| Thu 4 Nov 2010, 9:08 | | RIN - Redefine Properties International Limited - Reviewed condensed |
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RIN
RIN
RIN - Redefine Properties International Limited - Reviewed condensed
consolidated results for the period from date of incorporation until 31
August 2010
Redefine Properties International Limited
(formerly Kalpafon Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2010/009284/06)
JSE share code: RIN ISIN: ZAE000149282
("RIN" or "the Company" and together with its subsidiaries "the Group")
REVIEWED CONDENSED CONSOLIDATED RESULTS
for the period from date of incorporation until 31 August 2010
- GBP84 million raised with successful listing on 7 September 2010
- NAV per linked unit of 43,48 pence. Pro forma NAV per linked unit of 45,58
pence after listing
- Acquisition of 50% of Grand Arcade Shopping Centre, Wigan completed post
period end
- Favourable restructuring of senior debt on the shopping centre portfolio
completed post period end
- Acquisition of GBP106 million hotel portfolio post period end
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
GROUP
31 August
2010
GBP`000
Revenue
Gross rental income 1 475
Other income 448
Total revenue 1 923
Expenses
Administrative expenses (37)
Investment management and professional fees (674)
Property operating expenses (167)
Net operating income 1 045
Losses from financial assets and liabilities (including (1 305)
debentures)
Equity accounted profit 683
Impairment of loans to joint ventures 15
Net fair value gains on investment property 392
Amortisation and impairment of intangible assets (31)
Profit from operations 799
Interest income 379
Interest expense (1 892)
Foreign currency loss (805)
Loss for the period before tax (1 519)
Taxation (3)
Loss for the period after tax (1 522)
Other comprehensive (loss)/income
Foreign currency translation on foreign operations - 217
subsidiaries
Foreign currency translation on foreign operations - joint (7)
ventures
Total comprehensive loss for the period (1 312)
Loss attributable to:
RIN linked unitholders (1 680)
Non-controlling interest 158
(1 522)
Total comprehensive loss attributable to:
RIN linked unitholders (1 470)
Non-controlling interest 158
(1 312)
Reconciliation of loss and headline loss
Loss for the period attributable to RIN linked unitholders (1 680)
Changes in fair value of investment property and (180)
intangible assets
Fair value adjustment on debentures 1 161
Headline loss attributable to linked unitholders (699)
Earnings available for distribution
Net operating income 1 045
Operating income from equity accounted entities 253
Straight-line rental income accrual 24
Acquisition costs on financial assets 444
Interest income 379
Interest expense (1 482)
Foreign exchange loss (20)
Taxation (3)
Earnings available for distribution 640
Attributable to non-controlling interest (185)
Earnings available for distribution attributable to linked 455
unitholders*
Actual number of linked units in issue (`000) 168 505
Weighted number of linked units in issue (`000) 168 505
Basic loss per linked unit (pence) (1,00)
Headline loss per linked unit (pence) (0,41)
Earnings available for distribution per linked unit 0,27
(pence)
* The earnings available for distribution represent the earnings that would
have been distributable to linked unitholders had a distribution been
declared for the period under review.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
GROUP
31 August
2010
GBP`000
ASSETS
Non-current assets
Investment property 227 675
Long-term receivables 48 160
Investments designated at fair value 75 139
Intangible assets 7 560
Investments in joint ventures 2 040
Investments in associates 18 923
Total non-current assets 379 497
Current assets
Trade and other receivables 13 233
Cash and cash equivalents 35 411
Total current assets 48 644
Total assets 428 141
EQUITY AND LIABILITIES
Capital and reserves
Share capital 15
Retained earnings (1 680)
Other reserve (1 289)
Currency translation reserve 150
Total equity attributable to equity shareholders (2 804)
Non-controlling interest 35 631
Total equity 32 827
Non-current liabilities
Debenture capital 76 065
Loans and borrowings 165 451
Total non-current liabilities 241 516
Current liabilities
Loans and borrowings 134 196
Trade and other payables 19 602
Total current liabilities 153 798
Total liabilities 395 314
Total equity and liabilities 428 141
Net asset value per linked unit (pence) 43,48
Number of linked units in issue 168 505 303
CONSOLIDATED STATEMENT OF CASH FLOWS
GROUP
31 August
2010
GBP`000
Cash flows from operating activities
Cash generated by operations 1 306
Interest paid (1 292)
Taxation paid (3)
Net cash generated from operating activities 11
Net cash generated from investing activities 940
Net cash generated from financing activities 15 844
