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RDF - Redefine Income Fund - Reviewed Interim Results For The Six Months Ended
28 February 2009
REDEFINE INCOME FUND LIMITED
Registration No: 1999/018591/06
Share Code: RDF
ISIN Code: ZAE000023503
("Redefine" or "the company")
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2009
- DISTRIBUTIONS 26.8 CENTS PER LINKED UNIT
- NAV R6.92 PER LINKED UNIT
- TOTAL ASSETS R10.0 BILLION
- MARKET CAPITALISATION R6.0 BILLION
- GEARING 36.6%
CONSOLIDATED INCOME STATEMENT
Reviewed Reviewed Audited
Feb 2009 Feb 2008 Aug 2008
R000 R000 R000
Revenue
Property portfolio 316 000 264 585 566 856
Contractual rental income 303 070 257 628 539 303
Straight-line rental income 12 930 6 957 27 553
accrual
Listed securities portfolio 169 380 163 481 332 396
Property trading income 3 186 12 616 23 638
Total revenue 488 566 440 682 922 890
Operating costs (65 913) (54 679) (106 324)
Administration costs (30 941) (33 280) (60 283)
BEE transaction costs - (44 000) (44 000)
Net operating income 391 712 308 723 712 283
Changes in fair values of (600 196) (179 322) (176 538)
properties, listed securities
and financial instruments
Interest in associates (8 016) 3 880 (7 407)
(Loss)/profit from operations (216 500) 133 281 528 338
Net finance charges (137 389) (118 237) (228 722)
(Loss)/profit before debenture (353 889) 15 044 299 616
interest
Debenture interest (239 367) (231 406) (495 157)
Loss before taxation (593 256) (216 362) (195 541)
Taxation 98 974 55 879 43 282
Loss for the period (494 282) (160 483) (152 259)
Attributable to:
Redefine shareholders (494 282) (160 483) (157 864)
Minority interest - - 5 605
(494 282) (160 483) (152 259)
Reconciliation of headline loss and distributable earnings
Loss for the period attributable (494 282) (160 483) (157 864)
to Redefine shareholders
Changes in fair values of 179 813 9 487 (175 776)
properties (net of deferred
taxation)
Changes in fair values of 221 530 11 447 (228 143)
properties
Deferred taxation (41 717) (1 960) 52 367
Taxation - CGT - - 1 197
Headline loss attributable to (314 469) (150 996) (332 443)
shareholders
Debenture interest 239 367 231 406 495 157
Headline (loss)/earnings (75 102) 80 410 162 714
attributable to linked
unitholders
Changes in fair values of listed 321 409 140 383 335 261
securities and financial
instruments (net of deferred
taxation)
Changes in fair values of listed 378 666 168 872 404 681
securities and financial
instruments
Deferred taxation (57 257) (27 489) (69 420)
Deferred taxation rate change - (26 430) (27 426)
Straight-line rental income (12 930) (6 957) (27 553)
accrual
Fair value adjustment in 5 308 - 4 237
associate
BEE transaction costs - 44 000 44 000
Foreign exchange loss/(gain) 682 - (1 681)
Minority interest - - 5 605
Distributable earnings 239 367 231 406 495 157
First quarter 116 111 108 150 108 150
Second quarter 123 256 123 256 123 256
Third quarter N/A N/A 125 043
Fourth quarter N/A N/A 138 708
Distributions 239 367 231 406 495 157
Actual linked units in issue 893 161* 893 161* 893 161*
(000)
Weighted linked units in issue 893 161* 818 435* 856 002*
(000)
(Loss)/earnings per linked unit (28.54) 8.67 39.40
(cents)
Headline (loss)/earnings (8.41) 9.82 19.01
per linked unit (cents)
Distributions per linked unit 26.80 27.10 56.63
(cents)
*Excludes 5 876 770 treasury linked units
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Reviewed Audited
Feb 2009 Feb 2008 Aug 2008
R000 R000 R000
Cash effects of operating (19 570) (94 173) (78 070)
activities
Cash generated from operations 375 357 257 844 680 727
Net financing costs (140 108) (118 237) (234 494)
Taxation paid - (6 537) (48 761)
Linked unit distributions paid (254 819) (227 243) (475 542)
Cash effects of investing 50 024 (554 489) (856 072)
activities
Net property acquisitions (82 634) (319 720) (558 205)
Net listed securities disposals/ 152 148 (197 753) (228 307)
(acquisitions)
Acquisition of property, plant - (227) (29 766)
and equipment
Acquisition of subsidiary - - (105)
Loans to associate companies (8 807) - (23 542)
Loans to related parties (10 683) (36 789) (16 147)
Cash effects of financing (200 019) 555 513 969 708
activities
Linked units issued - 590 941 546 731
Net movement in borrowings (200 019) (35 428) 422 977
Net movement in cash and cash (169 565) (93 149) 35 566
equivalents
Opening cash and cash 158 195 122 629 122 629
equivalents
Closing cash and cash (11 370) 29 480 158 195
equivalents
CONSOLIDATED BALANCE SHEET
Reviewed Reviewed Audited
Feb 2009 Feb 2008 Aug 2008
R000 R000 R000
ASSETS
Non-current assets 9 523 459 9 661 806 10 143 277
Investment property 5 854 953 5 331 969 5 974 522
Fair value of property 5 431 273 4 578 022 5 538 362
portfolio for accounting
purposes
Straight-line rental income 239 096 205 570 226 166
accrual
