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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 Supplied by www.sharenet.co.za Produced by the JSE SENS Department
