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REDEFINE PROPERTIES LIMITED - Summarised audited financial statements for the year ended 31 August 2014

Release Date: 06/11/2014 07:05
Code(s): RDF     PDF:  
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Summarised audited financial statements for the year ended 31 August 2014

Redefine Properties Limited             
(Incorporated in the Republic of South Africa)
Registration number: 1999/018591/06
JSE share code: RDF    ISIN: ZAE000190252
(“Redefine” or “the company” or “the group”)   (Approved as a REIT by the JSE)
Summarised audited financial statements for the year ended 31 August 2014

- Distributions +8,5% 
  Ahead of guidance
- Net asset value +12,1% 
  To 976 cents
- Market cap +20,5%
  To R36,4 billion
- Acquisitions +R4,6 billion
  R3 billion in progress
- Developments +R3,8 billion
  R1,5 billion completed
- International +R3,6 billion
  R7,4 billion global assets

  
Consolidated statements of comprehensive income                                                  
Audited / R’000                                              31 August 2014    31 August 2013       
Revenue                                                                                                    
Property portfolio                                                5 372 149         3 791 621   
 - Contractual rental income                                      5 310 428         3 723 977*        
 - Straight-line rental income accrual                               61 721            67 644   
Listed security income                                              185 742           311 046   
Fee income                                                           35 204            88 886   
Trading income                                                        1 032             3 807   
Total revenue                                                     5 594 127         4 195 360   
Operating costs                                                  (1 907 524)       (1 204 846)*   
Administration costs                                               (202 031)         (149 968)  
Net operating profit                                              3 484 572         2 840 546   
Changes in fair values of properties, listed securities
and financial instruments                                         2 051 245         1 369 451   
Amortisation of intangibles                                         (62 856)          (62 856)  
Equity accounted profits                                            439 766           329 656   
Profit from operations                                            5 912 727         4 476 797   
Net interest                                                     (1 297 768)         (850 716)  
 - Interest paid                                                 (1 457 159)         (989 407)  
 - Interest received                                                159 391           138 691   
Foreign exchange loss                                               (13 638)          (81 279)  
Profit before debenture interest                                  4 601 321         3 544 802   
Debenture interest                                               (1 115 697)       (2 012 705)  
Profit before taxation                                            3 485 624         1 532 097   
Taxation                                                             31 303         1 389 657   
Profit for the year from continuing operations                    3 516 927         2 921 754   
Profit from discontinued operations                                 369 458           935 272   
Profit for the year                                               3 886 385         3 857 026    
 - Redefine shareholders                                          3 407 818         3 619 654   
  - Continuing operations                                         3 042 122         2 693 667   
  - Discontinued operations                                         365 696           925 987   
 - Non-controlling interests                                        478 567           237 372   
  - Continuing operations                                           474 805           228 087   
  - Discontinued operations                                           3 762             9 285   
Other comprehensive loss                                            (40 817)         (297 087)  
Exchange differences on translation of foreign 
discontinued operations - subsidiaries                               93 230            93 449      
Exchange differences on translation of foreign 
continuing operations - associates                                  (25 140)          (17 820)  
Recycling of exchange differences on translation                   (108 907)         (372 716)  
of disposal/deemed disposal of foreign subsidiary                                                                                                              
Total comprehensive income for the year                           3 845 568         3 559 939    
 - Redefine shareholders                                          3 363 439         3 314 344   
  - Continuing operations                                         3 016 983         2 675 847   
  - Discontinued operations                                         346 456           638 497   
 - Non-controlling interests                                        482 129           245 595   
  - Continuing operations                                           474 805           228 087   
  - Discontinued operations                                           7 324            17 508   
*Represented - refer to Basis of preparation.             