Net movement in cash and cash equivalents 16 795
Effect of exchange rate fluctuations on cash held 174
Cash and cash equivalents at the beginning of the period -
Net cash and cash equivalents at the end of the period 16 969
SEGMENTAL ANALYSIS
Shopping
UK Centre European
Portfolio Portfolio Portfolio
GBP`000 GBP`000 GBP`000
Period ended
31 August 2010
Revenue 343 777 355
Property operating expenses (10) (120) (37)
Net property income 333 657 318
Non-current assets
Investment property 58 903 114 449 54 323
Investments designated at fair 362 - -
value
Investment in associates - - -
Wichford Cromwell Total
GBP`000 GBP`000 GBP`000
Period ended
31 August 2010
Revenue - - 1 475
Property operating expenses - - (167)
Net property income - - 1 308
Non-current assets
Investment property - - 227 675
Investments designated at fair - 74 777 75 139
value
Investment in associates 18 923 - 18 923
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
GROUP
31 August
2010
GBP`000
Balance at beginning of period -
Shares issued 15
Comprehensive income attributable to linked unitholders (1 530)
Other reserves (1 289)
Total equity (2 804)
PRO FORMA STATEMENT OF FINANCIAL POSITION AFTER LISTING ON 7 SEPTEMBER 2010
(not reviewed)**
GROUP
GBP`000
ASSETS
Non-current assets
Investment property 227 675
Long-term receivables 48 160
Investments designated at fair value 75 139
Intangible assets 7 560
Investments in joint ventures 2 040
Investments in associates 18 923
Total non-current assets 379 497
Current assets
Trade and other receivables 13 233
Cash and cash equivalents 68 120
Total current assets 81 353
Total assets 460 850
EQUITY AND LIABILITIES
Capital and reserves
Share capital 30
Retained earnings (1 680)
Other reserve (1 289)
Currency translation reserve 150
Total equity attributable to equity shareholders (2 789)
Non-controlling interest 35 631
Total equity 32 842
Non-current liabilities
Debenture capital 156 212
Loans and borrowings 165 451
Total non-current liabilities 321 663
Current liabilities
Loans and borrowings 86 743
Trade and other payables 19 602
Total current liabilities 106 345
Total liabilities 428 008
Total equity and liabilities 460 850
Net asset value per linked unit (pence) 45,58
Number of linked units in issue 336 574 640
** Prepared by taking the statement of financial position as at 31 August
2010 and including the funds raised on 7 September 2010.
COMMENTARY
Introduction
RIN is a listed property loan stock company with shares linked to debentures
to create linked units. RIN holds as its sole asset, currently a controlling
shareholding of 81,9% in Redefine International plc ("Redefine
International"). Each linked unit in RIN effectively equates to one share in
Redefine International.
Background to Redefine International
Redefine International (formerly Ciref Plc) is a closed-ended property
investment company listed on the AIM market of the London Stock Exchange
("LSE"). Redefine International is a hybrid property fund with an exposure to
a broad range of properties, listed property securities and geographical
areas. It has investments in commercial and retail properties in the United
Kingdom ("UK"), Switzerland, Germany and the Channel Islands as well as
significant non-controlling interests in Wichford P.L.C. ("Wichford") (21,7%)
which is listed on the LSE and the Cromwell Group ("Cromwell") (19,9%) which
is listed on the Australian Stock Exchange. Redefine International has
recently extended its investment mandate to include limited service hotels.
Financial results
RIN was incorporated in South Africa on 11 May 2010 as Kalpafon Limited as a
wholly-owned subsidiary of Redefine Properties Limited ("Redefine"). Kalpafon
changed its name to `Redefine Properties International Limited` on 23 July
2010 and acquired Redefine`s interest in Redefine International with effect
from 1 August 2010 by issuing linked units.
As such the results have been prepared for one month to 31 August 2010 only
and do not fully represent the trading of the Company`s underlying subsidiary
Redefine International for the 11 months to 31 August 2010.
Furthermore the listing of RIN on the JSE Limited ("JSE") and associated
capital raising occurred post year end and the effects thereof are excluded
from this set of results.
A pro forma statement of financial position setting out the position as at 7
September 2010 (the date of listing and post the capital raising) is set out
for information purposes.
The pro forma statement of financial position is the responsibility of the
Directors of RIN. By its nature, the pro forma statement of financial
position may not fairly reflect the financial position of the Group after the
capital raising.
The pro forma statement of financial position has not been reviewed or
reported on by the Group`s auditors.
