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RDF
Redefine - Reviewed interim results for the six months ended 28 February 2006
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 2006
* Distributions up 21% to 20.9 cents per linked unit
* NAV per linked unit up 60% to R5,82
* Total assets up 40% to R5,2 billion
* Gearing down to 37% from 43%
CONSOLIDATED INCOME STATEMENT
Restated and Audited
Reviewed Feb Reviewed Feb 31 Aug 2005
2006 2005
R000 R000 R000
Revenue
Property portfolio 155 203 140 110 290 616
Contractual rental income 141 480 125 623 262 757
Straight-line rental income 13 723 14 487 27 859
adjustment
Listed security portfolio 88 324 73 608 147 983
243 527 213 718 438 599
Operating costs - property portfolio 26 554 28 550 61 320
Administration costs 16 064 10 489 22 827
Operating profit 200 909 174 679 354 452
Net capital gain on non-current assets 695 536 480 857 833 935
Provision against straight-lining of (13 723) (14 487) (27 859)
rental income
Interest rate swap termination costs - - (97 784)
Profit from operations 882 722 641 049 1 062 744
Interest received 3 428 2 771 4 693
Profit before finance charges 886 150 643 820 1 067 437
Finance charges 85 964 78 903 150 197
Profit before taxation 800 186 564 917 917 240
Taxation - - 28 357
Profit attributable to linked 800 186 564 917 945 597
unitholders
HEADLINE EARNINGS AND DISTRIBUTIONS
Profit attributable to linked 800 186 564 917 945 597
unitholders
Net capital gain on non-current assets (695 536) (480 857) (833 935)
Headline earnings 104 650 84 060 111 662
Interest rate swap termination costs - - 69 427
* Gross - - 97 784
* Taxation - - (28 357)
Total distributions 104 650 84 060 181 089
* First quarter 51 574 39 173 39 173
* Second quarter 53 076 44 887 44 050
* Third quarter N/A N/A 46 317
* Fourth quarter N/A N/A 51 549
Actual number of linked units in 500 719 * 499 085 * 500 719 *
issue (000)
Weighted number of linked units in 500 719 * 478 469 * 489 274 *
issue (000)
Earnings per linked unit (cents) 159.81 118.07 193.27
Headline earnings per linked unit 20.90 17.57 22.82
(cents)
Distribution per linked unit (cents) 20.90 17.25 36.80
* Excludes 5 866 500 treasury units
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Restated and Audited
Reviewed
Feb 2006 Feb 2005 31 Aug 2005
R000 R000 R000
Balance at beginning of period 2 217 993 1 314 901 1 314 901
Net issue of linked units - 72 509 76 545
Issue expenses written-off - (993) (1 125)
Revaluation of interest rate swap - (54 278) (34 620)
Deferred interest rates hedging loss - - 97 784
removed from equity and reported in
net profit
Profit attributable to linked 800 186 564 917 945 597
unitholders
Distributions to linked unitholders (104 650) (84 057) (181 089)
2 913 529 1 812 999 2 217 993
CONSOLIDATED BALANCE SHEET
Restated and Audited
Reviewed Feb Reviewed Feb 31 Aug 2005
2006 2005
R000 R000 R000
ASSETS
Non-current assets 5 089 902 3 585 630 3 938 569
Property portfolio at valuation 2 391 488 2 067 417 2 035 961
Property under development at cost - _ 53 872
Straight-line rental income - - -
adjustment
Straight-lining of rental income 56 460 44 790 42 378
Provision against straight-lining (56 460) (44 790) (42 378)
of rental income
Listed securities portfolio 2 698 414 1 518 213 1 848 736
Current assets 87 556 108 586 67 432
Trading securities 492 492 492
Straight-line rental income - - -
adjustment
Straight-lining of rental income 28 797 13 372 29 156
Provision against straight-lining (28 797) (13 372) (29 156)
of rental income
Receivables 80 517 60 533 31 844
Cash and cash equivalents 6 547 47 561 35 096
Total assets 5 177 458 3 694 216 4 006 001
EQUITY AND LIABILITIES
Capital and reserves 2 913 529 1 812 999 2 217 993
Linked unit capital 1 114 056 1 110 151 1 114 056
Non-distributable reserves 1 799 473 820 290 1 103 937
Deferred interest rate hedging loss - (117 442) -
Non-current liabilities 2 130 713 1 759 550 1 685 563
Interest-bearing liabilities 1 876 327 1 528 785 1 554 875
Interest rate swaps - 117 442 -
Deferred capital gains tax 254 386 113 323 130 688
Current liabilities 133 216 121 667 102 445
Interest-bearing liabilities - 22 075 -
Payables 80 140 54 705 50 896
Linked unitholders for distribution 53 076 44 887 51 549
Total equity and liabilities 5 177 458 3 694 216 4 006 001
Net asset value per linked unit 581.87 363.26 442.96
(cents)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Restated and Audited
Reviewed Feb Reviewed Feb 31 Aug 2005
2006 2005
R000 R000 R000
Cash effects from operating 16 722 9 910 53 739
activities
Cash generated from operations 202 381 164 134 367 702
Net financing costs (82 536) (76 132) (145 504)
Linked unit distributions paid (103 123) (78 092) (168 459)
Cash effects of investing activities (366 723) (237 628) (203 064)
Net property disposals / 1 100 (376 798) (416 627)
(acquisitions)
Net listed security (acquisitions) / (367 823) 139 170 213 563
disposals
Cash effects from financing 321 452 207 305 116 447
activities
Linked units issued - 72 509 75 420
Net movement in borrowings 321 452 134 796 41 027
Net movement in cash and cash (28 549) (20 413) (32 878)
equivalents
Opening cash and cash equivalents 35 096 67 974 67 974
Closing cash and cash equivalents 6 547 47 561 35 096
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
International Financial Reporting Standards (`IFRS") and IAS34 - Interim
Financial Reporting. In order to comply with international interpretation of
IAS17-Leases, total revenue reflects rental income recognised on a straight-line
basis. The comparatives have been restated accordingly. This adjustment has no
effect on prior period profit or equity. The accounting policies are materially
consistent with those applied in previous years.