Consolidated statements of financial position                                     
Audited / R’000                                              31 August 2014    31 August 2013       
ASSETS                                                                                              
Non-current assets                                               55 007 339        42 796 057       
Investment properties                                            40 906 077        32 812 494       
 -  Fair value of investment properties for            
    accounting purposes                                          37 710 045        30 687 910       
 - Straight-line rental income accrual                            1 213 985         1 089 942       
 - Properties under development                                   1 982 047         1 034 642       
Listed securities                                                 2 750 900         2 050 203       
Goodwill                                                          3 769 570         3 647 251       
Intangible assets                                                 1 559 106         1 616 871       
Interest in associates and joint ventures                         4 173 173         1 654 067       
Loans receivable                                                  1 727 212           837 742       
Other financial assets                                               23 510            78 236       
Guarantee fees receivable                                            50 000            50 000       
Property, plant and equipment                                        47 791            49 193       
Current assets                                                      992 697           997 895       
Properties held-for-trading                                          21 349            23 949       
Trade and other receivables                                         580 021           453 483       
Loans receivable                                                      2 050           113 504       
Listed security income receivable                                    38 671            48 051       
Cash and cash equivalents                                           350 606           358 908       
Non-current assets held-for-sale                                  1 490 128         5 087 645       
Total assets                                                     57 490 164        48 881 597       
EQUITY AND LIABILITIES                                                                              
Shareholders/linked unitholders interest                         32 720 342        19 833 320       
Stated capital                                                   22 558 039        12 979 046       
Reserves                                                         10 162 303         6 854 274       
Non-current liabilities - debenture capital                               -         5 085 419       
Shareholders/linked unitholders interest                         32 720 342        24 918 739       
Non-controlling interests (NCI)                                   3 015 595         4 240 603       
Total shareholders/unitholders interest                          35 735 937        29 159 342       
Non-current liabilities                                          14 997 245        13 525 562       
Interest-bearing liabilities                                     14 355 324        12 873 367       
Interest rate swaps                                                  95 192            10 430       
Other financial liabilities                                          36 731            52 241       
Deferred taxation                                                   509 998           589 524       
Current liabilities                                               6 756 982         4 149 445       
Trade and other payables                                          1 294 307           948 055       
Interest-bearing liabilities                                      5 401 205         2 142 000       
Interest rate swaps                                                     926            16 165       
Other financial liabilities                                          12 872            11 439       
Taxation payable                                                     47 672             6 390       
Linked unitholders for distribution                                       -         1 025 396       
Non-current liabilities held-for-sale                                     -         2 047 248       
Total equity and liabilities                                     57 490 164        48 881 597       
Net asset value per share/linked unit                                       
(excluding deferred tax and NCI)(cents)                              976,03            870,68                               
Net tangible asset value per share/linked unit                              
(excluding deferred tax and NCI)(cents)                              819,52            691,00                               


Summarised consolidated statements of changes in equity     
Audited / R’000                                              31 August 2014    31 August 2013 
Opening balance                                                  24 073 923        16 551 915 
Issue of shares/linked units                                      3 663 579         1 318 110 
Conversion of debentures to stated capital                        5 915 414                 - 
Effect on NCI from deemed disposal and dilution 
of interest in subsidiary                                                 -        (1 177 188)
Total comprehensive income for the year                           3 845 568         3 559 939 
Transactions with non-controlling interests                      (1 686 423)         (153 782)
Changes in ownership interests in subsidiaries                      (84 004)         (431 968)
Share-based payment reserve                                           7 880             5 822 
NCI on acquisition of subsidiaries                                        -         4 401 075 
Total stated capital, reserves and 
non-controlling interests                                        35 735 937        24 073 923 


Distributable income analysis                                                                                                                                     
R’000                                                            Redefine    Fountainhead    International          Total    
Net property income (excluding                                   
straight-line rental accrual)                                   2 433 121         969 783                -      3 402 904                                                          
Listed security income                                             18 916               -          166 826        185 742 
Fee income                                                         34 735               -              469         35 204 
Trading income                                                      1 032               -                -          1 032 
Total revenue                                                   2 487 804         969 783          167 295      3 624 882 
Administration costs (excluding transaction 
costs relating to corporate action)                              (114 034)        (73 448)            (126)      (187 608)
Distributable equity income from interest 
in associates (RI PLC and Cromwell Partners Trust)                      -               -          301 998        301 998    
Realised foreign exchange gains                                         -               -           16 307         16 307 
Net interest (excluding costs relating to debt 
restructure and unrealised interest received)                    (919 662)       (218 714)         (48 978)    (1 187 354)   
Net distributable profit before taxation from 
continuing operations                                           1 454 108         677 621          436 496      2 568 225 
Taxation (excluding CGT and deferred tax)                         (14 391)              -          (44 678)       (59 069)
Net distributable profit from continuing operations             1 439 717         677 621          391 818      2 509 156 
Net distributable profit from discontinued operations                   -               -           22 283         22 283 
Net profit from operations before distributable adjustments     1 439 717         677 621          414 101      2 531 439 
Non-controlling interest’s share of Fountainhead distribution           -        (231 116)               -       (231 116)
Distributable income                                            1 439 717         446 506          414 101      2 300 323 
Distributable income adjustments:                                                                                         
- Pre-acquisition distribution received from Annuity               36 454               -                -         36 454 
- Antecedent interest                                              77 446               -                -         77 446 
Distributable income                                            1 553 617         446 506          414 101      2 414 223 


