Wrap Text
Results for the six months ended 28 February 2014
REDEFINE INTERNATIONAL P.L.C.
(Incorporated in the Isle of Man)
(Registered number 010534V)
LSE share code: RDI
JSE share code: RPL
ISIN: IM00B8V8G91
(“Redefine International” or the “Company” or the ”Group”)
RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2014
REDEFINE INTERNATIONAL DELIVERS STRONG MAIDEN RESULTS AS A UK-REIT
Redefine International, a UK-REIT, which holds a primary listing on the London Stock Exchange and a secondary listing
on the Johannesburg Stock Exchange, today announces its results for the six months ended 28 February 2014.
Financial Highlights
- Earnings available for distribution of 1.55 pence per share (28 February 2013: 1.475 pence per share) an increase of
5.1%
- Basic earnings per share (excluding the effect of the management internalisation) of 2.18 pence (28 February 2013:
1.91 pence), an increase of 14.1%
- Adjusted NAV per share of 38.14 pence (31 August 2013: 38.66 pence)
- Adjusted NAV per share (excluding the effect of the management internalisation) of 40.10 pence (31 August 2013:
38.66 pence)
- Successful placing of 115.1 million new Redefine International shares to raise £54.7 million
- Interim dividend of 1.50 pence per share (28 February 2013: 1.475 pence)
- Balance sheet strengthened with pro-forma Group LTV reduced to 53.0% (31 August 2013: 56.8%) and ongoing
programme of early debt extensions
Operational Highlights
- Conversion to a UK-REIT
- Strong operating results across all income focused business segments
- Property portfolio valuations up 2.0% despite adverse foreign exchange movements
- Disposals totalling £29.4 million at an average premium to book value of 23.8%, providing opportunities for further
accretive capital recycling
- Completion of acquisition of Weston Favell Shopping Centre for £84.0 million
- Acquisition of remaining 40% of Earls Court Holiday Inn Express for £6.3 million (post period end)
- Good progress on asset management initiatives; marginal decline in occupancy to 97.2% (31 August 2013: 97.3%),
largely reflecting retail space taken back to progress redevelopment opportunities
- Board and management team strengthened
- Inclusion in FTSE and EPRA indices
Greg Clarke, Chairman, commented:
“Our conversion to a UK-REIT and the internalisation of our management in December 2013 marked the successful
conclusion of the strategy outlined to shareholders over 18 months ago. This has, in turn, resulted in a larger free float and
enhanced liquidity which has ensured the Company's admission into the FTSE and EPRA/NAREIT indices and growing
recognition as a mid-cap REIT.
“This, combined with the growth in the Company's market cap and reduction in leverage, has created access to new
sources of funding and the ability to drive down the cost of capital, which will support our strategy to invest into high quality
assets generating strong income flows with the potential for capital growth.”
Mike Watters, Chief Executive, added:
"Based on current market conditions, our expectations are for full year earnings to be in line with management
expectations. With our focus on positioning the Company and its portfolio for future growth, we look forward with
confidence."
Meeting, webcast and conference call
A meeting for analysts and investors will take place today at 09.00 (UK local time) at FTI Consulting, 200 Aldersgate,
Aldersgate Street, London, EC1A 4HD. The meeting can also be accessed via a conference call dial in facility and
webcast link, starting at 09.00am (UK time) 10.00am (SA time), using the details below. The presentation will be made
available on the Company’s website http://www.redefineinternational.com/investor-relations/financial-reports.
Conference call
Dial in numbers: United Kingdom Local +44(0)20 3427 1904 and South Africa Local +27(0)11 019 7075
Confirmation Code: 6558656
Webcast link: http://www.brrmedia.co.uk/event/122945?popup=true
For further information, please contact:
Redefine International P.L.C. FTI Consulting LLP
Michael Watters (CEO) , Stephen Oakenfull (Deputy CEO) Stephanie Highett, Dido Laurimore
Tel: +44 (0)20 7811 0100 Tel: +44 (0)20 3727 1000
Chairman’s Statement
I am pleased to present our maiden interim report as an internally managed UK-REIT. The conversion to a UK-REIT and
the acquisition of the investment advisor were finalised in December 2013 and it is satisfying to see the conclusion of the
restructuring strategy that was outlined over eighteen months ago, through the delivery of a strong set of interim results.
The re-structuring has delivered a larger free float and improved liquidity enabling the Company to be admitted to the
FTSE SmallCap and All Share indices and the EPRA/NAREIT Index in December 2013.
Management remains focused on positioning the Company and its income focused property portfolio for future growth.
Financial Results
Earnings available for distribution for the period were 1.55 pence per share, 5.1% higher than the same period last year.
This growth is notwithstanding the additional shares in issue as a result of the management internalisation in December
2013. UK-REIT status and the change to an internalised management structure applied to the second quarter, while
earnings for the first quarter were accounted for under the old regime.
Adjusted NAV per share was marginally down to 38.14 pence per share (31 August 2013: 38.66 pence per share), a good
result considering the write off of £24.9 million associated with the share issuance in respect of the management company
internalisation, and volatility in the market value of the Cromwell investment. The financial benefit of the internalisation is
anticipated to accrue to future earnings given the more efficient cost structure, particularly with the anticipated growth in
the Group’s gross asset base.
The strength of the UK investment market was reflected in positive revaluations across all UK business segments. The
European portfolio valuations were broadly flat in local currency terms, but were impacted by a 3.3% decline in the value
of the Euro against Sterling during the period. Despite this, the total property portfolio increased in value by 2.0%.
Cromwell once again produced a strong set of financial results with distributions per security increasing 6.9% on the same
period last year. Volatility in the Cromwell share price together with a weaker Australian Dollar did however impact NAV by
0.94 pence per share.
The restructuring of the Aviva debt secured against Grand Arcade and West Orchards accompanied by the acquisition of
Weston Favell completed in December 2013. The significant reduction in the overall debt secured against these assets
was a milestone achievement for the Group.
The successful placement of 115.1 million new Redefine International shares in February 2014, which raised £54.7 million,
assisted in reducing the Group’s LTV to 53.0% which, together with an ongoing programme of early debt extensions, has
further strengthened the Company’s balance sheet.
Operations
It has been a busy period as the Company progresses its strategy of improving the overall quality of its portfolio and its
income generating potential. New investment has typically targeted larger assets, such as the recent CMC and Weston
Favell acquisitions, which provide significant asset management and development options to create further value. These,
together with ongoing sales of smaller and non-core assets, are expected to tighten the focus of the portfolio.
The strength of the investment market has created opportunities to sell certain assets at significant premiums to book
value and we have capitalised on this by completing £29.4 million of sales at an average premium of 23.8% to the 31
August 2013 book value.
Occupancy across the portfolio increased marginally to 97.2% (31 August 2013: 97.3%). The marginal decline was
anticipated and was largely due to taking back 14,400 sqft of retail space to progress redevelopment opportunities.
The UK Commercial portfolio (formerly known as the UK Stable Income portfolio) provided consistent high income returns
with a welcome return of asset value stability and growth in certain areas. Recent sales have capitalised on renewed
investor appetite for regional assets or assets with residential conversion potential. The Government (previously Wichford)
portfolio has now been reduced to 8.1% of the total portfolio when excluding non-core assets.
The UK Retail portfolio has increased to 34.6% of the portfolio following the acquisition of Weston Favell, Northampton
and the restructuring of the Aviva portfolio, which result in all UK shopping centres being wholly owned. Although the
underlying performance of the retail market remains mixed and some way behind the overall recent strong performance of
the investment market, a number of economic indicators, including the prospect of real wage growth, bode well for
continued improvement in retailing, consumer confidence and demand for space.
The Hotel portfolio produced a very pleasing performance with underlying operating metrics showing strong like-for-like
improvements. The remaining 40% of the Earl’s Court Holiday Inn Express was acquired post period end which, together
with the addition of 48 rooms at Southwark nearing completion, will increase the Company’s exposure to a portfolio with
good growth prospects.
The European portfolio produced a steady performance in local currency terms, however a weaker Euro against Sterling
negatively impacted its net contribution to the Group. The impact of the weaker Euro was however partially offset by Euro
denominated bank funding. The newly acquired shopping centres in Berlin and Hamburg have performed well and the
opportunities to add value that were identified on acquisition are progressing to plan.
Cromwell continues to perform well operationally and has grown its third party asset management business significantly.
Unfortunately the decline of the Australian dollar against Sterling negatively impacted the Cromwell contribution in this
reporting period. The shareholding in Cromwell remains a strategic holding although the Company took advantage of the
strong share price to dispose of a further 8.46 million securities in December 2013.
Changes to the Board
As part of the corporate restructuring, certain Board changes were made during the last quarter.
I am delighted to welcome Sue Ford and Bernie Nackan as non-executive directors and Adrian Horsburgh as property
director. All have strong track records in the real estate environment and we are fortunate to have such high calibre
individuals joining our team. Sue is expected to play a major role on the audit committee; Bernie will represent Redefine
Properties Limited, the Company’s 33% shareholder, whilst Adrian will lead the property team.
It is also with sadness that we say farewell to three long serving board members; Ita McArdle, Mark Taylor and Stewart
Shaw-Taylor. All three have played significant roles in the creation and advancement of the Company and I would like to
thank them for their efforts over the many years they have served on the Board.
Dividend
The Board declared an interim dividend of 1.50 pence per share for the six months ended 28 February 2014 on 29 April
2014, reflecting a pay-out ratio of 97% of earnings available for distribution. Shareholders are being given the opportunity
to elect to receive new ordinary shares in lieu of the cash dividend under a Scrip Dividend Scheme. A circular will be
posted to all shareholders setting out details of the election. Further details on the timing of the interim dividend will be
announced today.
Prospects
The current imbalance between investment demand and good quality investment opportunities, particularly in the UK, has
resulted in a very competitive bidding environment. Our approach to new investment and pricing therefore remains
cautious, particularly where the institutional market is concerned. We do however continue to see attractive off-market
opportunities which, in the current interest rate environment, can either be financed at rates which are accretive to
earnings or offer development opportunities where we believe we can create value for the Group.
The growth in the Company’s market capitalisation, reduction in leverage and establishment as a recognised mid-cap UK-
REIT has created access to new sources of funding and the ability to drive down the cost of capital which will support
investment into high quality assets with long-term growth potential. The Company has also been on the cusp of FTSE 250
admission which, if achieved in the future, will reinforce the Company’s status as a mid-cap player in the UK listed real
estate market.
The current interest rate environment together with the return of a competitive lending market has created an opportunity
to secure finance at attractive rates when compared to long run averages. There has also been good progress in
extending a number of near term facilities and this is expected to provide clear visibility on interest costs over the medium
term.
The Company expects earnings for the full financial year to 31 August 2014 (barring any major unforeseen macro events)
to be in line with management expectations and looks forward to the second half with confidence.
Greg Clarke
Chairman
Our Business
Investment Strategy
The Group’s strategy is focused on delivering sustainable and growing income returns through investment in income
yielding assets let to high quality occupiers on long leases. Development exposure is generally limited to asset
management and the ancillary development of existing assets in order to enhance and protect capital values. The Group
aims to distribute the majority of its earnings available for distribution on a semi-annual basis, providing investors with
attractive income returns and exposure to capital growth opportunities.
Investment Markets
The Group is focused on real estate investment in large, well developed economies with established and transparent real
estate markets. The investment portfolio is geographically diversified across the UK, Europe and Australia and provides
exposure to the office, retail, industrial and hotel sectors.
Business Segments
UK Commercial Offices let to the UK Government, motor trade and roadside services, and residential units.
UK Retail The Group’s UK shopping centre portfolio of seven wholly owned shopping centres.
Hotels The Group’s hotel properties situated in the United Kingdom. The hotels are let to Redefine Hotel
Management Limited on a fixed rental basis with annual reviews. The portfolio comprises six
London based hotels and one hotel in Reading, branded under the Holiday Inn, Holiday Inn
Express and Crowne Plaza franchises.
RBDL The Group’s 33% shareholding in Redefine BDL Hotel Group Limited, the UK’s largest
independent hotel management company.
Europe The Group’s properties in Continental Europe, located primarily in Germany but also in Switzerland
and the Netherlands. The portfolio comprises shopping centres, discount supermarkets and
government-let offices.
Cromwell The Group’s investment in the Cromwell Property Group, a commercial real estate company listed
in Australia with major lettings to listed companies and Government tenants. As at 28 February
2014 Cromwell’s market capitalisation was £911.1 million and the Group’s shareholding was
13.17%.
Property portfolio by business segment at 28 February 2014
Occupancy by Annualised gross
Business segments Market values lettable area Lettable area rental income
2
28 February 2014 (£’million) (%) (m ) (£’million)
UK Commercial 136.6 98.4% 117,614 12.1
UK Retail 331.6 95.4% 175,577 26.5
Hotels 155.7 100.0% 26,744 11.1
Europe 262.4 98.0% 117,320 17.4
Total (excl non-core assets) 886.3 97.2% 437,255 67.1
Non-core assets 70.9 99.2% 81,087 9.7
Total 957.2 97.5% 518,342 76.8
Notes:
1. Figures reflect the Group’s share of joint ventures.
2. The table excludes the Group’s interest in Cromwell, which had a market value of £120.0 million at 28 February 2014.
3. Non-core assets comprise the Delta portfolio, the Justice Centre in the Hague and the Ciref Berlin/German portfolio.
Top 10 properties by value
Weighted
Annual- average
Owner- Lett- ised Let unexpired
Market ship able gross by lease
Portfolio analysis value interest area rental area term
Top 10 investments Anchor tenants (£'m) (%) Sector (m2) (£'m) (%) (years)
Weston Favell, Northampton Tesco, Wilkinsons 87.1 100.0 Retail 28,486 6.6 96.6 9.2
Wigan, Grand Arcade Debenhams, BHS 85.4 100.0 Retail 43,375 7.2 97.9 11.3
Schloss Centre, Berlin Primark 72.6 100.0 Retail 18,107 4.1 99.3 6.6
Harrow, St.George’s Vue, Wilkinsons 62.5 100.0 Retail 20,312 4.2 97.6 6.4
Bahnhoff Altona, Hamburg Media Markt 60.0 100.0 Retail 15,561 3.6 100.0 4.0
Coventry, West Orchards Debenhams 37.0 100.0 Retail 19,472 3.6 96.1 6.6
Warrington, Birchwood ASDA 30.5 100.0 Retail 36,289 2.5 91.8 17.8
Earls Court, Holiday Inn Express RHM 28.1 42.6 Hotels 1,854 2.1 100.0 11.8
Brentford Lock, Holiday Inn RHM 26.2 71.0 Hotels 5,673 1.9 100.0 11.8
Limehouse, Holiday Inn Express RHM 26.2 71.0 Hotels 5,747 1.8 100.0 11.8
Notes:
1. Figures reflect 100% of the asset values; ownership percentages are provided above.
2. The effective shareholding in the Earls Court Holiday Inn Express increased to 71.0% post period end.
UK Commercial
Market
The second half of 2013 saw a modest recovery in occupational markets with demand for space at its highest level since
2008. London continues to dominate occupier demand and generate exceptional investor activity, but it is the recovery in
the South East market, and in particular the Thames Valley, which was a major driver of overall performance. Despite the
strength of London and the South East, the improvement in the office market was reported as widespread with Leeds,
Manchester, Edinburgh and Glasgow all showing encouraging results. Caution still needs to be exercised as the recovery
in occupier demand remains fragile in the regions.
The well documented increase in investor risk appetite continues to benefit the regional office market as a lack of supply in
London and South East forces investors to bid competitively for prime and secondary assets. This is expected to continue
during the second half, as demonstrated by unprecedented investment by Sovereign wealth funds in cities such as
Birmingham and Manchester. Bristol has recently demonstrated a return to yield compression, not seen since 2007, for
well let prime office stock.
The Government’s apparent ability to enter into longer lease terms is also an encouraging trend. Previous Government
Property Unit policy required mandatory five year breaks.
Performance
Occupancy increased to 98.4% (31 August 2013: 98.0%) following the take up of 8,500 sqft in total at the Observatory,
Chatham and the Crescent Centre, Bristol. A stronger occupational market was also reflected in stabilising and, in some
cases, improving ERVs which increased 5.0% on a like-for-like basis.
The portfolio value increased 3.6% in the six month period (excluding sales of £28.4 million which achieved an average
premium of 25.0% to their 31 August 2013 book values). Well located assets with secure cash flows or residential
conversion potential continued to attract strong investment demand as evidenced by the sales concluded during the
period.
Investment and asset management
The Company capitalised on a strong investment market to sell assets at a premium to book value. West Tullos,
Aberdeen was sold in December 2013 for £2.2 million reflecting a 5% premium to the 31 August 2013 book value. The
sale is in line with the Company’s strategy to reduce the number of smaller assets in the portfolio. The sales price reflected
a net initial yield of 4.5%.
St Anne House, Croydon was sold in February 2014 for £8.4 million reflecting a 53% premium to the 31 August 2013 book
value, having secured planning permission to convert the 100,000 sqft office building to hotel and residential uses. The
sales proceeds will be reinvested into income producing investments.
The sale of the Harrow residential scheme completed during the period for a total consideration of £13.77 million reflecting
a 12.4% premium to the 31 August 2013 book value.
A number of small sales totalling £4.1 million were completed to meet sales targets under the Delta portfolio restructuring
agreement.
Letting activity in the period focused on the Observatory, Chatham with the letting of the vacant ground floor (4,475 sqft) to
the Insolvency Service (Department of Business, Innovation and Skills) on a 10 year lease at £15.75 per sqft. The
remainder of the space (2,092 sqft) is currently under offer at the same rent.
The Crescent Centre, Bristol, continued to perform well and a further two new lettings were secured; Arriva took 2,373
sqft and Protection Group International took 1,640 sqft, both on five year lease terms at £11.50 per sqft and £20 per sqft
respectively.
