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Summarised and audited for the year ended 31 August 2015
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)
REDEFINE PROPERTIES LIMITED
GROUP RESULTS
SUMMARISED AND AUDITED FOR THE YEAR ENDED 31 AUGUST 2015
- Distribution of 80 cents; +7,3% in line with guidance
- Market cap R54,8 billion; +18,4 billion - Top 40 inclusion
- Developments of R3,8 billion; projects of R1,4 billion completed
- Property assets R64,5 billion; +R13,4 billion
- Acquisitions R11,2 billion; all asset categories expanded
- Fountainhead merger; shift in sector focus to retail
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
31 August 31 August
2015 2014
R’000 R’000
Revenue
Property portfolio 6 304 742 5 372 149
- Contractual rental income 6 141 437 5 310 428
- Straight-line rental income accrual 163 305 61 721
Listed security income 344 229 185 742
Insurance proceeds received 119 420 -
Fee income 44 800 35 204
Trading (loss)/income (1 946) 1 032
Total revenue 6 811 245 5 594 127
Operating costs (2 084 709) (1 907 524)
Administration costs (228 834) (202 031)
Net operating profit 4 497 702 3 484 572
Change in fair value of properties,
listed securities and
financial instruments 2 242 360 2 051 245
Amortisation of intangible assets (62 856) (62 856)
Equity accounted profit 453 053 439 766
Profit from operations 7 130 259 5 912 727
Net interest (1 376 835) (1 297 768)
- Interest paid (1 683 064) (1 457 159)
- Interest received 306 229 159 391
Foreign exchange loss (223 072) (13 638)
Profit before debenture interest 5 530 352 4 601 321
Debenture interest - (1 115 697)
Profit before taxation 5 530 352 3 485 624
Taxation 170 662 31 303
Profit from continuing operations 5 701 014 3 516 927
Profit from discontinued operations - 369 458
Profit for the year 5 701 014 3 886 385
- Redefine shareholders 5 425 097 3 407 818
- Continuing operations 5 425 097 3 042 122
- Discontinued operations - 365 696
- Non-controlling interest 275 917 478 567
- Continuing operations 275 917 474 805
- Discontinued operations - 3 762
Other comprehensive loss (90 397) (40 817)
Items that are or may be reclassified
to profit or loss
Exchange differences on translation of
foreign continuing/discontinued operations
- subsidiaries (70 491) 93 230
Exchange differences on translation of
foreign continuing operations - associates (19 906) (25 140)
Recycling of exchange differences on translation of
disposal/deemed disposal of foreign subsidiary - (108 907)
Total comprehensive income 5 610 617 3 845 568
- Redefine shareholders 5 334 700 3 363 439
- Continuing operations 5 334 700 3 016 983
- Discontinued operations - 346 456
- Non-controlling interests 275 917 482 129
- Continuing operations 275 917 474 805
- Discontinued operations - 7 324
SUMMARISED CONSOLIDATED STATEMENTS OF CASH FLOW
31 August 31 August
2015 2014
R’000 R’000
Cash generated from continuing operations 4 201 916 3 612 333
Net interest paid (1 376 835) (1 297 768)
Distributions paid (2 859 144) (2 141 093)
Distributions to non-controlling interests (264 910) (168 460)
Net cash (outflow)/inflow from operating activities
- Continuing operations (298 973) 5 012
Net cash inflow from operating activities
- Discontinued operations - 180 979
Net cash (outflow)/inflow from operating activities (298 973) 185 991
Net cash outflow from investing activities (6 371 977) (5 871 318)
Net cash outflow from investing activities
- Continuing operations (6 371 977) (6 419 871)
Net cash inflow from investing activities
- Discontinued operations - 548 553
Net cash inflow from financing activities 6 583 831 5 558 778
Net cash inflow from financing activities
- Continuing operations 6 583 831 5 559 634
Net cash outflow from financing activities
