeting. Please note that your proxy may delegate

his/her authority to act on your behalf to another person, subject to the restrictions set out in the attached form of proxy. Please also note that the

attached form of proxy must be delivered to the registered office of Resilient or to the transfer secretaries or handed to the chairman of the annual

general meeting, before your proxy may exercise any of your rights as a member of the company at the annual general meeting.

Please note that any member of the company that is a company may authorise any person to act as its representative at the annual general meeting.

Please also note that section 63(1) of the Companies Act requires that persons wishing to participate in the annual general meeting (including the

aforementioned representative) must provide satisfactory identification before they may so participate.

Notice to owners of dematerialised linked units

Please note that if you are the owner of dematerialised linked units held through a CSDP or broker (or their nominee) and are not registered as an “own

name” dematerialised linked unitholder, then you are not a registered linked unitholder of the company, but your CSDP or broker (or their nominee)

would be.

86



Accordingly, in these circumstances, subject to the mandate between yourself and your CSDP or broker as the case may be:

– if you wish to attend the annual general meeting you must contact your CSDP or broker, and obtain the relevant letter of representation from it;

alternatively

– if you are unable to attend the annual general meeting but wish to be represented at the annual general meeting, you must contact your CSDP

or broker, and furnish it with your voting instructions in respect of the annual general meeting and/or request it to appoint a proxy. You must not

complete the attached form of proxy. The instructions must be provided in accordance with the mandate between yourself and your CSDP or broker,

within the time period required by your CSDP or broker.

– CSDP’s, brokers or their nominees, as the case may be, recorded in the company’s sub-register as holders of dematerialised linked units should, when

authorised in terms of their mandate or instructed to do so by the owner on behalf of whom they hold dematerialised linked units, vote by either

appointing a duly authorised representative to attend and vote at the annual general meeting or by completing the attached form of proxy (blue) in

accordance with the instructions thereon and return it to the registered office of the company or to the transfer secretaries, by no later than 14h00

on Wednesday, 24 April 2013. Alternatively, the form of proxy may be handed to the chairman of the annual general meeting at the annual general

meeting at any time prior to the commencement of the annual general meeting.

Voting at the annual general meeting

In order to more effectively record the votes and give effect to the intentions of members, voting on all resolutions will be conducted by way of a poll.

Rajeshree Sookdeyu

Company secretary

Johannesburg

6 February 2013

Address of registered office Address of transfer secretaries

4th Floor Rivonia Village Link Market Services South Africa Proprietary Limited

Rivonia Boulevard Rivonia 2191 13th Floor Rennie House 19 Ameshoff Street Braamfontein 2001

(PO Box 2555 Rivonia, 2128) (PO Box 4844 Johannesburg 2000)

R e s i l i e n t P R o P e R t y i n c o m e F u n d INTEGRATED REPORT 2012

FORM OF PROxy


(Incorporated in the Republic of South Africa)


Share Code: RES ISIN: ZAE000043642

(“Resilient” or “the company”)

For use by the holders of the company’s certificated linked units (“certificated linked unitholders”) and/or dematerialised linked units held through a Central Securities Depository Participant (“CSDP”) or broker who have selected “own name” registration (“own–name dematerialised linked unitholders”), at the eleventh annual general meeting of members of the company to be held at the company’s registered office, 4th Floor, Rivonia Village, Rivonia Boulevard, Rivonia, 2191, on Friday, 26 April 2013 at 14h00, or at any adjournment thereof if required. Additional forms of proxy are available from the company’s registered office.

Not for use by dematerialised linked unitholders who have not selected “own name” registration. Such linked unitholders must contact their CSDP or broker timeously if they wish to attend and vote at the annual general meeting and request that they be issued with the necessary Letter of Representation to do so, or provide the CSDP or broker timeously with their voting instructions should they not wish to attend the annual general meeting in order for the CSDP or broker to vote in accordance with their instructions at the annual general meeting.

