Wrap Text
RIN - Redefine Properties International Limited - Reviewed interim results
for Redefine International Plc for the six months ended 28 February 2011
REDEFINE PROPERTIES INTERNATIONAL LIMITED
(formerly Kalpafon Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2010/009284/06)
JSE share code: RIN ISIN Code: ZAE000149282
("RIN")
REVIEWED INTERIM RESULTS FOR REDEFINE INTERNATIONAL PLC FOR THE SIX MONTHS
ENDED 28 FEBRUARY 2011
Set out below is an announcement which was released by Redefine International
plc, the AIM-listed subsidiary of RIN, on the Regulatory News Service ("RNS")
of the London Stock Exchange on Tuesday, 3 May 2011.
"Redefine International plc
("RI plc" or "the Company" and together with its subsidiaries "the Group")
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2011
SALIENT FEATURES
Results
- 322.7% increase in profit after tax for the interim period.
- Profit from core operations of GBP 8.40 million (February 2010:GBP 3.41
million), an increase of 146.3%
- Fully diluted earnings per share of 2.17 pence (February 2010: 2.90
pence loss).
- Interim dividend of 2.03 pence per share (February 2010:1.14 pence), an
increase of 78.1%.
- Fully diluted net asset value per share of 49.00 pence (August 2010:
46.77 pence).
Development Highlights
- Successful listing of parent company, Redefine Properties International
Limited, on the JSE Limited and raising of GBP 86 million of new equity.
- Agreement in principle reached to merge with Wichford P.L.C.
- Favourable long term restructuring of shopping centre senior debt.
- Successful GBP 20 million capital raising post interim period.
- Shareholding in the Cromwell Group, Australia increased to 22.2% post
interim period.
Acquisitions
- 50% of Grand Arcade Shopping Centre, Wigan.
- Completion of acquisition of GBP 106 million Hotel Property Portfolio.
- 2 OBI properties in Germany.
- Non-controlling shareholding in Swiss properties.
- St Georges Shopping Centre in Harrow, United Kingdom post interim period
end.
Chairman`s Statement
The period under review was an active and important one for the Group. Most
encouragingly the Group returned to overall profitability with both operating
profit and total profit being positive for the first time since the 2008
credit crisis.
Through the listing on the JSE Limited ("JSE") of its parent company,
Redefine Properties International Limited ("RI Ltd"), the Group was able to
significantly strengthen its statement of financial position, diversify its
investment portfolio into hotel properties and consolidate its strategic
holding in the Cromwell Group in Australia.
The Group`s trading operations performed well and the non-trading result was
a net positive for the period. The trading results were bolstered by rental
income on a number of acquisitions and tight cost containment. Non-trading
results included some write back of previous loses on interest rate swaps and
mark-to-market gains on a number of instruments. There were limited fair
value adjustments on the bulk of the Group`s property portfolio as the
property sector continues to be impacted by liquidity constraints.
Although it is early days, the new investment in hotel properties has
exceeded expectations and the outlook for the sector and the Group`s
strategically located, quality hotel portfolio in particular is very
promising.
The Group however remains cautious about the general economic environment for
the remainder of the financial year. In the UK, banks continue to reduce
exposure to the property sector which will limit any short- term increase in
commercial property values notwithstanding inflationary pressures.
Interest rates are expected to remain at relatively low levels in both the UK
and Europe in the near term, although the Investment Manager is being
cautious in its interest rate strategy and is budgeting for increases in the
bank rate over the next three financial years.
The boards of Wichford P.L.C and RI plc have agreed in principle to a
combination of the two companies ("the Potential Merger"). An announcement
in this regard was made on 23 March 2011. Expectations are that the
Potential Merger will become effective, subject to the necessary regulatory
and shareholder approvals being obtained, by the end of the third calendar
quarter in 2011.
The Potential Merger is consistent with our strategy to build a larger, more
liquid company focused on diversified, income producing investment
properties. We believe that the enlarged company will be well placed to
deliver attractive cash returns for investors and competitive total returns
over the long-term.
On behalf of the Board
G R Tipper
Chairman
COMMENTARY
Introduction
RI plc is a property investment and development company which owns
investments in commercial and retail properties in the UK, Switzerland,
Germany and the Channel Islands, which provide sustainable occupancy rates
and income flows, together with opportunities for development and value
enhancement. The Company also owns material investments in two listed
companies being Wichford P.L.C. in the United Kingdom (currently 21.7%) and
the Cromwell Group in Australia (22.2% post the interim period). It recently
extended its investment mandate to include investments in hotel properties.
The Group`s primary objective is to produce sustainable and growing income
for its investors. Underscoring this is RI plc`s pursuit of revenue
enhancing opportunities that provide long term capital growth and translate
into increasing distributions to shareholders.
Growth in income and distributions is achieved through:
- organic growth from the core property portfolio;
- increased distributions from strategic listed securities;
- yield enhancing acquisitions and disposals;
- development and redevelopment of properties to add value to the property
portfolio; and
- containment of costs.
Financial Results
RI plc has declared a dividend of 2.03 pence per share for the six months
ended 28 February 2011, based on the distributable earnings of GBP 8.4
million. The interim dividend declaration illustrates that the Company is on
track to achieve the forecast dividend for the year ended 31 August 2011
contained in the Redefine Properties International Limited ("RI Ltd") JSE
prospectus issued on 23 August 2010 and reflects a steady operational
performance across the Group.
The Group produced a net profit for the period attributable to equity holders
of the parent of GBP 9.5 million which represents an increase of 347.7% over
the corresponding 5 month interim period to 28 February 2010 and a 292.4%
increase since the 31 August 2010 financial year end.
Gross rental income reflects a 60.1% pro-rata increase over the 31 August
2010 financial year,the majority of which is due to the acquisition of the
Hotel Property Portfolio and the OBI properties.
Wichford P.L.C ("Wichford")
Wichford delivered a pleasing set of results for the financial year ended 30
September 2010 and met the challenging targets set out at the time of the
rights issue in September 2009.
Earnings per share of 0.90 pence from the trading operations reflected a 4.7%
increase on last year. A final dividend of 0.33 pence per share was paid on
1 March 2011, resulting in income of GBP 761,548 for RI plc.
Further details of the Potential Merger can be found in the Company`s
announcement published on the London Stock Exchange Regulatory News Service
on 23 March 2011.
Cromwell Group ("Cromwell")
The Company`s investment in Cromwell showed a gain of GBP 11.5million since
31 August 2010 and continued to deliver a 10% yield on the initial
acquisition price.
Cromwell reported first half (period ended 31 December 2011) operating
earnings of AUS$32.9 million, or 3.7 cents per stapled security and advised
the market that it is on track to achieve full year earnings of at least 7.0
cents per stapled security. In line with its objective of increasing its
presence in the Australian property market, RI plc subscribed for a further
35 million Cromwell stapled securities in March 2011, resulting in RI plc
holding 22.2% in Cromwell. The transaction consolidates the Group`s position
as the largest security holder in Cromwell and provides significant influence
over the affairs of Cromwell.
Property Portfolio
In addition to the aggregate Wichford and Cromwell property securities
totalling GBP 103million, as at 28 February 2011 the Group had interests in
99 properties with a gross rentable area of approximately 3.9million square
feet. These include 4 UK shopping centres; a large integrated UK town centre
redevelopment project; well let, low risk, stable income office and
commercial properties spread across the UK and Jersey; six German-based
portfolios which include, shopping centres, supermarkets, petrol stations and
a medical centre; anda supermarket and home depot centre in Switzerland.
