A change in accounting practices, a good property portfolio performance and reduced costs helped MICC Property Income Fund boost its distribution to unitholders 12,16% for the six months to March.

The listed property loan stock company reported a distribution of 41,5c a linked unit yesterday, compared with a 37c distribution for the same period last year.

Gerhard van Zyl, CEO of Vukile Property Fund, the holding company and manager of MICC, said a strong performance from MICC's property portfolio and a change in accounting policies had contributed to the strong performance.

MICC said that in aligning its company's accounting policies with its holding company, it had changed its accounting policies for the treatment of certain items in its financial statements.

The company said one item, letting commissions paid, was amortised over the period of the underlying lease agreement whereas previously the letting commissions paid was expensed in the period during which it was incurred.

For instance, if the letting commission was R100, it would have previously been taken through the income statement and would have been an expense in the year it was incurred. In the new scenario, assuming the existence of a two-year lease agreement, only R50 would be taken through the income statement as an expense.

MICC said another item, deferred taxation on the revaluation of investment properties, was provided at the capital gains tax rate, which would apply if the revaluation was realised through the disposal of the properties. Previously the tax rate applicable to the company's taxable income was used.

When provision for deferred taxation on the revaluation of investment properties is made in companies' financial statements, provision for deferred tax can be made either at the company rate, which would be 30% of the increase in value of investment properties, or at the capital gains tax rate, which is 14,5% of the increase in value of investment properties.

Van Zyl said it was Vukile's policy to use the 14,5% rate.

"These changes provide a once- off benefit to MICC and won't be repeated going forward. Vukile's accounting policies were set a long time ago. You can?t have different accounting policies for subsidiaries," he said.

Andisa Securities property analyst Len van Niekerk said the results were better than he expected but that the change in accounting practices had helped the fund.