- Discontinued operations - (856)
Net movement in cash and cash equivalents (87 119) (126 549)
Cash and cash equivalents at beginning of the year 350 606 358 908
Translation effects on cash and cash equivalents
of foreign operations (133 563) 118 247
Cash and cash equivalents at end of the year 129 924 350 606
DISTRIBUTABLE INCOME ANALYSIS
Inter-
Redefine Fountainhead national Total
R’000 R’000 R’000 R’000
Net property income
(excluding straight-line rental accrual) 3 161 867 894 861 - 4 056 728
Listed security income 138 541 - 205 688 344 229
Fee income 44 800 - - 44 800
Trading loss (1 946) - - (1 946)
Administration costs (146 639) (66 932) (15 263) (228 834)
Distributable income from interest in
associates and joint ventures - - 384 448 384 448
Realised foreign exchange gains - - 10 776 10 776
Net interest (1 236 819) (173 323) 33 307 (1 376 835)
Distributable income before taxation 1 959 804 654 606 618 956 3 233 366
Taxation (excluding deferred tax) (7 185) - (64 636) (71 821)
Distributable income after taxation 1 952 619 654 606 554 320 3 161 545
Non-controlling interests’ share of
Fountainhead distribution - (223 266) - (223 266)
Distributable income before distributable
income adjustments 1 952 619 431 340 554 320 2 938 279
Below the line-distributable income adjustments:
- Pre-acquisition listed security income - - 6 565 6 565
- Antecedent distribution 209 474 - - 209 474
- Emira distribution accrual
(July and August 2015) 13 751 - - 13 751
- Pre-acquisition distribution
received from Leaf 14 955 - - 14 955
- Transactions costs relating
to business acquisitions 4 874 - - 4 874
- Fountainhead’s NCI portion
of distribution for period
1 March 2015 to 3 August 2015 - 101 917 - 101 917
Distributable income 2 195 673 533 257 560 885 3 289 815
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 August 31 August
2015 2014
R’000 R’000
Non-current assets 67 465 410 55 007 339
Investment properties 49 898 869 40 906 077
- Fair value of investment properties 46 589 717 37 710 045
- Straight-line rental income accrual 1 436 762 1 213 985
- Properties under development 1 872 390 1 982 047
Listed securities 988 793 2 750 900
Goodwill and intangible assets 5 367 047 5 328 676
Interest in associates and joint ventures 9 823 319 4 173 173
Interest rate swaps 93 150 -
Loans receivable 1 184 924 1 727 212
Other financial assets - 23 510
Guarantee fees receivable 73 760 50 000
Property, plant and equipment 35 548 47 791
Current assets 1 422 776 992 697
Properties held-for-trading 1 080 21 349
Trade and other receivables 617 964 580 021
Loans receivable 587 440 2 050
Listed security income receivable 86 368 38 671
Cash and cash equivalents 129 924 350 606
Non-current assets held-for-sale 1 289 612 1 490 128
Total assets 70 177 798 57 490 164
EQUITY AND LIABILITIES
Shareholders' interest 45 145 459 32 720 342
Stated capital 33 738 010 22 558 039
Reserves 11 407 449 10 162 303
Non-controlling interests (NCI) - 3 015 595
Total shareholders’ interest 45 145 459 35 735 937
Non-current liabilities 21 894 566 14 997 245
Interest-bearing liabilities 21 602 140 14 355 324
Interest rate swaps - 95 192
Other financial liabilities 17 507 36 731
Deferred taxation 274 919 509 998
Current liabilities 3 137 773 6 756 982
Trade and other payables 1 106 230 1 294 307
Interest-bearing liabilities 1 980 226 5 401 205
Interest rate swaps 10 488 926
Other financial liabilities 18 437 12 872
Taxation payable 22 392 47 672
Total equity and liabilities 70 177 798 57 490 164
Net asset value per share
(excluding deferred tax and NCI) (cents) 1 021.00 976.03
Net tangible asset value per share
(excluding deferred tax and NCI) (cents) 900.35 819.52
HEADLINE EARNINGS AND DISTRIBUTABLE EARNINGS RECONCILIATION