Sector Profile by Area
SECTORAL PROFILE BY GLA
Sector Number of properties GLA (square feet) %
Retail 38 2,138,199 55
Commercial 51 785,781 20
Offices 3 260,718 7
Other 2 488,134 12
94 3,672,832 94
Hotels 5 233,867 6
Total 99 3,906,699 100
Tenant Profile by Area
TENANT PROFILE BY GLA
Sector GLA (square feet) %
National Multiples 2,407,897 62
Regional Multiples 866.53 22
0
Local & other 632,272 16
Total 3,906,699 100
Lease Expiry Profile
LEASE EXPIRY PROFILE (GLA Square Feet)
Retail Commercial Offices Hotels Other Total
0-5yrs 574,842 18,974 60,372 - 41,525 695,713
5-10yrs 475,951 - 79,726 - 90,527 646,204
10-15yrs 428,581 596,710 55,402 233,867 20,066 1,334,626
15+ yrs 658,825 170,097 65,218 - 336,016 1,230,156
TOTAL 2,138,199 785,781 260,718 233,867 488,134 3,906,699
As at 28 February 2011, the Group`s property portfolio was valued at GBP 510
million and had a vacancy rate of 1.6%.
Acquisitions and Disposals
OBI properties
On 2 December 2010, RI plc announced the effective 50% acquisition of two
properties located in Herzogenrath and Schwandorf, Germany ("the
OBIproperties").
The OBI properties are leased to OBI on 15 year leases. OBI is Germany`s
leading DIY chain with over 530 stores throughout Europe, employs over 38,000
employees and turnover of approximately EUR 5.9 billion in 2009. There are 3
other tenants, all national German chains, which account for approximately
10% of the rental income of the OBI properties.
The OBI properties were acquired for a purchase price of EUR 23 million. The
OBI properties are funded through a senior debt facility of EUR 16.7 million
with a term of 7 years and an interest rate of 1.3% above Euribor. An
interest rate instrument is currently being negotiated to fix the interest
rate.
Swiss properties
In February 2011, RI plc acquired the remaining 19.54% of Kalihora Holdings
Limited ("Kalihora") which it did not already hold for a total purchase price
of GBP 1,007,160. The total purchase price was settled by a placement of
1,694,000 new RI plc shares at a subscription price of 54.5 pence per share
with the non-controlling shareholders of Kalihora ("the Placing"). The
balance of the purchase price of GBP 83,930 was settled in cash.
Kalihora, a company that owns two COOP stores in Switzerland, was 80.46%
owned by the Company, prior to the Placing.
Hotel properties
RI plc completed the acquisition of the Splendid Hotel Portfolio ("the Hotel
Property Portfolio") on 30 November 2010. The Hotel Property Portfolio
includes the following hotels:
- Holiday Inn Brentford Lock, Brentford, London;
- Express by Holiday Inn Limehouse, London;
- Express by Holiday Inn Park Royal, North Acton, London;
- Express by Holiday Inn Royal Docks, London; and
- Express by Holiday Inn Southwark, London.
The total consideration payable after acquisition costs was GBP 112 million.
The Hotel Property Portfolio is an exceptional acquisition, as not only is it
London based, but its track record of occupancy and revenue are exemplary.
A lease agreement has been entered into with Redefine Hotel Management
Limited ("RHML"), a subsidiary of the Investment Manager. RHML has the
expertise and resources necessary to effectively operate and manage the Hotel
Property Portfolio.
Streatham Disposal
An agreement was exchanged on 16 December 2010 for the disposal of Ciref
Streatham Limited, a subsidiary company that owns two properties in
Streatham, South London. The base sale price of GBP 4.85 million is slightly
below the book value of the properties; however the Company will receive an
additional payment should the purchaser sell the total site for more than an
agreed amount. No value has been attributed to the potential additional
consideration in the interim financial statements. Payment of the base sale
price is due 24 months after exchange.
JSE Listing of RI Ltd
The Company`s controlling shareholder Redefine Properties Limited transferred
its shareholding in RI plc to a South African subsidiary RI Ltd with effect
from 1 August 2010 in exchange for linked units in RI Ltd. The linked units
comprise one share indivisibly linked to one debenture in RI Ltd. RI Ltd was
successfully listed on the JSE on 7 September 2010. The listing was preceded
by a capital raising with some GBP 84 million being raised in the process and
was well received by the South African investment community. RI Ltd`s sole
asset comprises its shareholding in RI plc with each RI Ltd linked unit
effectively equating to one share in RI plc.
Borrowings
The restructuring of the senior debt of the Shopping Centre Portfolio, as set
out in the Annual report, has allowed the Group to extend its average debt
expiry profile and the absence of loan to value covenants is an asset in the
current economic environment.
From a UK perspective, RI plc has a conservative debt profile with a current
overall loan-to-value ratio of circa 61%.
Market Overview
The three major economies in which the Group operates showed mixed economic
conditions during the period under review.
In the UK GDP shrank by 0.5% in Q4 of 2010 (Source: UK Office for National
Statistics), but is expected to grow during Q1 2011. The Bank of England is
being squeezed by an above target inflation rate and a below target growth
rate and is expected to err on supporting growth at the expense of a slightly
higher inflation rate over the medium-term. Consumer confidence is fragile
and although business confidence appears to be building, the economy is
likely to move sideways for the remainder of this financial year. Growth in
rentals is therefore expected to remain subdued, with the result that cash
flow and yield will be the predominant determinants of property returns
during this period.
UK banks continue to be net negative lenders to the property sector,
effectively putting a limit on short term capital growth. More positively,
Jones Lang Lasalle recently published an estimate that equity investors
currently have more than GBP 52 billion earmarked for the UK commercial
property market. This fresh equity could materially alleviate any short-to-
medium-term refinancing pressures for commercial property loans, and support
UK commercial property prices.
In Germany and Switzerland the economic recovery continues to gain momentum
and the European Central Bank has commenced the tightening phase with a 25
basis point increase announced on 7 April 2011. Properties held by the Group
in these geographical regions continue to perform well.
In Australia the economic recovery is proceeding strongly with the Central
Bank already having increased interest rates four times since the interest
rate cycle bottomed.
Prospects
As a consequence of the emergence from the deep recession caused by the
global financial crisis (albeit it at different rates in different countries
and regions), the ultra-loose monetary policy implemented by the world`s
leading central banks is expected to be phased out in the months and years
ahead.
The higher nominal interest rate environment, together with higher inflation
and government austerity measures, will be the biggest factors influencing
property returns. The Investment Manager, Redefine International Fund
Managers ("RIFM"), believes that the Group`s current investment portfolio is
well diversified and defensive; and is well placed to weather these short
term pressures and provide solid returns to shareholders in the medium to
long term.
Factors such as rental indexations to the Consumer Price Index and the Retail
price Index as well as long term fixed rate debt and lease contracts will
benefit the Group during the economic adjustment period ahead.
Economic growth is expected to revert to trend once the austerity and other
measures have had time to feed through the system.
On a more positive note, the forecasts for hotel income in the period ahead
are very encouraging and hence bode well for RI plc`s annual operating lease
review of its investment in the hotel property portfolio.
PriceWaterhouseCoopers LLP ("PwC") in their recent "UK Hotels Forecast 2011
and 2012" make the following comment:
"... the performance for 2010 was better than our original forecast, closing
an exceptional year for London with overall Revenue per available room
("RevPAR") growth of 11.4%. Given the better than expected finish to 2010,
our 2011 forecast for London is now for slightly lower RevPAR growth of 8.3%,
reflecting harder comparatives and above average levels of new supply; slower
growth but no re-Olympic dip.