Property under development 184 584 548 377 209 994
Listed securities portfolio 3 398 496 4 110 248 3 906 307
Interest in associates 143 726 174 050 140 227
Loans receivable 75 931 35 937 65 248
Interest rate swaps 67 7 596 6 514
Guarantee fee receivable 19 865 - 19 865
Property, plant and equipment 30 421 2 006 30 594
Current assets 423 596 507 819 574 134
Properties held for trading 124 498 202 767 137 016
Listed securities held for 102 378 110 138 105 385
trading
Trade and other receivables 81 315 67 383 64 637
Listed securities income 109 705 96 599 108 899
receivable
Cash and cash equivalents 5 700 30 932 158 197
Total assets 9 947 055 10 169 625 10 717 411
EQUITY AND LIABILITIES
Share capital and reserves 3 910 115 4 394 453 4 404 397
Share capital and premium 2 088 943 2 089 156 2 088 943
Accumulated loss (31 517) (31 517) (31 517)
Non-distributable reserves 1 846 983 2 336 814 2 341 265
Minority interest 5 706 - 5 706
Non-current liabilities 5 790 370 5 510 748 5 972 087
Debenture capital 1 607 689 1 607 689 1 607 689
Interest-bearing liabilities 3 480 928 3 154 909 3 572 250
Interest rate swaps 28 802 - 16 823
Financial guarantee contract 12 373 - 15 774
Deferred taxation 660 578 748 150 759 551
Current liabilities 246 570 264 424 340 927
Trade and other payables 106 244 98 689 95 773
Interest-bearing liabilities - - 106 444
Taxation - 41 027 -
Bank overdraft 17 070 1 452 2
Linked unitholders for 123 256 123 256 138 708
distribution
Total equity and liabilities 9 947 055 10 169 625 10 717 411
Net asset value ("NAV") per 691.74 755.78 758.17
linked unit excluding deferred
taxation (cents)
Share in associate`s post 8 679 27 987 16 700
aquisition reserves (R000)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Reviewed Audited
Feb 2009 Feb 2008 Aug 2008
R000 R000 R000
Balance at beginning of period 4 404 397 4 107 996 4 107 996
Issue of shares - 448 000 448 000
Issue expenses written off - (1 060) (1 272)
Loss for the period (494 282) (160 483) (157 864)
Revaluation of property, plant - - 1 831
and equipment (net of deferred
taxation)
Minority interest - - 5 706
Total share capital and reserves 3 910 115 4 394 453 4 404 397
Review opinion - The independent auditors, PKF (Jhb) Inc., have reviewed these
results. Their unqualified report is available for inspection at the company`s
registered office.
Basis of preparation - The interim financial statements have been prepared in
accordance with International Financial Reporting Standards, IAS34 - Interim
Financial Reporting, JSE Listing Requirements and the requirements of the South
African Companies Act. All accounting policies are consistent with those applied
for the year ended 31 August 2008.
SEGMENTAL INFORMATION
Contractual Net
revenue income
2009 2009
(R000) % R000
Property portfolio
Commercial 156 986 51.8 122 844
Retail 84 046 27.7 65 767
Industrial 62 038 20.5 48 546
303 070 100.0 237 157
Listed securities 169 380 169 380
portfolio
Property trading 3 186 3 186
Total 475 636 409 723
COMMENTS
Financial results
Distributable earnings have increased by 3.4% from the comparable period.
Growth in earnings has been adversely affected mainly by a slow down in sales of
property held for trading and delays in transfers of sold units to purchasers.
The loss for the period of R494 million resulted from the decrease in value of
the listed securities portfolio by R361 million, the net reduction in value of
the property portfolio by R209 million, mark to market adjustment in interest
rate swaps of R18 million and reduction in the value of the property portfolio
held in associates of R5 million partly offset by a reduction in deferred
capital gains taxation by R99 million.
Distribution
The Board has approved an interest distribution of 13.8 cents per linked unit
for the quarter ended 28 February 2009. This, together with the distribution of
13.0 cents per linked unit for the quarter ended 30 November 2008, results in
interest distributions for the six months ended 28 February 2009 of 26.8 cents
per linked unit, a decrease of 1.0% on the distributions of 27.1 cents for the
comparable period.
Redefine`s next quarterly distribution is to be replaced with a distribution for
the four months ended 30 June 2009 to coincide with the expected effective date
of the merger of 1 July 2009. This will be followed by a distribution for the
two months ended
31 August 2009 which will be the first distribution of the merged company.
Thereafter, Redefine will resume its quarterly distributions.
Property portfolio
At 28 February 2009 Redefine`s property portfolio comprised
97 properties with a total gross lettable area (`GLA`) of 898 778m2, valued at
R5.4 billion. The directors have valued the property portfolio by applying
market related yields which are substantiated by independent external valuers.