31 August 31 August
2015 2014
R’000 R’000
Profit for the year attributable to
Redefine shareholders 5 425 097 3 407 818
Change in fair value of properties
(net of deferred taxation) (2 111 739) (1 108 787)
Insurance proceeds received (119 420) -
Profit on disposal/deemed disposal
of subsidiaries - (340 949)
Profit on deemed disposal of interest in
an associate (net of deferred tax) - (726 919)
Headline profit attributable to
Redefine shareholders 3 193 938 1 231 163
Debenture interest - 1 115 697
Headline earnings attributable to
Redefine shareholders 3 193 938 2 346 860
Change in fair value of listed securities and
financial instruments (net of deferred taxation) (532 016) (238 302)
Amortisation of intangible assets
(net of deferred taxation) 45 256 45 256
Emira distribution accrual for July and August 2015 13 751 -
Fountainhead’s NCI portion of distribution for period
1 March 2015 to 3 August 2015 101 917 -
Straight-line rental income accrual (163 305) (61 721)
Unrealised foreign exchange loss 233 848 29 945
Fair value adjustments of associates and NCI
(other than investment property) 160 558 53 448
Debt restructure costs and unrealised
interest received - 110 414
Pre-acquisition distribution received from annuity - 36 454
Pre-acquisition distribution received from Leaf 14 955 -
Transaction costs relating to business acquisitions 4 874 14 423
Antecedent distribution 209 474 77 446
Pre-acquisition listed security income 6 565 -
Distributable earnings 3 289 815 2 414 223
Six months ended 28 February 1 465 880 1 115 697
Six months ended 31 August 1 823 935 1 298 526
Total distributions 3 289 815 2 414 223
Actual number of shares in issue (000)* 4 448 623 3 404 630
Weighted number of shares in issue (000)* 3 798 575 3 090 599
Diluted number of shares in issue (000)* 3 798 575 3 654 675
Basic earnings per share (cents) 142.82 146.36
- Continuing operations per share (cents) 142.82 134.53
- Discontinued operations per share (cents) - 11.83
Diluted earning per share (cents) 142.82 123.78
- Continuing operations per share (cents) 142.82 113.77
- Discontinued operations per share (cents) - 10.01
Headline earnings per share (cents) 84.08 75.94
- Continuing operations per share (cents) 84.08 75.48
- Discontinued operations per share (cents) - 0.46
Diluted headline earnings per share (cents) 84.08 64.22
- Continuing operations per share (cents) 84.08 63.83
- Discontinued operations per share (cents) - 0.39
Distribution per share (cents) 80.00 74.54
*Excludes 305 876 766 (2014: 5 876 766) treasury shares
SUMMARISED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
31 August 31 August
2015 2014
R’000 R’000
Opening balance 35 735 937 24 073 923
Issue of shares 11 179 971 3 663 579
Conversion of debentures to stated capital - 5 915 414
Total comprehensive income for the year 5 610 617 3 845 568
Transactions with non-controlling interests (4 529 930) (1 686 423)
Changes in ownership interests in subsidiaries - (84 004)
Share-based payment reserve 8 008 7 880
Distributions paid (2 859 144) -
Total stated capital, reserves and
non-controlling interests 45 145 459 35 735 937
CONDENSED SEGMENTAL ANALYSIS
Office Retail Industrial Specialised Fountainhead Total
R’000 R’000 R’000 R’000 R’000 R’000
Year ended
31 August 2015
Contractual rental income^ 2 009 643 1 859 390 886 976 3 646 1 381 782 6 141 437
Operating costs (669 542) (733 126) (230 003) (5) (452 033)* (2 084 709)
Net property income 1 340 101 1 126 264 656 973 3 641 929 749 4 056 728
Investment property
portfolio# 18 355 620 20 622 822 9 917 549 420 100 - 49 316 091
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 property
portfolio# 11 781 330 11 302 104 5 162 643 - 12 168 081 40 414 158
^ Excluding straight-line rental income accrual.
