Wrap Text
RDF - Redefine Income Fund Limited - Reviewed Interim Results For The Six
Months Ended 29 February
Redefine Income Fund Limited
(Registration No. 1999/018591/06)
Share Code: RDF & ISIN Code: ZAE000023503
("Redefine" or the "company")
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY
Distributions up 12.9% to 27.1 cents per linked unit
NAV R7.56 per linked unit
Total assets R10.2 billion
Market capitalisation R6.4 billion
Gearing 32%
Consolidated income statement
Reviewed Reviewed Audited
Feb 2008 Feb 2007 Aug 2007
R000 R000 R000
Revenue
Property portfolio 264 585 206 414 488 799
Contractual rental income 257 628 190 247 429 948
Straight-line rental income accrual 6 957 16 167 58 851
Listed securities portfolio 163 481 143 405 300 285
Property trading income 12 616 15 316 40 486
Total revenue 440 682 365 135 829 570
Operating costs - property portfolio (54 679) (39 156) (86 655)
Administration costs (33 280) (27 247) (56 401)
BEE transaction costs (44 000) - -
Net operating income 308 723 298 732 686 514
Changes in fair value and net surplus on (179 322) 704 044 1 105 548
disposal of properties, listed
securities and intangibles
Income from associates 3 880 783 24 107
Income from operations 133 281 1 003 559 1 816 169
Interest received 26 281 5 893 18 638
Interest paid (144 518) (128 419) (269 799)
Income before debenture interest 15 044 881 033 1 565 008
Debenture interest (231 406) (194 234) (415 784)
(Loss) income before taxation (216 362) 686 799 1 149 224
Taxation 55 879 (217 376) (364 090)
(Loss) income for the period (160 483) 469 423 785 134
RECONCILIATION OF HEADLINE EARNINGS AND DISTRIBUTABLE EARNINGS
(Loss) income for the period (160 483) 469 423 785 134
Changes in fair value and net surplus on 9 487 363 458 (180 090)
disposal of properties and intangibles
(net of deferred taxation)
Headline (loss) earnings attributable to (150 996) 832 881 605 044
shareholders
Debenture interest 231 406 194 234 415 784
Headline earnings attributable to linked 80 410 1 027 115 1 020 828
unitholders
Taxation rate change (26 430) - -
Capital gains taxation - - 47 564
Straight-line rental income accrual (6 957) (16 167) (58 851)
Changes in fair value and net surplus on 140 383 (850 125) (608 931)
disposal of listed securities (net of
deferred taxation)
Spearhead pre-acquisition income - 31 517 31 517
VAT and interest disallowed - 1 894 1 894
Fair value adjustment in associate - - (18 237)
BEE transaction costs 44 000 - -
Distributable earnings 231 406 194 234 415 784
Debenture interest distributions
First quarter 108 150 95 028 95 027
Second quarter 123 256 99 206 99 206
Third quarter N/A N/A 102 458
Fourth quarter N/A N/A 119 093
231 406 194 234 415 784
Actual linked units in issue (000) 893 161* 813 161* 813 161*
Weighted linked units in issue (000) 818 435* 678 101* 746 185*
Earnings per linked unit (cents) 8.67 97.87 160.94
Headline earnings per linked unit 9.82 151.47 136.81
(cents)
Distributions per linked unit (cents) 27.10 24.00 51.25
* Excludes 5 876 770 treasury linked units
Condensed consolidated cash flow statement
Reviewed Reviewed Audited
Feb 2008 Feb 2007 Aug 2007
R000 R000 R000
Cash effects of operating activities (94 173) (58 713) 34 122
Cash generated from operations 257 844 221 263 644 397
Interest paid (118 237) (122 526) (251 161)
Taxation paid (6 537) - -
Distributions paid (227 243) (157 450) (359 114)
Cash effects of investing activities (554 489) 176 929 (42 182)
Net property (acquisitions) disposals (319 720) 46 320 (143 908)
Net listed securities (acquisitions) (197 753) 208 162 240 496
disposals
Acquisition of plant and equipment (227) - -
Acquisition of business - (7 190) (21 138)
Investment in associate - (70 363) (99 990)
Loans advanced to related parties (36 789) - (17 642)
Cash effects of financing activities 555 513 189 185 139 162
Linked units issued 590 941 217 855 217 855
Net movement in borrowings (35 428) (28 670) (78 693)
Net movement in cash and cash (93 149) 307 401 131 102
equivalents
Opening cash and cash equivalents 122 629 (8 473) (8 473)
Closing cash and cash equivalents 29 480 298 928 122 629
CONSOLIDATED BALANCE SHEET
Reviewed Reviewed Audited
Feb 2008 Feb 2007 Aug 2007
R000 R000 R000
ASSETS
Non-current assets 9 661 806 8 838 646 9 306 257
Property portfolio at valuation 4 783 592 4 369 875 4 702 219
Fair value of property portfolio for 4 578 022 4 213 947 4 503 606
accounting purposes
Straight-line rental income accrual 205 570 155 928 198 613
Property developments at cost 548 377 154 872 347 514
Listed securities portfolio 4 110 248 4 243 536 4 075 285
Other financial assets 217 583 70 363 179 460
Plant and equipment 2 006 - 1 779
Current assets 507 819 444 100 528 231