Redefine holds a further R184.6 million property for development and R124.5
million property for trading.
The total property portfolio of R5.7 billion constitutes 58.8% (Aug 2008: 56.8%)
of Redefine`s total non-current assets.
During the period under review, 29 632m2 of vacant space was leased and leases
in respect of 38 408m2 were renewed. Vacancies at 28 February 2009 were 5.9%
(Aug 2008: 4.8%) of GLA. Subsequent to 28 February 2009 a further 7 662m2 of
vacant space has been let reducing vacancies to 5.1%. 53.7% of leases, by GLA,
expire in 2012 and beyond.
During the period Redefine disposed of TBWA Benmore for
R18.8 million, a surplus of R9.5 million on cost.
Developments
Redefine currently has 3 projects in various stages of development with an
estimated total completed cost of R353.8 million. To date, R184.6 million has
been expended.
Trading
Redefine`s trading portfolio consists of Oasis, Newmarket/Buchanan and Upper
East Side Phase 2.
Sales of units at Oasis have slowed significantly. To date, 25% of units in
Newmarket/Buchanan have been sold of which 47% of units sold have been
transferred and recognised as property trading income. Upper East Side Phase 2
is under construction and 92% has been pre-sold.
Listed securities portfolio
Redefine acquired an additional 833 333 units in CIREF Limited for R7.1 million
facilitated by means of a swap of 12.5 million units in APN European Retail
Property Group which were acquired during the period. Redefine`s holding in
CIREF is 28.05%.
Redefine disposed of 28.1 million units in Vukile Property Fund Limited for
R254.5 million, realising a minimal loss.
Borrowings
Redefine`s borrowings decreased by R197.8 million from August 2008. Total debt
of R3.5 billion represents gearing of 36.6% (Aug 2008: 35.2%).
The current average all inclusive interest rate is 9.9% (Aug 2008: 10.5%) and
the interest rate is fixed on 88.6% of borrowings for an average period of five
years.
Liquidity
20.6% of the weighted average number of linked units in issue traded during the
six months ended February 2009.
Capital commitments and contingencies
Capital expenditure on developments of R173.8 million has been authorised.
Redefine has provided suretyships limited to R119.1 million relating to its BEE
initiatives.
The company has guaranteed liabilities of JV`s limited to
R30.8 million.
Merger
At the Redefine general meetings held on 2 April, all of the special and
ordinary resolutions required to implement the proposed acquisition by Redefine
of Madison and ApexHi were passed by the requisite majorities of Redefine
shareholders and debenture holders. The ApexHi and Madison schemes were
subsequently approved by the requisite majorities of members.
The merger is conditional upon the approval of the Competition Authorities and
sanctioning of the above schemes by the court.
Further announcements regarding the fulfilment of the outstanding conditions and
the date on which the schemes will be implemented will be released on SENS and
published in the press in due course.
Prospects
The revised listing particulars issued to linked unitholders on 11 March 2009
included a forecast distribution for the year to 31 August 2009 of 62.6 cents
per linked unit not taking into account the effects of the merger with ApexHi
and Madison. This forecast was prepared using actual results for the 4 months to
31 December 2008 and forecast results for the remainder of the year ending 31
August 2009.
Since the release of this forecast there has been a greater than expected
deterioration in the overall economy and consequently the property market. The
forecast is thus likely to be impacted by lower distributions from the listed
portfolio and joint ventures and slower sales in property trading exacerbated by
delays in transfer. It is difficult to predict the level of property trading
sales which will be achieved as these are, by their very nature, lumpy. However,
it is expected that income from the core property portfolio will be in line with
the forecast.
Payment of debenture interest
Unitholders are advised that interest distribution no. 36 in respect of the
period 1 December 2008 to 28 February 2009 of 13.8 cents per linked unit has
been declared.
2009
- The last date to trade cum interest Friday 29 May
- Linked units will trade ex interest Monday 1 June
- Record date Friday 5 June
- Payment of interest distribution no. 36 Monday 8 June
Unitholders may not dematerialise or re-materialise their linked units between
Monday 1 June 2009 and Friday 5 June 2009, both days inclusive.
Dines Gihwala Brian Azizollahoff
Chairman Chief Executive Officer
Johannesburg
11 May 2009
2 Arnold Road, Rosebank, Johannesburg. P O Box 1731, Parklands, 2121, South
Africa. Telephone +27 11 283 0110 E-mail: mail@redefine.co.za
Website: www.redefine.co.za
Directors: D Gihwala*# (Chairman), B Azizollahoff+ (CEO),
L Barnard*#, W Cesman*, D Perton*+#, S Shaw-Taylor*, N Venter*#,
M Wainer*
*non-executive +British #independent
Company Secretary: Probity Business Services (Proprietary) Limited.
Sponsor: Java Capital (Proprietary) Limited
Transfer Secretary: Computershare Investor Services (Proprietary) Limited
Date: 11/05/2009 17:30:47 Produced by the JSE SENS Department.
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