Redefine International`s results
The results for the 11 months to 31 August 2010 have been released
simultaneously with these results and can be found on the website
www.redefineinternational.je or on the JSE`s SENS or the LSE`s Regulatory
News Service ("RNS"). Shareholders will be able to obtain full financial
information and commentary on the performance of Redefine International for
the 11 months to 31 August 2010 by referring to these results.
Property portfolio
The Group`s property portfolio consists of 91 properties with an effective
Gross Leasable Area (GLA) of 2 672 284 square feet.
Graphs
Sector Profile by area
Retail 56%
Commercial 29%
Offices 10%
Other 5%
Tenant Profile by GLA
Large international & national tenants 58%
Smaller international and national tenants 31%
Other local tenants & sole proprietors 11%
Lease expiry profile square feet (`000)
Commercial Offices Other Retail Grand Total
0-5yrs 18 975 60 390 33 401 541 772 654 538
5-10yrs 170 098 65 218 7 880 416 432 659 628
10-15yrs 596 710 55 402 13 596 106 686 772 393
15+ yrs - 79 746 89 000 416 979 585 726
TOTAL 785 783 260 756 143 877 1 481 868 2 672 284
Listing on the JSE
RIN was successfully listed on the JSE on 7 September 2010. The investment
opportunity has been well received by the South African investment community
and justified the decision to pursue a listing. Capital of GBP84 million was
raised pursuant to the listing, RIN currently has 336,5 million shares in
issue of which 57,2% or 192,6 million shares are owned by Redefine.
The issue price under the capital raising was 50 pence per linked unit which
equated to ZAR5,69 per linked unit at an exchange rate of GBP1: ZAR11,37.
Business combinations
With effect from 1 August 2010, the Company gained control of Redefine
International through the acquisition of 168 505 303 shares in Redefine
International from Redefine (excluding entitlement to the dividend from
Redefine International in respect of the six month period ended 31 August
2010). Redefine exchanged its entire holding in Redefine International for a
100% interest in RIN. The purchase consideration was settled by the issue of
linked units amounting to GBP74 919 298. The Company acquired an additional
66 000 000 shares at 50 pence in Redefine International during August 2010
which resulted in an effective shareholding in Redefine International of
76,96% at 31 August 2010. The acquisition was financed by way of a loan from
Redefine International denominated in ZAR.
With effect from 1 August 2010, the Company, through Redefine International,
increased its interest in the Birchwood Shopping Centre from 33,33% to 100%.
The acquisition was secured by way of a capitalisation in Birchwood
Warrington Limited of a GBP531 850 debt due to Redefine International.
The fair value of the assets and liabilities, on the dates acquired are as
follows:
Birchwood Redefine
Warrington International Total
GBP`000 GBP`000 GBP`000
Investment property 30 000 196 567 226 567
Long-term receivables 8 199 40 446 48 645
Investments designated at fair - 72 760 72 760
value
Investments in joint ventures - 2 170 2 170
Investments in associates - 18 116 18 116
Intangible assets 575 7 016 7 591
Trade and other receivables 438 8 080 8 518
Trade and other payables (2 258) (12 913) (15 171)
Cash and cash equivalents 552 21 034 21 586
Loans and borrowings (37 506) (243 233) (280 739)
- 110 043 110 043
Less: Non-controlling interest - (35 124) (35 124)
Purchase consideration - 74 919 74 919
Linked units issued - (15) (15)
- shares
- debentures - (74 904) (74 904)
The business combinations contributed revenues of GBP1,47 million and a net
loss of GBP0,67 million to the Group for the period under review. The
business combinations have been accounted for in terms of IFRS 3: Business
Combinations (2008) and in accordance with the Group`s accounting policies.
Borrowings
The Company repaid the loan of ZAR388 million from Redefine from the proceeds
of the listing. The loan was used to subscribe for additional securities in
Cromwell through Redefine International. The Company currently has zero
borrowings.
Linked units
During the period ended 31 August 2010, 168 505 303 linked units were issued
to fund the acquisition of the shareholding in Redefine International. The
linked units were issued at a price per linked unit of 44,46 pence.
During the period from listing 7 September 2010 to 31 October 2010, 18,51
million linked units traded for ZAR110,54 million equivalent to 5,5% of the
number of linked units in issue.
Fair value adjustment on debentures
Each linked unit comprises one share and one debenture. The debentures have
been designated at fair value through profit or loss. Debentures are adjusted
to fair value which represents the net asset value attributable to debenture
holders. As one linked unit in the Company is irrevocably linked to one share
in the Company`s subsidiary, Redefine International, the fair value of one
debenture is determined by the ex-dividend net asset value of one Redefine
International share as at 31 August 2010 (45,15 pence per share). Debentures
are reflected in the statement of financial position as follows:
31 August
2010
GBP`000
Debentures issued at par value 73 718
Premium on debentures issued 1 186
Fair value adjustment 1 161
76 065
Linked unit distribution
No distribution has been declared for the period under review. A distribution
for the period 1 September 2010 to 28 February 2011 is expected to be payable
in early May 2011.