# Excluding properties under development and held-for-trading. Properties classified as held-for-sale
are included.
* Fountainhead results are for 11 months and exclude property management fees reversed on consolidation
of R34,9 million.
PROFILE
Redefine is a diversified Real Estate Investment Trust (REIT) with a market capitalisation of
R54,8 billion and is classified as one of the Top 40 companies listed on the Johannesburg Stock Exchange
(JSE). Redefine manages a property asset base with a market value of R64,5 billion, comprising local and
international property investments. Redefine’s core focus is to deliver sustained value to all
stakeholders by achieving its primary goal of growing and improving cash flow. Redefine’s shares are
actively traded on the JSE, making it a highly liquid investment choice for gaining exposure to the
domestic and international commercial real estate markets.
At 31 August 2015, Redefine’s diversified, local property portfolio was valued at R53,4 billion. The
group’s international investments, valued at R11,1 billion represent 17,3% of total property assets and
provide geographic diversification into the UK, German and Australian property markets. Redefine has a
30,1% equity interest, with a market value of R4,9 billion, in Redefine International PLC (RI PLC) which
is listed on both the London Stock Exchange and the JSE. During the year Redefine acquired a German
retail portfolio in a co-investment with RI PLC valued at R653 million. In addition, Redefine has a
R5,6 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 25,6% in Cromwell Property Group (Cromwell), which is
listed on the Australian Stock Exchange.
FINANCIAL RESULTS
Redefine’s Board has declared a dividend of 41,00000 (2014: 38,14000) cents per share for the six months
ended 31 August 2015, an increase of 7,5% on the comparable period, which is in line with market
guidance. This brings the full year distribution to 80,00000 (2014: 74,54000) cents per share resulting
in year-on-year growth of 7,3% (2014: 8.5%). In Rand terms, distributable income for the year increased
by 36,3% (2014: 19,9%) benefiting from a number of substantial quality acquisitions made in recent years.
Property portfolio income for the year contributed 94,2% (2014: 96,0%) of total revenue (excluding
insurance proceeds received), income from listed securities 5,1% (2014: 3,3%), and fee and trading income
were 0,7% (2014: 0.6%).
Operating costs were 33.9% (2014: 35,9%) of contractual rental income (excluding straight-line rental
income accruals) – with the decrease resulting mainly from reduced municipal charges following successful
valuation objections. Net of electricity and utility recoveries, operating costs were 18,0% (2014: 18,8%)
of contractual rental income. Redefine’s international property investments contributed 17,0% (2014:
17,2%) of distributable income.
CHANGES IN FAIR VALUES
The group’s property portfolio was independently valued at 31 August 2015 producing a net increase in
value of R1,9 billion (2014: R1,2 billion). In terms of IAS 40 and IFRS 7, Redefine’s investment
properties are measured at fair value and are categorised as level 3 investments. There were no transfers
between levels 1, 2 and 3 during the year. The investment in listed securities increased in value by
R160 million (2014: R297 million) during the year. The balance of R146,4 million relates mainly to the
mark-to-market of the group’s interest rate swaps, which protect the group against adverse interest rate
movements. In terms of IAS 39 and IFRS 7, Redefine’s listed securities and interest rate swaps are
measured at fair value through profit or loss and are categorised as level 1 and level 2 investments
respectively. There were no transfers between levels 1, 2 and 3 during the year.
PROPERTY PORTFOLIO
PORTFOLIO SPLIT BY TENANT TYPE
Multi 60,8%
Single 39,2%
SECTORAL SPREAD BY VALUE
Office 38,0%
Retail 40,7%
Industrial 20,5%
Specialised 0,8%
GEOGRAPHIC SPREAD BY GLA
Gauteng 64,8%
Cape Town 17,3%
KwaZulu-Natal 8,4%
Other 9,5%
Letting activity: The overall portfolio vacancy rate improved during the year by 0,1% to 5,4%. Leases
covering 510 649m2 were renewed at an average rental decrease of 3,0%, with the retention rate a pleasing
87%. A further 338 294m2 was let across the portfolio. Vacancies are set out below as a percentage of
gross lettable area (GLA):
31 August 31 August
Vacancy per sector 2015* 2014
Office 8,5% 7,2%
Retail 4,3% 3,9%
Industrial 3,8% 5,3%
Specialised -% -%
5,4% 5,5%
* Adjusted for properties-held-for-sale and properties under development.
