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Redefine Income Fund Limited - Reviewed Interim Results For The Six Months Ended
28 February 2005
Redefine Income Fund Limited
(`Redefine` or `the Company`)
Registration No. 1999/018591/06
Share code: RDF
ISIN Code: ZAE000023503
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2005
Distributions for 6 months up 11.29% to 17.25 cents per linked unit
NAV per linked unit up 36.93% to R3.63
Total assets up 29.25% to R3.7 billion
Gearing down to 42.64% from 55.51%
CONSOLIDATED INCOME STATEMENT
Reviewed Unaudited Audited
Feb 2005 Feb 2004 31 Aug 2004
R000 R000 R000
Revenue
Property portfolio 114 655 117 238 238 953
Listed security portfolio 73 608 88 143 181 705
188 263 205 381 420 658
Operating costs - property portfolio 17 582 36 093 78 342
Administration costs 10 489 9 026 18 069
Operating profit 160 192 160 262 324 247
Net capital gain on non- current
assets 480 857 97 266 192 936
Profit from operations 641 049 257 528 517 183
Interest received 2 771 1 068 3 572
Profit before finance charges 643 820 258 596 520 755
Finance charges 78 903 92 614 181 983
Profit before taxation 564 917 165 982 338 772
Taxation - - -
Profit attributable to linked
unitholders 564 917 165 982 338 772
Reconciliation of headline earnings
and distributions
Profit attributable to linked
unitholders 564 917 165 9 82 338 772
Net capital gain on non- current
assets (480 857) (97 266) (192 936)
Headline earnings and total
distributions 84 060 68 716 145 836
First quarter 39 173 32 068 32 068
Second quarter 44 887 36 648 36 622
_ _
Third quarter 38 227
_ _
Fourth quarter 38 919
Earnings per linked unit
Actual number of linked units in issue
(000) 499 085 463 358 474 705
Weighted number of linked units in
issue (000) 478 469 442 838 455 262
Earnings per linked unit (cents) 118.07 37.48 74.41
Headline earnings per linked unit
(cents) 17.57 15.52 32.03
Distribution per linked unit (cents) 17.25 15.50 32.00
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Unaudited Audited
Feb 2005 Feb 2004 31 Aug 2004
R000 R000 R000
Balance at beginning of period 1 314 901 994 503 994 503
Net issue of linked units 72 509 128 750 155 700
Issue expenses written-off (993) (443) (542)
Revaluation of interest rate swaps (54 278) 9 132 (27 696)
Profit attributable to linked
unitholders 564 917 165 982 338 772
Distributions to linked unitholders (84 057) (68 716) (145 836)
1 812 999 1 229 208 1 314 901
CONSOLIDATED BALANCE SHEET
Reviewed Unaudited Audited
Feb 2005 Feb 2004 31 Aug 2004
R000 R000 R000
ASSETS
Non-current assets 3 585 630 2 777 806 2 694 514
Property portfolio 2 067 417 1 279 546 1 345 043
Listed security portfolio 1 518 213 1 498 260 1 349 471
Current assets 108 586 92 843 196 936
Trading securities 492 492 492
Receivables 60 533 77 095 128 470
Cash and cash equivalents 47 561 15 256 67 974
Total assets 3 694 216 2 870 649 2 891 450
EQUITY AND LIABILITIES
Capital and reserves 1 812 999 1 229 208 1 314 901
Linked unit capital 1 110 151 1 011 785 1 038 636
Non-distributable reserve 820 290 243 759 339 429
Deferred interest rate hedging loss (117 442) (26 336) (63 164)
Non-current liabilities 1 759 550 1 568 362 1 508 084
Interest-bearing liabilities 1 528 785 1 542 026 1 410 477
Interest rate swaps 117 442 26 336 63 164
Deferred capital gains tax 113 323 - 34 443
Current liabilities 121 667 73 079 68 465
Interest- bearing liabilities 22 075 15 221 5 587
Payables 54 705 23 049 23 959
Linked unitholders for distribution 44 887 34 809 38 919
Total equity and liabilities 3 694 216 2 870 649 2 891 450
Net asset value per linked unit
(cents) 363.26 265.28 276.99
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Unaudited Audited
Feb 2005 Feb 2004 31 Aug 2004
R000 R000 R000
Cash effects from operating
activities 55 080 12 630 43 315
Cash generated from operations 209 304 164 810 355 370
Net financing costs (76 132) (91 546) (178 411)
Linked unit distributions paid (78 092) (60 634) (133 644)
Cash effects of investing activities(282 798) (232 405) (93 732)
Net property acquisitions (421 968) (135 331) (181 234)
Net listed security disposals
(acquisitions) 139 170 (97 074) 87 502
Cash effects from financing
activities 207 305 238 172 121 532
Linked units issued 72 509 128 750 155 158
Net movement in borrowings 13 4 796 109 422 (33 626)
Net movement in cash and cash
equivalents ( 20 413) 18 397 71 115
Opening cash and cash equivalents 67 974 (3 141) (3 141)
Closing cash and cash equivalents 47 561 15 256 67 974
COMMENTS
Financial results Redefine increased its headline earnings by 13.21% to
17.57 cents per linked unit for the 6 months to 28 February 2005.
Non- current assets have increased by 29.08% to R3,6 billion at 28 February
2005.
The Net Asset Value (NAV) per linked unit is R3.63 (Feb 2004: R2.65)
Distributions
Redefine paid an interim distribution of 8.25 cents per linked unit
for the quarter ended 30 November 2004.
The board has approved an interest distribution of 9 cents per linked unit for
the quarter ended 28 February 2005.