Summarised segmental analysis                                                                                  
Audited / R’000                       Office          Retail     Industrial    Fountainhead           Total      
Year ended 31 August 2014                                                                                      
Contractual rental income¥         1 597 514       1 520 780        633 521       1 558 613       5 310 428     
Operating costs                     (551 164)       (619 196)      (183 896)       (553 268)     (1 907 524)   
Net property income                1 046 350         901 584        449 625       1 005 345       3 402 904   
Investment properties#            11 781 330      11 302 104      5 162 643      12 168 081      40 414 158   
Year ended 31 August 2013                                                                                      
Contractual rental income¥*        1 385 523       1 210 012        524 042         604 400       3 723 977      
Operating costs*                    (432 424)       (425 132)      (132 013)       (215 277)     (1 204 846)   
Net property income                  953 099         784 880        392 029         389 123       2 519 131   
Investment properties#             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. Properties classified as held-for-sale are included.            
*Represented - refer to Basis of preparation.                                                                                        


Headline earnings and distributable income reconciliation             
Audited / R’000                                                        31 August 2014    31 August 2013                
Profit for the year attributable to shareholders                            3 407 818         3 619 654  
Changes in fair values of properties 
(net of deferred taxation)                                                 (1 108 787)       (2 024 718)  
Profit on disposal/deemed disposal of subsidiaries                           (340 949)         (898 651)  
Profit on deemed disposal of investment in an associate 
(net of deferred tax)                                                        (726 919)                -  
Capital gains tax                                                                   -            64 542  
Headline profit attributable to shareholders                                1 231 163           760 827  
Debenture interest                                                          1 115 697         2 012 705  
Headline earnings attributable to shareholders/linked unitholders           2 346 860         2 773 532  
Changes in fair values of listed securities and 
financial instruments (net of deferred taxation)                             (238 302)         (718 943)  
Amortisation of intangibles (net of deferred taxation)                         45 256            45 256  
Alignment of consolidated foreign profits with distributions                        -            47 589  
Straight-line rental income accrual                                           (61 721)          (67 644)  
Unrealised foreign exchange loss                                               29 945            85 552  
Fair value adjustments of associates and NCI 
(other than investment property)                                               63 965          (164 203)  
Anticipated withholding taxes on RI PLC distributable profit                  (10 517)                -  
Debt restructure costs and unrealised interest received                       110 414                 -  
Pre-acquisition distribution received from Annuity                             36 454                 -  
Transaction costs relating to Annuity and 
Fountainhead corporate action                                                  14 423                 -  
Antecedent interest (capitalised on shares issued)                             77 446                 -  
Pre-acquisition income on listed securities                                         -            11 566  
Distributable income                                                        2 414 223         2 012 705  
Six months ended 28 February                                                1 115 697           987 309  
Six months ended 31 August                                                  1 298 526         1 025 396  
Total distributions                                                         2 414 223         2 012 705  
Actual number of shares/linked units in issue (000) *                       3 404 630         2 929 702  
Weighted number of shares/linked units in issue (000)*                      3 090 599         2 824 980  
Diluted number of shares/linked units in issue (000)*                       3 654 675         2 929 702  
Basic earnings per share/linked unit (cents)                                   146,36            199,38  
- Continuing operations per share/linked unit (cents)                          134,53            166,60  
- Discontinued operations per share/linked unit (cents)                         11,83             32,78  
Diluted earnings per share/linked unit (cents) ^                               123,78                 -  
- Continuing operations per share/linked unit (cents)                          113,77                 -  
- Discontinued operations per share/linked unit (cents)                         10,01                 -  
Headline earnings per share/linked unit (cents)                                 75,94             98,18  
- Continuing operations per share/linked unit (cents)                           75,48             97,21  
- Discontinued operations per share/linked unit (cents)                          0,46              0,97  
Diluted headline earnings per share/linked unit (cents) ^                       64,22                 -  
- Continuing operations per share/linked unit (cents)                           63,83                 -  
- Discontinued operations per share/linked unit (cents)                          0,39                 -                                                                                                                                          
Distribution per share/linked unit (cents)                                      74,54             68,70  
*Excludes 5 876 766 treasury shares/units.                                                               
^In the prior period there were no dilutionary linked units in issue.                                                                                                                  