We have introduced some new analysis this time showing how performance
compares to a 22 year long term real RevPAR average. This shows that London
has remained above the long term average of GBP 83.20 throughout the downturn
(albeit only just in 2009) and is now heading into very positive territory."
Dividend
The Board has declared an interim dividend of 2.03 pence per share. The
dividend will be payable to RI plc shareholders in accordance with the
abbreviated timetable set out below:
Last day to trade "cum" dividend Monday, 9 May 2011
"Ex" dividend Wednesday, 11 May 2011
Record date Friday, 13 May 2011
Payment date Thursday, 26 May 2011
Statement of Directors` Responsibilities in respect of the interim financial
report
Each of the directors confirms that, to the best of each person`s knowledge
and belief
a. the condensed consolidated interim financial statements comprising the
condensed consolidated statement of comprehensive income, the condensed
consolidated statement of financial position, the condensed consolidated
statement of changes in equity, the condensed consolidated statement of
cash flows and related notes have been prepared in accordance with IAS
34 Interim Financial Reporting.
b. the interim financial report includes the information content and
presentation requirements of paragraphs 4.2.3, 4.2.4, 4.2.6, 4.2.7,
4.2.8, 4.2.9 and 4.2.10 of the United Kingdom Listing Authority
Disclosure and Transparency Rules.
On Behalf of the Board
GR Tipper JH Ruddy
Non- Executive Director Non-Executive Director
3 May 2011
Auditors` Independent review report to Redefine International plc
We have been engaged by the Company to review the condensed consolidated
interim financial statements in the interim financial report for the six
months ended 28 February 2011 which comprises the condensed consolidated
statement of comprehensive income, the condensed consolidated statement of
financial position, the condensed consolidated statement of cash-flows, the
condensed consolidated statement of changes in equity and the related
explanatory notes.
We have read the other information contained in the interim financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the company in accordance with the terms of our
engagement letter. Our review has been undertaken so that we might state to
the Company those matters we are required to state to it in this report and
for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have reached.
Directors` Responsibility
The interim financial report is the responsibility of, and has been approved
by, the Directors. As disclosed in Note 1, the annual financial statements of
the Group are prepared in accordance with IFRSs. The Directors are
responsible for ensuring that the condensed set of financial statements
included in this interim financial report has been prepared in accordance
with IAS 34 Interim Financial Reporting.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
consolidated interim financial statements in the interim financial report
based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated interim financial statements in the
interim report for the six months ended 28 February 2011 is not prepared, in
all material respects, in accordance with IAS 34.
Darina Barrett 3 May 2011
Senior Statutory Auditor
For and on behalf of KPMG
1 Harbourmaster Place
IFSC
Dublin 1
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
Notes 2011 2010 2010
GBP `000 GBP `000 GBP `000
Revenue
Gross rental income 11,588 5,690 13,267
Investment income 6 3,875 99 2,560
Other income 7 994 163 673
Total revenue 16,457 5,952 16,500
Expenses
Administrative expenses (252) (166) (466)
Investment management and (2,083) (1,820) (3,406)
professional fees
Property operating expenses (1,595) (852) (1,661)
Net operating income 12,527 3,114 10,967
Gains/(losses) from financial assets 8 17,100 1,469 (544)
and liabilities
Equity accounted loss 9 (6,784) (1,448) (3,525)
Impairment of loans to joint ventures (15) (762) (598)
Net fair value losses on investment 12 (6,802) (2,583) (2,167)
property
Amortisation of intangible assets - (157) (345)
Profit/(loss) from operations 16,026 (367) 3,788
Interest income 10 3,194 1,497 3,381
Interest expense 11 (9,320) (5,283) (12,363)
Share based payment 18 (294) - -
Foreign currency (loss)/gain (143) 6 (6)
Profit/(loss) before tax 9,463 (4,147) (5,200)
Taxation (193) (15) (200)
Profit/(loss) after tax 9,270 (4,162) (5,400)
Profit/(loss) attributable to:
Equity holders of the parent 9,457 (3,818) (4,915)
Non-controlling interest (187) (344) (485)
9,270 (4,162) (5,400)
Other comprehensive income
Foreign currency translation on 153
foreign operations - subsidiaries 319 (43)
Foreign currency translation on 44
foreign operations - joint ventures (393) (217)
Share of foreign currency movement 779
recognised in associate undertaking - (1,494)
Share of cash flow hedge reserve 2,459
movement recognised in associate - 155
undertaking
Total comprehensive income for the 12,705 (4,236) (6,999)
period
Total comprehensive income
attributable to:
Equity holders of the parent 12,882 (3,884) (6,498)
Non-controlling interest (177) (352) (501)
12,705 (4,236) (6,999)
Distributable earnings (not reviewed)
Net operating income 12,527 3,114 10,967
Operating income from equity 1,206 2,915 4,010
accounted entities
Straight line rental income accrual 131 - 113
Acquisition costs on financial assets 171 1,166 1,610
Gain on redemption of loans and 912 - -
borrowings
Interest income 3,194 1,496 3,619
Interest expense (9,176) (5,283) (12,363)
Foreign exchange loss (143) 6 (6)
Taxation (193) (15) (200)
Distributable earnings 8,629 3,399 7,750
Attributable to non-controlling (232) 15 (257)
interest
Distributable earnings attributable 8,397 3,414 7,493
to shareholders
Actual number of shares in issue 17 412,899 238,484 304,706
(`000)
Number of shares in issue (`000) with 439,487
capital instrument conversion 17 - -
Weighted number of shares in issue 20 407,121 131,873 199,492
(`000)
Basic earnings/(loss) per share 20 2.32 (2.90) (2.46)
(pence)
Diluted earnings/(loss) per share 20 2.17 (2.90) (2.46)
(pence)
Distributable earnings per share 2.03 1.43 2.46
(pence)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Reviewed Audited
6 months 5 months 11 months
28 Feb 28 Feb 31 Aug
2011 2010 2010
Notes GBP `000 GBP `000 GBP `000
Assets
Non-current assets
Investment property 12 348,183 182,786 227,675
Long-term receivables 13 87,809 41,789 48,160
Investments designated at fair 14 86,958 43,381 75,139
value
Intangible assets 575 7,172 7,559
Investments in joint ventures 15 2,647 2,554 2,041
Investments in associates 16 16,731 21,525 18,923
Total non-current assets 542,903 299,207 379,497
Current assets
Trade and other receivables 19,288 9,813 13,233
Cash and cash equivalents 10,763 24,387 35,411
Total current assets 30,051 34,200 48,644
Total assets 572,954 333,407 428,141
EQUITY AND LIABILITIES
Capital and reserves
Share capital 17 4,129 2,385 3,047
Share premium 261,923 179,893 211,359
Capital instrument 18 13,294 - -
Retained earnings (73,865) (74,511) (78,327)
Other reserves 9,852 7,944 6,427
