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REDEFINE INCOME FUND - UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY
2003
Redefine Income Fund
Registration No. 1999/018591/06
SHARE CODE: RDF
ISIN CODE: ZAE000023503
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2003
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
28 Feb 2003 28 Feb 2002 31 Aug 2002
R000 R000 R000
Revenue
Property portfolio 92 940 45 128 106 695
Listed security portfolio 90 448 66 106 142 116
183 388 111 234 248 811
Operating costs - property
portfolio 23 844 11 034 25 678
Administration costs 8 041 5 506 11 451
Operating profit 151 503 94 694 211 682
Net capital gain (loss)
on non-current assets 120 380 (116 222) (79 674)
Profit (loss) from operations 271 883 (21 528) 132 008
Interest received 3 970 752 1 211
Profit (loss) before
finance charges 275 853 (20 776) 133 219
Finance charges 89 427 50 145 109 437
Profit (loss) before taxation 186 426 (70 921) 23 782
Taxation - - -
Profit (loss) attributable to linked
unitholders 186 426 (70 921) 23 782
Headline earnings and distributions
Profit (loss) attributable to linked
unitholders 186 426 (70 921) 23 782
Net capital loss (gain)
on non-current assets (120 380) 116 222 79 674
Headline earnings and
total distributions 66 046 45 301 103 456
- First quarter 29 669 22 530 22 530
- Second quarter 36 377 22 771 22 771
- Third quarter - - 28 430
- Fourth quarter - - 29 725
Earnings per linked unit
Actual number of linked
units in issue (000) 421 653 253 014 321 068
Weighted number of linked units
in issue (000) 388 146 248 578 279 096
Earnings per linked unit (cents) 48,03 (28,53) 8,52
Headline earnings per
linked unit (cents) 17,02 18,22 37,07
Distribution per
linked unit (cents) 17,00 18,00 37,00
Net asset value per
linked unit (cents) 265,73 228,69 234,74
(excluding unpaid distributions)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
28 Feb 2003 28 Feb 2002 31 Aug 2002
R000 R000 R000
Opening balance 761 457 644 824 644 824
- As previously stated 753 666 753 666 753 666
- Gains on interest rate swaps 7 791 - -
Issue of linked units 246 242 50 091 190 888
Issue expenses written-off (979) (85) (2 372)
Net change in interest rate swaps (6 649) - -
Profit (loss) attributable
to linked Unitholders 186 426 (70 921) 23 782
Distributions to
linked unitholders (66 046) (45 301) (103 456)
Closing balance 1 120 451 578 608 753 666
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
28 Feb 2003 28 Feb 2002 31 Aug 2002
R000 R000 R000
Assets
Non-current assets 2 465 895 1 366 073 1 894 390
Property portfolio 1 171 026 550 251 807 777
Listed security portfolio 1 293 727 815 822 1 086 613
Interest rate swaps 1 142 - -
Current assets 93 578 56 025 58 698
Trading securities 9 347 - -
Deposits, prepayments and
other receivables 9 854 6 351 11 270
Tenant debtors 4 814 1 126 3 120
Managing agent debtors 5 983 1 918 764
Listed security distributions
receivable 58 173 45 074 43 539
Cash and cash equivalents 5 407 1 556 5
Total assets 2 559 473 1 422 098 1 953 088
Equity and liabilities
Capital and reserves 1 120 451 578 608 753 666
Linked unit capital 903 831 520 002 658 513
Non-distributable reserve 215 478 - -
Gains on interest rate swaps 1 142 58 606 95 153
Non-current liabilities 1 375 741 795 665 1 100 201
Interest-bearing liabilities 1 375 741 778 145 1 100 201
Non-interest bearing liabilities - 17 520 -
Current liabilities 63 281 47 825 99 221
Interest-bearing liabilities 15 480 7 702 26 240
Trade and other payables 11 424 17 352 10 223
Bank overdraft - - 33 033
Unitholders for distribution 36 377 22 771 29 725
Total equity and liabilities 2 559 473 1 422 098 1 953 088
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
28 Feb 2003 28 Feb 2002 31 Aug 2002
R000 R000 R000
Cash effects from
operating activities (22 127) (43 323) (47 252)
Cash generated from operations 122 724 49 940 156 045
Net financing costs (85 457) (49 393) (108 226)
Linked unit distributions paid (59 394) (43 870) (95 071)
Cash effects of investing
activities (449 481) (129 069) (621 308)
Net property acquisitions (362 747) (98 379) (352 570)
Net listed security acquisitions (86 734 (30 690) (268 738)
Cash effects from
financing activities 510 043 141 588 603 172
Linked units issued 245 263 50 006 188 516
Net borrowings 264 780 91 582 414 656
Net movement in cash
and cash equivalents 38 435 (30 804) (65 388)
Opening cash and cash equivalents (33 028) 32 360 32 360
Closing cash and cash equivalents 5 407 1 556 (33 028)
Commentary
Review of results
Redefine has maintained its interest distribution at 8,5 cents per linked unit
for the second quarter of the current financial year notwithstanding the
difficult economic conditions experienced by the property sector. Total
distributions for the six months ended 28 February 2003 are 17 cents per linked
unit.