COMMENTS
Financial results
Redefine continues to increase distributions per linked unit with growth for the
six months to 28 February 2006 of 21.2% over the comparative period.
The Board has approved an interest distribution of 10.6 cents per linked unit
for the quarter ended 28 February 2006. This together with an interim
distribution of 10.3 cents per linked unit for the quarter ended 30 November
2005 amounts to a total interest distribution for the six months ended 28
February 2006 of 20.9 cents per linked unit. This is in line with the forecast
for the year ending August 2006.
Non-current assets have increased by 42.0% to R5,1 billion at 28 February 2006
(Feb 2005: R3,6 billion).
Net Asset Value (NAV) per linked unit is R5,82 (Feb 2005: R3.63)
Valuation of property portfolio
The directors have valued the property portfolio by applying market related
rates which are substantiated by the independent external valuers. This has
resulted in an increase in the value of the portfolio of R324,1 million or
15.7%. Deferred capital gains taxation of R47,0 million has been provided in
respect of the revaluation surplus.
The property portfolio is revalued by independent external valuers at the end of
each financial year.
Property acquisitions
During the period under review the following property was acquired:
Property Location GLA Purchase Price Initial Yield
(m2) R000 (%)
Celtic Freight Isando 13 472 16 100 12
16 100
Property disposals
During the period under review the followings properties were disposed of and
ownership transferred:
Property Location GLA Net Proceeds
(m2) R000
Woodmead 4 & 5* Woodmead 1 527 9 898
18 Hurlingham Road Illovo 1 189 7 750
44 Wierda Road Wierda 1 044 6 300
Valley
ERP.com* Sunninghill 775 4 242
Kyalami Park - Stand 36 Kyalami 837 3 150
31 340
* Transferred on 13 March 2006
Property portfolio
The property portfolio comprises 47.0% of Redefine"s total non-current assets
(Feb 2005: 57.7%). The reduction in the ratio arises from a positive re-rating
of the listed property sector.
Sectoral spread by revenue comprises 56.8% commercial, 24.5% retail and 18.7%
industrial. It is Redefine"s strategy to increase its retail assets.
During the period under review 16 038m2 of vacant space was leased and leases in
respect of 21 575m2 were renewed.
The lease expiry profile has continued to improve and outperform the sector
average with 63.5% of leases expiring in 2009 and beyond.
At 28 February 2006, 97.3% of the property portfolio was leased (Feb 2005:
96.3%).
Listed securities portfolio
Hyprop Investments Limited made an offer to acquire SA Retail Properties Limited
linked units from unitholders holding SA Retail units in terms of which the
consideration was 1 Hyprop linked unit for every 2.7 SA Retail linked units.
Redefine accepted the offer and obtained an additional 20,7 million Hyprop
linked units. Subsequently an additional 8,2 million Hyprop linked units were
purchased increasing Redefine"s holding in Hyprop to 28.9%.
ApexHi Properties Limited purchased the entire business of Prima Property Trust.
Prima unitholders received 5.9 ApexHi `A" and 5.9 ApexHi `B" units for every 100
Prima units held. As a result Redefine received an additional 12,3 million
ApexHi `A" and 12,3 million ApexHi `B" linked units.
Redefine purchased an additional 15,6 million units in Marriott Property Fund.
The value of Redefine"s listed securities portfolio increased by 77.7% from
February 2005 to R2,7 billion.
Borrowings
Redefine"s borrowings of R1,9 billion represent gearing of 36.9% a reduction
from 39.5% at August 2005 (Feb 2005: 42.6%).
The current average all-in interest rate is 9.9% and the interest rate of 69.3%
on borrowings is fixed for an average period of five years.
Liquidity
Redefine is one of the most liquid counters in the listed property sector with
29.2% of its linked units in issue having traded during the six months ended
February 2006.
Prospects
The Board anticipates that the total distribution per linked unit for the six
months ended 28 February 2006 will at least be maintained for the remainder of
the current financial year.
Rights Issue
Unitholders are advised that the Board has resolved to implement a rights offer
to raise capital of up to R310,3 million, full details of which are published in
an announcement released simultaneously with this announcement.
Distribution
Unitholders are advised that interest distribution No. 24 in respect of the
period 1 December 2005 to 28 February 2006 of 10.6 cents per linked unit has
been declared.
* The last date to trade cum interest Thursday, 20 April 2006
* Linked units will trade ex interest Friday, 21 April 2006
* Record Date Friday, 28 April 2006
* Payment of interest distribution No. 24 Tuesday, 2 May 2006
Unitholders may not dematerialise or re-materialise their linked units between
Friday, 21 April and Friday, 28 April 2006, both days inclusive.
Wolf Cesman Brian Azizollahoff
Chairman Chief Executive Officer
Johannesburg
10 April 2006
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+ (CEO) L Barnard*u W Cesman* (Chairman) C Clarke*u
E Ellerine*u D Perton*+u S Shaw-Taylor* M Wainer* *non-executive +British
uindependent
Company secretary: Probity Business Services (Pty) Ltd. Suite 204, 20 Baker
Street, Rosebank, 2196. Telephone: +27 11 327 7146
www.redefine.co.za
Date: 10/04/2006 04:59:49 PM Produced by the JSE SENS Department