Total equity attributable to 215,333 115,711 142,506
equity shareholders
Non-controlling interest 5,172 2,561 2,254
Total equity 220,505 118,272 144,760
Non-current liabilities
Loans and borrowings 19 309,187 161,444 167,263
Current liabilities
Loans and borrowings 19 20,267 43,028 100,003
Trade and other payables 22,995 10,663 16,115
Total current liabilities 43,262 53,691 116,118
Total liabilities 352,449 215,135 283,381
Total equity and liabilities 572,954 333,407 428,141
Net asset value per share 52.15 48.52 46.77
(pence)
Fully diluted net asset value 49.00 48.52 46.77
per share (pence)
Number of ordinary shares in 17 412,898,995 238,483,821 304,706,406
issue at period end
Number of ordinary shares in 439,486,995 238,483,821 304,706,406
issue with conversion of 17,18
capital instrument
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
Notes GBP `000 GBP `000 GBP `000
Cash flows from operating activities
Profit/(loss) before tax 9,463 (4,147) (5,200)
Adjusted for:
Negative goodwill
Amortisation and impairment of - 157 345
intangible assets
Net fair value losses on investment 12 6,802 2,583 2,167
property
Exchange rate losses/(gains) 143 (6) 6
Share based payments 294 - -
Losses from financial assets and 8 (17,100) (1,469) 544
liabilities
Equity accounted losses from associates 6,784 1,448 3,525
Impairment of loans to joint ventures 15 762 598
Investment income 6 (3,875) (99) (2,560)
Finance income 10 (3,194) (1,497) (3,381)
Finance expense 11 9,320 5,283 12,363
Cash generated by operations 8,652 3,015 8,407
Changes in working capital 1,705 (938) 279
Cash generated by operations 10,357 2,077 8,686
Interest paid (7,710) (5,849) (12,257)
Taxation paid (193) (15) (200)
Net cash generated from/(utilised in) 2,454 (3,787) (3,771)
operating activities
Cash flows from investing activities
Dividend income 5,040 - 1,395
Distribution from associates and joint - - 1,849
ventures
Interest income 822 1,444 1,158
Purchase of investment properties (112) (527)
(132,141)
Investment in associates and joint (1,916) (22,885)
ventures (21,560)
Acquisition of non-controlling interests (84) - (390)
Disposal of investment property (641)
Decrease/(Increase) in loans to joint 35 (3,261) (1,504)
ventures & associates
Increase in loans to related parties - 626 -
Purchases of financial assets 14 - (72,188)
(40,267)
Restricted cash balances 18,442 - (18,442)
Net cash utilised in investing
activities (110,443) (63,130) (111,534)
Cash flows from financing activities
Repayment of loans and borrowings (37,637) (1,056) (2,648)
Proceeds from loans and borrowings 88,847 - 13,610
Dividends paid to equity shareholders (4,786) (869) (3,465)
Dividends paid to non-controlling (45) (14) (14)
interests
Proceeds from issue of share capital 53,115 77,377 112,642
Share issue costs written off (2,631) - (3,260)
Unsettled balances from non-controlling 4,700 - -
shareholders
Additional contribution from non- 500 - 247
controlling shareholders
Net cash generated from financing 102,063 75,438 117,112
activities
Net(decrease)/increase in cash (5,926) 8,521 1,807
Effect of exchange rate fluctuations on (280) 334 (370)
cash held
Net cash at the beginning of the period 16,969 15,532 15,532
Net cash at the end of the period 10,763 24,387 16,969
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Trea Capita Retained Other Total Non- Total
Capit Prem- sury l Earnings Reserve Attrib- Contr Equity
al ium Shar Instru- GBP `000 s utable ol- GBP
GBP GBP es ment GBP To ling `000
`000 `000 GBP GBP `000 Equity Inter
`000 `000 Share- est
holders GBP
GBP `000
`000
Balan 739 104,127 (61) - (69,717) 8,010 43,098 2,512 45,610
ce at
1
Octob
er
2008
Total - - - - (3,818) -
loss (3,818) (344) (4,162)
for
the
perio
d
Effec - - - - - - - - -
tive
porti
on of
cash
flow
hedge
s
from
assoc
iates
Forei - - - - - (66) (66) (8) (74)
gn
curre
ncy
trans
latio
n
effec
t
Total - - - - (3,818) (66)
compr (3,884) (352) (4,236)
ehens
ive
incom
e
Share 1,646 78,091 - - - - 79,737 - 79,737
s
issue
d
Share - - - - - -
issue (2,264) (2,264) (2,264)
costs
Divid - (61) 61 - (966) - (966) - (966)
end
paid
to
equit
y
stake
holde
rs
Divid - - - - - - - (14) (14)
end
paid
to
non-
contr
ollin
g
inter
ests
Incre - - - - (10) - (10) 10 -
ase
in
non-
contr
ollin
g
inter
est
Incre - - - - - - - 405 405
ase
in
non-
contr
ollin
g
share
holde
r
balan
ces
Balan 2,385 179,893 - - 7,944 115,711 2,561 118,272
ce at (74,511)
28
Febru
ary
2010
Total - - - - (1,097) -
loss (1,097) (141) (1,238)
for
the
perio
d
Effec - - - - - 155 155 - 155
tive
porti
on of
cash
flow
hedge
s
from
assoc
iates
Forei - - - - - (8)
gn (1,672) (1,672) (1,680)
curre
ncy
trans
latio
n
effec
t
Total - - - - (1,097)
compr (1,517) (2,614) (149) (2,763)
ehens
ive
incom
e
Share 662 32,462 - - - - 33,124 - 33,124
s
issue
d
Share - (996) - - - - (996) - (996)
issue
costs
Divid - - - - (2,719) - -
end (2,719) (2,719)
paid
to
equit
y
stake
holde
rs
Incre - - - - - - - (158)
ase (158)
in
non-
contr
ollin
g
share
holde
r
balan
ces
Balan 3,047 211,359 - - 6,427 142,506 2,254 144,760
ce at (78,327)
31
Augus
t
2010
Total - - - - 9,457 - 9,457 9,270
profi (187)
t for
the
perio
d
Effec - - - - - 2,459 2,459 2,459
tive
porti
on of
cash
flow
hedge
s
from
assoc
iates
Forei - - - - - 966 966 10 976
gn
curre
ncy
trans
actio
n
effec
t
Total - - - - 9,457 3,425 12,882 12,705
compr (177)
ehens
ive
incom
e
Share 1,078 52,961 - - - - 54,039 - 54,039
s
issue
d
Share - - - - -
issue (2,631) (2,631) (2,631)
costs
Divid 4 234 - - (5,024) -
end - (4,786) (4,786)
paid
to
equit
y
stake
holde
rs
Divid - - - - - - - (46) (46)
end
paid
to
non-
contr
ollin
g
inter
ests
Group - - - - 29 - 29 (428)
acqui (457)
sitio
n of
non-
contr
ollin
g
inter
est
Conve - - - 13,000 - - 13,000 - 13,000
rtibl
e
share
s to
be
issue
d
Share - - - 294 - - 294 - 294
based
payme
nt
Contr - - - - - - - 3,598 3,598
ibuti
on of
non-
contr
ollin
g
share
holde
rs
Balan 4,129 261,923 - 13,294 9,852 215,333 5,172 220,505
ce at (73,865)
28
Febru
ary
2011
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The unaudited condensed consolidated interim financial statements of the
Company for the six months ended 28 February 2011 consolidate the
Company and its subsidiaries (together referred to as the `Group`). They
are presented in pound sterling which represents the functional currency
of the Company and are rounded to the nearest thousand. The condensed
consolidated interim financial statements are prepared on the historical
cost basis except for the following assets and liabilities which are
stated at fair value: investment properties and financial instruments at
fair value through profit or loss.
The preparation of interim financial statements requires management to
make judgements, estimates and assumptions that affect the application
of policies and reported amounts of assets and liabilities, income and
expenses. Actual results may differ materially from these estimates. In
preparing these interim financial statements, the significant judgements
made by management in applying the Company`s accounting policies and the
key sources of estimation uncertainty relate to the valuation of
investment property detailed in note 3.
