CORPORATE OVERVIEW

OUR STRATEGY

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

Delivering on our stated strategy

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

  • Optimise short-term and long-term returns
    • Annual growth in dividends for FY2018 of 7.7% continues the unbroken record of growth in dividends since listing in 2004.
    • Delivered a compound annual growth rate in total return (CAGR) to shareholders of 21.9% over a 14-year period.
  • Grow the portfolio
    • Landmark acquisition of 11 retail parks in Spain valued at €193 million.
    • Further acquisition of two Spanish retail assets valued at €67.8 million.
    • Major redevelopment of Maluti Crescent and Pine Crest currently under way.
    • Acquired a 33% stake in Thavhani Mall for R368 million.
    • Grew NAV by 7.6% during FY2018.
  • Minimise cost of funding and refinance risk
    • Funding spread across both bank funding and debt capital markets
    • Bank funding is diversified across nine funding providers.
    • Overall average cost of finance at yearend equated to 5.74%.
    • Term debt funding fully hedged in both ZAR and EUR.
    • Maintained an A- corporate credit rating and AA+ rating for the senior secured bonds issued under our DMTN programme.
  • Improve customer tenant focus
    • Further progress with Vukile Alternative Income Management (Vukile AIM) which will seek to understand customer and tenant needs.
    • Ongoing research in respect of lower LSM retail.
    • Continuous engagement with major retailers.
    • Fibre installation in 37 centres in process, and will roll out free Wi-Fi in 17 centres to better engage with, and understand our customers.
  • OPERATIONAL EFFICIENCIES – SOUTHERN AFRICAN PORTFOLIO
    • Vacancies reduced to 3.7% despite the difficult trading environment.
    • Positive lease reversions across key retail sector of 5.1%.
    • The ratio of net recurring cost to revenue improved to 16.1%.
    • Significant progress made with energy saving initiatives and the reduction of net utility costs.
    • 84% tenant retention ratio.
    • Industry leading rent to sales ratio of 6.0% across the portfolio.
  • Invest in our people
    • Maintained strong workforce having more than circa 400 years of experience in the property industry.
    • Stable and consistent workforce with very low staff turnover.
    • Enhancing workforce diversity in respect of age, skill and race by the introduction of new finance, investment and alternative income skills.
  • Transformation
    • Encha’s shareholding in Vukile comprises 5.36%.
    • Encha’s effective shareholding under the property sector charter code comprises 21.46%.
    • Achievement of an Empowerdex B-BBEE certification at level 4 – 100% recognition level.
    • Creation of the Vukile Development Academy to actively drive transformation and skills development.