The strength of the London West End market in general has had a positive impact on the Southbank market as a number
of traditional Soho and West End occupiers have relocated into this rapidly improving area of London. This was clearly
evidenced by the 5% rental uplift to £897,500 p.a. achieved at Newington House, Southwark Bridge Road.
Strategy and outlook
The Government-let (formerly Wichford) portfolio (excluding non-core assets) now represents 8.1% of the total portfolio by
value (31 August 2013: 11.6%). The successful restructuring of this portfolio has removed significant medium term re-
letting risk and increased the overall quality of the portfolio in the process.
UK Retail
Market
The economic recovery together with improved consumer confidence supported like-for-like growth in UK retail sales in
the second half of 2013. Lower inflationary expectations and reduced unemployment are expected to support real wage
growth and consequently higher retail spending in 2014.The British Retail Consortium reported that footfall in March 2014
was 1.8% higher than a year ago while in the year to February 2014 the amount spent on UK high streets rose by 3.5%.
While there is a general oversupply of retail space, particularly in poor secondary and tertiary locations, demand remains
robust for the right type of large format retail and leisure space in the right locations. It is considered that the significant
‘retail rent correction’ is well advanced with average rental growth stabilising, having previously been in negative territory.
The leisure, food and beverage market remains one of the most successful sub-sectors with operators such as Nandos
and Frankie & Benny’s still expanding rapidly. The fashion retail market is more polarised. Operators such as River Island,
Next, TK Maxx and H&M continue to trade well and the discount and single price operators such as B&M Bargains and
Home Bargains have experienced good growth. With the exception of the convenience stores, the supermarket sector is
no longer in a growth phase.
Investment in shopping centres witnessed a sharp increase in 2013 with over 80 separate transactions totalling £4.58
billion. The weight of capital being invested has seen a significant re-rating of investment yields with yields for town centre
dominant schemes decreasing by 50 – 70 basis points during 2013.
Performance
Occupancy by area increased to 95.4% (31 August 2013: 95.0%) following a period of successful lettings at St Georges,
Harrow and Grand Arcade, Wigan.
Footfall declined 2.0% compared to the same six month period last year. This is in line with the Experian national
benchmark reflecting a 2.1% decline for the same six month period.
The like-for-like portfolio value increased 5.3% which excludes an increase of 3.7% at Weston Favell which was acquired
during the period. Valuation uplifts were supported by leasing, rent reviews and asset management progress; particularly
at Grand Arcade (Wigan), St Georges (Harrow) and Byron Pace (Seaham). ERVs across the portfolio grew marginally by
1.0% on a like-for-like basis.
Investment and asset management
St Georges, Harrow
The asset management plan at St Georges to position the centre as the leisure, dining and retail destination of choice in
the wider catchment area continues to be implemented through investment into the centre’s entrance and façade to
modernise its appearance and customer appeal. The success of recently introduced food and beverage retailers such as
Nandos and Frankie & Benny’s has resulted in increased demand from food and beverage operators and improved footfall
which is benefitting other retailers. Key leasing activity during the period included:
- Frankie and Benny’s entered into a new 25 year lease (15 years term certain) over 4,270 sqft at a rent of £102,480
p.a.
- Warren James entered into a new five year lease at a rent of £45,000 p.a. over a newly configured 575 sqft unit.
Grand Arcade, Wigan
Retailer demand at Grand Arcade has strengthened, cementing the centre’s dominance in the town and reflecting our
strategy of investing in dominant retail locations and offering retailers space that meets their requirements. Improving
sentiment for the right retail product is being reflected in increased leasing activity. Key leasing activity during the period
included:
- Superdrug entering into a new ten year lease over 7,263 sqft establishing a new zone A rental tone of £98.3 per sqft
net effective and equating to a gross rent of £165,000 p.a.
- Pandora opening a new store over 1,198 sqft on a ten year lease with a break at year five at £50,000 p.a. The store
has experienced exceptionally strong trade since opening.
Weston Favell
Plans to refurbish the recently acquired centre on a phased basis are being put in place. A modest capital investment is
being committed to refresh the centre’s branding and appeal to customers and retailers has commenced and is anticipated
to be completed over the next 12 months.
UK Retail at a glance (£m) 28 February 2014 31 August 2013 28 February 2013
Market value 331.6 232.1 226.3
Occupancy (by lettable area) 95.4% 95.0% 95.9%
Annualised gross rental income 26.5 19.6 20.5
ERV 28.9 21.4 20.9
Footfall %change (yoy) (2.0%) (3.8%) (2.6%)
Net initial yield 6.9% 7.1% 7.5%
2 2 2
Lettable area 175,577 m 147,127 m 148,788 m
Notes:
1. Prior period figures have been re-stated to reflect 100% ownership for comparison on a like-for-like basis
Strategy and outlook
Following the restructuring of the portfolio, the Group now owns 100% of all seven of its UK shopping centres which has
simplified the ownership structure.
Investment remains focused on efficient capital expenditure to support leasing and asset management plans by making
the Group’s centres more attractive to retailers and their customers.
Hotels
Market
The London hotel market has witnessed continued strength following a strong performance in the second half of 2013. An
improvement in economic indicators and sentiment is being reflected in both trading activity and the investment market.
The investment market has been dominated by bank-led sales and liquidity has improved to the highest level since 2007.
An increase in regional investment activity is a further indication of renewed investor confidence with regional transactions
comprising up to 43% of total activity.
Performance
Underlying trading across the Company’s portfolio of London limited service hotels has performed well ahead of operating
budgets. The majority of the hotels continue to achieve relative share growth in their markets with Brentford Lock and
Earls Court leading the way.
Average underlying occupancy across the portfolio was 78.7% for the six month period to 28 February 2014 (28 February
2013: 79.3%) however RevPars grew by 12.1% on average compared to the same six month period last year.
The value of the portfolio increased 3.6% to £155.7 million. Following the anticipated completion of the additional rooms at
Southwark, the portfolio value is expected to increase to approximately £168.0 million.
Investment and asset management
The 48 bedroom extension at the Southwark Holiday Inn Express is due to open in May 2014. Trading at the hotel remains
ahead of expectations and the additional rooms should be easily absorbed by the market, which will support increased
market share in an area of London that is undergoing significant redevelopment.
The remaining 40% of the Holiday Inn Express at Earls Court was acquired post period end for a consideration of £6.3
million reflecting a net initial yield of 7.0%. Earl’s Court has delivered trading figures ahead of expectations and the
proposed large scale redevelopment of the Earls Court and Olympia Exhibition Centre is anticipated to provide continued
strong demand to the hotel during the development phase.
Strategy and outlook
The Company has targeted growth in its portfolio through the development of additional rooms and the acquisition of
minority interests. This is seen as an effective way of increasing exposure to assets that are expected to outperform over
the medium-term.
Despite increases in supply, PWC is forecasting ongoing strong demand in London to drive RevPar growth of 3.8% and
5.2% in 2014 and 2015 respectively. RevPar growth is expected to be supported by growth in average daily room rates as
occupancy is already high with London hotel rooms typically full from mid-week business trade.
Current evidence of strong trading together with expectations of further growth make for encouraging prospects for our
portfolio. Furthermore we believe with London’s consistent ranking, at or near the top of European cities hotel market,
supports the Group’s narrow investment focus on the London limited service hotel sector.
Redefine BDL Hotel Group Limited (“RBDL”)
The Group’s 33% share in RBDL is shown at its initial acquisition cost of £7.26 million and has produced earnings of
£0.18 million. RBDL currently has 56 management contracts making it the largest independent hotel operator in the
UK. RBDL signed a new agreement with Holiday Inn Express Cheltenham in February 2014.
Europe
Market
Risk aversion to the Eurozone appears to be diminishing with improving economic and financial data. It also seems likely
that monetary policy will remain accommodative for the foreseeable future, maintaining low interest rates and attracting
capital to real estate assets.
Investment activity in Germany continued to increase with total investment in 2013 exceeding €30.8 billion, an increase of
over 20% from 2012. A continued strong investment market is expected to see a narrowing in the yields between prime
and secondary assets, as has been experienced in the UK.
Performance
Occupancy remains high at 98.0% (31 August 2013: 98.6%). The small reduction in overall occupancy reflects progress
on asset management initiatives which require obtaining vacant possession by agreeing surrender or termination
agreements with certain tenants. Excluding the impact of units taken back and currently not available to let, occupancy
was 99.2%.
Footfall and turnover figures at the recently acquired Schloss Centre in Berlin and the Bahnhof Altona Centre in Hamburg
are showing stable or increasing trends. Primark continues to deliver exceptional footfall at the Schloss Centre with over
9.7 million visitors annually.
The value of the portfolio increased marginally in local currency terms, however a weaker Euro resulted in a 3.1% decline
in Sterling terms.
Investment and asset management
Solid progress has been made in respect of a number of asset management opportunities including those related to the
recently acquired shopping centres.
Bahnhof Altona, Hamburg
2
Leases in respect of 6,704 m of retail space have been extended for periods of between five and ten years. The lease
extensions provided an uplift in base rents of €0.8 million. In particular, Media Markt exercised their option to extend their
2
lease over 5,273 m on existing terms to 2020.
Schloss Centre, Berlin
The success of Primark at the Schloss Centre continues with strong footfall being reported during the period under review.
four new leases were signed in the period over a total of 206 m². Occupancy has increased marginally from 99.0% on
acquisition to 99.3% at 28 February 2014 following the letting of vacant units.
Current initiatives include improvements to the quality of the kiosks and commercialisation activities to develop longer term
secure income, and introducing retailers that will benefit from the high levels of footfall generated by the centre and its
integrated transport links.
Strategy and outlook
Property values outside of prime institutional assets in major centres such as Frankfurt and Berlin have not seen the rapid
recovery in values experienced in the UK. Although asset selection remains critical and investment demand and
competition have increased, opportunities to acquire good quality assets producing relatively high income yields remain.
Combined with an exceptionally low interest rate environment and a competitive German lending market, current market
conditions provide strong opportunities to acquire earnings accretive investments backed by good quality assets.
Investment will remain opportunistic, but focused on larger assets in established local investment markets. Rationalisation
of the existing portfolio will continue with the sale of smaller and non-core assets.
Cromwell
The Group’s investment in Cromwell remains a significant part of the overall investment portfolio. The Company has
however taken the opportunity to further reduce its shareholding in order to recycle capital into new and higher return
opportunities. As at 28 February 2014, the market value of the Company’s shareholding was £120.0 million and reflected
11.14% of the Group’s combined gross property and investment portfolio.
Shareholding
The Group’s shareholding at 28 February 2014 was 13.17% (31 August 2013: 13.72%) following the sale of 8.46 million
securities in December 2013 for AUD 0.96 per security, at an exchange rate of GBP1.00:AUD1.81, netting proceeds of
£4.5 million.
Valuation
The requirement to report the value of the Group’s shareholding at market value has led to some volatility; both as a result
of security price fluctuations and movements in exchange rates. Cromwell’s share price closed at AUD 0.99 on 28
February 2014 (31 August 2013: AUD 1.025) whilst the AUD: GBP exchange rate declined 7.3% during the period. The
combined impact resulted in a 10% like-for-like market value decline of £14.5 million. However, as at 28 April 2014, the
Australian Dollar had strengthened 3.1% from the period end date.
Operating and financial results
Cromwell produced a strong set of operating and financial results for the first six months of its financial year to 31
December 2013. Highlights included:
- Half-year profit from operations up 59% over the same period in 2013 to AUD 73.2 million
- Sale of six non-core assets for AUD 253 million and the acquisition of Northpoint Tower
- Increase in external assets under management to AUD 1.2 billion with fund management earnings up 285%
- Gearing reduced to 43% with debt refinance well advanced
- Full year guidance of at least 8.4 cps earnings and distribution guidance increased to 7.625 cps.
For further information please visit www.cromwell.com.au
Portfolio Summary
Portfolio overview by business segment
Business segments – market values
Segmental
Lettable Market split by Net initial
Properties area value value yield
2
(No.) (m ) (£’million) (%) (%)
UK Commercial 69 117,614 136.6 14.3% 8.4%
UK Retail 7 175,577 331.6 34.6% 6.9%
Hotels 7 26,744 155.7 16.3% 6.7%
Europe 23 117,320 262.4 27.4% 6.3%
Total (excl. non-core portfolio) 106 437,255 886.2 92.6% 6.9%
Non-core portfolio 25 81,087 70.9 7.4% 13.2%
Total 131 518,342 957.2 100.0% 7.4%
Notes:
1. Figures reflect the Group’s share of joint ventures.
2. The table excludes the Group’s interest in Cromwell which had a market value of £120.0 million at 28 February 2014.
3. The non-core portfolio includes the Delta portfolio, the Justice Centre in the Hague and the Ciref German/Berlin portfolio.
Business segments – gross rental income
Annualised Weighted
gross average Occupancy Indexation
rental Average unexpired by lettable and fixed
income rent per lease term area increases
2
(£’million) (m ) (years) (%) (%)
UK Commercial 12.1 102.8 7.7 98.4% 38.2%
UK Retail 26.5 150.7 10.1 95.4% 19.7%
Hotels 11.1 415.0 11.8 100.0% 0.0%
Europe 17.4 148.4 6.8 98.0% 98.4%
Total (excl. non-core portfolio) 67.1 153.4 9.1 97.2% 45.0%
Non-core portfolio 9.7 119.8 4.1 99.2% 75.6%
Total 76.8 148.1 8.5 97.5% 47.7%
Notes:
1. Figures reflect the Group’s share of joint ventures.
2. The table excludes the Group’s interest in Cromwell which had a market value of £120.0 million at 28 February 2014.
3. The non-core portfolio includes the Delta portfolio, the Justice Centre in the Hague and the Ciref German/Berlin portfolio.
Business segments - valuation movement since 31 August 2013
Valuation movement
Proportion Market value six months ended
of portfolio 28 February 28 February
by value 2014 2014
(%) (£’million) (%)
UK Commercial 14.3% 136.6 3.6%
UK Retail 25.5% 244.5 5.3%
Hotels 16.3% 155.7 3.6%
1
Europe 27.4% 262.4 (3.1%)
Total like-for-like portfolio 83.5% 799.2 1.8%
Acquisitions 9.1% 87.1 3.7%
Total (excl. non-core portfolio) 92.6% 886.3 2.0%
3
Non-core portfolio 7.4% 70.9 (7.6%)
Total (incl. non-core assets) 100.0% 957.2 1.2%
Notes:
1. Includes the effect of foreign exchange movement during the period. The Euro declined 3.3% against Sterling.
2. Figures reflect the Group’s share of joint ventures.
3. The non-core portfolio includes the Delta portfolio, the Justice Centre in the Hague and the Ciref German/Berlin portfolio.
Portfolio overview by sector
Property sectors at 28 February 2014
Occupancy Annualised gross
Market value by lettable area Lettable area rental income
(£’million) (%) (sq ft’000) (£’million)
Retail 568.3 96.0 285,861 41.8
Office 195.0 99.0 143,287 21.3
Industrial 36.2 100.0 61,549 2.5
Hotels 155.7 100.0 26,744 11.1
Other 2.0 100.0 901 0.1
Total 957.2 97.5 518,342 76.8
Notes:
1. Figures reflect the Group’s share of joint ventures.
2. The table excludes the Group’s interest in Cromwell which had a market value of £120.0 million at 28 February 2014.
Financial Review
Overview
Profit after tax, excluding the effect of the management internalisation, increased by £7.1 million against the same six
month period last year. The consideration of £22.8 million related to the cancellation of the investment advisory agreement
as well as the £2.1 million of goodwill on the acquisition of RIFM were fully written off in the period. The property valuation
uplift of £20.1 million was offset by the unrealised Cromwell fair value decline of £14.5 million.
Basic earnings per share, excluding the effect of the management internalisation, were 2.18 pence compared with 1.91
pence for the six months ended 28 February 2013. Earnings available for distribution were £17.9 million, an increase of
£3.5 million from the comparable period.
Adjusted NAV per share was marginally down to 38.14 pence (31 August 2013: 38.66 pence). The cost of the
management internalisation was fully written off in the period which had an impact of 1.96 pence per share. Adjusted NAV
per share, excluding the effect of the management internalisation would have been 40.10 pence.
Earnings available for distribution and dividend
Earnings available for distribution increased 24.3% to £17.9 million, mainly due to higher distributable rental income (as
set out in Note 25 of the Interim Financial Statements). Distributable rental income was up £20.5 million due to the
acquisition of the CMC portfolio, Weston Favell and the restructuring of the Aviva shopping centre portfolio resulting in
Grand Arcade, Wigan and West Orchards, Coventry becoming 100% owned. The higher rental income was partly offset
by higher interest costs.
Distributable earnings per share increased 5.1% to 1.55 pence (28 February 2013: 1.475 pence) despite an additional
302.4 million shares in issue.
The Company’s policy is to distribute the majority of its earnings available for distribution in the form of dividends. The
earnings available for distribution excludes any capital items and is the figure used by the Board as its measure of
underlying performance. The earnings also exclude any earnings from the Gamma portfolio and includes only the Group’s
share of the net income from the Delta portfolio.
The Board declared an interim dividend of 1.50 pence per share on 29 April 2014, for the six month period ended 28
February 2014. The distribution reflects an annualised yield of 7.9% on the Adjusted NAV per share at 28 February 2014.
The Company proposes offering shareholders the option of receiving ordinary shares in lieu of the cash dividend under a
Scrip Dividend Scheme. An announcement containing details of the tax components of the dividend, the timetable and the
Scrip Dividend Scheme will be announced separately today. A reconciliation of profit attributable to equity holders to
headline earnings and earnings available for distribution has been provided in Note 25 to the interim financial statements.
Net assets
EPRA NAV per share has increased by 5.4% to 31.62 pence (31 August 2013: 30.00 pence). EPRA NAV is used as a
reporting measure to better reflect underlying net asset value attributable to shareholders by removing the cumulative fair
value movements of interest rate derivatives and deferred tax.
The property valuation uplift of £20.1 million (1.58 pence per share) was offset by the unrealised Cromwell fair value
decline of £14.5 million (1.14 pence per share) as well as a £1.9 million (0.15 pence per share) foreign exchange
translation movement. Share placements during the period added 2.04 pence per share owing to placements at a
premium to net asset value.
The EPRA NAV as at 28 February 2014 includes items which, in the opinion of the Board, should be adjusted for in order
to better reflect the underlying value of the Group. An Adjusted NAV per share has therefore been calculated as follows:
28 February 28 February 31 August
2014 2013 2013
Note Pence per share Pence per share Pence per share
Fully diluted IFRS NAV per share 31.02 26.69 29.05
Adjusted for derivatives and deferred tax 0.60 1.67 0.95
EPRA NAV per share 1 31.62 28.36 30.00
Gamma residual debt 2 3.49 4.82 4.21
Delta negative equity 3 1.82 2.52 2.36
Other negative equity/provision 4 1.21 - 1.66
Cromwell fair value write-up - 4.59 -
Performance fee - - 0.43
Adjusted NAV per share 38.14 40.29 38.66
The cancellation fee and goodwill amounts of £22.8 million and £2.1 million respectively, for the internalisation of the
investment advisor, were fully written off in the period. This had the effect of reducing EPRA NAV per share and Adjusted
NAV per share by 1.96 pence. There is no adjustment for this as it has a permanent impact despite the expectation that
the management internalisation will have a long-term positive effect on earnings and the performance of the Group.
Without the impact of the management internalisation, Adjusted NAV per share would have been 40.10 pence per share.
Notes:
1. The EPRA publishes best practice recommendations for Europe’s Stock Exchange listed real estate sector. In order to enhance
comparability and transparency the Company has adopted the EPRA net asset value measure within its reporting. The EPRA net
asset value (“NAV”) presented removes the cumulative fair value movements of interest rate derivatives and deferred tax.
2. Notwithstanding the appointment of a receiver to the assets held in the Gamma portfolio, the residual non-recourse debt associated
with the portfolio of £41.9 million and accrued interest of £2.5 million will remain on the Group’s statement of financial position until
such time as it can be legally extinguished or the Company loses control of Wichford Gamma Limited.
3. Following the successful completion of the Delta restructuring announced on 15 October 2012, the negative net asset value position
of 1.82 pence per share is expected to reverse at the end of the loan term.
4. A liability of £5.6 million (0.44 pence per share) is currently held relating to the facility provided to the Grand Arcade, Wigan. As part of
the Aviva restructure completed in December 2013, Aviva retained the right to participate in 50% of the income and capital growth
generated by Grand Arcade. This right has been recognised at fair value on 28 February 2014 although is not deemed to have an
immediate impact on NAV and has therefore been adjusted for. In addition, as a result of the non-recourse nature of the debt relating
to the Justice Centre in the Hague, Netherlands and the Ciref Berlin portfolio, the negative net asset value positions of 0.67 pence per
share and 0.10 pence per share respectively have been written back.
Net debt and capital management
The Company has made substantial progress in improving its capital structure. The Group’s pro-forma LTV ratio reduced
to 53.0% (31 August 2013: 56.8%) as a result of actively managing the balance sheet through the successful issuance of
new equity, the refinancing of existing facilities at lower LTVs and selective sales of, and repayment of debt associated
with, non-core assets. The “pro-forma” ratio shown below excludes the debt against the Delta portfolio, the residual
Gamma debt and other legacy non-recourse loans.
The Company has taken the decision to extend or refinance the majority of its facilities maturing in 2016. Historically low
interest rates combined with a competitive lending market are providing an opportunity to extend the Group’s debt maturity
profile at attractive rates. Of the £194.1 million maturing in 2016, £144.7 million is at advanced stages of negotiation. It is
anticipated that, on average, existing facilities can be extended or refinanced at comparable all-in rates.
The Group’s existing weighted average debt maturity stands at 7.24 years and, subject to the successful extension of
various 2016 maturities, is anticipated to be extended to approximately 8.55 years before the financial year end. £160.4
million of debt was refinanced during the period.
The nominal value of the Group’s total debt facilities at 28 February 2014 was £795.6 million. The Group’s economic share
of debt (including its share of debt in subsidiaries and jointly controlled entities), was £698.4 million.
28 February 28 February 31 August
(1)
pro-forma 2014 2013 2013
Key financing statistics £’000 £’000 £’000 £’000
Total investment portfolio 926,715 1,000,239 744,319 1,111,702
Gross debt 576,467 680,952 438,821 815,932
Cash and short-term deposits (85,217) (85,217) (57,879) (33,657)
Net debt 491,250 595,735 380,942 782,275
Weighted average debt maturity 8.32 years 7.24 years 8.18 years 4.67 years
Weighted average interest rate 4.50% 4.22% 4.25% 3.94%
% of debt at fixed/capped rates 96.8% 97.3% 99.9% 99.9%
Loan-to-value 53.0% 59.8% 51.2% 60.4%
Note:
1. Pro-forma ratios exclude debt against the Delta portfolio, the residual Gamma debt and other smaller legacy non-recourse loans.
£64.8 million of the Mezzanine Capital loans were repaid with effect from 1 December 2013 with the remaining loans to be
repaid before the financial year end.
Equity
The Group’s total equity attributable to equity holders increased by £94.2 million during the six months ended 28 February
2014. The substantial increase in equity was due to the 79.0 million shares issued to fund the acquisition of the investment
advisor, the placement of 155.1 million new ordinary shares, the 36.6 million shares issued to repay the Aviva convertible
loan instrument, as well as the 31.7 million shares issued to the vendors of the Schloss Strassen and Altona Centres in
Germany. Further details of these issues have been disclosed in Notes 18 and 19 to the interim financial statements.
Taxation
The Company converted to a UK-REIT on 4 December 2013. The Group continues to pay tax on non-UK property
earnings as well as overseas investment earnings under the UK-REIT rules. Following the management internalisation,
taxation also includes all employment taxes for the Group.
Independent Auditors’ Review Report to Redefine International P.L.C.
We have been engaged to review the condensed consolidated set of financial statements in the half-yearly financial report
of Redefine International P.L.C. for the six months ended 28 February 2014 which comprise the condensed consolidated
income statement, 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 the related explanatory notes.
We have read the other information contained in the half-yearly 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 our engagement letter to assist the Company in meeting the
requirements of the Disclosure and Transparency Rules (“the DTR”) of the UK’s Financial Conduct Authority (“the FCA”).
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’ Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are
responsible for preparing the half-yearly financial report in accordance with the DTR of the FCA.
As disclosed in Note 2, the annual financial statements of the Group are prepared in accordance with IFRS.
The Directors are responsible for ensuring that the condensed consolidated set of financial statements included in this
half-yearly 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 set of financial statements in
the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with the International Standards 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 set of
financial statements in the half-yearly report for the six months ended 28 February 2014 is not prepared, in all material
respects, in accordance with IAS 34 Interim Financial Reporting and the DTR of the UK FCA.
Niamh Marshall
Senior Statutory Auditor
For and on behalf of KPMG
Chartered Accountants
Dublin, Ireland
29 April 2014
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 28 February 2014
Reviewed Reviewed Audited
6 Months 6 Months Year ended
ended ended 31 August
28 Feb 2014 28 Feb 2013 2013
Notes £'000 £'000 £'000
Revenue
Gross rental income 30,571 29,421 51,407
Investment income 5,085 - 2,511
Other income 214 1,012 2,129
Total revenue 35,870 30,433 56,047
Expenses
Administrative and other operating expenses 4 (2,757) (721) (1,601)
Investment adviser and professional fees (6,001) (3,159) (14,067)
Property operating expenses (1,652) (1,875) (3,445)
Net operating income 25,460 24,678 36,934
Net (losses)/gains from financial assets and liabilities 5 (6,007) 3,081 44,944
Gain on sale of subsidiaries - 16,491 17,285
Equity accounted profit 14,15 1,712 5,082 11,106
Net fair value gains / (losses) on investment property
and assets held for sale 10,13 20,145 (15,680) (20,721)
Impairment of goodwill 6 (2,069) - -
Write down and amortisation of intangible assets 16 (22,847) - -
Profit from operations 16,394 33,652 89,548
Interest income 7 4,911 6,125 12,106
Interest expense 8 (21,666) (20,174) (37,960)
Share based payments – finance cost - (387) (803)
Foreign exchange gain / (loss) 2,396 (1,137) 4,352
Profit before taxation 2,035 18,079 67,243
Taxation 9 (348) (2,535) (6,179)
Profit after taxation 1,687 15,544 61,064
(Loss)/profit attributable to:
Equity holders of the parent (897) 16,918 61,521
Non-controlling interest 2,584 (1,374) (457)
1,687 15,544 61,064
Basic (loss)/earnings per share (pence) 25 (0.08) 1.91 6.66
Diluted (loss)/earnings per share (pence) 25 (0.08) 1.85 6.23
Basic headline (loss)/ earnings per share (pence) 25 (0.22) N/a 2.64
Diluted headline (loss)/ earnings per share (pence) 25 (0.22) N/a 2.44
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 28 February 2014
Reviewed Reviewed Audited
6 Months 6 Months Year ended
ended ended 31 August
28 Feb 2014 28 Feb 2013 2013
Total Total Total
£'000 £'000 £'000
Profit for the period 1,687 15,544 61,064
Other comprehensive income
Items that are or may be reclassified to profit or loss
Transfer of FCTR to income statement on disposal of
foreign operation - 298 (10,334)
Foreign currency translation on foreign operations –
subsidiaries (1,932) (98) (316)
Foreign currency translation on foreign operations -
associates and joint ventures 14,15 - 5,338 6,846
Total comprehensive income for the period (245) 21,082 57,260
Total comprehensive income attributable to:
Equity holders of the parent (2,818) 22,507 57,775
Non-controlling interest 2,573 (1,425) (515)
(245) 21,082 57,260
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 28 February 2014
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
Total Total Total
Notes £'000 £'000 £'000
Assets
Non-current assets
Investment property 10 842,184 487,349 643,892
Long-term receivables 11 38,629 103,559 103,928
Investments at fair value 12 120,057 99 139,092
Investments in joint ventures 14 15,192 14,068 15,150
Investment in associates 15 7,437 158,208 -
Intangible assets 16 1,792 - -
Property, plant and equipment 211 - -
Total non-current assets 1,025,502 763,283 902,062
Current assets
Cash at bank 17 85,217 57,879 33,657
Trade and other receivables 49,342 32,269 69,705
Assets held for sale 13 50,925 60,326 57,250
Total current assets 185,484 150,474 160,612
Total assets 1,210,986 913,757 1,062,674
Equity and liabilities
Capital and reserves
Share capital 18 101,626 77,029 77,437
Share premium 303,263 187,106 188,690
Reverse acquisition reserve 134,295 134,295 134,295
Retained loss (151,390) (164,400) (134,667)
Capital instrument 19 - 14,923 15,339
Foreign currency translation reserve 3,844 15,100 5,765
Other reserves 2,363 903 12,940
Total equity attributable to equity shareholders 394,001 264,956 299,799
Non-controlling interest 13,203 10,150 10,649
Total equity 407,204 275,106 310,448
Non-current liabilities
Borrowings 20 520,737 450,013 504,218
Derivatives 21 252 2,120 776
Deferred tax 9 4,057 3,219 4,924
Total non-current liabilities 525,046 455,352 509,918
Current liabilities
Borrowings 20 245,690 141,938 173,294
Derivatives 21 3,336 4,235 4,038
Provision for liabilities and commitments 22 - 12,079 12,079
Trade and other payables 29,710 25,047 52,897
Total current liabilities 278,736 183,299 242,308
Total liabilities 803,782 638,651 752,226
Total equity and liabilities 1,210,986 913,757 1,062,674
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
The condensed consolidated interim financial statements were approved by the Board of Directors on 29 April 2014.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 28 February 2014
Foreign Total
Reverse currency attributable Non-
Share Share acquisition Retained translation Capital Other to equity controlling Total
Capital Premium reserve loss reserve instrument reserves shareholders interest equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 September 2012 41,721 164,939 134,295 (232,991) 9,511 14,536 903 132,914 5,342 138,256
Total comprehensive income
Total profit for the period - - - 16,918 - - - 16,918 (1,374) 15,544
Foreign currency translation effect - - - - 5,589 - - 5,589 (51) 5,538
Total comprehensive income - - - 16,918 5,589 - - 22,507 (1,425) 21,082
Transactions with owners of the Company –
contributions and distributions
Shares issued 35,308 92,192 - - - - - 127,500 - 127,500
Share issue costs - (5,025) - - - - - (5,025) - (5,025)
Reduction of share premium - (65,000) - 65,000 - - - - - -
Dividend paid to equity stakeholders - - - (13,327) - - - (13,327) - (13,327)
Dividends paid to non-controlling interest - - - - - - - - (96) (96)
Share based payment – Capital instrument - - - - - 387 - 387 - 387
35,308 22,167 - 51,673 - 387 - 109,535 (96) 109,439
Changes in ownership interest in subsidiaries
Increase in non-controlling interest - - - - - - - - 6,547 6,547
Disposal of subsidiaries/non-controlling interests - - - - - - - - (218) (218)
- - - - - - - - 6,329 6,329
Balance at 28 February 2013 77,029 187,106 134,295 (164,400) 15,100 14,923 903 264,956 10,150 275,106
Total comprehensive income
Total loss for the period - - - 44,603 - - - 44,603 917 45,520
Foreign currency translation effect - - - - (9,335) - - (9,335) (7) (9,342)
Total comprehensive income - - - 44,603 (9,335) - - 35,268 910 36,178
Transactions with owners of the Company –
contributions and distributions
Dividend paid to equity stakeholders - - - (14,203) - - - (14,203) - (14,203)
Shares issued to acquire NCI shares 408 1,584 - - - - - 1,992 - 1,992
Share based payment – Capital instrument - - - - - 416 - 416 - 416
Share based payment – incentive fee - - - - - - 6,430 6,430 - 6,430
Share based payment – share consideration - - - - - - 5,515 5,515 - 5,515
408 1,584 - (14,203) - 416 11,945 150 - 150
Changes in ownership interest in subsidiaries
Acquisition of non-controlling interests - - - (667) - - 92 (575) (873) (1,448)
Acquisition of subsidiaries/non-controlling interests - - - - - - - - 462 462
Foreign Total
Reverse currency attributable Non-
Share Share acquisition Retained translation Capital Other to equity controlling Total
Capital Premium reserve loss reserve instrument reserves shareholders interest equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
- - - (667) - - 92 (575) (411) (986)
Balance at 31 August 2013 77,437 188,690 134,295 (134,667) 5,765 15,339 12,940 299,799 10,649 310,448
Balance at 1 September 2013 77,437 188,690 134,295 (134,667) 5,765 15,339 12,940 299,799 10,649 310,448
Total comprehensive income
Total profit for the period - - - (897) - - - (897) 2,584 1,687
Foreign currency translation effect - - - - (1,921) - - (1,921) (11) (1,932)
Total comprehensive income - - - (897) (1,921) - - (2,818) 2,573 (245)
Transactions with owners of the Company –
contributions and distributions
Shares issued for cash 15,334 71,082 - - - - - 86,416 - 86,416
Shares issued as consideration for acquisitions 6,808 35,317 - - - - - 42,125 - 42,125
Settlement of incentive fee on acquisition of RIFM 1,039 5,391 - - - - (6,430) - - -
Share based payment – issuance of deferred
consideration shares 1,008 4,507 - - - - (5,515) - - -
Share issue costs - (314) - - - - - (314) - (314)
Capital instrument repaid - - - - - (15,339) - (15,339) - (15,339)
Dividend paid to equity stakeholders - (1,410) - (15,826) - - - (17,236) - (17,236)
Share based payment (Note 23) - - - - - - 1,368 1,368 - 1,368
24,189 114,573 - (15,826) - (15,339) (10,577) 97,020 - 97,020
Changes in ownership interest in subsidiaries
Decrease in non-controlling interest - - - - - - - - (106) (106)
Acquisition of subsidiaries/non-controlling interests - - - - - - - - 87 87
- - - - - - - - (19) (19)
Balance at 28 February 2014 101,626 303,263 134,295 (151,390) 3,844 - 2,363 394,001 13,203 407,204
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 28 February 2014
Reviewed Reviewed
6 Months 6 Months Audited
ended ended Year ended
28 February 28 February 31 August
2014 2013 2013
Notes £'000 £'000 £'000
Cash flows from operating activities
Profit before taxation 2,035 18,079 67,243
Adjustments for:
Straight lining of rental income 461 99 620
Share based payment – incentive fee - - 6,430
Share based payments – capital instrument - 387 803
Share based payments - PSP 23 1,368 - -
Net fair value (profit) / losses on investment property
and assets held for sale 10,13 (20,145) 15,680 20,721
Foreign exchange (gain) / loss (2,396) 1,137 (4,352)
Net losses / (gains) from financial assets and liabilities 5 6,007 (3,081) (44,944)
Equity accounted profit 14,15 (1,712) (5,082) (11,106)
Gain on sale of subsidiaries - (16,491) (17,285)
Write down and amortisation of intangible asset 16 22,847 - -
Depreciation 17 - -
Investment income (5,085) - (2,511)
Interest income 7 (4,911) (6,125) (12,106)
Interest expense 8 21,666 20,174 37,960
Impairment of goodwill 6 2,069 - -
Cash generated by operations 22,221 24,777 41,473
Changes in working capital (2,230) 3,655 6,381
Cash flow from operations 19,991 28,432 47,854
Interest income 13,833 3,221 5,953
Interest paid (29,276) (18,321) (30,080)
Taxation paid (2,734) (2,088) (1,923)
Investment income 5,085 - 2,511
Distributions from associates and joint ventures 14 1,494 7,591 12,554
Net cash generated from operating activities 8,393 18,835 36,869
Cash flows from investing activities
Purchase of investment properties 10,13 (90,073) (29,798) (34,187)
Disposal of investment properties 22,694 6,937 10,383
Purchase of property, plant and equipment (67) - -
Investments in associates and joint ventures 14,15 - (42,781) (43,709)
Disposal of shares in associate (net of costs) - - 52,270
Net cash outflow on acquisition of subsidiaries 27, 28 (5,745) - (16,792)
Net cash outflow on settlement of CMC deferred
consideration (11,512) - -
Disposal of subsidiaries – net cash disposed - (1,693) (1,337)
Loss of control of Gamma - - (6,042)
Net decrease / (increase) in loans to joint ventures 45 - (38,728)
Net increase in loans to related parties (587) (6,066) (1,465)
Net increase in loans to other parties (13,032) - (5,147)
Decrease / (increase) in long term receivables 65,701 (5,089) (5,458)
Disposal of investments at fair value 12 4,498 - -
(Increase) / decrease in restricted cash balances 17 (12,293) (3,867) 8,063
Net cash utilised in investing activities (40,371) (82,357) (82,149)
Cash flows from financing activities
Proceeds from loans and borrowings 90,297 33,385 95,820
Repayment of loans and borrowings (75,564) (48,957) (127,480)
Dividends paid to equity shareholders (17,236) (13,327) (27,530)
Reviewed Reviewed
6 Months 6 Months Audited
ended ended Year ended
28 February 28 February 31 August
2014 2013 2013
Notes £'000 £'000 £'000
Dividends paid to non-controlling interests - (96) (96)
Repayment of capital instrument (15,339) - -
Proceeds from issue of share capital 86,416 127,500 127,500
Share issue costs (314) (5,025) (5,025)
(Decrease) / increase in contribution from non-controlling
shareholders (106) 6,547 6,547
Net cash generated from financing activities 68,154 100,027 69,736
Net increase in cash 36,176 36,505 24,456
Effect of exchange rate fluctuations on cash held 3,091 (219) (561)
Opening cash 29,598 5,703 5,703
Net cash at end of period 17 68,865 41,989 29,598
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 28 February 2014
1. GENERAL INFORMATION
Redefine International P.L.C was incorporated on 28 June 2004 under the laws of the Isle of Man.
Following approval from the South African Reserve Bank in July 2013, the Company concluded an inward listing
on the JSE. The Company now holds a primary listing on the Main Market of the LSE and a secondary listing on
the Main Board of the JSE.
On 4 December 2013 the Company converted to a UK Real Estate Investment Trust and moved its tax residence
from the Isle of Man to the UK.
New articles of association were adopted by the Company in the period and it converted to an Isle of Man
Companies Act 2006 company with effect from 3 December 2013.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 BASIS OF PREPARATION
Statement of compliance
The condensed consolidated interim financial statements (hereafter ‘interim financial statements’) for the half-year
ended 28 February 2014, were prepared in accordance with IAS 34 “Interim Financial Reporting” as issued by the
International Accounting Standards Board (“IASB”).
Selected explanatory notes are included to explain events and transactions that are significant to an
understanding of the changes in financial position and performance of the Group since the last annual
consolidated financial statements as at and for the year ended 31 August 2013.
The financial information contained in these Interim financial statements does not constitute a complete set of
financial statements (including all comparative figures and all required notes) and does not include all of the
information required for full annual financial statements prepared in accordance with International Financial
Reporting Standards. The Interim financial statements should therefore be read in conjunction with the
consolidated financial statements as at and for the year ended 31 August 2013 which are available at the Group’s
website www.redefineinternational.com .
The preparation of the condensed consolidated 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. The significant
judgements made by management in applying the Group’s accounting policies and the key sources of estimation
uncertainty are discussed further in Note 2.2.
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 consolidated financial statements as at and for the year
ended 31 August 2013, except for the new standards adopted during the period and the additional policies
adopted due to changes in the business during the period.
New standards adopted during the period
The following standards, amendments and interpretations have been adopted during the half year to 28 February
2014:
- IAS 1 (amended) – Presentation of Items of Other Comprehensive Income;
- IFRS 10 Consolidated Financial Statements;
- IFRS 11 Joint Arrangements;
- IFRS 12 Disclosure of Interests in Other Entities;
- IAS 28 Investments in Associates
- IAS 19 (revised) Employee Benefits
- IFRS 7 (amended) – Offsetting Financial Assets and Financial Liabilities; and
- IFRS 13 Fair Value Measurement.
These had no material impact on the financial statements, but the adoption of IFRS 13 Fair Value Measurement
has resulted in additional disclosure.
RIFM was acquired on 2 December 2013 thereby internalising the management function of the Company. This
resulted in the implementation of new service contracts with employees.
Arising from the adoption of the IFRSs set out above and the changes in the business in the period, the following
are the revised accounting policies applicable in the period:
Investments in subsidiaries
A subsidiary undertaking is an investee controlled by the Group. The Group controls an investee when it has
power over the investee, is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee. Subsidiaries are consolidated in the
Group’s financial statements from the date on which control commences until the date that control ceases.
The Group reassesses whether it controls a subsidiary when facts and circumstances indicate that there are
changes to one or more elements of control.
Loss of control
If the Group loses control of a subsidiary, the Group:
a) derecognises the assets (including any goodwill) and liabilities of the former subsidiary at their carrying
amounts at the date control is lost;
b) derecognises the carrying amount of any non-controlling interests in the former subsidiary at the date control
is lost (including any attributable amounts in other comprehensive income);
c) recognises the fair value of any consideration received and any distribution of shares of the subsidiary;
d) reclassifies to profit or loss, or transfers directly to retained earnings, amounts recognised in OCI in relation to
the subsidiary on the same basis as would be required if the parent had directly disposed of the related
assets or liabilities;
e) recognises any investment retained in the former subsidiary at its fair value at the date when control is lost;
f) recognises any resulting difference of the above items as a gain or loss in the income statement.
The Group subsequently accounts for any investment retained in the former subsidiary in accordance with IAS 39
Financial Instruments, or when appropriate, IAS 28 Investments in Associates and Joint Ventures.
Business combinations
The Group accounts for the acquisition of businesses using the acquisition method. Under the acquisition method,
the consideration transferred in a business combination is measured at fair value, which is calculated as the sum
of:
- the acquisition date fair value of assets transferred by the Group;
- liabilities incurred by the Group to the former owners of the acquiree; and
- the equity interests issued by the Group in exchange for control of the acquiree.
Acquisition related costs are recognised in the income statement as incurred.
Goodwill is measured as the excess of the sum of:
- the fair value of the consideration transferred;
- the amount of any non-controlling interests in the acquiree; and
- the fair value of the acquirer’s previously held equity interest in the acquiree, if any; less
- the net of the acquisition date fair value of the identifiable assets acquired and liabilities assumed.
For each business combination, the Group recognises any non-controlling interest in the acquiree either at fair
value; or at their proportionate share of the acquiree’s identifiable net assets.
For changes in the Group’s interest in a subsidiary that do not result in a loss of control, the Group adjusts the
carrying amounts of the controlling and non-controlling interests to reflect the changes in their relative interests in
the subsidiary. The difference between the change in value of the non-controlling interest and the fair value of the
consideration paid or received is recognised directly in equity and attributed to the equity holders of the parent.
Consistent accounting policies are applied throughout the Group for the purposes of consolidation.
Joint arrangements
Under IFRS 11, the Group classifies its interests in joint arrangements as either joint operations or joint ventures
depending on the Group’s rights to the assets and obligations for the liabilities of the arrangements. When making
this assessment, the Group considers the structure of the arrangements, the legal form of any separate vehicles,
the contractual terms of the arrangements and other facts and circumstances. Previously, the structure of the
arrangement was the sole focus of classification.
The Group’s current joint arrangements continue to be classified as joint ventures and continue to be
accounted for using the equity method.
Fair Value measurement
IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value
measurements, when such measurements are required or permitted by other IFRSs. In particular, it unifies the
definition of fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would
take place between market participants at the measurement date. It also replaces and expands the disclosure
requirements about fair value measurements in other IFRSs, including IFRS 7 Financial Instruments: Disclosures.
In accordance with the transitional provisions of IFRS 13, the Group has applied the new fair value measurement
guidance prospectively, and has not provided any comparative information for new disclosures. Notwithstanding
the above, the change had no significant impact on the measurements of the Group’s assets and liabilities.
Presentation of items of other comprehensive income
As a result of the amendments to IAS 1, the Group has modified the presentation of items of other
comprehensive income in its condensed consolidated statement of comprehensive income, to present
separately items that would be reclassified to profit or loss in the future from those that would never be.
Comparative information has also been re-presented accordingly.
Employee benefits
Employee benefits, such as salaries and other benefits, are accounted for on an accruals basis over the period
during which employees have provided services. Bonuses are recognised to the extent that the Group has a legal
or constructive obligation to its employees that can be measured reliably.
Share based payment arrangements with employees
Share based incentives are provided to all employees under the Group’s Long-Term Performance Share Plan
(“PSP”) for Executive Directors and the Restricted Stock Plan for employees. The Group recognises a
compensation cost in respect of these schemes that is based on the fair value of the awards, measured using the
Monte Carlo valuation methodology. For equity-settled schemes, the fair value is determined at the date of grant
and is not subsequently re-measured unless the conditions on which the award was granted are modified. For
cash-settled schemes, the fair value is determined at the date of grant and is re-measured at each reporting date
until the liability is settled. Generally, the compensation cost is recognised on a straight line basis over the vesting
period. Adjustments are made to reflect expected and actual forfeitures during the vesting period due to the failure
to satisfy service conditions or non-market performance conditions.
Property plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated
impairment losses. Subsequent expenditure is capitalised only if it is probable that the future economic benefits
associated with the expenditure will flow to the Group. Depreciation is calculated to write off the cost of items less
their estimated residual values using the straight line method over their estimated useful lives and is generally
recognised in profit or loss. Leased assets are depreciated over the shorter of the lease term and their useful lives
unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Property plant
and equipment is depreciated over a period of between 2 to 5 years.
2.2 JUDGEMENTS AND ESTIMATES
The preparation of the condensed consolidated interim financial statements requires the use of judgements and
estimates that affect the reported amounts of assets and liabilities at the reporting date and the reported amounts
of revenues and expenses reported during the period. Although these estimates are based on the Directors’ best
knowledge of the amount, event or actions, actual results may differ from those estimates.
The principal areas where such judgements and estimates have been made are discussed in more detail below.
2.2.1 FINANCING AND THE GOING CONCERN BASIS OF ACCOUNTING
Application of the Going Concern Basis of Accounting
These condensed consolidated interim financial statements have been prepared on a going concern basis as
after considering the relevant factors, the Directors have a reasonable expectation that the Group has adequate
resources to continue in operation for the foreseeable future. Completion of the restructuring of the Aviva Facility
in the period has improved the going concern expectation of the Group.
The Board has also had regard to the funds raised as part of the share placements which completed in
September 2013 and February 2014 and saw the Company raise gross proceeds of £16.8 million and £54.7
million respectively. This additional capital has allowed the Group to further reduce its leverage.
The Board has also considered the working capital forecast for the Group and believes that based on a detailed
analysis of, cashflow projections, the level of capital raised in the period and the completion of loan refinancing,
that the Group has adequate resources to continue in operation for the foreseeable future.
2.2.2 ACCOUNTING FOR GAMMA
Following the appointment of a Fixed Charge Receiver (the “Receiver”) to the property subsidiaries which secure
the Gamma facility in January 2013, the Board considered whether the Group should continue to consolidate the
underlying property companies.
Under IFRS 10 the requirement for consolidation is based on control, which is power over the investee, exposure,
or rights, to variable returns from involvement with the investee and the ability to affect those returns through
power over the investee.
As a result of the powers and the responsibilities of the Receiver as set out under UK law, the Directors believe
that the Group has lost control of the underlying property companies. It no longer has the power to govern their
operating activities or dispose of any of the underlying assets. It is also not in a position to exercise any power to
generate variability of returns from the underlying subsidiaries’ activities. Redefine International has therefore
ceased to consolidate the underlying property companies from the date control was lost i.e the date the Receiver
was appointed.
Wichford Gamma Limited is the primary obligor for the debt although it is recourse only to the subsidiary
companies on which it is secured. The Group is deemed to continue to control this company as a receiver has
not been appointed to it and at 28 February 2014 Redefine International continues to have the ability to govern
the activities of Wichford Gamma Limited.
The Directors have considered the impact of the appointment of the Receiver to the underlying property
subsidiaries on the carrying value of the loan facility in the books of Wichford Gamma Limited.
IAS 39 does not provide specific guidance on whether or not the appointment by the lender of a receiver over the
secured assets constitutes partial settlement of the debt. In the opinion of the Directors, the receiver is acting on
behalf of the lender and consequently they consider that the transfer of the secured assets to the Receiver is in
substance the transfer of those assets to the lender.
As a result the loan facility recorded in the books of Wichford Gamma Limited, and hence consolidated by
Redefine International, has been reduced by the fair value of the net assets of the property subsidiaries at the
date the Receiver was appointed to those companies. This is a key judgement.
The Group will continue to recognise the residual debt until such time as that element of the debt is legally
extinguished or legally released by the Security Trustee or it can be evidenced that Redefine International no
longer has the power to control Wichford Gamma Limited.
The Company is currently seeking a legal extinguishment of the debt from the Security Trustee following the sale
by the Receiver of all of the properties securing the Gamma facility.
2.2.3 INVESTMENT PROPERTY VALUATION
The Group uses the valuations performed by its independent valuers in accordance with IFRS 13 as the fair
value of its investment properties. The valuations are based upon assumptions including estimated rental values,
future rental income, anticipated maintenance costs, future development costs and appropriate discount rates.
The valuers also make reference to market evidence of transaction prices for similar properties.
2.2.4 CLASSIFICATION OF INVESTMENT PROPERTY FOR HOTELS
The hotel properties are held for capital appreciation and to earn rental income. The properties have been let to
Redefine Hotel Management Limited (“RHML”) and Redefine Earls Court Management Limited (“RECML”) for a
fixed rent which is subject to annual review. The annual review takes into account the forecast EBITDA for the
hotel portfolio when setting the revised rental level. RHML and RECML operate the hotel business and are
exposed to the fluctuations in the underlying trading performance of the hotels. They are responsible for the day
to day upkeep of the properties and retain the key decision making responsibility for the business.
As part of the acquisition of RIFM in December 2013, Redefine International acquired a 33% shareholding in
Redefine BDL Hotel Group Ltd which in turn owns RHML and RECML. Having considered the guidance in IFRS
10, the respective rights of each of the shareholders in Redefine BDL Hotel Group Ltd and the size of the
Company’s shareholding compared with other shareholders management have determined that Redefine
International does not control Redefine BDL Hotel Group Ltd and hence does not control RHML or RECML.
Aside from the payment of rental income to Redefine International which resets annually and the Group’s
shareholding in Redefine BDL Hotel Group Ltd, Redefine International is not involved with the hotel management
business and there are limited transactions between it and RHML and RECML. As a result, Redefine
International classifies the hotel properties as investment properties in line with IAS 40.
2.2.5 FAIR VALUE OF RESTRUCTURED OR ACQUIRED LIABILITIES
New borrowings or borrowings which have been substantially modified leading to the recognition of a new liability
at fair value. The determination of fair value involves the application of judgement and estimation.
The Group determines fair value by discounting cashflows associated with the liability at a market discount rate.
The key judgement surrounds the determination of an appropriate market discount rate. Management determine
the discount rate on a loan by loan basis having regard to the term, duration and security arrangements of the
new liability and an estimation of the current rates charged in the market for similar instruments.
This judgment is made more difficult given the bespoke nature of certain loans obtained by the Group. Any
difference between the nominal value of the loan and the deemed fair value will be accreted through profit or loss
over the term of the loan through the effective interest rate.
2.2.6 CLASSIFICATION OF THE GROUP’S INVESTMENT IN CROMWELL AT FAIR VALUE THROUGH PROFIT OR LOSS
The Group ceased to account for Cromwell as an associate in April 2013 from the date its shareholding fell below
20% as it was no longer deemed to have significant influence over the operations of Cromwell. The investment
was designated at Fair Value through Profit or Loss on that date as it is managed on a fair value basis.
While there is a presumption that significant influence does not exist if the holding is less than 20% this may be
refuted if an ability, or lack of ability, to exercise significant influence is clearly demonstrated.
While the Company does not have a right to appoint a director it does currently have board representation. As
such this increases the judgement involved in determining whether significant influence over the operations of
Cromwell exists.
The Board has considered whether significant influence continues to exist notwithstanding the fact that the
shareholding is below 20%. Having considered all of the facts and circumstances the Directors do not believe that
the Company has significant influence over the operations of Cromwell.
In making this determination the Board have considered the size of the Company’s shareholding, the size of the
Cromwell board, the nature of the directorship currently held on the Cromwell Board (independent Non-executive
Director), the fact that the Company does not have a right to appoint a director and the fact that in practice the
Company is unable to significantly influence the decisions and business focus of the Cromwell group. The
Directors believe that significant influence over Cromwell does not exist and that the designation of the
Company’s residual investment at Fair Value through Profit or Loss is appropriate.
2.2.7 PROPERTY ACQUISITIONS
Where properties are acquired through the acquisition of corporate interests, the Directors have regard to the
substance of the assets and activities of the acquired entity in determining whether the acquisition represents the
acquisition of a business.
Where such acquisitions are not judged to be an acquisition of a business the transactions are accounted for as if
the Group had acquired the underlying property directly. Accordingly, no goodwill arises, rather the cost of the
corporate entity is allocated between the identifiable assets and liabilities of the entity based on their relative fair
values at the acquisition date.
Otherwise corporate acquisitions are accounted for as business combinations.
3. SEGMENTAL REPORTING
The Group's identified reportable segments are set out below. These segments are generally managed by
separate management teams. As required by IFRS 8 Operating Segments, the information provided to the Board
of directors, who are the Chief Operating Decision Makers, can be classified in the following segments:
UK Commercial (formerly UK Consists predominantly of UK offices, but includes petrol filling stations,
Stable Income): Kwik-Fit centres, retail and residential units.
UK Retail: Consists of the Group’s major UK shopping centres and retail parks.
Europe: Consists of the Group’s properties in Continental Europe, located in
Germany, Switzerland and the Netherlands.
Hotels: Consists of the Group’s hotel properties. The hotels are let to RHML and
RECML on a fixed rental basis with annual reviews.
Cromwell: Relates to the Group’s investment in the Cromwell Property Group, Australia.
RBDL: The Group’s 33% shareholding in Redefine BDL Hotel Group Limited
(“RBDL”), the UK’s largest independent hotel management company.
Relevant revenue, assets and capital expenditure information is set out below:
i) Information about reportable segments
UK
Commer UK
cial Retail Europe Hotels Cromwell RBDL Total
£'000 £'000 £'000 £'000 £'000 £’000 £'000
For the six months ended
28 February 2014
Rental income 8,702 8,517 7,952 5,400 - - 30,571
Investment Income - - - - 5,085 - 5,085
Net fair value gains/( losses) on
investment property and assets held
for sale 8,879 10,266 (4,400) 5,400 - - 20,145
Net gain/(loss) from financial assets
and liabilities 99 7,700 112 533 (14,451) - (6,007)
Equity accounted profit - - 1,536 - - 176 1,712
Interest income 852 1,935 (66) 50 10 - 2,781
Interest expense - senior debt (4,108) (3,796) (3,193) (1,917) (1,179) - (14,193)
Property operating expenses 121 (1,121) (637) (15) - - (1,652)
Total per reportable segments 14,545 23,501 1,304 9,451 (10,535) 176 38,442
Investment property (including
finance leases) 124,650 335,035 226,374 156,125 - - 842,184
Assets held for sale 50,925 - - - - - 50,925
Investments designated at fair value - 88 9 - 119,960 - 120,057
Investment in joint ventures - - 15,192 - - - 15,192
Investment in associates - - - - - 7,437 7,437
Loans and receivables 2,068 - - 36,561 - - 38,629
Borrowings – senior debt (177,646) (204,247) (177,780) (84,975) (32,017) - (676,665)
For the six months ended
28 February 2013 -
Rental income 15,681 4,519 4,149 5,072 - - 29,421
Net fair value (losses)/gains on
investment property and assets held
for sale (13,658) 844 (2,144) (722) - - (15,680)
Net gain/(loss) from financial assets
and liabilities 1,798 (48) 700 387 244 - 3,081
Gain on sale of subsidiaries 71 - 16,420 - - - 16,491
Equity accounted profit/(loss) 439 (1,003) (3,133) - 8,779 - 5,082
Interest income 1,157 2,976 2 1,687 10 - 5,832
Interest expense - senior debt (5,837) (2,199) (2,230) (1,906) (1,043) - (13,215)
Property operating expenses (734) (850) (291) - - - (1,875)
Total per reportable segments (1,083) 4,239 13,473 4,518 7,990 - 29,137
Investment property (including
finance leases) 137,161 112,929 86,634 150,625 - - 487,349
Assets held for sale 56,630 - 3,696 - - - 60,326
Investments designated at fair value - 79 20 - - - 99
Investment in joint ventures 276 - 13,792 - - - 14,068
Investment in associates - - - - 158,208 - 158,208
Long term receivables 17,208 49,790 - 36,561 - - 103,559
Borrowings – senior debt (321,639) (73,072) (69,950) (86,831) (40,459) - (591,951)
For the year ended 31 August
2013 -
Rental income 24,748 8,540 7,497 10,622 - - 51,407
Investment income - - - - 2,511 - 2,511
Net fair value (losses)/gains on
investment property and assets held
for sale (15,217) 2,715 (7,597) (622) - - (20,721)
Gains/(losses) from financial assets
and liabilities 2,141 (279) 514 1,416 41,152 - 44,944
UK
Commer UK
cial Retail Europe Hotels Cromwell RBDL Total
£'000 £'000 £'000 £'000 £'000 £’000 £'000
Gain on sale of subsidiaries 82 - 17,203 - - - 17,285
Equity accounted profit / (loss) 313 (1,930) (615) - 13,338 - 11,106
Interest income 1,448 5,979 2 3,505 25 - 10,959
Interest expense – senior debt (8,557) (4,104) (3,251) (3,938) (2,370) - (22,220)
Property operating expenses (1,024) (1,850) (562) (9) - - (3,445)
Total per reportable segments 3,934 9,071 13,191 10,974 54,656 - 91,826
Investment property 137,327 117,010 238,830 150,725 - - 643,892
Assets held for sale 57,250 - - - - - 57,250
Investments designated at fair value 72 66 45 - 138,909 - 139,092
Investment in joint ventures - - 15,150 - - - 15,150
Long term receivables 17,577 49,790 - 36,561 - - 103,928
Borrowings – senior debt (184,568) (72,792) (176,772) (85,903) (34,522) - (554,557)
ii) Reconciliation of reportable segment profit or loss
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Rental income
Total rental income for reported segments 30,571 29,421 51,407
Profit or loss
Net fair value gains/(losses) on investment property and
assets held for sale 20,145 (15,680) (20,721)
Investment income 5,085 - 2,511
Net (loss)/gain from financial assets and liabilities (6,007) 3,081 44,944
Gain on sale of subsidiaries - 16,491 17,285
Equity accounted profit 1,712 5,082 11,106
Interest income 2,781 5,832 10,959
Interest expense – senior debt (14,193) (13,215) (22,220)
Property operating expenses (1,652) (1,875) (3,445)
Total profit per reportable segments 38,442 29,137 91,826
Other profit or loss - unallocated amounts
Other income 214 1,012 2,129
Administrative expenses (2,757) (721) (1,601)
Investment adviser and professional fees (6,001) (3,159) (7,637)
Share based payment – incentive fee - - (6,430)
Write down and amortisation of intangible assets (22,847) - -
Impairment of goodwill (2,069)
Interest income 2,130 293 1,147
Interest expense (7,473) (6,959) (15,740)
Share based payment – finance cost - (387) (803)
Foreign exchange gain / (loss) 2,396 (1,137) 4,352
Consolidated profit before taxation 2,035 18,079 67,243
4. ADMINISTRATIVE AND OTHER OPERATING EXPENSES
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Administration and other operating expenditure (671) (721) (1,601)
Staff costs (701) - -
Depreciation (17) - -
Share-based payments (Note 23) (1,368) - -
Total administrative and other operating expenses (2,757) (721) (1,601)
5. NET (LOSSES)/GAINS FROM FINANCIAL ASSETS AND LIABILITIES
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Fair value through profit or loss
Equity investments – gain on loss of significant influence - - 46,690
Equity investments - unrealised (14,568) (149) (5,657)
Equity investments – realised 117 - -
Derivative financial instruments 1,084 3,248 5,449
Loss on remeasurement of deferred consideration related
to the CMC acquisition (613) - -
Financial assets carried at amortised cost
Gain on debt restructure (Note 29) 6,182 - -
Reversal of impairments 1,791
Impairment of loans and receivables - (18) (1,538)
Net (losses)/gains from financial assets and liabilities (6,007) 3,081 44,944
In the prior year the Group recognised a gain on loss of significant influence in Cromwell of £46.69 million which
was comprised of a £9.97 million (net of fees paid of £0.53 million) gain on the sale of 86 million of the securities
it held in Cromwell, a £26.09 million gain being the difference between the carrying value and fair value of the
remaining Cromwell securities held on the date significant influence was lost and £10.63 million related to the
recycle to the income statement of the foreign currency translation reserve.
During the period the Group disposed of 8,460,067 securities in Cromwell realising a gain of £0.12 million (refer
Note 12).
The unrealised loss on equity investments reflects the fair value movement in the Group’s investment in
Cromwell. The Cromwell security price decreased from 102.5 Australian cents per security at 31 August 2013 to
99.0 Australian cents per security at 28 February 2014. The AUD: GBP rate also declined from AUD1.738:1GBP
at 31 August 2013 to AUD1.874:1GBP at 28 February 2014.
A loss of £0.61 million was incurred on the remeasurement of the deferred consideration arising on the purchase
of the CMC Berlin asset which was acquired in August 2013. The £0.61 million represents the difference between
the fair value of the consideration liability at 31 August 2013 and the fair value at the date of issuing the
consideration shares.
6. IMPAIRMENT OF GOODWILL
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Opening balance - - -
Goodwill generated from business acquisitions (Note 27) 2,069
Write off of goodwill (2,069) - -
Closing balance - - -
Goodwill arose as a result of the acquisition of RIFM (refer Note 27). Subsequent to its recognition, an impairment
assessment was carried out at which point a decision was taken, given an assessment as to its recoverable
amount, to impair the goodwill to zero.
7. INTEREST INCOME
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Interest receivable from mezzanine financing 3,970 5,358 10,895
Interest income on bank deposits 25 767 267
Interest income on loans advanced to other parties 916 - 567
Interest income on loans to joint ventures - - 377
Total interest income 4,911 6,125 12,106
8. INTEREST EXPENSE
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Interest expense on secured bank loans (16,198) (13,773) (25,176)
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Finance lease interest (350) (244) (426)
Interest expense on amounts due to related parties (Note 24) (314) - (70)
Interest expense on other financial liabilities (435) (300) (18)
Interest expense on mezzanine financing (4,369) (5,857) (12,270)
Total interest expense (21,666) (20,174) (37,960)
Interest expense on secured bank loans for the period ended 28 February 2014 includes £1.3 million (28
February 2013: £14.82 million, 31 August 2013: £22.2 million) in finance costs due to the amortisation of the fair
value adjustments on liabilities acquired or substantially modified leading to the recognition of the deemed new
liability at fair value. The charge for the six month period to 28 February 2013 and year to 31 August 2013 related
primarily to the amortisation of the fair value adjustment on the Gamma, Hague and Delta loan facilities which
arose on the reverse acquisition of Wichford in August 2011.
Swap interest expense is included in interest expense.
Interest expense on other financial liabilities includes a charge of £0.3m (28 February 2013 and 31 August 2013:
Nil) related to the profit share granted to Aviva within the Grand Arcade Wigan loan agreement.
9. TAXATION
a) Tax recognised in profit or loss:
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Current income tax
Income tax in respect of current year (727) (1,460) (3,228)
Withholding tax (488) (226) (397)
Deferred tax
Origination and reversal of temporary differences 867 (849) (2,554)
Total income tax expense (348) (2,535) (6,179)
No tax was recognised on equity or other comprehensive income during the period (2013: nil).
b) Recognised deferred tax liability and movement during the period:
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Opening balance 4,924 2,489 2,489
Deferred tax liability recognised on investment properties 10 253 115
Deferred tax liability recognised on associates - 477 2,320
Deferred tax asset recognised on investments at fair value (877) - -
Closing balance 4,057 3,219 4,924
c) Reconciliation
The tax for the period is lower than the standard rate of corporation tax in the UK of 23% (28 February 2013:
24%). The differences are explained below:
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Profit before tax 2,035 18,079 67,243
Profit before tax multiplied by rate of corporation tax in the
UK of 23% (Prior periods: NRL rate of UK income tax of
20%) 468 3,616 13,449
Effect of:
- exempt property valuations (4,633) 3,136 4,144
- income not subject to UK income tax (3,293) (9,474) (5,531)
- gain from financial assets and liabilities 1,382 (616) (8,989)
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
- losses carried forward 1,375 4,216 1,193
- expenses not deductible for tax 4,561 1,431 609
- share-based payment – incentive fee - - 1,447
- withholding tax 488 226 397
Total tax charge for the year 348 2,535 6,179
Net deferred tax assets not recognised amounted to £13.8 million (28 February 2013: £46.03 million; 31 August
2013: £45.06 million).
From the reconciliation above, the effective tax rate of the Group was 17.1% (28 February 2013: 14.0%, 31
August 2013: 9.2%).
10. INVESTMENT PROPERTY
The cost of the consolidated investment properties at 28 February 2014 was £0.99 billion (28 February 2013:
£0.90 billion, 31 August 2013: £1.02 billion). The carrying amount of investment property is the fair value of the
property as determined by a registered independent appraiser having an appropriate recognised professional
qualification and recent experience in the location and category of the property being valued (together referred to
as “valuers”).
The fair value of each of the properties for the year ended 31 August 2013 was assessed by the valuers in
accordance with the Appraisal and Valuation Standards of the Royal Institution of Chartered Surveyors (“Red
Book”). For the six months ended 28 February 2014, the independent valuers performed a desktop review to
update the 31 August 2013 valuations to reflect movements in the market and guidance in IFRS 13.
The valuers have used the following key assumptions:
The market value of investment properties has been primarily derived using comparable market transactions on
arm’s-length terms and an assessment of market sentiment. The aggregate of the net annual rents receivable
from the properties and, where relevant, associated costs, have been valued at average yields ranging from 5.3%
to 15.4% which reflect the risks inherent in the net cash flows. Valuations reflect, where appropriate, the type of
tenants actually in occupation or likely to be in occupation after letting of vacant accommodation and the market’s
perception of their creditworthiness and the remaining useful life of the property.
In accordance with IAS 40 Investment property: Paragraph 14, judgement is needed to determine whether a
property qualifies as an investment property. The Group has developed criteria so that it can exercise its
judgement consistently in recognising investment properties. These include inter alia; property held for long-term
capital appreciation, property owned (or under finance leases) and leased out under one or more operating
leases; and property that is being constructed or developed for future use as an investment property. The
recognition and classification of property as investment property principally assures that the Group does not retain
significant exposure to the variation in cash flows arising from the underlying operations of properties. Investment
property comprises a number of commercial and retail properties that are leased to third parties. The hotel
properties are held for capital appreciation and to earn rental income. The properties have been let to Redefine
Hotel Management Limited (“RHML”) and Redefine Earls Court Management Limited (“RECML”) for a fixed rent
which is subject to annual review. The annual rent review takes into account the forecast EBITDA for the hotel
portfolio when setting the revised rental level.
As part of the acquisition of RIFM in December 2013, Redefine International acquired a 33% shareholding in
Redefine BDL Hotel Group Ltd which in turn owns RHML and RECML. Having considered the guidance in IFRS
10, the respective rights of each of the shareholders in Redefine BDL Hotel Group Ltd and the size of the
Company’s shareholding compared with other shareholders, management have determined that Redefine
International does not control Redefine BDL Hotel Group Ltd and hence does not control RHML or RECML
RHML and RECML operate the hotel business and are exposed to the fluctuations in the underlying trading
performance of the hotels. They are responsible for the day to day upkeep of the properties and retain the key
decision making responsibility for the business.
Aside from the payment of rental income to Redefine International which resets annually and the Group’s
shareholding in Redefine BDL Hotel Group Ltd, Redefine International is not involved with the hotel management
business and there are limited transactions between it and RHML and RECML. As a result, Redefine
International classifies the hotel properties as investment properties in line with IAS 40.
Property operating expenses in the consolidated income statement relate solely to income generating properties.
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Opening balance 643,892 631,278 631,278
Properties acquired during the period 88,514 27,000 27,000
Capitalised expenditure 1,509 2,798 7,187
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Disposals during the period (23,119) (7,985) (7,985)
Disposals through the sale of property (23,119) (6,937) (7,250)
Disposals through sale of subsidiaries - (1,048) (735)
Impact of the loss of control of subsidiary property
companies securing the Gamma facility - (158,040) (158,040)
Impact of acquisition of subsidiaries (Note 28) 118,597 - 158,330
Foreign exchange movement in foreign operations (7,454) 6,854 5,854
Net fair value gains/(losses) on investment property 20,245 (10,330) (13,406)
Reclassification to assets held-for sale (Note 13) - (4,226) (6,326)
Closing balance 842,184 487,349 643,892
Acquisitions
Earls Court Holiday Inn Express, London - 27,000 27,000
Weston Favell Shopping Centre, Northampton 88,514 - -
Properties acquired through the acquisition of
subsidiaries 118,597 - 158,330
West Orchards Shopping Centre, Coventry 37,400 - -
Grand Arcade Shopping Centre, Wigan 77,740 - -
Bahnhof Altona Shopping Centre, Hamburg - - 60,060
City Arkaden Shopping Mall, Ingolstadt - - 19,478
Schloss-Strassen Shopping Centre, Berlin - - 77,032
Finance leases acquired 3,457 - 1,760
207,111 27,000 185,330
On 11 December 2013, the Company, through its 100% held subsidiary, Weston Favell Limited, completed the
acquisition of the Weston Favell Shopping Centre, Northampton for £88.5 million (inclusive of direct acquisition
costs). This acquisition was part of the Aviva restructuring and was part financed by a loan from Aviva of £50.0
million. The property has been included in the security pool associated with the Aviva shopping centre debt.
The Group also acquired the other 50% of the former joint venture companies holding West Orchards Shopping
Centre, Coventry and Grand Arcade Shopping Centre, Wigan with the properties consolidated from the date of
acquisition. These acquisitions were deemed to be asset acquisitions within subsidiary entities rather than
business acquisitions.
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
Disposals £'000 £'000 £'000
Lyon and Equitable House, Harrow (13,770) - -
St Anne House, Croydon (8,400) - -
Aschaffenburg, Germany (949) - -
Trito Petersfield Limited - (735) (735)
Inkstone Portfolio, Germany - (3,447) (3,447)
Princes Street Investments (Petrol Stations) - (3,490) (3,490)
Finance leases - (313) (313)
(23,119) (7,985) (7,985)
On 13 December 2013, the Group disposed of the Lyon House and Equitable House sites to Redrow Homes
Limited for £13.77 million. £6.7 million of the £13.77 million proceeds is deferred and payable within 12 months of
the completion date. The Group is also entitled to additional consideration based on a share of sales revenues if
the units developed by Redrow Homes Limited are sold for in excess of an agreed aggregate threshold. This
additional consideration has not been recorded in the condensed consolidated interim financial statements given
the uncertainty surrounding any potential sales proceeds.
In January 2014, the Company, through its 100% owned subsidiary, Wichford Wellesley Road Limited, sold St
Anne’s House, Croydon for £8.4 million.
The Group also sold one of its smaller German properties located in Aschaffenburg for £0.95 million.
A reconciliation of investment property valuations to the condensed consolidated statement of financial position is
shown below:
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Investment property at market value as determined by
external valuers 880,816 540,516 692,256
Freehold 663,985 378,000 525,377
Freehold and long leasehold - 12,530 12,530
Leasehold 216,831 149,986 154,349
Adjustments for items presented separately on the
Statement of Financial Position:
- Add minimum payment under head leases separately
included under Borrowings 12,293 7,159 8,886
- Investment properties classified as assets held for sale
(Note 13) (50,925) (60,326) (57,250)
Statement of financial position carrying value of
investment property 842,184 487,349 643,892
11. LONG TERM RECEIVABLES
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Amounts due from joint ventures (Note 24) 476 74 74
Amounts due from Mezzanine Capital Limited 38,153 103,485 103,854
38,629 103,559 103,928
The loan to joint ventures is unsecured, bears interest at a rate of 2% and is repayable on demand, but the
expectation is that the term will be greater than 12 months.
The loans to Mezzanine Capital Limited are secured, bear interest at rates between 10% and 12% and are
repayable between one and two years. Amounts due from Mezzanine Capital Limited have decreased over the
period due to the repayment of certain facilities effective 1 December 2013.
12. INVESTMENTS AT FAIR VALUE
The following table details investments designated at fair value.
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Derivative financial instruments (Note 21) 25 27 111
Investment in Cromwell 119,960 - 138,909
Other investments – designated at fair value 72 72 72
Closing balance 120,057 99 139,092
The movement in investments designated at fair value may be reconciled as follows:
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Opening balance 139,092 399 399
Recognition of Cromwell shares at fair value at the date
significant influence was lost - - 144,416
Movement in unrealised gains and losses on derivative
assets (86) (151) (66)
Movement in unrealised gains and losses on other
investments - (149) (149)
Disposal of Cromwell shares (4,498) - -
Realised gains on sale of Cromwell shares 117 - -
Movement in unrealised gains and losses on Cromwell (14,568) - (5,508)
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Closing balance 120,057 99 139,092
The Group ceased to account for Cromwell as an associate from April 2013 and the investment was designated
as Fair Value through Profit or Loss from that date as the Group was deemed to have lost significant influence
following the sale of 86 million securities.
The Group disposed of 8,460,067 securities in Cromwell on 3 December 2013 at a price of AUD 0.96 for a total
consideration of AUD 8.1 million (£4.5 million).
The Group’s shareholding in Cromwell at 28 February 2014 was 13.17% (31 August 2013: 13.70%, 28 February
2013: 22.01%). The closing price of Cromwell on 28 February 2014 was 99.0 Australian cents per security
(28 February 2013: 94.0 cents; 31 August 2013: 102.5 cents).
13. ASSETS AND LIABILITIES HELD FOR SALE
Assets held for sale
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Opening balance 57,250 136,009 136,009
Capitalised expenditure 50 - -
Transfers in (Note 10) - 4,226 6,326
Disposals (6,275) (76,307) (79,440)
Foreign exchange movement in foreign operations - 1,748 1,670
Net fair value losses on assets held for sale (100) (5,350) (7,315)
Total 50,925 60,326 57,250
Assets held for sale include the following property assets:
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Delta 50,925 56,100 55,150
Telford - 530 -
Inkstone - 3,463 -
Ciref Berlin 1 Limited - Delmenhorst - 233 -
West Tullos, Aberdeen - - 2,100
Total 50,925 60,326 57,250
The Company announced on 15 October 2012 the agreement to extend and restructure the £114.6 million Delta
facility. The maturity date of the Delta facility was extended to 15 April 2015 subject to the Company meeting
annual disposal targets, in respect of the remaining 16 Delta portfolio assets. The Group has undertaken to sell
these properties over a two year period with sales targets which are required to be met each year. The Group is
unable to specifically identify in which financial year each of the Delta assets will be sold. As the Group is
committed to the sale of the Delta property portfolio, all of the properties were included in assets held for sale.
In October 2013, 3 properties within the Delta facility including the Grays, Hartlepool and Smethwick properties
were disposed of for £1.475 million, £1.4 million and £1.2 million respectively. The proceeds of these sales were
utilised to reduce the Delta facility loan balance in line with the agreed disposal targets in the Delta restructuring
agreement.
On 13 December 2013, the Company disposed of a small industrial property in West Tullos, Aberdeen for £2.2
million.
Liabilities held for sale
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Opening balance - 91,935 91,935
Disposals - (91,935) (91,935)
Total - - -
At 31 August 2012 the Group had committed to a sale plan involving the loss of control of a number of
subsidiaries and, as a result, all the assets and liabilities of those subsidiaries were classified as held for sale.
The Group finalised the restructuring of the VBG assets and the associated financing facilities on 8 October
2012.The related sale of subsidiaries process to which the Group had committed and which resulted in liabilities
being designated as held for sale completed in October 2012.
14. INVESTMENTS IN JOINT VENTURES
The Group’s investments in joint ventures currently consist of the following:
(i) 50% in Pearl House Swansea Limited, a joint venture with Sandgate Properties Limited, which owns a long
leasehold retail interest in Swansea, Wales.
(ii) 50% in Swansea Estates Limited, a joint venture with Sandgate Properties Limited, which owns a long
leasehold retail interest in Swansea, Wales.
(iii) 50% in Ciref NEPI Holdings Limited, a joint venture with New Europe Property Investments, which ultimately
owns property in Germany, Western Europe.
(iv) 50% in 26 The Esplanade No 1 Limited, a joint venture with Rimstone Limited, which ultimately owns an
office building in St. Helier, Jersey.
(v) 50% in Ciref Crawley Limited, a joint venture with Graymont Limited, which owns 3 blocks of offices in
Crawley, Surrey.
(vi) 50.5% interest in RI Menora German Holdings S.a.r.l, a joint venture with Menora Mivtachim, which
ultimately owns properties in Waldkraiburg, Hucklehoven and Kaiserslautern in Germany.
(vii) 49% interest in VBG Holdings S.a.r.l., a joint venture with Menora Mivtachim, which ultimately owns
government let properties in Dresden, Berlin, Stuttgart and Cologne, Germany.
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Opening balance
15,150 2,159 2,159
Increase in investment
- 16,660 17,588
Equity accounted profit/(loss) 1,536 (3,697) (2,232)
Foreign currency translation - 53 (48)
Distributions received (1,494) (1,107) (2,317)
Closing balance 15,192 14,068 15,150
The investment in joint ventures includes investments at nil value in the balance carried forward on 1 September
2013.
Ciref Coventry Limited and Redefine Wigan Limited became subsidiaries with effect from December 2013,
following the purchase of 50% of the shares in the entities for £1. These joint ventures had been held at nil value
prior to this acquisition.
15. INVESTMENTS IN ASSOCIATES
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Opening balance - 124,507 124,507
Acquisition of/increase in investment 7,261 26,121 26,121
Impact of foreign currency translation - 5,285 6,894
Equity accounted profits 176 3,302 7,861
Distribution received from associates - (6,484) (10,237)
Change in accounting treatment on loss of significant
influence - - (118,325)
Disposal of shares - - (42,298)
Reversal of impairment previously recorded - 5,477 5,477
Closing balance 7,437 158,208 -
As detailed in Note 27, the acquisition of the investment in associate for the period ended 28 February 2014
reflects the 33% shareholding acquired in Redefine BDL Hotel Group Limited, acquired as part of the
management internalisation on 2 December 2013.
16. INTANGIBLE ASSETS
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Opening balance - - -
Impact of acquisition of subsidiaries 24,639 - -
Write down of intangible assets (22,789) - -
Amortisation (58) - -
Closing Balance 1,792 - -
As detailed in Note 27, intangible assets were recognised on the acquisition of RIFM and represented the fair
value of the Advisory Agreements acquired by the Group. The value attributed to the Group’s agreement with
RIPML of £22.79 million has been treated as a payment to avoid making future payments under the contract and
has been fully written down in the year. The value attributed to the contracts between RIFM and third parties
including joint ventures of the Group and the non-controlling element of properties held by the Group of £1.85
million is being amortised on a straight line basis over the remaining terms of the contracts, which have an
average life of eight years.
17. CASH AT BANK
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Cash at bank consists of the following:
Unrestricted cash balances 68,865 41,989 29,598
Bank balances 15 41,989 29,580
Call deposits 68,850 - 18
Restricted cash balances 16,352 15,890 4,059
85,217 57,879 33,657
As at 28 February 2014, there was £16.4 million (28 February 2013: £15.9 million, 31 August 2013: £4.1 million)
of cash at bank to which the Group did not have instant access. The principal reason for this is that rents received
are primarily held in locked bank accounts as interest and other related expenses are paid from these monies. At
28 February 2014 trade and other payables includes accrued interest on bank debt facilities of £5.2 million
against which these cash balances will be applied.
Also included in the restricted cash balance at 28 February 2014 is £5.7 million held with Aviva with regards to
the developments in Birchwood Warrington Limited, and the proposed developments in Grand Arcade Wigan
Limited and Weston Favell Limited (28 February 2013: £1.2m, 31 August 2013: £0.7m).
18. CAPITAL AND RESERVES
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Authorised
Ordinary shares of 8 pence each
- number 1,800,000,000 1,800,000,000 1,800,000,000
- £'000 144,000 144,000 144,000
Issued, called and fully paid
Opening: Ordinary Shares of 8 pence each (1 September
2013 7.2 pence each)
- number 967,963,757 579,454,792 579,454,792
- £'000 77,437 41,721 41,721
Shares issued during the period of 8 pence each (28
February 2013 & 31 August 2013: 7.2 pence each)
- number 302,364,897 490,384,616 490,384,616
- new issue 302,364,897 490,384,616 490,384,616
- £'000 24,189 35,308 35,308
Consolidation from 7.2 pence to 8 pence each (9 shares
allotted for every 10 previously owned)
- number - (106,983,941) (106,983,941)
Shares issued to acquire non-controlling interests
- number - - 5,108,290
- £'000 - - 408
Closing: Ordinary Shares of 8 pence each
- number 1,270,328,654 962,855,467 967,963,757
- £'000 101,626 77,029 77,437
SHARE CAPITAL AND SHARE PREMIUM
Issue of shares associated with the CMC acquisition
The consideration for the CMC acquisition which completed in August 2013 was settled in part in cash and in part
in shares. The share consideration was deferred as well as the cash element of the Berlin acquisition and settled
in the period to 28 February 2014.
Included in the Share Consideration Reserve at 31 August 2013 was an amount of £5.5 million related to the
shares to be issued for the acquisition of Hamburg and Ingolstadt which the Company acquired as part of the
CMC acquisition in August 2013. On 3 September 2013 the Company issued 12,606,061 new Ordinary Shares
of 8 pence each to settle this obligation.
As the exact number of shares to be issued for the acquisition of the Berlin asset was not known at 31 August
2013, the fair value of the deferred consideration was reflected as a liability at 31 August 2013. The consideration
was subsequently settled on 6 December 2013 through payment of €12.1 million (£11.51 million) in cash and the
issue of 19,090,863 new Ordinary Shares of 8 pence each (the “Berlin Consideration Shares”) at an effective
issue price of 40.0 pence per share. The fair value of the shares issued was £7.64 million. The Berlin
Consideration Shares did not rank for the final dividend for the year ended 31 August 2013. The difference
between the fair value of the liability at 31 August 2013 and the fair value at the date of issuing the shares of
£0.61 million has been reflected in Net (losses)/gains from financial assets and liabilities in the Income
Statement.
Issue of shares to acquire Redefine International Fund Managers Limited (“RIFM”) and to settle the incentive fee
On 2 December 2013 the Company completed the acquisition of the entire issued share capital of RIFM for an
issue of new ordinary shares in the Company. In total, 79,000,000 new ordinary shares were issued to acquire
RIFM and to settle the incentive fee payable by the Company to RIPML. The fair value of these shares on the
date of issue was £39.11 million. These shares were issued and admitted to trading on the LSE on 6 December
2013.
Other share issues
The Company raised £16.8 million through the issue of 40,000,000 new Ordinary Shares at 42 pence per share
on 3 September 2013.
Also in September 2013 the Company repaid its £13 million 6% convertible loan instrument issued to Aviva in
September 2010. This repayment was financed by the issue of 36,587,873 new Ordinary Shares of 8 pence each
to Redefine Properties Limited at an issue price of 41.925 pence per share.
115,080,100 new ordinary shares were issued and admitted to trading on the LSE on 28 February 2014 raising
gross proceeds of approximately £54.28 million.
The 40,000,000 shares issued in September 2013 along with the 12,606,061 shares issued to settle the
acquisition of Hamburg and Ingolstadt and the 36,584,873 shares issued to fund the repayment of Aviva were
issued cum dividend and so the associated dividend amount has been set against share premium.
The total voting rights in the Company at 28 February 2014 are 1,270,328,654.
OTHER RESERVES
Other reserves comprise the Share consideration reserve, the share-based payment reserve and other reserves.
Share consideration reserve
The share consideration reserve comprised £5.5 million at 31 August 2013 related to the shares to be issued to
settle the consideration associated with the Hamburg and Ingolstadt asset acquisitions. These shares were
issued in September 2013 reducing the share consideration reserve to Nil at 28 February 2014.
Share-based payment reserve
The share – based payment reserve at 31 August 2013 related to potential shares to be issued to settle the
incentive fee payable by the Company to RIPML. As detailed above shares were issued in December 2013 to
settle this obligation.
The share – based payment reserve at 28 February 2013 relates to shares to be issued arising from equity
settled share based payments to employees if certain conditions are met. Refer Note 23.
Other reserves
These are reserves arising from the acquisition of subsidiaries.
REVERSE ACQUISITION RESERVE
The reverse acquisition reserve arose on the reverse acquisition of Wichford PLC (subsequently renamed
Redefine International P.L.C.) by RIHL and comprises the difference between the capital structure of the
Company and RIHL.
DISTRIBUTIONS
In terms of the dividend policy, the Company will seek to distribute the majority of its recurring earnings available
for distribution in the form of dividends. However, there is no assurance that the Company will pay a dividend or,
if a dividend is paid, the amount of such dividend.
During the period ended 28 February 2014, the second interim dividend of 1.635 pence per share for the period
ended 31 August 2013 (28 February 2013: 2.30 pence per share for the period ended 31 August 2012) was
distributed.
19. CAPITAL INSTRUMENT
As part of the Aviva debt restructuring in 2010 the Company entered into a £13 million convertible facility with
Aviva. The loan bore interest at 6% per annum, and all interest was rolled up until the repayment of the facility.
The capital plus rolled up interest was repayable or convertible three years after the date of the agreement.
The convertible facility was classified as an equity instrument under IAS 32 as it was 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
changed over time but was fully predetermined based on the time the Company chose to settle the instrument.
The additional shares that become due over time were charged to profit or loss in each period as a share based
payment charge which was credited to the equity reserve.
On 13 September 2013, the capital instrument was settled in cash which was financed through the issue of
36,587,873 new ordinary shares in the Company to Redefine Properties Limited.
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Opening balance 15,339 14,536 14,536
Share based payment - 387 803
Repayment (15,339) - -
Closing balance - 14,923 15,339
20. BORROWINGS
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Non-current
Loan facilities 508,078 444,685 497,230
Less: deferred finance costs (2,212) (1,831) (1,369)
Aviva profit share 3,203 - -
Finance leases 11,668 7,159 8,357
Total non-current borrowings 520,737 450,013 504,218
Current
Loan facilities 243,964 143,585 174,097
Less: deferred finance costs (1,301) (1,647) (1,333)
Aviva profit share 2,402 - -
Finance leases 625 - 530
Total current borrowings 245,690 141,938 173,294
Total borrowings 766,427 591,951 677,512
As part of the terms of the Aviva debt restructure Aviva have retained the right to participate in 50% of the income
and capital growth generated by Grand Arcade Wigan (after all costs, expenses and interest). This profit share is
deemed to be a financial liability and has been recognised initially at fair value and thereafter will be carried at
amortised cost.
a) Loans
This note provides information about the contractual terms of the Group’s loans and borrowings, which are
measured at amortised cost.
SECURED BORROWINGS
The terms and conditions of outstanding loans are as follows:
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Facility Amortising Lender Loan interest rate Currency Maturity date Carrying Value Carrying Value Carrying Value
Windermere VIII
Gamma2 No CMBS LIBOR + 0.75% GBP October 2012 41,862 47,904 41,862
Windermere XI
3
Delta Partly CMBS LIBOR + 0.75% GBP April 2015 74,059 81,116 79,165
Schloss-Strassen, Berlin Yes HSH Nordbank EURIBOR + 2.0% EUR August 2017 51,868 - 57,249
Weston Favell Limited4 Yes Aviva 5.71%1 GBP November 2038 47,065 - -
Bahnhof Altona, Hamburg Yes HSH Nordbank EURIBOR + 2.2% EUR February 2020 45,281 - 44,299
Grand Arcade Wigan Limited4 No Aviva 5.68%1 GBP April 2032 60,292 - -
Redefine Hotel Holdings Limited Yes Aareal LIBOR + 2.45% GBP November 2015 84,975 86,831 85,903
Zeta Yes Lloyds TSB LIBOR + 3.25% GBP May 2016 36,195 46,000 37,695
Landesbank
St Georges Harrow Limited Yes Berlin LIBOR + 2.5% GBP April 2016 39,963 40,940 40,538
Redefine Australian Investments
Limited No Investec BBSY + 4% AUD March 2016 32,017 40,459 34,522
West Orchards Coventry Limited Yes Santander LIBOR + 2.75% GBP December 2018 18,250 - -
SNS Property
Hague Yes Finance EURIBOR + 2.3% EUR July 2014 16,700 17,223 17,148
Birchwood Warrington Limited4 Partly Aviva 6.10%1 GBP September 2035 25,655 16,979 17,112
Ciref Berlin 1 Limited Partly RBS EURIBOR + 1.2% EUR September 2014 9,962 15,425 14,980
Byron Place Seaham Limited4 Partly Aviva 6.44%1 GBP September 2031 15,391 15,153 15,142
City Arkaden Ingolstadt Yes Eurohypo EURIBOR + 1.15% EUR June 2016 11,685 - 10,457
Kalihora Holdings Limited Yes UBS LIBOR + 1.25% CHF October 2018 11,430 12,377 11,927
Princes Street Investments
Limited Yes HSBC LIBOR + 2.5% GBP September 2016 8,907 9,147 9,027
Gibson Property Holdings Limited Partly Aviva 6.37%1 GBP June 2029 10,650 10,820 10,735
ITB Herzogenrath B.V. Yes Bayern LB EURIBOR + 1.3% EUR October 2017 7,051 7,521 7,369
ITB Schwandorf B.V. Yes Bayern LB EURIBOR + 1.3% EUR October 2017 5,832 6,221 6,096
Newington House Limited Yes AIB LIBOR + 2.50% GBP February 2014 5,974 6,194 6,084
CEL Portfolio Limited & Co. KG Yes Valovis 4.95%1 EUR November 2014 3,752 4,116 4,015
CEL Portfolio 2 Limited & Co. KG Yes Bayern LB EURIBOR + 1.7% EUR September 2018 3,342 - -
Inkstone Zwei
Grundstucksverwaltung Limited &
Co. KG Yes Barclays 5.91%1 EUR August 2012 - 3,786 -
Ciref German Portfolio Limited Yes RBS EURIBOR + 1.2% EUR September 2014 3,107 3,281 3,232
Redefine Investment Managers
Limited No Standard Bank Libor + 4.57% GBP May 2014 5,400 - -
Total Bank loans - - - - - 676,665 471,493 554,557
Mezzanine Capital Limited6 - - 7.10% - 10%1 GBP Various 51,282 116,106 116,107
Coronation Group Investments
Limited5 - - 6%1 GBP 2014 23,452 - -
CEL Portfolio Limited & Co. KG - - 0%1 GBP 2029 643 671 663
Total secured loans - - - - - 752,042 588,270 671,327
All bank loans are secured over investment property, and bear interest at the specified interest rates.
1 Fixed rates.
2 During the prior year a Fixed Charge Receiver was appointed to the property company subsidiaries that secured the Gamma debt resulting in the lender having been deemed to
have taken control of the assets and resulting in the extinguishing of part of the related debt. Refer Note 2.2.2 for further details.
3 The maturity date of the Delta facility was extended to 15 April 2015 subject to the Group meeting annual disposal targets in respect of the remaining Delta portfolio assets.
4 These facilities were subject to a fundamental debt restructure in December 2013 as detailed in Note 29 and are cross collateralised against each other.
5 This facility was repaid in full on 3 March 2014.
6 The outstanding facilities will be repaid prior to 31 August 2014.
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Non-current liabilities
Secured bank loans 508,078 444,685 497,230
Total non-current loans and borrowings 508,078 444,685 497,230
The maturity of non-current borrowings is as follows:
Between one year and five years 268,089 391,089 398,015
More than five years 239,989 53,596 99,215
508,078 444,685 497,230
Current liabilities
Secured loans 243,964 143,585 174,097
Total current loans and borrowings 243,964 143,585 174,097
Total loans and borrowings 752,042 588,270 671,327
Exposure to credit, interest rate and currency risks arise in the normal course of the Group's business. Derivative
financial instruments are used to reduce exposure to fluctuations in interest rates. Refer to Note 21 for further
details.
b) Finance leases
Obligations under finance leases at the reporting dates are analysed as follows:
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Gross finance leases liabilities repayable:
Not later than one year 625 318 404
Later than one year not later than five years 2,502 1,274 1,615
Later than five years 36,421 20,019 21,652
39,548 21,611 23,671
Less: finance charges allocated to future periods (27,255) (14,452) (14,784)
Present value of minimum lease payments 12,293 7,159 8,887
Present value of finance lease liabilities repayable:
Not later than one year 625 318 404
Later than one year not later than five years 2,133 1,108 1,428
Later than five years 9,535 5,733 7,055
Present value of minimum lease payments 12,293 7,159 8,887
21. DERIVATIVES
The Group enters into interest rate swaps and interest rate cap agreements. The purpose is to manage the
interest rate risks arising from the Group’s operations and its sources of finance.
The interest rate swaps are employed by the Group to convert the Group’s borrowings from floating to fixed
interest rates and are detailed in a) below.
The interest rate caps as detailed in b) below are employed by the Group to limit the exposure to upward
movements in interest rates.
It is the Group’s policy that no economic trading in derivatives is undertaken.
a) Interest rate swap agreements
In accordance with the terms of borrowing arrangements, the Group has entered into interest swap agreements.
The interest rate swaps are used to manage the interest rate profile of financial liabilities. The Group has
employed borrower level interest rate swaps to eliminate future exposure to interest rate fluctuations.
Borrower level interest rate swap agreements are those that have a Group company as the counter-party to the
commercial bank providing the interest rate swap. The following table sets out the Borrower level interest rate
swaps.
Fair value
Reviewed Reviewed Audited
28 February 28 February 31 August
Effective Maturity Swap 2014 2013 2013
Facility date date rate £’000 £’000 £’000
Newington House
Limited 03/09/2010 19/09/2013 1.54% - (42) (10)
Princes Street 30/09/2011 30/09/2016 1.69% (130) (318) (176)
Investments Limited
Ciref Berlin 1 Limited 05/06/2007 15/04/2014 4.61% (58) (449) (257)
Ciref Berlin 1 Limited 31/07/2007 15/04/2014 4.20% (44) (361) (212)
Ciref German
Portfolio Limited 31/07/2007 15/04/2014 4.20% (30) (162) (95)
Redefine Hotel
Holdings Limited 30/11/2010 30/11/2015 2.45% (1,543) (2,936) (2,017)
Redefine Hotel
Holdings Limited 30/06/2011 30/11/2015 2.32% (195) (364) (255)
Hague 01/08/2008 01/08/2014 4.89% (366) (1,273) (814)
Zeta 22/07/2013 24/05/2016 0.81% 45 (216) 2
Matterhorn Brig SARL
(Kalihora) 30/01/2012 08/10/2018 0.73% (70) (73) (17)
Matterhorn Vich
SARL (Kalihora) 30/01/2012 08/10/2018 0.73% (155) (161) (36)
CMC Hamburg 27/02/2013 28/02/2020 1.48% (263) - (371)
CMC Berlin 03/01/2013 30/08/2017 0.94% (272) - (281)
Redefine Australian
Investments 03/03/2013 04/03/2016 3.30% (284) - (275)
West Orchard
Coventry Limited* 11/12/2013 11/12/2018 2.033% (223) - -
(3,588) (6,355) (4,814)
* £14.6 million of the initial loan amount of £18.25 million was subject to the interest rate swap ie: 80% Fixed.
b) Interest rate cap agreements
The Group has entered into interest rate caps in order to protect the Group against any significant increases in
the current low interest rates in the market. The current interest rate cap agreements are detailed below:
Fair value
Reviewed Reviewed Audited
28 February 28 February 31 August
Effective Maturity 2014 2013 2013
Facility date date Cap rate £’000 £’000 £’000
St Georges Harrow 27/04/2011 27/04/2016 2.85% 16 7 67
ITB Herzogenrath
B.V. 31/05/2011 31/05/2017 4.50% 5 11 24
ITB Schwandorf B.V. 31/05/2011 31/05/2017 4.50% 4 9 20
25 27 111
c) Summary of fair value of interest rate swaps and interest rate caps
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
Facility £'000 £'000 £'000
Borrower level interest rate swaps
Non Current (252) (2,120) (776)
Current (3,336) (4,235) (4,038)
Total borrower level interest rate swaps (3,588) (6,355) (4,814)
Fair value of interest rate cap agreements* 25 27 111
Fair value of the Group's derivative instruments (3,563) (6,328) (4,703)
*Interest rate cap assets are included in investments designated at fair value (Note 12).
22. PROVISION FOR LIABILITIES AND COMMITMENTS
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Opening balance 12,079 12,079 12,079
Release of provisions (see Note 29) (12,079) - -
Total - 12,079 12,079
A provision of £12.1 million had been set up in respect of estimated potential future cash outflows related to
external loans provided by Aviva to the former joint ventures Redefine Wigan Limited and Ciref Coventry Limited
which were cross collateralised against properties held directly by the Group.
Following the acquisition of these joint ventures and the agreed restructure of the Aviva debt facilities in
December 2013 this provision was released.
See Notes 28 and 29 for further details on the acquisition of the joint ventures and the restructure of the Aviva
shopping centre facilities.
23. SHARE BASED PAYMENTS
The Group’s share-based payments are all equity-settled and comprise the Long-Term Performance Share Plan
(“PSP”) for Executive Directors and the Restricted Stock Plan for employees. In accordance with IFRS 2 ‘Share-
based payments’ the fair value of equity-settled share-based payments to employees is determined at grant date,
and is expensed on a straight-line basis over the vesting period, with a corresponding credit to the share-based
payments reserve. The Company utilises the Monte-Carlo simulation valuation model to determine the fair value
at grant date.
Long-Term Performance Share Plan
28 February 28 February 31 August
2014 2013 2013
Number of Number of Number of
Shares Shares Shares
Awards brought forward - - -
Awards made during the current period 3,970,000 - -
Awards carried forward 3,970,000 - -
Share-based payment charge
28 February 28 February 31 August
2014 2013 2013
£’000 £’000 £’000
Opening balance - - -
Share based payment expense in the period/year 1,368 - -
Closing share-based payment balance 1,368 - -
The PSP for Executive Directors authorises the Remuneration Committee to make grants of PSP shares with a
face value of up to 100% of salary to participants. Awards of PSP shares are subject to performance measures
over three years. Half of the award will vest dependent on the Company’s Total Shareholder Return (“TSR”)
equalling, or exceeding, the TSR relative to that of each of the members of the FTSE EPRA / REIT Developed
Europe Index (“the Index”) and the other half of an award will be subject to a performance target which measures
the Company’s TSR relative to that of the members of a bespoke comparator group. Vesting is on a sliding scale
between 25% for median performance and 100% for upper quartile performance, with 0% vesting below a
median performance. For the market-based TSR awards, the effect of the performance conditions is incorporated
into the grant date fair value of the award. The fair value calculation assumes that PSP shares will be awarded at
65% of the face value at grant for the portion of the award subject to relative TSR performance against members
of the Comparator Group and 73% of the face value at grant date for the portion of the award subject to relative
TSR performance against members of the Index. No subsequent adjustment to the charge can be made to reflect
the outcome of the performance test. Adjustments can, however, be made for participants who leave the scheme
before vesting.
The shares outstanding under the scheme are to be issued at nil consideration provided performance conditions
are met.
No shares were granted in respect of the Restricted Stock Plan during the six months ended 28 February 2014.
24. RELATED PARTY TRANSACTIONS
Related parties of the Group include associate undertakings and joint ventures, the Investment Advisor, Directors
and key management personnel and connected parties, the major shareholder Redefine International Properties
Limited and the ultimate parent Redefine Properties Limited as well as entities connected through common
directors.
MANAGEMENT INTERNALISATION
Following the management internalisation and related acquisition of the investment adviser on 2 December 2013,
RIFM and its group undertakings are no longer considered related parties as they are consolidated within the
Group.
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Trading transactions
Rental income received from Redefine Hotel
Management Limited 5,400 5,072 10,622
Fee income from the Cromwell Property Group - 513 631
Interest receivable from West Orchards Coventry Limited - - 377
Portfolio management fees charged by Redefine
International Property Management Limited (501) (1,234) (2,728)
Portfolio management fees charged by Redefine
International Fund Managers Limited (160) (352) (727)
Portfolio management fees charged by Redefine
International Fund Managers Europe Limited (709) (367) (590)
Redefine International Hotels Limited - (342) (514)
Incentive fees payable to Redefine International Property
Management Limited - - (6,430)
Amounts receivable
Pearl House Swansea Limited 476 74 74
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Redefine Hotel Management Limited 4,096 3,080 3,642
Corovest Offshore Limited 162 162 162
Ciref Crawley Investments Limited 48 87 87
Swansea Estates Limited 87 87 87
West Orchards Coventry Limited - - 37,989
Kaiserslautern Merkerstrasse GmbH - - 400
Grand Arcade Wigan Limited - - 487
26 The Esplanade No 1 Limited - 78 78
Banstead Property Holdings Limited - 496 510
VBG Holdings S.a.r.l. - 243 -
Redefine International Hotels 3,012 - -
Amounts Payable
26 The Esplanade No 1 Limited 22 - -
Redefine International Fund Managers Limited - 352 374
Redefine International Fund Managers Europe Limited - 336 -
Redefine Properties International Limited - 45 7
VBG Holdings S.a.r.l - - 78
Pearl House Swansea - - 16
Osiris Properties Services Limited - - 6
Redefine BDC Hotel Group Limited - 342 480
Redefine International Property Management Limited - 464 176
MEZZANINE CAPITAL LIMITED
Details of transactions with Mezzanine Capital Limited are provided in Notes 7, 8, 11 and 20.
DIRECTORS
The remuneration paid to non-executive directors for the period ended 28 February 2014 was £160,318 which
represents directors fees only (28 February 2013: £179,970, 31 August 2013: £345,000).
The remuneration paid to executive directors for the 3 months ended 28 February 2014, following the
internalisation totalled £198,500.
25. EARNINGS PER SHARE AND EARNINGS AVAILABLE FOR DISTRIBUTION
Earnings per share is calculated on the weighted average number of shares in issue and the profit/(loss)
attributable to shareholders.
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Net (loss)/profit attributable to equity holders (Basic
and diluted) (897) 16,918 61,521
Weighted average number of ordinary shares 1,100,490 883,545 924,394
Effect of potential share based payment transactions -
capital instrument - 29,846 36,587
Effect of potential share-based payment transactions –
incentive fee arrangements - - 14,697
Effect of potential share-based payment transactions –
consideration payable on CMC - - 12,502
Diluted weighted average number of ordinary shares 1,100,490 913,391 988,180
Number of ordinary shares
- In issue 1,270,329 962,855 967,964
- Weighted average 1,100,490 883,545 924,394
- Diluted weighted average* 1,100,490 913,391 988,180
(Loss)/Earnings per share (pence)
- Basic (0.08) 1.91 6.66
- Diluted* (0.08) 1.85 6.23
(Loss)/Headline earnings per share (pence)
- Basic (0.22) - 2.64
- Diluted* (0.22) - 2.44
* The share incentive scheme in place is currently non-dilutive.
The reconciliation of (loss)/profit attributable to equity holders to headline earnings and earnings available for
distribution is as follows:
Six months Six months Year
ended ended ended
28 February 28 February 31 August
2014 2013 2013
Total Total Total
£'000 £’000 £'000
(Loss)/profit attributable to equity holders of the
parent (897) 16,918 61,521
Changes in fair value of investment property (net of
deferred tax) (18,437) 12,965 23,299
Net fair value (gains)/losses on investment property (20,145) 15,680 20,721
Deferred taxation 10 372 234
Effect of non-controlling interest on above 2,055 (1,507) (1,069)
Net fair value losses in jointly controlled entities (357) (1,580) 3,413
Gain on loss of significant influence of Cromwell (net of
capital gains tax) - - (44,643)
Gain on loss of significant influence of Cromwell - - (46,690)
Capital gains tax on Cromwell disposal - - 2,047
Impairment of receivables - - 1,538
Impairment of goodwill 2,069 - -
Impairment of intangible asset 22,789 - -
Gain on debt restructure (6,182) - -
Reversal of impairments (1,791) - -
Gain on sale of subsidiaries - (16,491) (17,285)
Headline earnings attributable to equity holders of
the parent (2,449) 13,410 24,430
Gain/(loss) on financial assets and liabilities 13,980 (3,078) 208
Straight-lining of rental income 461 99 620
Fair value interest amortisation 1,397 468 983
Net interest on mezzanine financing 398 176 1,375
Amortisation of debt issue costs 637 558 1,972
Share based payment 1,368 387 803
Capital gains tax on Cromwell disposal 298 - -
Deferred tax liability recognised on Cromwell (877) 477 2,320
Unrealised foreign exchange gain (2,408) 1,133 (4,357)
Non-distributable income from Gamma facility entities 2,413 (1,975) (1,314)
Non-distributable income from Delta facility entities (851) (665) (1,846)
Non-distributable income from VBG - - (22)
Earnings on new investments - - 1,156
Non-distributable equity accounted profits 763 4,448 (1,049)
Capital costs included in professional fees 3,059 - 293
Investment advisors fees - performance fee - - 6,430
Amortisation of intangible asset 58 - -
Depreciation 17 - -
RIFM acquired earnings 540 - -
Impact of non-distributable items on non-controlling
interest (893) (1,019) (1,889)
Earnings available for distribution (not reviewed or
audited) 17,911 14,419 30,113
First interim dividend - - (14,202)
Earnings available for distribution at period ended
(not reviewed or audited) 17,911 14,419 15,911
Number of ordinary shares in issue at period end 1,270,329 962,855 967,964
Less: February 2014 placement (115,080) - -
Adjusted shares in issue 1,155,249 962,855 967,964
Earnings available for distribution per share 1.550 1.475 3.110
Dividend per share (pence) 1.500 1.475 3.110
First interim dividend per share (pence) 1.500 1.475 1.475
Second interim dividend per share (pence) - - 1.635
26. NET ASSET VALUE PER SHARE
Reviewed Reviewed Audited
28 February 28 February 31 August
2014 2013 2013
£'000 £'000 £'000
Net assets attributable to equity shareholders (£'000) 394,009 264,956 299,799
Number of Ordinary Shares ('000's) 1,270,329 962,855 967,964
Effect of potential share-based payment transactions –
incentive fee arrangements - - 14,697
Effect of potential share-based payment transactions –
consideration payable on CMC - - 12,606
Effect of potential share based payment transactions -
capital instrument - 29,846 36,587
Diluted number of shares ('000's) 1,270,329 992,701 1,031,854
Net asset value per share (pence):
- Basic 31.02 27.52 30.97
- Diluted* 31.02 26.69 29.05
* There are currently no dilutionary instruments in issue.