Properties for trading and development 202 767 16 640 173 927
Listed securities for trading 110 138 - 112 401
Receivables 67 383 55 952 54 071
Listed security income 96 599 72 580 58 908
Cash and cash equivalents 30 932 298 928 128 924
Total assets 10 169 625 9 282 746 9 834 488
EQUITY AND LIABILITIES
Share capital and reserves 4 394 453 3 752 260 4 107 996
Share capital and premium 2 089 156 1 642 215 1 642 215
Accumulated loss (31 517) (31 517) (31 517)
Non-distributable reserves 2 336 814 2 141 562 2 497 298
Non-current liabilities 5 510 748 5 316 807 5 440 207
Debenture capital 1 607 689 1 463 689 1 463 689
Interest-bearing liabilities 3 154 909 3 154 048 3 172 489
Deferred taxation 748 150 699 070 804 029
Current liabilities 264 424 213 679 286 285
Payables 98 689 114 473 95 485
Interest-bearing liabilities - - 17 848
Taxation 41 027 - 47 564
Bank overdraft 1 452 - 6 295
Linked unitholders for distribution 123 256 99 206 119 093
Total equity and liabilities 10 169 625 9 282 746 9 834 488
Net asset value ("NAV") per linked
unit (cents) 755.78* 727.41* 784.07*
NAV per linked unit (cents)
*Excluding deferred taxation 672.01 614.44 685.19
Condensed consolidated statement of changes in equity
Reviewed Reviewed Audited
Feb 2008 Feb 2007 Aug 2007
R000 R000 R000
Balance at beginning of period 4 107 996 2 151 170 2 151 170
Issue of shares 448 000 1 132 049 1 181 169
Issue expenses written off (1 060) (382) (382)
(Loss) income for the period (160 483) 469 423 785 134
Trading profit removed from equity and - - (9 095)
reported in net profit
Total share capital and reserves 4 394 453 3 752 260 4 107 996
Review opinion - The independent auditors, PKF (Jhb) Inc., have reviewed
these 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, IAS34 - Interim
Financial Reporting and the requirements of the South African Companies Act.
All accounting policies are consistent with those applied for the year ended
31 August 2007.
Comments
Financial results
Distributable earnings have increased by 19.1%.
The loss for the period of R160.5 million resulted from the decrease in value
of the listed securities portfolio by R167.9 million, the reduction in value
of the property portfolio by R14.9 million and BEE transaction costs of R44.0
million. These losses were partly offset by a reduction in deferred capital
gains taxation by R55.9 million, profits from the disposal of properties and
listed securities of R8.7 million and a mark to market adjustment of interest
rate swaps of R1.3 million.
Segmental information
Contractu % Net
al income20
revenue20 08(R000)
08(R000)
Property portfolio
Commercial 134 746 52.3 110 556
Retail 82 000 31.8 57 627
Industrial 40 882 15.9 34 766
257 628 100. 202 949
0
Listed securities 163 481 163 481
portfolio
Property trading 12 616 12 616
Total 433 725 379 046
Distribution
The Board has approved an interest distribution of 13.8 cents per linked unit
for the quarter ended 29 February 2008. This, together with the distribution
of 13.3 cents per linked unit for the quarter ended 30 November 2007, results
in interest distributions for the six months ended 29 February 2008 of 27.1
cents per linked unit, an increase of 12.9% on the distributions of 24.0
cents for the comparable period.
Property portfolio
At 29 February 2008 Redefine`s property portfolio comprised 97 properties
with a total gross lettable area ("GLA") of 827 748m2, valued at R5.0
billion. The directors have valued the property portfolio by applying market
related yields which are substantiated by independent external valuers. The
property portfolio is revalued by independent external valuers at the end of
each financial year.
The property portfolio constitutes 50.2% (Aug 2007: 50.5%) of Redefine`s
total non-current assets.
During the period under review, 45 284m2 of vacant space was leased and
leases in respect of 35 691m2 were renewed. Vacancies at 29 February 2008
were 5.7% (Aug 2007: 2.2%) of GLA. The increased GLA of the portfolio which
includes completed new developments has resulted in additional vacant space
which presents a positive opportunity for Redefine.
55.1% of leases, by GLA, expire in 2011 and beyond.
During the period under review the following property developments were
completed:
- A 40 000m2 warehouse on erf 509 Isando at a cost of R100.8 million with
an anticipated forward yield of 11.8%;
- CTX Business Park 1, comprising 9 041m2 of warehousing in close
proximity to Cape Town International Airport at a cost of R45.0 million;
- Platinum Park 3, an industrial mini-unit complex, located in Cape Town
at a cost of R10.1 million with a GLA of 2 215m2;
- Heron Place, a 4 958m2 office building in Century City at a cost of
R60.6 million.