Summarised consolidated statements of cash flow                                                                         
Audited / R’000                                                        31 August 2014    31 August 2013   
Cash generated from continuing operations                                   3 612 333         2 790 761   
Net interest paid                                                          (1 297 768)         (923 410)  
Debenture interest paid                                                    (2 141 093)       (1 884 471)  
Distributions to non-controlling interests                                   (168 460)         (303 582)  
Net cash inflow/(outflow) from                                       
operating activities - continuing operations                                    5 012          (320 702)  
Net cash inflow from operating activities                            
- discontinued operations                                                     180 979            14 523   
Net cash inflow/(outflow) from operating activities                           185 991          (306 179)  
Net cash outflow from investing activities                                 (5 871 318)       (5 209 623)  
Net cash outflow from investing activities                           
- continuing operations                                                    (6 491 871)       (4 810 258)  
Net cash inflow/(outflow) from investing activities                  
- discontinued operations                                                     548 553          (399 365)  
Net cash inflow from financing activities                                   5 558 778         5 504 581   
Net cash inflow from financing activities                            
- continuing operations                                                     5 559 634         5 500 030   
Net cash (outflow)/inflow from financing activities                  
- discontinued operations                                                        (856)            4 551                                                                                                                       
Net movement in cash and cash equivalents                                    (126 549)          (11 221)  
Cash and cash equivalents at beginning of year                                358 908           351 333   
Translation effects on cash and cash equivalents                     
of foreign operations                                                         118 247            18 796   
Cash and cash equivalents at end of year                                      350 606           358 908   


Commentary 
Profile
Redefine is a diversified Real Estate Investment Trust (REIT), with a strategic focus centred on delivering sustained
value to stakeholders. Redefine controls a property income earning asset base of R51,1 billion and is capitalised on the
Johannesburg Stock Exchange (JSE) at R36,4 billion. 

At 31 August 2014, it actively managed a diversified directly held local property portfolio valued at R31,5 billion,
while Fountainhead Property Trust (Fountainhead), in which Redefine has a 65,9% equity interest, had a R12,2 billion
(predominantly retail) property portfolio. 

Redefine’s international property investments totalling R7,4 billion, (representing 14,5% of the group’s property
assets) provide geographic diversification. Redefine has a 30,1% equity interest, equating to R3,5 billion, in Redefine
International P.L.C. (RI PLC) which is listed on both the London Stock Exchange and the JSE. In addition, Redefine has a
R3,9 billion presence in the Australian property market through a direct 50% interest in North Sydney’s landmark tower,
Northpoint, as well as a holding of 15,9% in Cromwell Property Group (Cromwell), which is listed on the Australian Stock
Exchange, and an indirect equity interest of a further 10% through RI PLC.

Financial results
Redefine has declared a dividend of 38,14000 cents per share for the six months ended 31 August 2014, an increase of
9% on the comparable period and ahead of market guidance. This brings the full year distribution to 74,54000 cents per
share (2013: 68,70000 cents per share) resulting in year-on-year growth of 8,5%, underpinned by a solid performance by the
core property portfolio, bolstered by acquisitions made in the previous financial year and a strong contribution from
international operations. In Rand terms, distributable income for the year grew by 19,9%. 

Property portfolio income for the year was 96,0% (2013: 90,4%) of total revenue, income from listed securities 3,3%
(2013: 7,4%), and trading and fee income 0,7% (2013: 2,2%).

Operating costs were 35,9% of contractual rental income (2013: 32,4%), with the increase arising mainly from the
internalisation of electricity recoveries. Net of electricity and utility recoveries, operating costs were 18,8% of
contractual rental income (2013: 20,1%).

Redefine’s international operations contributed 17,2% (2013: 15,0%) to distributable income.

Changes in fair values
The group’s property portfolio was independently valued at 31 August 2014 resulting in a net increase in value of 
R1,2 billion. The investment in listed securities decreased in value by R340 million during the year and the sale of the
remaining holding in Hyprop Investments Limited realised a gain of R637 million. The unbundling of RI PLC resulted in a
deemed profit on sale of an investment in an associate of R735 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.

Redefine’s property portfolio (excluding Fountainhead) 
Letting activity: During the year, the overall vacancy rate increased marginally by 0,2% to 5,5% reflecting a number
of industrial vacates. Leases covering 570 610 m² were renewed at an average rental increase of 5,4%. A further 238 203m²
was let across the portfolio. Vacancies are set out below as a percentage of gross lettable area (GLA):

               2014    2013    
Office         7,2%    8,6%    
Retail         3,9%    3,6%    
Industrial     5,3%    3,7%    
Total          5,5%    5,3%    

Arrears amounted to R61 million (2013: R46 million) against which a provision for possible bad debts of R29 million
(2013: R21 million) is held. The increase in arrears is due to the growth in rental income and reflects a number of
tenants who are operating under Business Rescue proceedings (Redefine’s exposure to Ellerines is approximately 1,8% of gross
rental income and no provision was required at 31 August 2014).

Redefine’s property portfolio strategy
Redefine has made further substantial progress in implementing its strategy of diversifying, growing and improving the
quality of the core property portfolio. The emphasis in acquisitions, wherever possible, is to secure fully repairing
leases with blue-chip tenants.
 
Acquisitions: 26 properties, with a GLA of 275 095 m², were acquired and transferred during the year for an aggregate
purchase consideration of R4,6 billion at an initial yield of 8,0%. In addition and subject to the usual conditions
precedent, agreements (including the Macsteel industrial property portfolio) have been concluded for the acquisition of
properties for an aggregate consideration of R3 billion at an initial yield of 8,7% and GLA of 580 735 m². Properties with
an aggregate consideration of R2,9 billion transferred subsequent to the reporting period.

Developments: Redefine’s newly completed premium grade 90 Grayston property (R504 million) earned a 4-Star Green Star
SA design rating and is already 88% let, yielding 8,5% for occupation during the first half of  2015. Matlosana Mall 
(R1 billion), a 65 180 m² super-regional mall, yielding 8,2%, successfully opened its doors on 23 October 2014. New
development projects covering 86 123 m² of GLA with an approved value of R1,5 billion at an average yield of 8,2%, are
presently in progress. Redevelopment projects of the existing portfolio with an approved value of R847 million at an average
yield of 6,9% are also in progress.

Disposals: During  the  year, 10 properties with a GLA of 58 008 m², which no longer meet Redefine’s investment
criteria, were sold to various buyers for an aggregate consideration of R202 million at an average yield of 11%. Agreements
for the disposal of properties for an aggregate consideration of R571 million with a GLA of  65 771 m², were concluded
which are subject to conditions precedent.

Government tenanted office portfolio: Discussions with a number of interested parties are underway to dispose of the
portfolio in tranches through a managed process to minimise any dilution in distributable income. As there is a high
degree of deal risk associated with these transactions, the properties are no longer included in non-current assets
held-for-sale.

Fountainhead: Redefine’s offer to acquire Fountainhead’s property portfolio did not receive the requisite support from
those Fountainhead unitholders eligible to vote on the transaction (Redefine could not vote its majority stake).
Redefine believes its offer was fair and was not willing to pay more to acquire the balance of Fountainhead. Fountainhead
remains an integral part of the Redefine group and in the fullness of time the balance will be acquired. For now the status
quo remains.

Annuity Properties Limited (Annuity): Redefine acquired 18 high quality properties with a GLA of 143 602 m² at a yield
of 8,7% in a single transaction. On 23 June 2014 the group acquired 100% of the share capital and the loan claims of
Annuity, Annuity Asset Managers Proprietary Limited and Annuity Property Managers Proprietary Limited (the management
companies). Annuity and the management companies’ share capital was acquired for an aggregate consideration of R1,4 billion.

The acquired businesses contributed revenues of R18,2 million and net profit after tax (including fair value
adjustments) of R56,6 million to the group for the two months since acquisition. These amounts have been accounted for in terms
of the group’s accounting policies.

The transaction had a commercial effective date of 1 March 2014 and pre-acquisition income of R36,5 million was
recognised for distributable income purposes as 136,6 million Redefine shares were issued ranking for distribution from the
commercial effective date.

If the businesses had been acquired on 1 September 2013, management estimates that the revenue and profit after tax
from these businesses would have been R186,4 million and R78,8 million respectively.

Purchase consideration                                       R’000              
Cost of shares acquired                                  1 405 054          
Loan claims acquired                                         5 552              
Total purchase consideration                             1 410 606  
        
The assets and liabilities as at 23 June 2014 
arising from the acquisition are as follows:                            
                                                        Fair value         
                                                             R’000               
Investment properties                                    1 894 586          
Straight-line rental income accrual                         55 135             
Interest rate swaps                                          4 245              
Trade and other receivables**                               35 365             
Cash and cash equivalents                                   14 609             
Interest-bearing liabilities - non-current                (612 437)          
Deferred taxation                                              102                
Trade and other payables                                   (42 404)           
Shareholder’s loans                                         (5 552)            
Interest-bearing liabilities - current                     (60 914)           
Fair value of net assets                                 1 282 735          
Goodwill*                                                  122 319            
Shareholder’s loans acquired                                 5 552              
Total purchase consideration                             1 410 606          
Purchase consideration:                                  1 410 606          
- Settled in Redefine shares                             1 307 506          
- Settled in cash                                          103 100            
Cash and cash equivalents in subsidiary acquired           (14 609)           
Cash outflow on acquisition                                 88 491             
 *The goodwill arises as a result of the expected synergies from the acquisition.
**Gross contractual amounts receivable are R36,9 million, the group’s best estimate of the contractual cashflow not
expected to be collected is R1,5 million.

Listed securities
Cromwell: During the year Redefine received South African Reserve Bank approval to hold its interest in Cromwell
directly and over the year increased its holding by 3,5% to 15,9%.

Emira Property Fund (Emira): Subsequent to the year end, Redefine identified an opportunity to acquire a strategic
foothold in Emira on a yield enhancing basis. The stake is positive on a stand-alone basis and positions Redefine well to
be a participant in any possible future corporate action involving Emira. 13,7% of Emira’s participatory interests are
owned by Redefine.

Interests in associates
RI PLC: Redefine Properties International Limited’s (RIN) unitholders approved the distribution of the RI PLC shares
held at a general meeting held on 18 October 2013. Following the secondary inward listing of RI PLC on the JSE on 
28 October 2013, RIN unbundled all of the RI PLC shares it held. With effect from 1 December 2013 Redefine International Fund
Managers was internalised as part of RI PLC’s conversion to a UK-REIT. Redefine received as consideration 69,3 million 
RI PLC shares. During the year Redefine reduced its interest in RI PLC by 2,8% to 30,1% and used the proceeds to partly
fund the increased holding in Cromwell.

Cromwell Partners Trust (CPT): During the year 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 area of more than 5 000m2 and a net lettable area of 35 145m2 spread across
42 floors, 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 year to adjust the equity accounted results from its international investments to reflect the anticipated dividends.

Funding
Redefine’s group borrowings of R19,8 billion at 31 August 2014 comprised borrowings of R16,6 billion by Redefine and
R3,2 billion by Fountainhead. Redefine’s debt represented 37,0% of the value of its property assets. Redefine’s average
cost of funding is 8,1% (2013: 8,0%) - interest rates are fixed on 78,3% (2013: 65,9%) of borrowings for an average
period of 3,5 years. 

During the year Redefine raised R2,8 billion through two accelerated bookbuilds (296,7 million shares), retained 
R402 million (41,6 million shares) through the distribution reinvestment alternative and 136,6  million shares were issued
for the acquisition of the Annuity property portfolio.

Subsequent to the reporting period a further 143,1 million shares were issued (to raise R1,5 billion) as part of an
accelerated bookbuild and 106,9 million shares were issued in an exchange to acquire the stake in Emira, taking the total
number of shares, ranking for distribution to 3 660 552 052.

Moody’s credit rating: The rating was refreshed during August 2014 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 the REIT standard in South Africa and to comply with JSE Listings
Requirements for REITs, Redefine converted its 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. The implementation date of the
scheme was 29 August 2014 resulting in a R5,9 billion increase to stated capital.

Contingencies and commitments
At 31 August 2014, Redefine had guarantees and suretyships in respect of its BEE initiatives and subsidiaries
amounting to R218 million (2013: R272 million). Redefine has capital commitments outstanding of R2,5 billion (2013: R3,1 billion) 
and committed property acquisitions of R3,0 billion (2013: R2,4 billion). The commitments are funded from the proceeds
of the recent equity raise and new banking facilities.

Changes to the Board and company secretary
Roger Rees (independent non-executive) sadly passed away on 11 June 2014. Dines Gihwala (independent non-executive
Chairman) resigned, for personal reasons, from the Board with effect from 26 June 2014. Robert Robinson (independent
non-executive) resigned from the Board with effect from 4 July 2014 to avoid possible conflicts of interest which might arise
as a result of him pursuing other property projects and investment opportunities. The Board thanks these gentlemen for their 
valuable contributions during their tenure.

With effect from 1 August 2014 Marc Wainer was appointed as executive Chairman and Andrew Konig as Chief Executive
Officer. Following these changes, Bernie Nackan was appointed as the lead independent non-executive director, David Nathan
was appointed Chairman of the Audit and Risk Committee and replaced Dines Gihwala as Chairman of the Social and Ethics
Committee with Günter Steffens appointed as a member of the Audit and Risk Committee as well as the Remuneration and
Nomination Committee. Mike Watters was appointed as a non-executive director on 1 August 2014. Leon Kok was appointed as
Financial Director with effect from 1 October 2014. 

Probity Business Services Proprietary Limited disposed of its business to Computershare Investor Services Proprietary
Limited (Computershare) on 5 June 2014 and as a result CIS Company Secretaries Proprietary Limited, a subsidiary of
Computershare, was appointed as company secretary.

Prospects
An upward interest rate cycle, disproportionate increases in administered prices and a lacklustre trading environment
pose challenges but will no doubt also create opportunities in the coming year. The diversified asset base combined with
management’s relentless focus on achieving cost efficiencies, strongly positions Redefine to actively pursue its
strategy. Growth in distributable income per share for 2015 is anticipated to be between 7% and 7,5%. This forecast has not
been reviewed or reported on by the group’s independent external auditors.

The forecast is predicated on the assumption that current trading conditions will prevail. Forecast rental income is
based on contractual terms and anticipated market related renewals.

Declaration of a cash dividend with the election to reinvest the cash dividend in return for Redefine shares
Shareholders were advised today, 6 November 2014 in the company’s results for the year ended 31 August 2014 that the
board of directors of Redefine declared a final cash dividend of 38,14000 cents per share, for the six months ended 
31 August 2014, out of the company’s distributable income (the cash dividend). 

Shareholders will be entitled, in respect of all or part of their shareholding, to elect to re-invest the cash
dividend in return for Redefine shares (the share alternative), failing which they will receive the cash dividend of 
38,14000 cents per share that will be paid to those shareholders not electing to participate in the share alternative. 

A circular providing further information in respect of the cash dividend and share alternative will be posted to
Redefine shareholders on 7 November 2014.
 
Shareholders who have dematerialised their shares 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 dividend and share alternative are as set out below.
                                                                                                       2014   
Circular and form of election posted to shareholders                                     Friday, 7 November   
Finalisation information including the share ratio                                      
and price per share published on SENS                                                   Friday, 14 November   
Last day to trade in order to participate in the election                               
to receive the share alternative or to receive a cash dividend (LDT)                    Friday, 21 November   
Shares to trade ex-dividend                                                             Monday, 24 November   
Listing of maximum possible number of shares under the share alternative             Wednesday, 26 November   
Last day to elect to receive the share alternative or to receive a                     
cash dividend (no late forms of election will be accepted) at 12:00 (SA time)           Friday, 28 November   
Record date for the election to receive the share alternative or to receive             
a cash dividend (record date)                                                           Friday, 28 November   
Announcement of results of cash dividend and share alternative released on SENS          Monday, 1 December   
Cash dividend cheques posted to certificated shareholders on or about                    Monday, 1 December   
Accounts credited by CSDP or broker to dematerialised shareholders with                 
the cash dividend payment                                                                Monday, 1 December   
Share certificates posted to certificated shareholders on or about                    Wednesday, 3 December   
Accounts updated with the new shares (if applicable) by CSDP or broker to               
dematerialised shareholders                                                           Wednesday, 3 December   
Adjustment to shares listed on or about                                                  Friday, 5 December   

Notes 
1. Shareholders electing the share alternative are alerted to the fact that the new shares will be listed on LDT + 3
   and that these new shares can only be traded on LDT + 3, due to the fact that settlement of the shares will be three
   days after the record date, which differs from the conventional one day after record date settlement process. 
2. Shares may not be dematerialised or rematerialised between Monday, 24 November 2014 and Friday, 28 November 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 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 dividend of 38,14000 cents per share 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 shareholders must be included in the gross income of such
  shareholders (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 shareholder. These qualifying distributions are
  however exempt from dividends withholding tax, provided that the South African resident shareholders provided the
  following forms to their CSDP or broker, as the case may be, in respect of uncertificated shares, or the company, in respect
  of certificated shares: 
  - a declaration that the dividends are 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. Shareholders 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 shareholders 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 dividend amount due to non-resident shareholders is 32,41900 cents per
  share. A reduced dividend withholding rate in terms of the applicable DTA, may only be relied upon if the non-resident
  shareholder has provided the following forms to their CSDP or broker, as the case may be, in respect of uncertificated
  shares, or the company, in respect of certificated shares: 
  - a declaration that the dividend 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 shareholders 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 dividend if such documents have not already been submitted, if applicable. 
 