These condensed consolidated financial statements have been prepared on
a going concern basis as the Directors consider this the most
appropriate basis.
The consolidated financial statements of the Group as at and for the
year ended 31 August 2010 are available upon request from the Company`s
Registered Office at Channel House, Green Street, St, Helier, Jersey JE2
4UH or at www.redefineinternational.je.
Statement of compliance
These condensed consolidated interim financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by EU. They do not include all of the information required for
full annual financial statements, and should be read in conjunction with
the consolidated financial statements of the Group as at and for the
period ended 31 August 2010.
Both interim figures for the six months ended 28 February 2011 and the
comparative amounts for the five months ended 28 February 2010 are
unaudited. Both sets of interim figures have however been reviewed by
the Auditors. The summary financial statements for the year ended 31
August 2010, as presented in the condensed consolidated interim
financial statements, represent an abbreviated version of the Group`s
full accounts for that period, on which independent auditors issued an
unqualified audit report. The financial information presented herein
does not amount to statutory financial statements.
The condensed consolidated interim financial statements were approved by
the Board of Directors on 14 April 2011.
2. Significant accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those applied
by the Group in its audited financial statements as at and for the year
ended 31 August 2010, except for the additional accounting policies
noted below:
Capital instrument
A financial instrument or its component parts is classified on initial
recognition as a financial liability, a financial asset or an equity
instrument in accordance with the substance of the contractual
arrangement.
An instrument is classified as equity where there is no contractual
obligation to deliver cash or another financial asset to another party,
or to exchange financial assets or financial liabilities with another
party under potentially unfavourable conditions (for the issuer of the
instrument) or where the instrument will or may be settled for a fixed
number of the entity`s own equity instruments.
Equity instruments are recognised initially at their fair value with any
directly attributable costs allocated to the instrument. The equity
instrument is not re-measured subsequent to initial recognition.
Payments in relation to the capital instrument are deemed to be share
based payments and are recorded in the statement of comprehensive income
due to the unavoidable nature of the obligation. See note 18 for
further details.
Restructured debt
A financial liability is derecognised when it is extinguished (i.e. it
is discharged, cancelled or expires) which may happen when a payment is
made to the lender, the borrower legally is released from primary
responsibility for the financial liability or where there is an exchange
of debt instruments with substantially different terms or a substantial
modification of the terms of an existing debt instrument.
Any difference between the carrying amount of the original liability and
the consideration paid is recognised in profit or loss. The
consideration paid includes non-financial assets transferred and the
assumption of liabilities, including the new modified financial
liability. Any new financial liability recognised is measured initially
at fair value. Any costs or fees incurred are recognised as part of the
gain or loss on extinguishment and do not adjust the carrying amount of
the new liability.
3. Significant accounting judgements, estimates and assumptions
Investment property valuation
The property valuations continue to be prepared in a period of market
uncertainty. The current turmoil in the world`s financial markets has
resulted in commercial and residential properties selling in much
reduced quantities with virtually little or no market activity in some
areas. Many vendors are choosing not to go to the market until
conditions improve. Many purchasers are choosing not to buy now in the
expectation that market conditions will continue to deteriorate and they
will be able to purchase more favourably in the future. Other
transactions are failing due to the current difficulty in funding
acquisitions. The lack of market activity and the resulting lack of
market evidence means that it is generally not possible to value
properties with as high a degree of certainty as would be the case in a
more stable market with a good level of market evidence.
The best evidence of fair value is current prices in an active market
for similar lease and other contracts. In the absence of such
information, the Group determines the amount within a range of
reasonable estimates.
The Group considers information from a variety of sources including:
- independent valuers;
- current prices in an active market for properties of a different
nature, condition or location, adjusted for those differences;
- recent prices from similar properties in less active markets, with
adjustments to reflect any changes in economic conditions;
- discounted cash flow projections based on reliable estimates of
future cash flows, derived from the terms of any existing leases
and from external evidence such as current market rents for similar
properties in the same location and condition, and using discount
rates that reflect current market assessments.
4. Taxation
The Group is exempt from all forms of taxation in Jersey, including
income, capital gains and withholding taxes. In jurisdictions other than
Jersey, foreign taxes will, in some cases, be withheld at source on
dividends and interest received by the Group. Other than Germany,
Switzerland and, as described below certain UK capital gains, gains
derived by the Group in such jurisdictions will generally be exempt from
foreign income or withholding taxes at source.
Income tax expense
The Group invests in UK property and therefore is liable to income tax
in the UK on the net rental profits. The current rate of UK income tax
for a non-resident company is 20%. Based on current UK law, certain
joint ventures in the Group will be subject to UK capital gains tax, or
corporation tax on capital gains, on the realisation of UK investment
property gains.
The Group invests in Swiss property and therefore is liable to cantonal
and federal taxes in Switzerland. The rates depend largely on the canton
in which the property is situated and the property values. The effective
rates of tax range from 22% to 25%.
The Group also invests in German properties held either in corporates or
partnerships. The effective rate of tax ranges from 18.463% to 25% and
the rate of capital gains tax on future disposals ranges from 15.825% to
20%.
Provision has been made for deferred capital gains tax in all relevant
entities, where taxable temporary differences arise.
All current year taxes arise in jurisdictions outside Jersey.
The Group`s investment in the Australian resident Cromwell Property
Group is held through an Irish Section 110 company. Un-franked dividends
received from the Cromwell Group are subject to an Australian
withholding tax of 7.5%.
Deferred taxation
As the majority of the Group`s assets (owned through subsidiary and
jointly controlled entities) are currently reflected at fair values
below their purchase prices, and a significant portion of property
assets are owned by companies in zero capital gains tax jurisdictions,
the consequences of recovery through use and ultimately sale creates a
deferred tax asset.
The deferred tax asset is limited to the amount of any deferred tax
liability raised, being that portion of the deferred tax asset that is
recoverable. The net effect of GBP nil is therefore reflected in the
Consolidated Statement of Financial Position.
Recovery of these deferred tax assets is dependent on the generation of
sufficient future taxable income. In order to recognise an asset, it
must be probable that deductible temporary differences in excess of
existing taxable temporary differences will be available at the date the
taxable differences reverse.
The most significant asset in this case is investment property, which is
expected to be recovered through a combination of use (rental to third
parties) and ultimately by sale. In determining the amount of deferred
tax to be calculated, accounting standards require:
i) the revaluation of land to be separated from that of the buildings
and deferred tax to be computed using the consequences of sale; and
ii) in respect of the buildings, management is required to estimate the
expected period of use until sale and an estimated sales value
(residual). The temporary difference is then split between a use and a
sale component and the respective tax consequences applied to each
component.
5. Segment reporting
The Group`s identified reportable segments are the geographical
locations in which it operates, which are generally managed by separate
management teams. As required by IFRS 8, Operating Segments, the
segmental analysis below follows the information provided to the Board
of directors, who are the Chief Operating Decision Makers.