Redefine disposed of Old Oak shopping centre for R17.5 million on a forward
yield of 8.7%, a surplus of R5.9 million on cost.
Developments
Redefine currently has 8 projects in various stages of development with an
estimated total completed cost of R801.3 million. The average anticipated
initial forward yield is 9.6%.
Trading
A joint venture ("JV"), has been established between Redefine and Madison
Property Fund Managers Limited in terms of which Redefine disposed of
Buchanan Square and Newmarket Junction to the JV for R90 million, a R20
million surplus on current valuations. The JV has been established to
redevelop the properties into sectional title units for sale.
Listed securities portfolio
Redefine acquired an additional 9.1 million units in CIREF Limited for R206.3
million
(GBP14.2 million). This is to be financed by a LIBOR (London Inter Bank
Offered Rate) based loan from Standard Finance Isle of Man. Redefine
exchanged 18.0 million units in Sycom Property Fund for 7.2 million units in
Hyprop Investments Limited.
Borrowings
Redefine`s borrowings decreased by R35.4 million from August 2007. Total
debt of R3.2 billion represents gearing of 32.3%, a reduction from 33.9% at
August 2007.
The current average all inclusive interest rate is 10.0% (Aug 2007: 10.0%)
and the interest rate is fixed on 67.6% of borrowings for an average period
of five years.
Black Economic Empowerment
On 18 February 2008, Redefine issued 80 million linked units to strategic and
broad-based BEE partners at R6.85 per linked unit, representing a discount of
7% to the market value on the date of issue. The proceeds from the issue of
these units have been applied to floating debt which will reduce interest
paid.
Post balance sheet events
Redefine acquired an industrial property of 13 400m2 in City Deep,
Johannesburg, for R47.0 million at a forward yield of 8.9%.
Three contiguous commercial properties in Paarden Eiland, Cape Town were
acquired for R67.8 million at a 7.8% forward yield with a total GLA of 16
203m2. These properties offer an attractive re-development opportunity.
Transfer is expected by 31 May 2008.
Properties in Strand and Vredenburg were sold to Shoprite for R20.0 million
on a forecast yield of 8.4%, a surplus of R8.5 million on cost.
Redefine has purchased an undivided share in a site for re-development with
SA Reit Limited on the Foreshore in Cape Town, at a cost of R51.7 million.
Liquidity
15.4% of the weighted average number of linked units in issue traded during
the six months ended February 2008.
Capital commitments and contingencies
Authorised capital expenditure on developments of R299.5 million.
Redefine has provided suretyships limited to R254.4 million relating to its
BEE initiatives.
The company has guaranteed liabilities of JV`s up to an amount of R79.8
million.
Prospects
Letting of vacant space, renewals of expiring leases at increased rentals,
completion of new developments and income growth from the listed securities
portfolio will collectively contribute to distribution growth.
The Board anticipates that, subject to no further deterioration in market
conditions, Redefine`s distributions per linked unit for the year ending 31
August 2008 will increase by between 12% and 14% compared to 2007. This
forecast has not been reviewed or reported on by the company`s auditors.
Cautionary
Unitholders are referred to the cautionary announcement published on 26 March
2008 and renewed on 7 May 2008 advising that the company is considering a
proposal which, if implemented, will result in the merger of ApexHi
Properties Limited, Hyprop Investments Limited, Madison Property Fund
Managers Limited and Redefine. Accordingly unitholders are advised to
continue to exercise caution in their dealings in Redefine linked units until
a further announcement is made.
Payment of debenture interest
Unitholders are advised that interest distribution no. 32 in respect of the
period 1 December 2007 to 29 February 2008 of 13.8 cents per linked unit has
been declared.
2008
The last date to trade cum interest Friday 23 May
Linked units will trade ex interest Monday 26 May
Record date Friday 30 May
Payment of interest distribution no. 32 Monday 2 June
Unitholders may not dematerialise or re-materialise their linked units
between Monday 26 May 2008 and Friday 30 May 2008, both days inclusive.
Dines Gihwala Brian Azizollahoff
Chairman Chief Executive Officer
9 May 2008
2 Arnold Road, Rosebank, Johannesburg. P O Box 1731, Parklands, 2121, South
Africa. Telephone +27 11 283 0110 E-mail: mail@redefine.co.za
Website: www.redefine.co.za
Directors: D Gihwala*# (Chairman), B Azizollahoff+ (CEO), L Barnard*#, W
Cesman*, E Ellerine*#, D Perton*+#, S Shaw-Taylor*, N Venter*#, M Wainer*
*non-executive +British #independent
Company Secretary: Probity Business Services (Proprietary) Limited.
Sponsor: Java Capital (Proprietary) Limited
Transfer Secretary: Computershare Investor Services (Proprietary) Limited
Date: 09/05/2008 17:19:01 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
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.
Sharenet Sites 