Net arrears remained stable at R42 million (31 August 2014: R42 million). Net arrears represent 8.3% of
gross monthly rental.
REDEFINE’S PROPERTY PORTFOLIO STRATEGY
Redefine continues to deliver on its strategy of diversifying, growing and improving the quality of it’s
property portfolio. In acquisitions the emphasis, wherever possible, is on securing fully repairing
leases with blue-chip tenants.
Leaf Property Fund (Leaf): Redefine acquired a portfolio of 14 high-quality commercial property assets,
valued at R4,1 billion, situated in the key nodes of the Western Cape and Gauteng from Leaf. The
acquisition added 213 155m2 to the office portfolio and has an expected yield of 7,8%. The acquisition is
in line with Redefine’s strategy of improving the quality of its core property portfolio by acquiring
high-quality assets that offer cash flow comfort and low vacancy levels. Black River Park is the first
office complex to be awarded a six-star Green Star SA rating in terms of the existing building
accreditation. This clearly supports and reaffirms Redefine’s commitment to sustainable business
practices.
All conditions precedent were fulfilled on 15 April 2015 and the transaction had a commercial effective
date of 1 March 2015. Pre-acquisition income of R14,9 million has been recognised for distributable
income purposes as 139,6 million Redefine shares were issued ranking for distribution from the commercial
effective date. The acquired businesses contributed revenues of R163,6 million and net loss after tax of
R20,4 million to the group for the five months since acquisition. These amounts have been calculated
using the group’s accounting policies. If the businesses had been acquired on 1 September 2014,
management estimates that the revenue and profit after tax from the businesses would have been
R421,2 million and R245,1 million respectively.
The assets and liabilities as at 15 April 2015 arising from the acquisition are as follows:
Fair value
R’000
Investment properties 4 119 392
Net working capital* 41 152
Other assets 155 664
Interest bearing borrowings (1 887 561)
Fair value of net assets 2 428 647
Goodwill** 101 227
Shareholders loans acquired (164 146)
Total purchase consideration 2 365 728
Purchase consideration: 2 365 728
- Settled in Redefine shares 1 735 358
- Settled in cash 630 370
Cash and cash equivalents in subsidiary acquired (65 678)
Cash outflow on acquisition 564 692
* The trade receivables comprise gross contractual amounts due of R24,9 million, the group’s best
estimate of the contractual cash flow not expected to be collected is R0,5 million.
** The goodwill arises as a result of the expected synergies from the acquisition.
The distributions received from the sellers amounting to R54,4 million, relating to the accounting period
before they obtained Redefine shares, were reimbursed to Redefine per the acquisition agreements.
Fountainhead Property Trust (Fountainhead): On 24 July 2015, Fountainhead unitholders voted in favour of
the acquisition by Redefine of all of Fountainhead’s assets, including its entire property portfolio, in
exchange for 85 Redefine consideration shares for every 100 Fountainhead units in issue, and the
assumption by Redefine of all Fountainhead’s liabilities, including its interest-bearing debt. The
transaction was implemented on 3 August 2015, with the consideration shares issued directly to
Fountainhead unitholders cum entitlement to the full Redefine income distribution for the six months
ended 31 August 2015. Notwithstanding the implementation date, the commercial effective date of the
transaction was 1 March 2015, from which date Redefine became entitled to all of the income received by
or accruing to Fountainhead. Accordingly, and as more fully detailed in the joint announcement released
by Redefine and Fountainhead on SENS on 25 June 2015, R101,9 million (being the minority shareholders’
portion of Fountainhead’s distributable income for the period 1 March 2015 to the date on which the
transaction was implemented) has been included in Redefine’s distributable income.