Headline earnings per linked unit are marginally lower than those for the
comparable period of the previous year because of the significant changes in the
composition of Redefine"s listed security portfolio as well as amended
distribution patterns of certain funds in which Redefine is invested.
Non-current assets increased by 30 percent to R2,46-billion and Net Asset Value
per linked unit of 265,73 cents at 28 February 2003 increased by 16 percent as
compared with the previous year.
Property portfolio
The acquisition of 27 prime investment properties - 24 commercial and three
retail - from Rand Leases Properties increased the property portfolio value to
R1,2-billion. Integration of these properties is almost complete in that 20 have
been transferred.
The property portfolio comprising 98 properties derives 62 percent of its gross
revenue from commercial, 23 percent from retail, and 15 percent from the
industrial, sectors. Overall, the quality of the portfolio has been enhanced to
73 percent A-grade and 27 percent B-grade properties.
Redefine"s policy of investing primarily in properties with few tenants and long
leases has ensured that its overall lease expiry profile is below the listed
property sector averages. The lease expiry risk in financial 2003 is 15 percent
and 42 percent of gross revenue is contracted for the next five years. Vacancies
by area have been reduced from 6,9 percent in August 2002 to 6,2 percent.
Listed security portfolio
The listed security portfolio increased by R207-million arising from net
acquisitions of R86-million and increases in market value of R121-million. Post
28 February 2003, the listed security portfolio, which is continually being
appraised, has continued to appreciate in value.
Linked unit capital - issue for cash
During February 2003 Redefine issued 55-million linked units for cash raising
R137-million net of costs which assisted in reducing gearing from 60 percent to
55 percent.
Interest rate management
Redefine increased the level of interest rate hedging to closely cover total
interest bearing liabilities in the knowledge that rate hedges of R550-million
mature within the next 14 months. A combination of five- and seven-year rate
swaps have been effected in the review period.
Net current assets
Listed security distributions receivable represent income declared but not
received at 28 February 2003 which, added to cash resources, cover Redefine"s
current liabilities, including unitholders for distribution.
Directorate
Peter Penhall has accepted an appointment abroad and has tendered his
resignation with effect from 31 March 2003. The Board extends its appreciation
for his valuable contribution and wishes him well in his future endeavours.
Until such time as a replacement is secured, management will be under the
control of Corpcapital, Redefine"s asset manager.
Prospects
It is anticipated that Redefine will be able to maintain its total distributions
per linked unit at substantially similar levels to those of the previous
financial year provided the property sector does not deteriorate and anticipated
distributions from the listed security portfolio materialise.
Interest distribution
Unitholders are advised that interest distribution No. 12 in respect of the
period 1 December 2002 to 28 February 2003 of 8,5 cents per linked unit has been
declared.
*The last date to trade cum interest Wednesday, 16 April 2003
*Linked units will trade ex interest Thursday, 17 April 2003
*Record date to participate Friday, 25 April 2003
*Payment of interest distribution No. 12 Tuesday, 29 April 2003
Unitholders may not dematerialise or re-materialise their linked units between
Thursday, 17 April 2003 and Friday, 25 April 2003, both days inclusive.
Wolf Cesman, Chairman
Peter Penhall, Chief Executive Officer
Johannesburg
31 March, 2003
BASIS OF PREPARATION
The financial results are determined in accordance with South African Statements
of Generally Accepted Accounting Practice and the accounting policies applied
are consistent with those applied in the previous financial year, except for the
adoption of AC133 Financial Instruments: Recognition and Measurement.
REDEFINE INCOME FUND LIMITED. 2 ARNOLD ROAD, ROSEBANK, JOHANNESBURG. PO BOX
471917, PARKLANDS, 2121, SOUTH AFRICA. TELEPHONE +27 11 283 0110 EMAIL:
redefine@corpcapital.com
DIRECTORS: W Cesman*. E Ellerine*. J Kron*. P Penhall . D Solomon*. J Solomon*.
M Wainer* non executive* Registration No. 1999/018591/06 SHARE CODE RDF ISIN
CODE ZAE000023503
COMPANY SECRETARY: Probity Business Services (Pty) Ltd. PO Box 85392,
Emmarentia, 2129. TELEPHONE +27 11 726 2446
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