I/We (name/s in block letters)

of

being the holders of linked units in the capital of the company do hereby appoint:

1 or failing him/her,

2 or failing him/her,

3 the chairman of the annual general meeting

as my/our proxy to act for me/us on my/our behalf at the annual general meeting or any adjournment thereof, which will be held for purposes of considering and, if deemed fit, passing, with or without modification, the ordinary and special resolutions to be proposed thereat as detailed in the notice of annual general meeting; and to vote for and/or against such resolutions and/or to abstain from voting for and/or against the resolutions in respect of the linked units registered in my/our name in accordance with the following instructions:

For Against Abstain

Ordinary resolution number 1 (re-election of Andries de Lange as director)

Ordinary resolution number 2.1 (re-election of Spiro Noussis as director)

Ordinary resolution number 2.2 (re-election of Umsha Reddy as director)

Ordinary resolution number 3.1 (re-election of Marthin Petrus Greyling as director)

Ordinary resolution number 3.2 (re-election of Mfundiso Johnson Ntabankulu Njeke as director)

Ordinary resolution number 3.3 (re-election of Barry Daniel van Wyk as director)

Ordinary resolution number 4.1 (re-election of Marthin Petrus Greyling as a member of the audit committee)

Ordinary resolution number 4.2 (re-election of Bryan Douglas Hopkins as a member of the audit committee)

Ordinary resolution number 4.3 (re-election of Barry Daniel van Wyk as a member of the audit committee)

Ordinary resolution number 5 (reappointment of auditors)

Ordinary resolution number 6 (authorising directors to determine auditors’ remuneration)

Ordinary resolution number 7 (unissued shares under the control of the directors)

Ordinary resolution number 8 (general authority to issue securities for cash)

Special resolution number 1 (authorising non-executive directors’ fees)

Special resolution number 2 (approval of financial assistance to related or inter-related companies)

Special resolution number 3 (approval of financial assistance to directors and prescribed officers for the purpose of acquiring securities in Capital Property Fund)

Special resolution number 4 (approval of the repurchase of linked units)

Special resolution number 5 (approval of provision of financial assistance for the purchase of linked units)

Ordinary resolution number 9 (authority for directors or company secretary to implement resolutions)

Signed at on

Signature

Assisted by (where applicable)

(Indicate instructions to proxy in the spaces provided above). Unless otherwise instructed, my proxy may vote as he thinks fit.Please read the notes on the reverse side hereof.

2013

87

88


NOTES TO THE FORM OF PROxy

1 Any alteration or correction made to this form of proxy must be initialled by the signatory(ies).

2 Members that are certificated or own–name dematerialised unitholders entitled to attend and vote at the annual general meeting may insert the name of

a proxy or the names of two alternative proxies of the member’s choice in the space/s provided, with or without deleting “the chairperson of the annual

general meeting”, but any such deletion must be initialled by the unitholder(s). Such proxy/ies may participate in, speak and vote at the annual general

meeting in the place of that unitholder at the annual general meeting. The person whose name stands first on the form of proxy and who is present at the

meeting will be entitled to act as proxy to the exclusion of those whose names follow. If no proxy is named on a lodged form of proxy the chairperson shall

be deemed to be appointed as the proxy.

3 A member’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by the member in the appropriate

box(es) provided. Failure to comply with the above will be deemed to authorise the proxy, in the case of any proxy other than the chairperson, to vote or

abstain from voting as deemed fit and in the case of the chairperson to vote in favour of the resolution.

4 A member or his/her proxy is not obliged to use all the votes exercisable by the member, but the total of the votes cast or abstained may not exceed the

total of the votes exercisable in respect of the linked units held by the member.

5 A member 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. The revocation of a proxy appointment constitutes a complete and final cancellation

of the proxy’s authority to act on behalf of the unitholder as at the later of the date stated in the revocation instrument, if any; or the date on which the

revocation instrument was delivered in the required manner.

6 A vote given in terms of an instrument of proxy shall be valid in relation to the annual general meeting notwithstanding the death of the person granting it

or the transfer of the linked units in respect of which the vote is given, unless an intimation in writing of such death or transfer is received by the transfer

secretaries not less than 48 hours before the commencement of the annual general meeting.

7 The chairperson of the annual general meeting may reject or accept any form of proxy which is completed and/or received otherwise than in compliance

with these notes, provided that, in respect of acceptances, the chairperson is satisfied as to the manner in which the member concerned wishes to vote.