Acquisitions: In addition to the Leaf and Fountainhead portfolio’s, Redefine acquired and transferred
34 properties, with a GLA of 637 867m2, during the year for an aggregate consideration of R3,6 billion,
at an initial yield of 8,5%. Redefine also acquired a 45% undivided share in vacant industrial land in
Germiston for R312 million, with a gross building area of 1 285 903m2 (Redefine’s share 578 656m2).
Subject to conditions precedent, agreements also have been concluded for the acquisition of properties,
for an aggregate consideration of R415 million, at an initial yield of 9,9% and GLA of 12 135m2.
Properties with an aggregate consideration of R354 million transferred subsequent to the reporting
period.
Developments: New development projects covering 195 055m2 of GLA with an approved value of R2,2 billion
at an average yield of 8,6%, are presently in progress. Redevelopment projects in the existing portfolio
with an approved value of R1,6 billion at an average yield of 6,1% are also in progress. Projects
totalling R1,4 billion were completed during the year.
Disposals: 35 properties with a GLA of 339 000m2, which no longer met Redefine’s investment criteria,
were sold during the year to various buyers for an aggregate consideration of R2,2 billion, at an average
yield of 9,3%. In addition, agreements, subject to conditions precedent, were concluded for the disposal
of properties for an aggregate consideration of R1,2 billion, with a GLA of 164 707m2 at an average
yield of 8.3%.
Government tenanted office portfolio: Discussions with a number of interested parties have continued
regarding the disposal of this portfolio through a structured process in order to manage the potential
dilution of distributable income. As there is a high degree of deal risk, the properties remain in the
active portfolio.
Sustainability: As part of Redefine’s focus on sustainability and cost efficiency, various energy-
efficient and sustainable building technologies are being implemented in new developments as well as on
existing buildings, including installation of solar PV and smart metering of electricity and water.
To protect income, Redefine is taking steps to ensure that there is uninterrupted electricity supply at a
number of its key properties.
LISTED SECURITIES
Redefine currently owns 11,5% of Emira Property Fund (Emira). During the year, Redefine sold 11 million
shares and realised a gain of R22 million. Redefine also disposed of 18,7 million Dipula A and B units
which realised a profit of R49,1 million. These shares were held for less than a year and as a result the
realised taxable profit has been included in listed security income.
INTERESTS IN ASSOCIATES AND JOINT VENTURES
RI PLC: On 3 March 2015, RI PLC undertook a capital raise in which Redefine participated and acquired
39,5 million additional RI PLC shares for a consideration of R384 million. During the year, Redefine also
participated in RI PLC’s dividend re-investment scheme and elected to receive 14,4 million shares.
Currently Redefine owns 30,1% of RI PLC, which is equity accounted. The market value of RI PLC is
R749 million more than the equity accounted carrying value.
German portfolio: During the year, Redefine entered into a joint venture arrangement with RI PLC to
acquire a 50% interest in a portfolio of 56 retail properties in Germany. Redefine’s aggregate
consideration for the acquisition was R704 million at an initial yield of 7,5%.
Cromwell: On 31 August 2015, Redefine acquired a further 9,7% interest in Cromwell for R1,6 billion,
increasing it’s holding in Cromwell to 25,6%. Redefine now has significant influence over Cromwell and,
as a consequence, the investment has been transferred to interest in associates.
FUNDING
Redefine’s debt represented 36,8% (2014: 38,0%) of the value of its property assets as at 31 August 2015.
Redefine’s average cost of funding is 8,4% (2014: 8,2%) – interest rates are fixed on 81,3% (2014: 78,3%)
of borrowings for an average period of 2,8 years (2014: 3,6 years). The interest cover ratio (which
includes equity accounted profit and listed security income) is 3.2 (2014: 3.0).