The relevant revenue, assets and capital expenditure are set out below:
i) Information about reportable segments
UK Shopping European
Portfoli Centres Portfoli Wichfor Cromwe Hotels Total
o GBP `000 o d ll GBP `000 GBP
GBP `000 GBP `000 GBP GBP `000
`000 `000
At 28
February
2011
Rental 1,924 4,612 3,009 - - 2,043 11,588
income
Investme - - - - 3,875 - 3,875
nt
income
Net fair (115) (5,556) 457 - - (1,588)
value (6,802
gains/ )
(losses)
on
investme
nt
property
Gains/ 4,642 - 756 - 10,350 1,352 17,100
(losses)
from
financia
l assets
and
liabilit
ies
Equity 121 (1,878) 403 - -
accounte (5,430) (6,784
d losses )
Impairme (15) - - - - - (15)
nt of
loans to
joint
ventures
Interest 849 1,168 - - - 790 2,807
income
Interest (606) (3,851) (1,085) - - (1,577)
expense (7,119
)
Share - (294) - - - - (294)
based
payment
Property (94) (1,196) (305) - - -
operatin (1,595
g )
expenses
Investme 52,290 108,914 76,379 - - 110,600 348,18
nt 3
property
Investme 478 - - - 85,128 1,352 86,958
nts
designat
ed at
fair
value
Investme 809 - 1,838 - - - 2,647
nt in
joint
ventures
Investme - - - 16,731 - - 16,731
nt in
associat
es
Loans 27,974 25,335 - - - 34,500 87,809
and
receivab
les
Loans - -
and (46,467) (116,547) (58,995) (107,445) (329,4
borrowin 54)
gs
At 28
February
2010
Rental 1,561 2,281 1,848 - - - 5,690
income
Investme - - - - 99 - 99
nt
income
Net fair 721 (1,000) (2,304) - - -
value (2,583
gains/(l )
osses)
on
investme
nt
property
Gains/(l (1,191) (93) - 2,753 - 1,469
osses)
from
financia
l assets
and
liabilit
ies
Equity (468) (1,100) (710) 830 - -
accounte (1,448
d losses )
Impairme (603) (159) - - - - (762)
nt of
loans to
joint
ventures
Interest 1,190 - - - - - 1,190
income
Interest (1,049) (1,910) (921) - - -
expense (3,880
- secure )
bank
loans
Property (127) (541) (184) - - - (852)
operatin
g
expenses
Investme 58,582 67,960 56,244 - - - 182,78
nt 6
property
Investme 361 - - - 43,020 - 43,381
nts
designat
ed at
fair
value
Investme 978 - 1,576 - - - 2,554
nt in
joint
ventures
Investme - - - 21,525 - - 21,525
nt in
associat
es
Loans 33,389 8,400 - - - - 41,789
and
receivab
les
Loans (81,334) - - -
and (74,864) (48,274) (204,4
borrowin 72)
gs
At 31
August
2010
Rental 3,532 5,745 3,990 - - - 13,267
income
Investme - - - - 2,560 - 2,560
nt
income
Net fair 691 (703) (2,155) - - -
value (2,167
gains/ )
(losses)
on
investme
nt
property
Gains/ (2,766) - (350) - 2,572 - (544)
(losses)
from
financia
l assets
and
liabilit
ies
Equity (615) (1,016) (786) - -
accounte (1,108) (3,525
d losses )
Impairme (598) - - - - - (598)
nt of
loans to
joint
ventures
Interest 1,714 909 - - - - 2,623
income
Interest (2,238) (4,934) (1,989) - - -
expense (9,161
- secure )
bank
loans
Property (177) (1,029) (455) - - -
operatin (1,661
g )
expenses
Investme 58,913 114,439 54,323 - - - 227,67
nt 5
property
Investme 362 - - - 74,777 - 75,139
nts
designat
ed at
fair
value
Investme 650 - 1,391 - - - 2,041
nt in
joint
ventures
Investme - - - 18,923 - - 18,923
nt in
associat
es
Loans 31,426 16,734 - - - - 48,160
and
receivab
les
Loans
and (99,868) (133,941) (33,457) (267,2
borrowin 66)
gs
ii) Reconciliation of reportable segment profit or loss
Reviewed Reviewed Audited
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Rental income
Total rental income for reported 11,588 5,690 13,267
segments
Profit or loss
Investment income 3,875 99 2,560
Net fair value losses on investment (6,802) (2,583) (2,167)
property
Gains/(losses) from financial assets and 17,100 1,469 (544)
liabilities
Equity accounted losses (6,784) (1,448) (3,525)
Impairment of loans to joint ventures (15) (762) (598)
Interest income 2,807 1,190 2,623
Interest expense - secure bank loans (7,119) (3,880) (9,161)
Share based payment (294) - -
Property operating expenses (1,595) (852) (1,661)
Total profit/(loss) per reportable 12,761 (1,077) 794
segments
Other profit or loss - unallocated
amounts
Other income 994 163 673
Administrative expenses (252) (166) (466)
Investment management and professional (2,083) (1,820) (3,406)
fees
Amortisation of intangible assets (157) (345)
Interest income 387 307 758
Interest expense (2,201) (1,403) (3,202)
Foreign exchange gain/(loss) (143) 6 (6)
Consolidated profit/(loss) before income 9, 463 (4,147) (5,200)
tax
6. Investment income
Reviewed Reviewed Audited
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Dividends received from equity 3,875 99 2,560
securities designated at fair value
through profit or loss
Total investment income 3,875 99 2,560
7. Other income
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Fee income 857 - 420
Other property income 137 163 253
994 163 673
8. Gains/(losses) from financial assets and liabilities
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Fair value through profit or loss
Equity investments - realised - 72 72
- 10,350 2,753 2,572
unrealised
Derivative financial instruments 6,321 77 (1,755)
Financial assets carried at amortised
cost
Impairment of loans and receivables (484) (1,433) (1,433)
Financial liabilities carried at
amortised cost
Redemption of loans and borrowings 913 - -
Net gain/(loss) from financial assets 17,100 1,469 (544)
and liabilities
9. Equity accounted losses
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Equity accounted losses consist of the
following:
Investment in joint ventures (see Note (1,316) (2,278) (2,415)
15)
Investment in associates (see Note 16) (3,335) 2,687 5,368
Investment in associates - impairment (2,133) (1,857) (6,478)
(see Note 16)
Total equity accounted losses (6,784) (1,448) (3,525)
10. Interest income
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Interest income on bank deposits 101 158 454
Interest receivable on mezzanine 3,093 1,339 2,927
financing
Total interest income 3,194 1,497 3,381
11. Interest expense
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Interest expense at amortised cost:
Interest expense on secured bank loans (6,330) (4,136) (9,161)
Interest expense on other financial (140) - (663)
liabilities
Interest payable on mezzanine financing (2,850) (1,147) (2,539)
Total interest expense (9,320) (5,283) (12,363)
12. Investment property
The book cost of properties as at 28 February 2010 was GBP 371,524,441
(2010: GBP 190,799,975). The carrying amount of investment property,
apart from the investment property on which development is planned at
Delamere Place Crewe, is the fair value of the property as determined
annually by a registered independent appraiser having an appropriate
recognised professional qualification and recent experience in the
location and category of the property being valued. The carrying amount
of the investment property at Delamere Place Crewe is the fair value as
determined by directors` valuation.
Fair values were determined having regard to recent market transactions
for similar properties in the same location as the Group`s investment
property. The valuers have also considered the rental status of each
property and current market yields. The Group is also exposed to the
risks associated with investment property held within joint venture and
associated entities, which are equity accounted.
The Directors have estimated the recoverable value of the property under
development based on expected/agreed development plans and have made a
number of assumptions in deriving this value, including, in their view,
various reasonable long-term assumptions relating to likely interest
rates and the ultimate rental potential of the development and likely
expected yields in the range of 6%-8%. Based on these calculations,
which, given current market conditions and the uncertainties in
projecting these assumptions forward, are subjective, the directors have
valued the property under development at GBP 17.15 million (31 Aug
2010: GBP 22.7 million).