Shareholders are advised that in electing to participate in the share alternative, pre-taxation funds are utilised for
the reinvestment purposes and that taxation will be due on the total cash dividend amount of 38,14000 cents per share. 

Other information
- The ordinary issued share capital of Redefine is 3 660 552 052 ordinary shares of no par value before any election
  to reinvest the cash dividend.
- Income Tax Reference Number of Redefine: 917/852/484/0.

The cash dividend or share alternative may have tax implications for resident as well as non-resident shareholders.
Shareholders are therefore encouraged to consult their professional advisors should they be in any doubt as to the
appropriate action to take.

Dividend declaration after reporting date
In line with IAS 10 - Events after the Reporting Period, the declaration of the dividend occurred after the end of the
reporting period, resulting in a non-adjusting event which is not recognised in the financial statements. In prior
periods, the distribution consisted of debenture interest which accrued on a daily basis. 

Basis of preparation
The financial statements for the year ended 31 August 2014 have been audited by the group’s independent external
auditors Grant Thornton (Jhb) Inc. Their unqualified audit opinion is available for inspection at the company’s registered
office. These summarised results have been prepared in accordance with International Financial Reporting Standards (IFRS),
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 and the change in accounting policy for property portfolio revenue as set out below, the accounting
policies applied by the group in the preparation of these consolidated annual financial statements from which the
summarised financial statements are derived in terms of IFRS and are consistent with the accounting policies applied in the
preparation of the previous consolidated annual financial statements. The group 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

There was no material impact on the financial statements identified based on management’s assessment of these
standards. 

In terms of IAS 18 - Revenue, Redefine acts as a principal for the collection of operating cost recoveries and as such
these recoveries should be accounted for as revenue and included in contractual rental income. In light thereof the
directors of Redefine decided during the current year to revise the accounting policy relating to the recognition of the
operating costs recoveries received from tenants. In the prior period these recoveries were offset against the relevant
operating costs. The revised policy adopted in the current year is as follows: Recoveries of costs from lessees are
included in contractual rental income, however where Redefine merely acts as an agent and makes payment of these costs on
behalf of lessees, the recoveries are offset against the relevant costs. In our view this policy better reflects the
economic substance of the transaction and is seen as best practice in the REIT industry. This change provides more relevant
information to the users of the financial statements. This change has not resulted in any impact on the profit of the
group. This change has been applied retrospectively and as a result the prior period’s statements of comprehensive income and
the segmental analysis have been represented to reflect this change.

This summarised report for the year ended 31 August 2014 has been extracted from the audited annual financial
statements but is not itself audited. The audit report does not necessarily cover all the information included in the
announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s
engagement they should obtain a copy of the auditor’s report together with the accompanying financial information from the
company’s registered office. The directors take full responsibility for the preparation of this summarised report and
confirm that the financial information has been correctly extracted from the underlying audited results for the year ended
31 August 2014.

These financial results have been prepared under the supervision of Andrew Konig (CA)SA and Leon Kok (CA)SA.

By order of the Board
Redefine Properties Limited
5 November 2014 

Directors: M Wainer* (Chairman), A J Konig* (CEO), L C Kok* (FD), H K Mehta, B Nackan+, D A Nathan, D H Rice*† (COO),
M J Ruttell*@, G Z Steffens#, M J Watters         *Executive  †British  @Irish  #German  +Lead independent

Registered office: 3rd Floor, Redefine Place, 2 Arnold Road, Rosebank, 2196. (PO Box 1731, Parklands, 2121)

Transfer secretaries: Computershare Investor Services Proprietary Limited

Sponsor: Java Capital

Company secretary: CIS Company Secretaries Proprietary Limited

The annual results presentation for the year ended 31 August 2014 is available on the website.

www.redefine.co.za
Date: 06/11/2014 07:05:00 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
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

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