During the year, Redefine issued 297,6 million shares through accelerated book builds for R3,1 billion
in cash, issued 246,5 million shares to various vendors for the acquisition of assets totalling
R2,6 billion, issued 337,1 million shares to Fountainhead’s minority investors representing R3,8 billion,
issued 300 million shares to the Redefine Empowerment Trust on loan account for R3,1 billion and
conserved R1,6 billion in cash through the issue of 162,7 million shares under the distribution
reinvestment alternative. The number of shares in issue increased by 1 343,9 million shares (an increase
of 41,5%) representing equity of R14,2 billion.
Moody’s credit rating: The rating was refreshed during August 2015 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
CONTINGENCIES AND COMMITMENTS
At 31 August 2015, Redefine had guarantees and suretyships in respect of its Black Economic Empowerment
initiatives amounting to R195 million (2014: R218 million). Capital commitments outstanding accounted to
R2,2 billion (2014: R2,5 billion) and committed property acquisitions totalled R415 million
(2014: R3,0 billion). Redefine has undertaken to underwrite R1,4 billion (£70,0 million) of RI PLC’s
planned capital raise to fund part of the second phase of the Aegon portfolio acquisition. Should the
equity raise not proceed, Redefine has provided a R2,8 billion (£135,0 million) loan facility to RI PLC,
which may be utilised to fully fund this phase of the transaction. The loan facility must be repaid
within three months of drawdown, or it will convert into a 50% equity interest in the Aegon portfolio,
which will be co-owned with RI PLC. The future commitments will be funded by the issue of Redefine
shares and undrawn banking facilities.
BROAD-BASED BLACK ECONOMIC EMPOWERMENT INITIATIVE
As part of Redefine’s commitment to sustainable, long-term economic and social development the Redefine
Empowerment Trust (the Trust) was established. On 17 July 2015 Redefine issued 300 million shares to the
Trust, which was funded by a loan advanced by Redefine. The Trust will primarily focus on activities to
improve education and training through the provision of scholarships and bursaries and community
development programmes. The Trust is constituted as a capital-preserving Trust and as such will not be
entitled to dispose of the shares not used to redeem the loan from Redefine. The Trust will therefore
continue in perpetuity. The 300 million shares issued to the Trust have been accounted for as treasury
shares.
PROSPECTS
The domestic economic outlook remains bleak. The manufacturing sector is in contractionary territory and
confidence is low. Neither the business cycle nor structural factors are likely to provide much support
to drive growth. There is therefore no compelling reason to believe that prevailing local trading
conditions (stagnant local economic growth and volatile financial markets) will change materially during
the coming financial year. In fact, expected interest rate hikes, a generally soft currency, a very
challenging leasing market, cash flow and cost pressures are business factors we anticipate having to
contend with during 2016. This calls for extra vigilance on risks and opportunities as well as a
relentless focus on disciplined and decisive execution of Redefine’s strategic priorities. Despite the
local trading pressures, Redefine anticipates that it will be able to leverage its geographically
diversified asset base to achieve distribution growth of between 6% and 7% per share for the full 2016
year.
This 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. The forecast has not
been reviewed or reported on by the group’s independent external auditors.
DECLARATION OF A CASH DIVIDEND WITH THE ELECTION TO REINVEST THE CASH DIVIDEND IN RETURN FOR REDEFINE SHARES
The Board of directors of Redefine has declared a final cash dividend of 41,00000 cents per share, for
the six months ended 31 August 2015, out of the company’s distributable income (the cash dividend).
Shareholders will be entitled, in respect of all or part of their shareholdings, to elect to reinvest the
cash dividend in return for Redefine shares (the share reinvestment alternative), failing which they will
receive the cash dividend of 41,00000 cents per share that will be paid to those shareholders not
electing to participate in the share reinvestment alternative.
A circular providing further information in respect of the cash dividend and share reinvestment
alternative will be posted to Redefine shareholders on 6 November 2015.
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 reinvestment alternative are as set out
below.