8 The completion and lodging of this form of proxy will not preclude the relevant member from attending the meeting and speaking and voting in person

thereat to the exclusion of any proxy appointed in terms hereof, should such member wish to do so.

9 Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy,

unless previously recorded by the company or the transfer secretaries or waived by the chairperson of the annual general meeting.

10 A minor or any other person under legal incapacity must be assisted by his/her parent or guardian, as applicable, unless the relevant documents establishing

his/her capacity are produced or have been registered by the company or the transfer secretaries.

11 Where there are joint holders of linked units, the vote of the first joint holder who tenders a vote, as determined by the order in which the names stand

in the register of members, will be accepted and only that holder whose name appears first in the register in respect of such linked units need to sign this

form of proxy.

12 The aforegoing notes contain a summary of the relevant provisions of section 58 of the Companies Act.

Forms of proxy must be lodged at, posted or faxed to the transfer secretaries, Link Market Services South Africa Proprietary Limited:

Hand deliveries to:


13th Floor Rennie House

19 Ameshoff Street

Braamfontein 2001

Postal deliveries to:


PO Box 4844

Johannesburg 2000

Fax to: 086 674 2450

to be received by no later than 14h00 on Wednesday, 24 April 2013.

>> DIaMOND PavILION >> 32 513m2 >> NORThERN CaPE


FACT SHEET

company name Resilient Property Income Fund Limited


Registered address 4th Floor Rivonia Village

Rivonia Boulevard Rivonia 2191

(PO Box 2555 Rivonia 2128)

Website address www.resilient.co.za

Year-end 31 December

chairman of the board JJ Njeke

Board of directors JJ Njeke (chairman); Thembi Chagonda; Jorge da Costa; Des de Beer; Andries de Lange;

Marthin Greyling; Nick Hanekom; Bryan Hopkins; Johann Kriek; David Lewis;

Phumelele Msweli; Spiro Noussis; Umsha Reddy; Barry van Wyk

Independent non-executive 7

Non-independent non-executive 2

Executive 5

14

managing director Des de Beer

company secretary Rajeshree Sookdeyu

corporate advisors Java Capital

External auditors Deloitte & Touche

Date of listing 6 December 2002

units in issue 285 744 070 (2011: 280 536 070) (inclusive of BEE SPV)

Gearing ratio 27,9% (2011: 30,5%)

Investment portfolio Direct property R10 894 million / 74,5% of portfolio

(2011: R9 228 million / 76,9% of portfolio)

listed property securities R3 720 million / 25,5% of portfolio

and associate (2011: R2 769 million / 23,1% of portfolio)

unit price (cents per unit) 2012 year 2011 year High 5 600 High 3 739

Low 3 427 Low 2 710

Closing 5 175 Closing 3 475

Distributions (cents) 2012 2011 Interim 120,74 109,36

Final 134,93 121,35

255,67 230,71

Volume traded 69,1 million units (2011: 79,0 million units)

Value traded R2 995,2 million (2011: R2 486,8 million)

Annual general meeting 26 April 2013 at 14h00

(4th Floor Rivonia Village Rivonia Boulevard Rivonia 2191)

Distribution calendar (final distribution for the 2012 financial year)

Last day to trade cum distribution 22 February 2013

Record date 1 March 2013

Distribution payment 4 March 2013

893687 visual IGNITION 011 888 5511

Photographs on ifc, pages 3, 11 and 13, courtesy of Grant Duncan-Smith www.subiacophotography.co.za

10 Years

www.resilient.co.za

RESILIENT PROPERTY INCOME FUND LIMITED

4th Floor Rivonia Village Rivonia Boulevard Rivonia 2191

PO Box 2555 Rivonia 2128

Tel +27 (0)11 612 6800 Fax +27 (0)11 612 6869 2 0 1 2 I N T E G R A T E D R E P O R T

10 Years

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Documents

RE sIl IENT PROPERTY IN cO E Fu ND 10 Y€¦ · Final 134,93 121,35 255,67 230,71 Volume traded 69,1 million units (2011: 79,0 million units) Value traded R2 995,2 million (2011: