Wrap Text
Unaudited group results for the six months ended 28 February 2014
REDEFINE PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1999/018591/06
JSE share code: RDF
ISIN: ZAE000143178)
“Redefine” or “the company” or “the group”
(Approved as a REIT by the JSE)
Unaudited group results for the six months ended 28 February 2014
- Distribution growth of 8%, ahead of market guidance
- Net asset value up 51,1 cents to 921,8 cents
- R4 billion in property acquisitions in progress
- Fountainhead holding up to 65,9%
- Developments in progress total R3,5 billion
- Direct investment in Australia totals R3,2 billion
Consolidated statements of comprehensive income
Unaudited Unaudited Audited
28 February 28 February 31 August
2014 2013 2013
R’000 R’000 R’000
Revenue
Property portfolio 2 115 771 1 381 083 3 220 615
- Contractual rental income 2 055 270 1 303 902 3 152 971
- Straight-line rental income accrual 60 501 77 181 67 644
Listed security income 99 938 182 112 311 046
Fee income 7 838 66 231 88 886
Trading income 982 1 810 3 807
Total revenue 2 224 529 1 631 236 3 624 354
Operating costs (402 876) (273 633) (633 840)
Administration costs (93 976) (63 500) (149 968)
Net operating income 1 727 677 1 294 103 2 840 546
Changes in fair values of properties, listed
securities and financial instruments 1 703 891 236 739 1 369 451
Amortisation of intangibles (31 428) (31 428) (62 856)
Equity accounted (loss)/profits (63 623) 73 271 329 656
Income from operations 3 336 517 1 572 685 4 476 797
Net interest (706 811) (379 275) (850 716)
- Interest paid (793 883) (402 301) (989 407)
- Interest received 87 072 23 026 138 691
Foreign exchange gain/(loss) 43 645 26 266 (81 279)
Income before debenture interest 2 673 351 1 219 676 3 544 802
Debenture interest (1 115 697) (930 287) (2 012 705)
Profit before taxation 1 557 654 289 389 1 532 097
Taxation (1 565) (74 235) 1 389 657
Profit for the period/year from continuing operations 1 556 089 215 154 2 921 754
Profit from discontinued operations 369 459 944 146 935 272
Profit for the period/year 1 925 548 1 159 300 3 857 026
- Redefine shareholders 1 601 077 1 159 463 3 619 654
- Continuing operations 1 235 380 216 412 2 693 667
- Discontinued operations 365 697 943 051 925 987
- Non-controlling interests 324 471 (163) 237 372
- Continuing operations 320 709 (1 258) 228 087
- Discontinued operations 3 762 1 095 9 285
Other comprehensive income (58 550) (342 740) (297 087)
Those items that will be reclassified to profit and loss
Exchange differences on translation of foreign discontinued
operations - subsidiaries 61 505 29 976 93 449
Exchange differences on translation of foreign continuing
operations - associates (11 148) - (17 820)
Recycling of exchange differences on translation
of disposal/deemed disposal of foreign subsidiary (108 907) (372 716) (372 716)
Total comprehensive income for the period/year 1 866 998 816 560 3 559 939
- Redefine shareholders 1 538 964 820 907 3 314 344
- Continuing operations 1 224 232 250 572 2 675 847
- Discontinued operations 314 732 570 335 638 497
- Non-controlling interests 328 034 (4 347) 245 595
- Continuing operations 320 709 (1 258) 228 087
- Discontinued operations 7 325 (3 089) 17 508
Consolidated statements of financial position
Unaudited Unaudited Audited
28 February 28 February 31 August
2014 2013 2013
R’000 R’000 R’000
ASSETS
Non-current assets 49 169 694 31 345 308 42 796 057
Investment properties 36 252 086 21 601 215 32 812 494
- Fair value of investment properties for
accounting purposes 33 635 897 20 605 033 30 687 910
- Straight-line rental income accrual 1 141 432 728 403 1 089 942
- Properties under development 1 474 757 267 779 1 034 642
Listed securities 2 047 805 2 664 022 2 050 203
Goodwill 3 647 251 2 755 471 3 647 251
Intangible assets 1 585 521 1 853 825 1 616 871
Interest in associates and joint ventures 3 993 422 1 585 345 1 654 067
Interest rate swaps 194 807 - -
Loans receivable 1 259 562 737 946 837 742
Other financial assets 88 198 - 78 236
Guarantee fees receivable 50 000 50 000 50 000
Property, plant and equipment 51 042 97 484 49 193
Current assets 1 188 745 428 411 997 895
Properties held-for-trading 21 192 27 338 23 949
Trade and other receivables 497 899 277 240 453 483
Loans receivable 113 060 12 988 113 504
Listed security income receivable 26 936 61 491 48 051
Cash and cash equivalents 529 658 49 354 358 908
Non-current assets held-for-sale 961 070 3 377 582 5 087 645
Total assets 51 319 509 35 151 301 48 881 597
EQUITY AND LIABILITIES
Shareholders’ interest 22 352 942 16 061 116 19 833 320
Stated capital 14 008 735 11 660 936 12 979 046
Reserves 8 344 207 4 400 180 6 854 274
Non-current liabilities - debenture capital 5 320 447 4 791 714 5 085 419
Linked unitholders interest 27 673 389 20 852 830 24 918 739
Non-controlling interests (NCI) 2 966 483 45 842 4 240 603
Total unitholders interest 30 639 872 20 898 672 29 159 342
Non-current liabilities 15 479 608 11 895 482 13 525 562
Interest-bearing liabilities 14 853 459 9 380 964 12 873 367
Interest rate swaps - 359 566 10 430
Other financial liabilities 44 848 54 814 52 241
Deferred taxation 581 301 2 100 138 589 524
Current liabilities 5 200 029 2 357 147 4 149 445
Trade and other payables 1 029 365 560 876 948 055
Interest-bearing liabilities 3 039 384 852 000 2 142 000
Interest rate swaps 926 - 16 165
Other financial liabilities 6 332 8 606 11 439
Taxation payable 8 325 5 378 6 390
Linked unitholders for distribution 1 115 697 930 287 1 025 396
Non-current liabilities held-for-sale - - 2 047 248
Total equity and liabilities 51 319 509 35 151 301 48 881 597
Net asset value per linked unit (excluding deferred tax
and NCI)(cents) 921,82 831,48 870,68
Net tangible asset value per linked unit (excluding deferred
tax and NCI)(cents) 751,10 664,51 691,00
Condensed consolidated statements of changes in equity
Unaudited Unaudited Audited
28 February 28 February 31 August
2014 2013 2013
R’000 R’000 R’000
Opening balance 24 073 923 16 551 915 16 551 915
Issue of linked units 1 029 689 - 1 318 110
Effect on NCI from deemed disposal and dilution
of interest in subsidiary - (1 177 188) (1 177 188)
Total comprehensive income for the period/year 1 866 998 816 560 3 559 939
Transactions with non-controlling interests (125 520) (8 051) (153 782)
Changes in ownership interests in subsidiaries (1 527 582) - (431 968)
Share-based payment reserve 1 917 - 5 822
NCI on acquisition of subsidiaries - (76 278) 4 401 075
Total stated capital, reserves and
non-controlling interests 25 319 425 16 106 958 24 073 923
Condensed segmental analysis
Office Retail Industrial Fountainhead Total
R’000 R’000 R’000 R’000 R’000
Six months ended 28 February 2014
Contractual rental income¥ 630 291 557 890 248 371 618 718 2 055 270
Operating costs (115 954) (129 787) (28 847) (128 288) (402 876)
Net property income 514 337 428 103 219 524 490 430 1 652 394
Investment property portfolio# 9 583 149 9 418 884 4 943 461 11 792 905 35 738 399
Six months ended 28 February 2013
Contractual rental income¥ 594 579 490 747 218 576 - 1 303 902
Operating costs (132 051) (122 131) (19 451) - (273 633)
Net property income 462 528 368 616 199 125 - 1 030 269
Investment property portfolio# 9 598 854 7 778 683 4 131 200 - 21 508 737
Year ended 31 August 2013
Contractual rental income¥ 1 200 156 1 026 981 437 024 488 810 3 152 971
Operating costs (247 058) (242 101) (44 994) (99 687) (633 840)
Net property income 953 098 784 880 392 030 389 123 2 519 131
Investment property portfolio# 9 380 152 9 251 965 4 308 244 11 105 125 34 045 486
¥Excluding straight-line rental income accrual.
#Excluding properties under development and held-for-trading. Includes investment properties classified as
non-current assets held-for-sale.
Distributable income analysis
Redefine Fountainhead International Total
R’000 R’000 R’000 R’000
Net property income (excluding straight-line rental accrual) 1 179 351 473 043 - 1 652 394
Listed security income 8 240 - 81 022 89 262
Trading income 982 - - 982
Fee income 7 838 - - 7 838
Total revenue 1 196 411 473 043 81 022 1 750 476
Administration costs (59 388) (34 587) (1) (93 976)
Distributable equity income from interest in associates - - 135 284 135 284
Realised foreign exchange gains (420) - 5 345 4 925
Net interest (462 148) (101 270) (7 298) (570 716)
Net distributable profit before taxation from continuing
operations 674 455 337 186 214 352 1 225 993
Taxation (excluding CGT and deferred tax) (1 443) - (16 133) (17 576)
Net distributable profit from continuing operations 673 012 337 186 198 219 1 208 417
Net distributable profit from discontinued operations - - 22 283 22 283
Net profit from operations before distributable adjustments 673 012 337 186 220 502 1 230 700
Non-controlling interest’s share of Fountainhead distribution - (115 003) - (115 003)
Distributable income 673 012 222 183 220 502 1 115 697
Headline earnings and distributable earnings reconciliation
Unaudited Unaudited Audited
28 February 28 February 31 August
2014 2013 2013
R’00 R’000 R’000
Profit for the period/year attributable to Redefine shareholders 1 601 077 1 159 463 3 619 654
Changes in fair values of properties (net of deferred taxation) (802 735) (136 860) (2 024 718)
Profit on disposal/deemed disposal of subsidiaries (332 713) (939 668) (898 651)
Profit on deemed disposal of investment in an associate (net
of deferred tax) (838 911) - -
Capital gains tax - 21 136 64 542
Headline (loss)/profit attributable to Redefine shareholders (373 282) 104 071 760 827
Debenture interest 1 115 697 930 287 2 012 705
Headline earnings attributable to Redefine linked unitholders 742 415 1 034 358 2 773 532
Changes in fair values of listed securities and financial instruments
(net of deferred taxation) (117 433) (49 626) (718 943)
Amortisation of intangibles (net of deferred taxation) 22 628 55 484 45 256
Alignment of consolidated foreign profits with distributions - (8 335) 47 589
Straight-line rental income accrual (60 501) (77 181) (67 644)
Unrealised foreign exchange (loss)/gain (38 720) (26 266) 85 552
Fair value adjustments of associates and NCI 439 015 - (164 203)
Withholding taxes on anticipated foreign distributions (7 802) - -
Debt restructure costs 136 095 - -
Pre-acquisition income on listed securities - 1 853 11 566
Distributable income 1 115 697 930 287 2 012 705
Six months ended 28 February 1 115 697 930 287 987 309
Six months ended 31 August - - 1 025 396
Total distributions 1 115 697 930 287 2 012 705
Actual number of linked units in issue (000)* 3 065 102 2 760 497 2 929 702
Weighted number of linked units in issue (000)* 2 995 531 2 760 497 2 824 980
Earnings and diluted^ earnings per linked unit (cents) 90,69 75,70 199,38
- continuing operations per linked unit (cents) 78,49 41,54 166,60
- discontinued operations per linked unit (cents) 12,20 34,16 32,78
Headline earnings and diluted^ headline earnings per linked unit (cents) 24,78 37,47 98,18
- continuing operations per linked unit (cents) 23,68 37,35 97,21
- discontinued operations per linked unit (cents) 1,10 0,12 0,97
Distribution per linked unit (cents) 36,40 33,70 68,70
*Excludes 5 876 766 treasury units.
^No dilutionary instruments in issue.
Condensed consolidated statements of cash flow
Unaudited Unaudited Audited
28 February 28 February 31 August
2014 2013 2013
R’00 R’000 R’000
Cash generated from continuing operations 1 643 842 1 354 446 2 652 809
Net interest (732 900) (379 275) (923 410)
Linked unit distributions paid (1 025 396) (897 162) (1 884 471)
Payments to non-controlling interests (55 673) - (165 630)
Net cash (outflow)/inflow from operating activities -
continuing operations (170 127) 78 009 (320 702)
Net cash inflow from operating activities -
discontinuing operations 180 979 19 100 14 523
Net cash inflow/(outflow) from operating activities 10 852 97 109 (306 179)
Net cash outflow from investing activities (2 265 683) (1 292 127) (5 209 623)
Net cash outflow from investing activities - continuing operations (2 814 235) (1 253 025) (4 810 258)
Net cash inflow/(outflow) from investing activities - discontinued
operations 548 552 (39 102) (399 365)
Net cash inflow from financing activities 2 447 297 891 265 5 504 581
Net cash inflow from financing activities -
continuing operations 2 448 153 891 265 5 500 030
Net cash (outflow)/inflow from financing activities - discontinued
operations (856) - 4 551
Net movement in cash and cash equivalents 192 466 (303 753) (11 221)
Cash and cash equivalents at beginning of
period/year 358 908 351 333 351 333
Translation effects on cash and cash equivalents of foreign operations (21 716) 1 774 18 796
Cash and cash equivalents at end of period/year 529 658 49 354 358 908
Commentary
Profile
Redefine with a total asset base of R51,3 billion, is a diversified Real Estate Investment Trust (REIT)
capitalised on the Johannesburg Stock Exchange (JSE) at R30,3 billion and controls property assets of R44,5 billion.
As at 28 February 2014, it actively managed a diversified directly held local property portfolio valued at R25,4 billion,
while Fountainhead Property Trust (Fountainhead), in which Redefine has a 65,9% equity interest, had an R11,8 billion
(mostly retail) property portfolio. Redefine’s international property investments, which total R6,6 billion (14,7% of
total property assets) provide geographic diversification. Redefine has a R3,4 billion (32,9% equity interest) in Redefine
International P.L.C. (RI PLC) listed on both the London Stock Exchange and JSE and has a R3,2 billion investment in the
Australian property market through a direct 50% interest in North Sydney’s landmark tower, Northpoint, as well as a holding
of 12,8% in Cromwell Property Group (Cromwell), which is listed on the Australian Stock Exchange - and an indirect holding
of a further 13,4% through RI PLC.
Redefine’s strategy is centred on delivering sustained value to stakeholders.
Financial results
Redefine has declared a distribution of 36,40 cents per linked unit for the six months ended 28 February 2014, which
is 8% ahead of the comparable period and is ahead of market guidance. In Rand terms, distributable income grew by 13%.
Contractual rental income for the period comprised 95% (31 August 2013: 89%) of total revenue and income from listed
securities 5% (31 August 2013: 9%), while trading and fee income (31 August 2013: 2%) were no longer a feature.
Operating costs represent 19% of contractual rental income (31 August 2013: 20%) and were contained to prior period
levels mainly due to the internalisation of electricity recoveries.
Redefine’s international investments contributed 20% (31 August 2013: 11%) to distributable income.
Changes in fair values
The group’s property portfolio was internally valued at 28 February 2014 resulting in a net increase in value of
R766 million. Investments in listed securities decreased in value by R101 million during the period. The unbundling by
Redefine Properties International Limited (RIN) of RI PLC resulted in a positive fair value adjustment of R847 million. The
balance mainly relates to the mark-to-market of the group’s interest rate swaps, which protect the group against adverse
interest rate movements.
Letting activity: During the period, leases covering 219 803 m² were renewed at an average rental increase of 6%. A
further 158 661 m² was let across the portfolio and together with vacates, vacancies decreased by 0,4% to 4,9%. Vacancies
are set out below as a percentage of gross lettable area (GLA):
2014 2013
Office 7,4% 8,6%
Retail 4,5% 3,6%
Industrial 2,9% 3,7%
Total 4,9% 5,3%
Arrears amounted to R52 million (31 August 2013: R46 million) against which a provision for possible bad debts of
R19 million (31 August 2013: R21 million) is held. Amounts due by Government total R7 million (31 August 2013: R7 million).
Redefine’s Property portfolio strategy
Redefine has substantially advanced its strategy of repositioning and improving the quality of the core property
portfolio. The emphasis in acquisitions, wherever possible, is to secure fully repairing leases with premium tenants.
Acquisitions: Three properties, with a GLA of 66 186 m², were acquired and transferred during the period for an
aggregate purchase consideration of R699 million at an initial yield of 7,6%. In addition and subject to the usual conditions
precedent, agreements have been concluded for the acquisition of properties for an aggregate consideration of R1,9 billion
at an initial yield of 7,6% and GLA of 76 570 m². Properties with an aggregate consideration of R793 million (Maponya
Mall being the largest property) transferred subsequent to the reporting period. Committed new development projects
covering 157 051 m² of GLA with an approved value of R2,8 billion at an average yield of 8%, are presently in progress,
with a pre-let factor in excess of 40%. Redevelopment projects of the existing portfolio with an approved value of
R671 million at an average yield of 7% are also in progress.
Disposals: During the period, four properties with a total GLA of 19 773 m², no longer meeting Redefine’s investment
criteria, were sold to various buyers for an aggregate consideration of R79 million at an average yield of 10,9%.
Agreements for the disposal of properties for an aggregate consideration of R124 million with a GLA of 39 161 m², were
concluded, which are subject to the usual conditions precedent.
Government tenanted office portfolio: As a result of the structural change in listed property yields, the sale of the
portfolio has been put on hold. In terms of the Government policy, Redefine is renewing leases for three year periods
whereas previously many of these were monthly tenancies or one year leases. These properties are no longer included in
non-current assets held-for-sale.
Fountainhead: During the period, Redefine used 15,4 million Hyprop units as currency to acquire 12% of Fountainhead’s
units in issue and an additional 4,2% was acquired on the open market for cash taking Redefine’s equity interest to
65,9%. Redefine and Fountainhead have begun engaging in relation to the possible terms of a potential merger between
Redefine and Fountainhead. These engagements are still at an early stage.
Annuity Properties Limited (Annuity): Subsequent to the period end, Redefine reached agreement with Annuity to acquire
its entire issued capital by way of a scheme of arrangement as well as its asset and property management companies for
a cash consideration of R103 million. Annuity linked unitholders will receive 57,752 Redefine linked units for every
100 Annuity linked units, equating to 136,6 million new Redefine linked units. The transaction, which will be with effect
from 1 March 2014, is subject to fulfilling various conditions precedent, including approvals by Annuity linked unitholders
and the usual regulatory approvals.
Listed securities portfolios
Cromwell: During the period Redefine received South African Reserve Bank approval to hold its interest
in Cromwell directly and increased its holding by 0,4% to 12,8%.
Hyprop: In line with its stated objective, Redefine disposed of its entire holding during the period by swapping
Hyprop units for Fountainhead units and selling the remaining balance in a single trade for cash.
Interests in associates
RI PLC: RIN’s unitholders approved the distribution of the RI PLC shares held by RIN at a general meeting held on
18 October 2013. Following the secondary listing on the JSE on 28 October 2013 of RI PLC, RIN unbundled all of the RI PLC
shares it held. With effect from 1 December 2013, Redefine International Fund Managers (RIFM) was internalised as part of
RI PLC’s conversion to a UK REIT. Redefine received as consideration 69,3 million RI PLC units. Redefine has a 32,9%
interest in RI PLC.
Cromwell Partners Trust (CPT): During the period CPT, which is a 50/50 joint venture between Redefine and Cromwell,
acquired an office building Northpoint Tower (Northpoint) for AUD279 million. Northpoint is North Sydney’s tallest and
most recognisable office tower with a total land areas of more than 5 000 m2 and a net lettable area of 35 145 m2 spread
across 42 levels, which is fully let. Redefine’s equity contribution of AUD80 million was funded through gearing obtained
in Australia, on a non-recourse basis, against its holding in Cromwell.
Distribution adjustment: It is Redefine’s policy to distribute its share of income from international investments to
the extent of dividends received. Accordingly, an adjustment has been made to the company’s distributable earnings for
the period to equate the equity accounted results from its international investments for the period to the anticipated
dividends.
Funding
Redefine’s group borrowings of R17,9 billion at 28 February 2014 comprised borrowings of R14,8 billion by Redefine and
R3,1 billion by Fountainhead. Redefine’s debt represented 37,6% of the value of its property assets. Redefine’s average
cost of funding is 7,8% (31 August 2013: 8,0%) - interest rates are fixed on 81% of borrowings for an average period of
four years.
During the period, Redefine issued 135,4 million linked units as part of an accelerated bookbuild, taking the total
number of linked units, ranking for distribution to 3 065 101 503 excluding linked units held in treasury.
During the first week of September 2013, Redefine launched an American Depositary Receipt Programme, which trades
under the symbol “REDPY” - this is designed to make investing into Redefine more accessible to international investors.
Moody’s credit rating:
The rating was refreshed on 5 August 2013 and remains unchanged as follows:
Global long term Baa3
Global short term P-3
National long term A3.za
National short term P-2.za
Capital conversion
To align the company’s capital structure with a structure that is anticipated to become the REIT standard in South
Africa, as well as to comply with JSE Listings Requirements for REITs, Redefine is in the process of converting its
existing linked unit capital structure into an all share capital structure within the scheme of arrangement framework provided
for in terms of section 114 of the Companies Act, 2008. This process is anticipated to be completed by the end of the
company’s financial year.
Contingencies and commitments
At 28 February 2014, Redefine had guarantees and suretyships in respect of its BEE initiatives and subsidiaries
amounting to R280 million (31 August 2013: R272 million). Redefine has capital commitments outstanding amounting to
R3,5 billion (31 August 2013: R3,1 billion) and committed property acquisitions of R2,0 billion (31 August 2013: R2,4 billion).
Changes to the board of directors (board)
Monica Khumalo (independent non-executive) resigned from the Board with effect from 11 November 2013 to avoid possible
conflicts of interest which might arise as a result of her assuming an executive role with another organisation. Diana
Perton (independent non-executive) retired from the Board with effect from 30 January 2014 and David Nathan (independent
non-executive) was appointed to the Board and as a member of the Audit and Risk Committee with effect from 17 March 2014.
Prospects
A challenging trading environment, disproportionate increases in utility costs and continued financial market
volatility are anticipated to continue. Notwithstanding these factors, Redefine is well focused on managing the variables within
its control. Accordingly, Redefine anticipates growth in distributable income per linked unit for the second half of
2014 at a rate similar to that achieved in the current period. This forecast has not been reviewed or reported on by the
group’s independent external auditors and is the responsibility of the Board.
The forecast is predicated on the assumption that the current trading conditions will prevail. Forecast rental income
is based on contractual terms and anticipated market related renewals.
Declaration of a cash distribution with the election to reinvest the cash distribution in return for redefine linked
units
Linked unitholders were advised today, 8 May 2014 in the company’s interim results for the six months ended 28 February 2014
that the Board of directors of Redefine has declared a cash distribution of 36,40 cents per linked unit out of
the company’s distributable income for the six months ended 28 February 2014 (the cash distribution).
Linked unitholders will be entitled, in respect of all or part of their linked unitholding, to elect to re-invest the
cash distribution in return for Redefine linked units (the linked unit reinvestment alternative), failing which they
will receive the cash distribution of 36,40 cents per linked unit that will be paid to those linked unitholders not
electing to participate in the linked unit reinvestment alternative.
A circular providing further information in respect of the cash distribution and linked unit reinvestment alternative
will be posted to Redefine linked unitholders today, 8 May 2014.
Linked unitholders who have dematerialised their linked units through a Central Securities Depository Participant
(CSDP) or broker should instruct their CSDP or broker with regard to their election in terms of the custody agreement
entered into between them and their CSDP or broker.
Salient dates and times
The salient dates and times for the cash distribution and linked unit reinvestment alternative are as set out below.
2014
Circular and form of election posted to linked unitholders Thursday, 8 May
Finalisation information including the linked unit ratio
and price per linked unit published on SENS Friday, 16 May
Last day to trade in order to participate in the election
to receive the linked unit reinvestment alternative or
to receive a cash distribution (LDT) Friday, 23 May
Linked units trade ex-distribution Monday, 26 May
Listing of maximum possible number of linked units under
the linked unit reinvestment alternative Tuesday, 27 May
Last day to elect to receive the linked unit reinvestment
alternative or to receive a cash distribution (no late
forms of election will be accepted) at 12:00 (SA time) Friday, 30 May
Record date for the election to receive the linked unit
reinvestment alternative or to receive a cash distribution
(record date) Friday, 30 May
Announcement of results of cash distribution and linked
unit reinvestment alternative released on SENS Monday, 2 June
Cash distribution cheques posted to certificated linked
unitholders on or about Monday, 2 June
Accounts credited by CSDP or broker to dematerialised
linked unitholders with the cash distribution payment Monday, 2 June
Linked unit certificates posted to certificated unitholders
on or about Tuesday, 3 June
Accounts updated with the new linked units (if applicable)
by CSDP or broker to dematerialised linked unitholders Tuesday, 3 June
Adjustment to linked units listed on or about Wednesday, 4 June
Notes:
1. Linked unitholders electing the linked unit reinvestment alternative are alerted to the fact that the new linked
units will be listed on LDT + 2 and that these new linked units can only be traded on LDT + 2, due to the fact that
settlement of the linked units will be two days after the record date, which differs from the conventional one day
after record date settlement process.
2.Linked units may not be dematerialised or rematerialised between Monday, 26 May 2014 and Friday, 30 May 2014, both
days inclusive.
3. The above dates and times are subject to change. Any changes will be released on SENS.
Tax implications
Redefine was granted REIT status by the JSE Limited with effect from 1 September 2013 in line with the REIT structure
as provided for in the Income Tax Act, No. 58 of 1962, as amended (the Income Tax Act) and section 13 of the JSE
Listings Requirements.
The REIT structure is a tax regime that allows a REIT to deduct qualifying distributions paid to investors, in
determining its taxable income.
The cash distribution of 36,40 cents per linked unit meets the requirements of a “qualifying distribution” for the
purposes of section 25BB of the Income Tax Act (a qualifying distribution) with the result that:
- qualifying distributions received by resident Redefine linked unitholders must be included in the gross income of
such linked unitholders (as a non-exempt dividend in terms of section 10(1)(k)(aa) of the Income Tax Act), with the
effect that the qualifying distribution is taxable as income in the hands of the Redefine linked unitholder. These qualifying
distributions are however exempt from dividends withholding tax, provided that the South African resident linked
unitholders provided the following forms to their CSDP or broker, as the case may be, in respect of uncertificated linked
units, or the company, in respect of certificated linked units:
- a declaration that the distribution is exempt from dividends tax; and
- a written undertaking to inform the CSDP, broker or the company, as the case may be, should the circumstances
affecting the exemption change or the beneficial owner cease to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Linked unitholders are advised
to contact their CSDP, broker or the company, as the case may be, to arrange for the abovementioned documents to be
submitted prior to payment of the distribution, if such documents have not already been submitted.