The total interest distribution for the 6 months ended 28 February 2005 of
17.25 cents per linked unit exceeds that for the comparative period in 2004 by
11.29%.
Valuation of property portfolio
The property portfolio is revalued by independent external valuers at the end
of each financial year.
Subsequent to the last valuation, long term interest rates have declined
substantially with a corresponding change in market related capitalisation
rates.
The directors have valued the property portfolio applying market related rates
resulting in an increase in value of R274.2 million.
Deferred capital gains taxation of R41.1 million has been provided in respect
of the revaluation surplus.
Property acquisitions
During the period under review the followings properties were acquired and
transfer registered:
Building Location/s GLA Purchase Price Yield
(m2) R (%)
Collins Portfolio Gauteng/
(9 buildings) KwaZulu- Natal 59 729 252 855 000 11.2
90 Rivonia Road Sandton 14 270 113 000 000 10.6
Rosebank Arena Rosebank 12 163 39 500 000 11.9
Riverside Value Mart Nelspruit 9 390 37 500 000 12.3
90 Grayston Drive Sandton 4 400 34 500 000 11.1
South Coast Mall
(50% Undivided
share in land for
development) Shelley Beach 8 000 000 n/a
485 355 000
Property Disposals
During the period under review the followings properties
were disposed of and ownership transferred:
Building Location/s GLA Selling Price Yield
(m2) R (%)
Western Cape
Portfolio (4 buildings) Cape Town 12 782 35 000 000 11.9
12 Rivonia Road Sandton 1 845 12 500 000 17.3
Trimtech Pretoria 6 669 5 700 000 n/a
Saambou Randburg 1 143 2 800 000 8.7
Bernie Street
(vacant land) Kya Sands 820 800 n/a
56 820 800
Property portfolio
The property portfolio has increased to 57.66% of Redefine`s total non-current
assets (Feb 2004: 46.06%).
The net effect of acquisitions and sales during the period increased the number
of properties to 77.
Sectoral spread by revenue comprises 64.3% commercial, 21.2% retail and 14.5%
industrial. It is Redefine`s strategy to continue to grow its retail assets to
approximately 35% of its property portfolio.
During the period under review 18 865 m2 of vacant space was leased and leases
in respect of 17 847 m2 were renewed.
The lease expiry profile has continued to improve and outperform the sector
average with 66.7% of leases expiring in 2008 and beyond.
At 28 February 2005, 96.3% of the portfolio was leased (Feb 2004: 93.4%).
Current yield differentials continue to favour direct property and therefore
Redefine intends to increase its direct property holdings.
Listed securities portfolio
Redefine disposed of its holding of 8,353 million units in Growthpoint
Properties Limited for R51,7 million and its holding of 70,752 million units in
Martprop Property Fund Limited for R169 million. The proceeds have been used to
acquire direct property and reduce debt.
Redefine increased its holding in S A Retail Properties Limited to 26.9% of the
total units in issue by acquiring 15,018 million units for R110,2 million.
Taking into account acquisitions, disposals and enhanced market value,
Redefine`s listed securities portfolio increased by 12,5% to R1,5 billion.
Borrowings
Redefine`s borrowings of R1,5 billion represents gearing of 42.64 %, a
substantial reduction from 52.35% at August 2004 (Feb 2004: 55.51%), in
accordance with the strategy to reduce gearing to below 45%.
The current average all- in interest rate is 10.19% and 73.91% of borrowings
are fixed for an average period of four years.
Liquidity
Redefine`s is one of the most liquid counters in the listed property sector
with 31% of its total linked units traded during the six months ended February
2005.
Directorate
Three new independent non- executive directors have been appointed to the board
of Redefine, Mr C Clarke on 14 October 2004, Ms L Barnard on 21 October 2004
and Mrs D Perton on 26 October 2004.
Prospects
The Board anticipates that the distribution per linked unit for the quarter
ended 28 February 2005 will at least be maintained for the remainder of the
current financial year.
This forecast has not been reviewed or reported on by Redefine`s auditors.
Interest distribution
Unitholders are advised that interest distribution No. 20 in respect of the
period 1 December 2004 to 28 February 2005 of 9 cents per linked unit has been
declared.
The last date to trade cum interest Friday,6 May 2005
Linked units will trade ex interest Monday,9 May 2005
Record Date Friday,13 May 2005
Payment of interest distribution No. 20 Monday,16 May 2005
Unitholders may not dematerialise or re materialise their linked units between
Friday, 13 May and Monday 16 May 2005, both days inclusive.
Wolf Cesman, Chairman Brian Azizollahoff, Chief Executive Officer
Johannesburg
18 April 2005.
REVIEW OPINION
The independent auditors, PKF (Jhb) Inc., have reviewed these interim 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 the
South African Statements of Generally Accepted Accounting Practice. The
accounting policies applied in the preparation of the interim financial
statements are consistent with those applied in the annual financial statements
for the year ended 31 August 2004.
REDEFINE INCOME FUND LIMITED
2 Arnold Road, Rosebank, Johannesburg. P O Box 1731,Parklands,2121,South Africa.
Telephone +27 11 283 0110 E - mail:mail@redefine.co.za
Directors: B Azizollahoff u (CEO), L Barnard*,
W Cesman* (Chairman), C Clarke*, E Ellerine*,
D Perton u* , S Shaw-Taylor*, M Wainer*
*=non-executive u=British
Company secretary: Probity Business
Services (Pty) Ltd. Suite 204, 20 Baker
Street, Rosebank, 2196. Telephone: +27 11
327 7146
Sponsor
Java Capital (Pty) Ltd