Investment property comprises a number of commercial and retail
properties that are leased to third parties. All investment properties
are income generating, as is the investment property on which
development is planned.
Property operating expenses in the income statement of comprehensive
income relate solely to income generating properties.
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Opening balance 227,675 186,021 186,021
Properties acquired during the period 132,141
Capitalised expenditure - 112 527
Impact of acquisition of subsidiaries - - 46,100
Properties disposed of during the (6,543) - -
period
Foreign exchange movement in foreign 1,712 (764) (2,806)
operations
Net fair value losses on investment (6,802) (2,583) (2,167)
property
Closing balance 348,183 182,786 227,675
Acquisitions (at cost)
Redefine Hotel Holdings Limited 112,188 - -
ITB Reinheim B.V. (OBI Portfolio) 19,953 - -
132,141 - -
The above acquisitions are properties held in companies in which other
investors own a percentage of the shares. These external shareholdings
and related inflows of cash have been recorded as non-controlling
interests.
Disposals
Ciref Streatham Limited (6,543) - -
13. Long term receivables
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Security deposits with banks 464 5,181 4,306
Amounts due from joint ventures 116 616 116
Amounts due from Corovest Mezzanine 87,229 35,992 43,738
Capital Limited
Loans 104,892 53,640 61,386
Impairment (17,663) (17,648) (17,648)
87,809 41,789 48,160
14. Investments designated at fair value
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Opening balance 75,139 290 290
Acquisitions during the period - 40,267 72,188
Fair value adjustments (refer note 8) 10,350 2,753 2,572
Foreign exchange movement in foreign - 71 89
investments
Derivative financial instruments 1,469 - -
Closing balance 86,958 43,381 75,139
Investments designated at fair value represent the Group`s 19.59%
holding in the Cromwell Property Group and derivative financial
instruments. The stapled securities were valued at AUD 0.76 per security
on 28 February 2011.
The investment in the Cromwell Property Group was translated at an
exchange rate of GBP 1 : AUD1.60 on 28 February 2011.
15. Investments in joint ventures
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Opening balance 2,041 5,008 5,008
Increase in investment 1,878 217 153
Equity accounted loss (1,316) (2,278) (2,415)
Change in fair value due to foreign 44 (393) (217)
currency translation
Distribution received from joint - - (488)
ventures
Closing balance 2,647 2,554 2,041
The increase in investment in joint ventures represents the costs
involved in investment in Redefine Wigan Limited, the company which
holds 100% of the Grand Arcade Shopping Centre in Wigan, Lancashire.
16. Investments in associates
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Opening balance 18,923 - -
Investment at cost including goodwill 38 21,343 22,732
Change in fair value due to foreign - (1) 1
currency translation
Equity accounted (loss)/profit (3,335) 2,687 5,368
Share of foreign currency movement 779 - (1,494)
recognised
Share of cash flow hedge reserve 2,459 - 155
movement recognised
Impairment of investment (2,133) (1,857) (6,478)
Distribution received from associates - (647) (1,361)
Closing balance 16,731 21,525 18,923
The Group holds an investment of 21.73% in Wichford, an investment
property company listed on the main market of the London Stock Exchange.
The closing price of Wichford on 28 February 2011 was 7.25p per share, a
total fair value of GBP 16.73 million at the period end.
17. Capital and reserves
Share capital and share premium
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Authorised
1,000,000,000 ordinary shares of GBP 10,000 10,000 10,000
0.01 each
eIssued
412,898,995 ordinary shares of GBP 0.01 4,129 2,385 3,047
each
(Feb 2010: 238,483,821 shares of GBP
0.01 each, August 2010:304,706,406
shares of GBP 0.01 each)
4,129 2,385 3,047
In issue at beginning of period 304,706 73,760 73,760
Shares issued 107,764 164,524 230,416
Shares issued as scrip dividend 429 92 422
Treasury shares issued - 108 108
Net Shares in issue at the end of the 412,899 238,484 304,706
period
Shares to be issued as a result of the 26,588 - -
capital instrument (see note 18)
Number of ordinary shares in issue with 439,487 238,484 304,706
conversion of capital instrument
On 7 September 2010 the Company issued 106,069,337 shares for a total
consideration of GBP 53.11million.
On 4 February 2011 the Company issued 1,694,000 shares for a total
consideration of GBP 923,000 to facilitate the buyout of the non-
controlling shareholders in Kalihora Holdings Limited.
Distributions
On 26 November 2010 the Company distributed the 2010 final dividend of
2.07p per share (February 2010: 1.31p per share). The dividend was
settled by GBP 4,785,331 in cash and by issuing 429,252 shares at a
price of 54.6p per share.
18. Capital instrument
As part of the Aviva debt restructuring RI plc has entered into a GBP 13
million facility (the "convertible loan") with Aviva. The capital
instrument incurs a charge of 6% per annum, which is rolled up until
payment at the Company`s discretion or conversion. The capital plus
rolled up charge is repayable at the Company`s discretion in cash or
through conversion to shares 3 years after the date of the agreement or
on any earlier date if there is an event of default.
Should the capital instrument together with charges not be repaid, RI
plc will be required to issue shares ("conversion shares") to discharge
the outstanding amount due, the number of which is calculated by
dividing the outstanding amount by 50 pence per ordinary share in RI
plc.
The new capital instrument is an equity instrument under IAS 32 as it is
to be settled in either cash or a fixed number of equity shares at the
discretion of the company. The fixed number of shares to be issued
changes over time but is fully predetermined based on the time the
company chooses to settle the instrument. The additional shares that
arise over time are charged to profit or loss in each period as a share
based payment charge and is credited to the equity reserve.
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Opening balance - - -
Capital instrument issued 13,000 - -
Share based payment 294 - -
Closing balance 13,294 - -
Based on the closing balance additional shares of 26,588,000 are
required to be issued to settle the obligation under the capital
instrument.
19. Loans and borrowings
19.1 Secured
Property Loan Currency Year of Reviewed Reviewed Audited
interest maturity 6 months 5 months 11 months
rate ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Gibson 6.37%* GBP 2029 11,128 11,265 11,197
Property
Holdings
Limited
Newington LIBOR + GBP 2013 6,609 6,779 6,699
House 2.50%
Limited
Ciref LIBOR + GBP 2015 2,500 2,980 2,980
Reigate 2.50%
Limited
Kalihora Base + CHF 2018 11,917 12,101 12,618
Holdings 1.20%
Limited
Ciref LIBOR + GBP 2009 3,078 1,400
Streatham 1.25% -
Limited
CirefMalthu LIBOR + GBP 2014 18,000 17,913
rst Limited 0.95% -
Delamere 6.49% GBP 2011 17,150 17,150 17,150
Place Crewe
Limited
West 6.29% GBP 2035 49,212 56,284 56,183
Orchards
Coventry
Limited
Byron Place 6.44% GBP 2031 15,193 15,203
Seaham
Limited
Birchwood 6.10% GBP 2035 16,457 29,307
Warrington
Limited
Ciref EURIBOR + EUR 2013 15,782 16,910 15,399
Berlin 1 1.2%
Limited
Ciref EURIBOR + EUR 2013 3,365 3,559 3,281
German 1.2%
Portfolio
Limited
InkstoneGru 5.75%* EUR 2012 3,506 3,742 3,434
ndstucksver
waltung
Limited
&Co. KG
InkstoneZwe 5.91%* EUR 2012 3,898 4,184 3,837
iGrundstuck
sverwaltung
Limited
& Co. KG
CEL 4.95%* EUR 2014 4,305 4,553 4,208
Portfolio
Limited &
Co. KG
ITB EURIBOR + EUR 2016 7,795
Herzogenrat 1.3% - -
h B.V.