27. BUSINESS COMBINATION – ACQUISITION OF RIFM
On 2 December 2013 the Company completed the acquisition of RIFM. The consideration was satisfied by the
issue of 79,000,000 new ordinary shares in the Company.
a) Consideration transferred
The following table summarises the acquisition date fair value of the consideration transferred:
Fair value of consideration transferred Note £’000
Equity instruments (i) 32,675
b) Identifiable assets and liabilities assumed
Fair Value of identifiable assets and liabilities £’000
Intangible asset – investment adviser agreement (iii) 22,789
Intangible asset - third party management contracts (iii) 1,850
Investment in associates (ii) 7,261
Cash (ii) 219
Property, plant & equipment (ii) 161
Trade and other receivables (ii) 6,734
Loans and borrowings (ii) (5,400)
Trade and other payables (ii) (2,924)
30,690
c) Goodwill
£’000
Consideration 32,675
NCI, based on their proportionate interest in the recognised amounts of the assets
and liabilities of RIFM 84
FV of identifiable assets and liabilities (30,690)
Goodwill (iv) 2,069
Notes
(i) Equity instruments issued
The Company issued 79 million shares on 2 December 2013. 12,989,899 were issued to settle the incentive fee payable
under the Investment Adviser Agreement with 66,010,101 issued as consideration to acquire RIFM. The fair value of the
ordinary shares issued was based on the listed share price of the Company at 2 December 2013 of 49.50 pence per
share.
(ii) Fair value of identifiable assets and liabilities
The fair value of the investment in associates, which relates to a 33.0% interest in RBDL has been calculated using a P/E
approach having regard for recent market transactions. The investment in associates has been recognised at its fair value
of £7.26 million and will be subsequently increased or decreased for the Group’s share of the profit or loss of the
associates and adjusted for any dividends received (refer to Note 15).
Given the short term nature of the trade and other payables and receivables the fair value has been deemed to be the
carrying value as reflected in the RIFM accounts.
The fair value of loans and borrowings has been calculated based on discounting the cashflows under the agreement at a
market interest rate for similar debt instruments.
(iii) Intangible assets
The intangible asset created represented the fair value of the Advisory Agreements acquired by the Group. The fair value
of the intangible assets has been determined using a discounted cashflow model with the expected cashflows on the
contracts discounted using a weighted average market discount rate determined by reference to the terms of the contracts.
The intangible asset includes an amount of £1.85 million related to the management contracts held by RIFM with third
parties including joint ventures of the Group and the non – controlling interest element of properties held by the Group. The
value attributed to these third party asset management fees of £1.85 million will be amortised over the remaining period of
the contracts/expected asset management term, which is an average of 8 years (refer Note 16).
The intangible asset acquired also includes an amount of £22.789 million associated with the Investment Adviser
agreement between RIPML and the Group. This has been treated as a payment to avoid making future payments under
the contract and has been fully written down in the year (refer Note 16).
(iv) Goodwill
Goodwill of £2.07 million arose as a result of the acquisition of RIFM. As detailed in Note 6, subsequent to its recognition, it
was reviewed for indications of impairment at which point a decision was taken, given an assessment as to its recoverable
amount to, impair the goodwill to zero.
In the period following the acquisition, RIFM had revenue of £1.28 million and a profit of £0.23 million. For the period from
1 September 2013 to the date of internalisation, RIFM had revenue of £11.9 million and a profit of £1.67 million. The
difference in revenue and profit is however not comparable, due to the restructure of the management fee charges within
the Group following the UK-REIT conversion and related transfer pricing policies adopted.
28. ACQUISITION OF SUBSIDIARIES
The companies holding Grand Arcade, Wigan and West Orchards, Coventry were acquired on 3 December 2013
in contemplation of the Aviva restructuring which is detailed further in Note 29.
The assets and liabilities arising from the acquisitions and the net cash position have been summarised in the
table below:
Coventry Wigan Total
Assets and liabilities acquired £’000 £’000 £’000
Investment property (including finance leases) 40,857 77,740 118,597
Trade and other receivables 526 183 709
Loans and borrowings (including finance leases) (3,457) (65,816) (69,273)
Trade and other payables (38,688) (5,381) (44,069)
Net assets acquired (762) 6,726 5,964
Settled as
Cash consideration - (7,146) (7,146)
Fair value of existing shareholding - - -
Total consideration - (7,146) (7,146)
Cash acquired 762 420 1,182
1) The fair value of the investment property has been determined by the Directors having regard to the 31 August 2013
independent valuation and movements in the market up to 3 December 2013.
2) The fair value of Wigan related loans and borrowings have been determined based on the fair value of the terms of the
restructured Aviva debt and incorporate the fair value of the profit share granted to Aviva (refer Note 29 for further details).
3) The fair value of the existing shareholding was deemed to be nil at the date of acquisition.
4)
29. AVIVA RESTRUCTURE
On 11 December 2013, the Company completed a fundamental restructuring of the loans advanced by Aviva with
respect to the Company’s UK shopping centre portfolio.
As part of the restructure:
1) The Company purchased Weston Favell Shopping Centre, Northampton for £84.0 million. This acquisition
was part funded by a new £50 million loan facility from Aviva which has a maturity date of November 2038.
2) Debt with a nominal value of £146.26 million against the Grand Arcade property was reduced by
approximately 50% to £73 million in consideration for a cash payment of £7 million. This debt had been fair
valued at £65.816 million on the acquisition of Wigan (refer Note 28).
3) Aviva retained the right to participate in 50% of the income and capital growth generated by Grand Arcade
(after all costs, expenses and interest) going forward. The Company has the right to “buy-back” the profit
share for a maximum cash payment of £18.5 million in five instalments upon the valuation of Grand Arcade
increasing by certain agreed benchmarks.
4) Debt with a nominal value of £56 million against the West Orchards Shopping Centre in Coventry (“West
Orchards”) was repaid in cash at the market value of the property (£37 million). Aviva are entitled to a 25%
of profit (above a base cost of £37m plus any further capital spend and a notional return of 10% from new
capital) should the property be sold within the next 3 years.
5) The cross collateralisation provisions were also amended with West Orchards removed from the Aviva
security pool and replaced by Weston Favell. Amendments were also made related to the Grand Arcade
Wigan property such that the Aviva facilities which finance Birchwood (Warrington), Byron Place (Seaham),
and Weston Favell are cross collateralised with Aviva having recourse to those properties for only 50% of
the Grand Arcade Wigan related facility.
Carrying value
Nominal Fair value at date at the date of Gain/loss on
value of restructure restructure restructure
West Orchards Coventry - - - -
Grand Arcade Wigan 73,000 60,211 60,211 -
Grand Arcade Wigan – Profit share - 5,605 5,605 -
Weston Favell 50,000 47,053 N/a (47,053)
Byron Place Seaham 16,707 15,402 15,136 (266)
Birchwood Warrington 29,024 26,683 18,105 (8,578)
Loss on restructure (55,897)
Cash received from Aviva 50,000
Release of existing provision held 12,079
Net gain on restructuring 6,182
30. INTEREST RATE RISK
The Group's exposure to the risk of the changes in market interest rates relates primarily to the Group's long-term
debt obligations with floating interest rates. The Group uses interest rate derivatives to mitigate its exposure to
interest rate fluctuations. At the year end, as a result of the use of interest rate swaps, the majority of the Group's
borrowings were at fixed interest rates.
While the Group has entered into interest rate swaps and interest rate cap agreements to minimise interest rate
fluctuations, the Group's profit before tax is exposed to the mark to market movement on the derivative
instruments until the repayment dates of the loans for which the interest rate swaps have been arranged. Refer to
Note 21 for further details on the Group's interest rate swap agreements.
31. LIQUIDITY RISK
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
rental income to service its financial obligations when they fall due. The monitoring of liquidity risk is assisted by
the monthly review of financial covenants imposed by financial institutions, such as interest and loan to value
covenant ratios. Renegotiation of loans takes place in advance of any potential covenant breaches in so far as the
factors that are within the control of the Board. In periods of increased market uncertainty the Board strive to
ensure sufficient cash resources are available for potential loan repayments/cash deposits as may be required by
financial institutions. In certain cases the Company may take a decision not to support non-recourse facilities.
Refer to Note 2.2.1 for further details on the going concern assumption adopted by the Board.
32. FAIR VALUES
The fair value of financial assets and liabilities together with the carrying amount shown in the statement of
financial position is detailed below:
28 February 2014 31 August 2013
Carrying Fair Carrying Fair
value value value value
£’000 £’000 £’000 £’000
Financial assets
Loans and receivables 38,629 38,629 173,633 173,633
Designated at fair value through profit or
loss 120,057 120,057 139,092 139,092
Cash at bank 85,217 85,217 33,657 33,657
243,903 243,903 346,382 346,382
Financial liabilities
Amortised cost (824,233) (796,137) (730,409) (664,533)
Derivatives at fair value through profit or
loss (3,588) (3,588) (4,814) (4,814)
(827,821) (799,725) (735,223) (669,347)
Basis for determining fair values
The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs
used in making the measurements.
Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.
Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived
from prices). This category includes instruments valued using: quoted market prices in active markets for similar
instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or
other valuation techniques where all significant inputs are directly or indirectly observable from market data.
Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where
the valuation technique includes inputs not based on observable data and the unobservable inputs have a
significant effect on the instrument’s valuation. This category includes instruments that are valued based on
quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to
reflect differences between the instruments.
Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted
market prices or dealer price quotations. For all other financial instruments the Company determines fair values
using net present value and discounted cash flow models and comparisons to similar instruments for which
market observable prices exist. Assumptions and inputs used in valuation techniques include risk-free and
benchmark interest rates, credit spreads and other premia used in estimating discount rates, foreign currency
exchange rates and expected price volatilities and correlations. The objective of valuation techniques is to arrive
at a fair value determination that reflects the price of the financial instrument at the reporting date that would have
been determined by market participants acting at arm’s length.
The Group uses widely recognised valuation models for determining the fair value of common and more simple
financial instruments such as interest rate swaps that use only observable market data and require little
management judgement and estimation. Observable prices and model inputs are usually available in the market
for simple over the counter derivatives, e.g. interest rate swaps. Availability of observable market prices and
model inputs reduces the need for management judgement and estimation and also reduces the uncertainty
associated with determination of fair values. Availability of observable market prices and inputs varies depending
on the products and markets and is prone to changes based on specific events and general conditions in the
financial markets.
The following is a summary of the classifications of the financial assets and liabilities:
Total
Level 1 Level 2 Level 3 Fair value
£’000 £’000 £’000 £’000
28 February 2014
Financial assets
Designated at fair value through profit or loss –equity
securities 119,960 72 - 120,032
Derivative financial assets - 25 - 25
119,960 97 - 120,057
Financial liabilities
Interest rate swaps - (3,588) - (3,588)
- (3,588) - (3,588)
31 August 2013
Financial assets
Designated at fair value through profit or loss –equity
securities 138,909 72 - 138,981
Derivative financial assets - 111 - 111
138,909 183 - 139,092
Financial liabilities
Interest rate swaps - (4,814) - (4,814)
- (4,814) - (4,814)
No financial instruments were transferred between levels during the year.
The investment in Cromwell is categorised as a Level 1 investment as it has been priced using quoted prices in
an active market.
Certain financial assets designated at fair value through profit or loss have been categorised as Level 2 as they
have been priced using quoted prices for identical instruments in markets that are considered less than active.
Interest rate swaps have been categorised as Level 2 as although they are priced using directly observable
inputs, the instruments are not traded in an active market.
No instruments have been categorised as Level 3.
33. CONTINGENCIES, GUARANTEES AND CAPITAL COMMITMENTS
The Group has capital commitments of £9.3 million (31 August 2013: £1.3 million) in respect of capital
expenditure contracted for at the reporting date, but not yet incurred, for future transactions approved by the
Board. The Group has entered into a corporate guarantee agreement with IHG Hotels Limited, the contingent
liability of which is not expected to exceed £0.3 million.
Further consideration being a share in the potential uplift in property values following redevelopment may be
payable in respect of the CMC acquisition specifically the acquisition of the Ingolstadt and Hamburg properties.
This is payable within three years of the completion date if certain conditions are met. Based on the facts as at 28
February 2014 the outflow of economic benefits is not probable and so no provision has been set up for any
potential future outflow.
The fair value of the assets and liabilities acquired in respect of the CMC acquisition was based on best estimates
at year end and may be subject to change as further information is obtained during the measurement period.
34. SUBSEQUENT EVENTS
The Board resolved to declare an interim dividend of 1.5 pence per share. The record date for the interim
dividend is 23 May 2014. The dividend will be paid to shareholders on 5 June 2014.
The Company proposes to offer shareholders the option to receive ordinary shares in lieu of the cash dividend
under a Scrip Dividend Scheme. An announcement will follow in due course.
Glossary
Aviva Aviva Commercial Finance Limited
Board The board of directors of Redefine International
AUD Australian Dollar made up of 100 cents.
Cromwell Cromwell Property Group is an Australian Securities Exchange listed stapled
security (ASX:CMW) comprising the Cromwell Corporation Limited and
Cromwell Property Securities Limited, which acts as the responsible entity of the
Cromwell Diversified Property Trust. www.cromwell.com.au.
EPRA European Public Real Estate Association.
ERV The estimated market rental value of lettable space which could reasonably be
expected to be obtained on a new letting or rent review.
Eurozone The geographic and economic region that consists of all the European Union
countries that have fully incorporated the Euro as their national currency.
Euro or € The lawful common currency of participating member states of the European
Monetary Union.
Fair value movement An accounting adjustment to change the book value of an asset or liability to its
market value.
Finance lease A lease that transfers substantially all the risks and rewards of ownership from
the lessor to the lessee.
FCTR Foreign Currency Translation Reserve.
GBP or £ Great British Pound, the legal currency of the UK.
GDP Gross domestic product
Grand Arcade Grand Arcade Shopping Centre in Wigan, UK
IFRS International Financial Reporting Standards.
Interest rate swap A financial instrument where two parties agree to exchange an interest rate
obligation for a predetermined amount of time. These are used by the Group to
convert floating-rate debt or investments to fixed rates.
JSE JSE Limited, licensed as an exchange and a public company incorporated in
terms of the laws of South Africa and the operator of the Johannesburg Stock
Exchange.
LIBOR The London Interbank Offered Rate, the interest rate charged by one bank to
another for lending money.
LTV Loan to value. A ratio of debt divided by the market value of investment property
LSE The London Stock Exchange plc.
NAV Net Asset Value.
PSP Long-term performance Share Plan awarded to the Executive Directors.
Redefine International P.L.C. The enlarged company following the reverse acquisition between Wichford and
(Redefine International, the Redefine International plc.
Company or the Group)
RBDL Redefine BDL Hotel Group Limited, the holding company for the hotel
management group.
RHM Redefine Hotel Management Limited
RIFM Redefine International Fund Managers Limited. The parent entity of RIPML.
RIHL Redefine International Holdings Limited. The previously AIM listed property
investment company party to the reverse acquisition (previously named
Redefine International plc).
RIPML Redefine International Property Management Limited. The Investment Adviser
to the Company.
Redefine Properties Limited Listed on the JSE, 32.95% shareholder of the Company.
(Redefine Properties)
REIT Real Estate Investment Trust. A REIT must be a publicly quoted company with
at least three-quarters of its profits and assets derived from a qualifying property
rental business. Income and capital gains from the property rental business are
exempt from tax but the REIT is required to distribute at least 90% of those
profits to shareholders. Corporation tax is payable on non-qualifying activities in
the normal way.
Revpar Revenue per available room (calculated by multiplying the hotel’s average daily
room rate by its occupancy rate).
Share Plan The Long-Term Performance Share Plan (PSP) and the Restricted Stock Policy
TSR Total Shareholder Return. The growth in value of the Company’s share over a
specified period, assuming that dividends are reinvested to purchase additional
shares.
UK The United Kingdom of Great Britain and Northern Ireland.
UK-REIT UK Real Estate Investment Trust. A UK-REIT must be a publicly quoted
company with at least three-quarters of its profits and assets derived from a
qualifying property rental business. Income and capital gains from the property
rental business are exempt from tax but the REIT is required to distribute at
least 90% of those profits to shareholders. Corporation tax is payable on non-
qualifying activities in the normal way.
WAULT Weighted average unexpired lease term.
Weston Favell Weston Favell Shopping Centre in Northampton, UK
West Orchards West Orchards Shopping Centre in Coventry, UK
Wichford Wichford P.L.C., the previously LSE listed property investment company party to
the reverse acquisition.
30 April 2014
JSE Sponsor
Java Capital
Date: 30/04/2014 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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