Prospects and strategy
The Company will continue to pursue a broad investment strategy that focuses
on assets that provide a strong yield, at low risk and with the likelihood of
capital enhancement.
The Group intends to continue with its current investment strategy, whilst
consolidating the holdings of assets under part-ownership. In this regard the
non-controlling interest in the partly owned companies are to be offered the
opportunity to exit either through a share swap with Redefine International
or a cash payment.
The Group will also consider increasing its stakes in Cromwell and Wichford
if the opportunities arise to do so at prices which offer our targeted
returns.
The Shopping Centre Portfolio will be managed to maximise cash returns and
redevelopment opportunities will be taken advantage of only where there are
strong cash on cash returns. An extension to the Birchwood Shopping Centre to
house a major discount retailer is at an advanced planning stage, and is
expected to significantly enhance the value of the centre.
Further opportunities in the hotel sector are being considered and will be
evaluated on the basis of projected returns and available capital.
The Group is well positioned due to the nature and geographical diversity of
its investment base. Australia`s economy is growing strongly and should
support Cromwell`s earnings growth going forward. Our European portfolio has
been resilient and has benefitted from consumers trading down in the German
economy. The UK Shopping Centre Portfolio financing has been restructured and
is set for solid medium-term growth as these assets become increasingly
difficult to replace.
The Board is committed to ensuring that the earnings and distribution
forecasts set out in the RIN listing prospectus are met and currently has
positive expectations in this regard.
Basis of preparation
These reviewed condensed consolidated results of the Group for the period
ended 31 August 2010 consolidate the Company and its subsidiaries (together
referred to as the "Group"). They are presented in pound sterling which
represents the functional currency of the Company as the Company`s revenue
stream is sterling denominated and are rounded to the nearest thousand. These
condensed consolidated results are based on the Group`s annual financial
statements that have been reviewed by the auditors, KPMG Inc. The auditors`
review opinion is available for inspection at the Company`s registered
office.
These condensed consolidated results have been prepared in accordance with
the recognition and measurement critieria of International Financial
Reporting Standards ("IFRS"), the AC 500 series issued by the South African
Institute of Chartered Accountants, the Companies Act of South Africa and the
JSE Listings Requirements. They are presented in accordance with the
presentation and disclosure requirements of IAS 34 Interim Financial
Reporting.
The preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the application of policies
and reported amounts of assets. In preparing these condensed consolidated
financial statements, the significant judgements made by management in
applying the Group`s accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated financial
statements as at and for the year ended 30 September 2009, for that of its
subsidiary entity Redefine International, except as noted below.
The Company has implemented the revised IAS 1 Presentation of Financial
Statements, and IFRS 8 Operating Segments. The changes on both standards are
of a presentation and disclosure nature only.
The Company adopted the revised versions of IFRS3, Business Combinations, IAS
27 Consolidated and Separate Financial Statements and IAS 40 Investment
Properties.
Accounting for debentures
Debentures are designated as held at fair value through profit or loss. These
instruments are measured initially at fair value, which is the nominal value
less debenture discount, and subsequently measured at fair value.
Fair value represents the net asset value attributable to debenture holders
after adjusting all other assets and liabilities to fair value (excluding
intangible assets).
Commitments
The Group has capital commitments of GBP51 million in respect of capital
expenditure contracted for at the reporting date.
On behalf of the Board
GR Tipper MJ Watters
Chairman CEO
4 November 2010
Directors
Gavin Tipper* (Non-executive Chairman)
Michael Watters (Chief Executive Officer)
Andrew Rowell (Financial Director)
Michael Farrow*
Bernard Nackan*
John Ruddy*
Peter Todd*
Marc Wainer+
+ Non-executive directors
* Independent non-executive directors
Registered office
Redefine Place
2 Arnold Road, Rosebank, Johannesburg, 2196
Transfer secretaries
Computershare Investor Services (Proprietary) Limited.
Company secretary
Probity Business Services (Proprietary) Limited
3rd floor JHI House
Cradock Avenue, Rosebank, Johannesburg, 2196.
Sponsor
Java Capital
www.redefineinternational.com
Date: 04/11/2010 09:08:01 Produced by the JSE SENS Department.
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employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