ITB EURIBOR + EUR 2016 6,447
Schwandorf 1.3% - -
B.V.
Redefine LIBOR + GBP 2015 68,445
Hotel 2.45% - -
Holdings
Limited
Total Bank 243,709 160,585 200,809
loans
Loans 7.00%* GBP 2012 650 5,915 5,040
secured by
cash
deposits
Coronation 6%** GBP 2011 596 13,600
Capital -
Limited
Corovest 7.10%* - GBP 2012 82,520 32,225 40,423
Mezzanine 10%
Capital
Limited
CEL 0%* GBP 2029 664 695 644
Portfolio
Limited &
Co. KG
Total 328,139 199,420 260,516
secured
loans
All bank loans are secured over investment property, and bear interest
at the specified interest rates.
* Fixed rates for between 2 and 23 years
19.2 Unsecured
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Non-controlling shareholder loans - 627 643
Derivatives 1,315 4,425 6,107
Total unsecured loans 1,315 5,052 6,750
Non-current liabilities
Secured bank loans 307,872 156,392 160,513
Unsecured shareholder loans - 627 643
Derivatives 1,315 4,425 6,107
Total non-current loans and borrowings 309,187 161,444 167,263
The maturity of non-current borrowings
is as follows:
Between 1 year and 5 years 117,442 90,801 95,133
More than 5 years 191,745 70,643 72,130
309,187 161,444 167,263
Current liabilities
Current portion of secured bank loans 20,267 43,028 100,003
Total current loans and borrowings 20,267 43,028 100,003
Total loans and borrowings 329,454 204,472 267,266
As detailed in the Annual Report for the period ended 31 August 2010, a
number of the debt facilities were restructured in the six month period
to 28 February 2011. This debt restructuring was accounted for in line
with the accounting policy detailed in note 2.
20. Earnings per share
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP `000 GBP `000 GBP `000
Net profit/(loss) attributable to
shareholders 9,457 (3,818) (4,915)
(Basic and diluted)
Number of ordinary shares (`000)
In issue 412,899 238,484 304,706
- Weighted average 407,121 131,873 199,492
- Weighted average (diluted) 435,807 131,873 199,492
- Weighted average 407,121 131,873 199,492
- Effect of conversion of capital 28,686 - -
instrument
Earnings/(loss) per share (pence)
- Basic 2.32 (2.90) (2.46)
- Diluted 2.17 (2.90) (2.46)
21. Interest rate risk
The Group uses interest rate swaps to hedge exposure to the variability
in cash flows on floating rate debt, caused by the movements in the
market rates of interest. The table below details the interest rate
swaps held by the Group:
Reviewed Reviewed Audited
6 months 5 months 11
Nominal ended ended months
Loan Fixed Year 28 Feb 28 Feb ended
Hedged Interest Of 2011 2010 31 Aug
Company GBP `000 Rate Currency Maturity GBP `000 GBP `000 2010
GBP `000
Subsidiari 20,000 5.17% GBP 2011 - (2,241) (3,989)
es
CirefMalth 2,500 2.03% GBP 2015 49 (86) (43)
urst
Limited
Ciref 6,609 1.54% GBP 2013 67 (195) (64)
Reigate
Limited
Newington 8,352 4.61% EUR 2014 (634) (916) (947)
House
Limited
Ciref 7,462 4.20% EUR 2014 (470) (683) (734)
Berlin 1
Limited
Ciref 3,352 4.20% EUR 2014 (211) (304) (330)
Berlin 1
Limited
Ciref 68,445 2.20% GBP 2015 1,351 - -
German
Portfolio
Limited
Redefine 20,000 5.17% GBP 2011 - (2,241) (3,989)
Hotel
Holdings
Limited
116,720 151 (4,425) (6,107)
Held in
joint
ventures
Ciref 18,500 5.48% GBP 2027 (3,808) (3,486) (5,343)
Jersey
Limited
Ciref 1,800 4.80% GBP 2027 (196) (191) (378)
Jersey
Limited
Premium 5,388 4.13% EUR 2014 (379) (475) (565)
Portfolio
Limited &
Co. KG
Premium 17,671 4.23% EUR 2014 (1,319) (1,642) (1,925)
Portfolio
Limited &
Co. KG
Churchill 10,238 5.08% GBP 2018 (1,088) (1,625) (1,657)
Court
Limited
53,597 (6,790) (7,419) (9,868)
22. Post balance sheet events
On 24 February 2011, RI plc announced that it had entered into a call
option agreement to subscribe for 35 million Cromwell stapled
securities. The call option was exercised by Cromwell on 2 March 2011
following which the Group now holds 22.2% of the issued stapled
securities in Cromwell.
On 23 March 2011 RI plc announced that it had reached an in principle
understanding with Wichford regarding a potential combination of the two
companies ("the Potential Merger"). Further details of the Potential
Merger can be found in the Company`s announcement published on the
London Stock Exchange Regulatory News Service. The Potential Merger is
subject to various regulatory and shareholder approvals being obtained.
On 5 April 2011, RI plc acquired St Georges Harrow Limited for an
effective purchase price of GBP 25 million. St Georges Harrow Limited
completed the acquisition of the St Georges Shopping Centre in Harrow,
United Kingdom on 27 April 2011 for a purchase price of GBP 68 million
(including transaction costs). Senior debt has been secured on
favourable terms with Landesbank Berlin AG.
On 26 April 2011 RI plc announced an issue of 39,283,188 new ordinary
shares at an average price of GBP0.52 per share (the "New Shares"). The
New Shares were admitted to trading on AIM on the 27 April 2011 and
these New Shares rank pari passu in all respects with the existing
ordinary shares in issue.
23. Guarantees and Capital Commitments
The Group has capital commitments of GBP 6 million in respect of capital
expenditure contracted for at the interim reporting date but not yet
incurred, for investment property redevelopment.
3 May 2011
REDEFINE INTERNATIONAL PLC
(Incorporated in Jersey, Channel Islands, United Kingdom)
(Registration number 91277)
LSE share code RDF ISIN :GB00B13PT348
("RI plc" or "the Company" and together with its subsidiaries "the Group")
Directors
Gavin Tipper* (Non-executive Chairman), Michael Watters, Andrew Rowell,
Michael Farrow*, Gregory Heron*, John Ruddy*, Peter Todd*, Marc Wainer
Non-executive director
* Independent non-executive directors
Registered Office
Channel House, Green Street, St Helier, Jersey, JE2 4UH
Company Registrar
Capita Registrars (Jersey) Limited
Company Secretary
Consortia Partnership Limited
Nominated Adviser and Broker
Singer Capital Markets Limited
For further information please contact:
REDEFINE INTERNATIONAL PLC + 27 (0)21 683 3829
Gavin Tipper - Chairman
www.redefineinternational.je
SINGER CAPITAL MARKETS LIMITED
Jeff Keating +44 (0)203 205 7500
www.singercm.com
POWERSCOURT
Matthew Fletcher/Karen Le Cannu +44 (0)207 250 1446
www.powerscourtmedia.com"
Sponsor to Redefine Properties International Limited
Java Capital
Date: 03/05/2011 14:11:01 Supplied by www.sharenet.co.za
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