- qualifying distributions received by non-resident Redefine linked unitholders will not be taxable as income and
instead will be treated as ordinary dividends but which are exempt in terms of the usual dividend exemptions per section
10(1)(k) of the Income Tax Act. It should be noted that until 31 December 2013 qualifying distributions received by
non-residents were not subject to dividends withholding tax. From 1 January 2014, any qualifying distribution will be
subject to dividends withholding tax at 15%, unless the rate is reduced in terms of any applicable agreement for the avoidance
of double taxation (DTA) between South Africa and the country of residence of the unitholder. Assuming dividends withholding
tax will be withheld at a rate of 15%, the net distribution amount due to non-resident linked unitholders is 30,94 cents
per linked unit. A reduced dividends withholding rate in terms of the applicable DTA, may only be relied upon if the
non-resident linked unitholder has provided the following forms to their CSDP or broker, as the case may be, in respect of
uncertificated linked units, or the company, in respect of certificated linked units:
- a declaration that the distribution is subject to a reduced rate as a result of the application of a DTA; and
- a written undertaking to inform their CSDP, broker or the company, as the case may be, should the circumstances
affecting the reduced rate change or the beneficial owner cease to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Non-resident linked unitholders
are advised to contact their CSDP, broker or the company, as the case may be, to arrange for the abovementioned
documents to be submitted prior to payment of the distribution if such documents have not already been submitted, if
applicable.
Linked unitholders are advised that in electing to participate in the linked unit reinvestment alternative,
pre-taxation funds are utilised for the reinvestment purposes and that taxation will be due on the total cash distribution amount
of 36,40 cents per linked unit.
Other information:
- The ordinary issued share capital of Redefine is 3 070 978 269 ordinary shares of no par value before any election
to reinvest the cash distribution.
- Income Tax Reference Number of Redefine: 917/852/484/0.
- There are no Secondary Tax on Company credits available for utilisation against the dividend tax.
The cash distribution or linked unit reinvestment alternative may have tax implications for resident as well as
non-resident linked unitholders. Linked unitholders are therefore encouraged to consult their professional advisors should
they be in any doubt as to the appropriate action to take.
Basis of preparation
The results for the period ended 28 February 2014 have not been reviewed or reported on by the group’s independent
external auditors Grant Thornton (Jhb) Inc. These results have been prepared in accordance with International Financial
Reporting Standards, IAS 34 - Interim Financial Reporting, SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, JSE Listings Requirements and the requirements of the South African Companies Act, 2008 (as amended).
Except for the new standards adopted as set out below, all accounting policies applied by the group in the preparation
of these condensed consolidated interim financial statements are consistent with those applied by the group in its
consolidated annual financial statements as at and for the year ended 31 August 2013. The group has adopted the following new
standards:
- Amendment to IFRS 7 - Disclosures - Offsetting Financial Assets and Financial Liabilities
- IFRS 10 - Consolidated Financial Statements
- IFRS 11 - Joint Arrangements
- IFRS 12 - Disclosure of Interests in Other Entities
- IFRS 13 - Fair Value Measurement
- Amendments to IAS 1 - Presentation of Items of Other Comprehensive Income
- Amendments to IAS 16 - Property, Plant and Equipment
- Revised IAS 27 and 28 - Investments in Associates and Joint Ventures
- Amendments to IAS 32 - Financial Instrument Presentation
- Amendments to IAS 34 - Interim Financial Reporting
There was no material impact on the interim financial statements identified based on management’s assessment of these
standards. The prior period’s statements of comprehensive income, cash flows and segmental analysis have been
represented to reflect the treatment of RIFM as a discontinued operation in terms of IFRS 5.
These financial results have been prepared under the supervision of Andrew Konig (CA)SA, the financial director of the
group.
By order of the Board
Redefine Properties Limited
8 May 2014
Directors: D Gihwala (Chairman), M Wainer* (CEO), A J Konig* (FD), H K Mehta, B Nackan, D A Nathan,
R W Rees†, D H Rice*† (COO), R Robinson, M J Ruttell*@, G Z Steffens#
*Executive †British @Irish #German
Registered office: 3rd Floor, Redefine Place, 2 Arnold Road, Rosebank, 2196.
(PO Box 1731, Parklands, 2121)
Transfer secretaries: Computershare Investor Services (Pty) Ltd
Sponsor: Java Capital
Company secretary: Probity Business Services (Pty) Ltd
www.redefine.co.za
Date: 08/05/2014 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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