Salient dates and times 2015
Circular and form of election posted to shareholders Friday, 6 November
Finalisation information including the share ratio and
price per share published on SENS Friday, 13 November
Last day to trade in order to participate in the election
to receive shares in terms of the share reinvestment alternative
or to receive a cash dividend (LDT) Friday, 20 November
Shares trade ex-dividend Monday, 23 November
Listing of maximum possible number of shares under the share
reinvestment alternative Wednesday, 25 November
Last day to elect to receive shares in terms of the share
reinvestment alternative or to receive a cash dividend
(no late forms of election will be accepted) at 12:00 (SA time) Friday, 27 November
Record date for the election to receive shares in terms of the share
reinvestment alternative or to receive a cash dividend (record date) Friday, 27 November
Announcement of results of cash dividend and share reinvestment
alternative released on SENS Monday, 30 November
Cash dividend cheques posted to certificated shareholders on or about Monday, 30 November
Accounts credited by CSDP or broker to dematerialised shareholders
with the cash dividend payment Monday, 30 November
Share certificates posted to certificated shareholders on or about Wednesday, 2 December
Accounts updated with the new shares (if applicable) by CSDP or
broker to dematerialised shareholders Wednesday, 2 December
Adjustment to shares listed on or about Friday, 4 December
Notes:
- Shareholders electing the share reinvestment 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.
- Shares may not be dematerialised or rematerialised between Monday, 23 November 2015 and Friday,
27 November 2015, both days inclusive.
- 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, 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 41,00000 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 above mentioned 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 shareholder. Assuming dividends withholding
tax will be withheld at a rate of 15%, the net dividend amount due to non-resident shareholders is
34,85000 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 above mentioned 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 reinvestment alternative, pre-
taxation funds are utilised for the reinvestment purposes and that taxation will be due on the total cash
dividend amount of 41,00000 cents per share.
OTHER INFORMATION
- The ordinary issued share capital of Redefine is 4 754 499 789 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 reinvestment alternative may have tax implications for resident as well as
non-resident shareholders. Shareholders are therefore encouraged to consult their professional advisers
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.
BOARD AND SECRETARIAL APPOINTMENTS
Phumzile Langeni was appointed to the Board as an independent non-executive director, with effect from
6 May 2015. Marius Barkhuysen and Nthombi Langa-Royds are appointed to the Board as independent non-
executive directors with immediate effect. Bronwyn Baker was appointed as company secretary with effect
from 1 August 2015.
BASIS OF PREPARATION
The financial statements for the year ended 31 August 2015 have been audited by the group’s independent
external auditors, Grant Thornton. Their unqualified audit opinion is available for inspection at the
company’s registered office. The summarised results have been prepared in accordance with International
Financial Reporting Standards, IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council, the JSE Listings Requirements and the requirements of the South African
Companies Act, 2008 (as amended). This summarised report is extracted from audited financial information,
but is not itself audited. The auditor’s report does not necessarily report on all of the information
contained in this 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 2015.
Except for the new standards and interpretations adopted as set out below, all accounting policies
applied by the group in the preparation of these consolidated annual 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 2014. The group has adopted the following new standards and interpretation:
- Investment entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
- Offsetting financial assets and financial liabilities (Amendments to IAS 32)
- Recoverable amount disclosure for non-financial assets (Amendments to IAS 36)
- Novation of derivatives and continuation of hedge accounting (Amendments to IAS 39)
- Annual improvements to IFRS 2010 – 2012
- Annual improvements to IFRS 2011 – 2013
There was no material impact on the financial statements identified based on management’s assessment of
these standards.
The results were prepared under the supervision of Leon Kok CA (SA), Redefine’s Financial Director.
By order of the Board
Redefine Properties Limited
4 November 2015
Executive Directors:
M Wainer (Chairman)
A J Konig (CEO)
L C Kok (FD)
D H Rice† (COO)
M J Ruttell@
Non-Executive Directors:
M Barkhuysen*
N B Langa-Royds*
H K Mehta
P Langeni*
B Nackan (Lead independent)*
D A Nathan*
G Z Steffens#*
M J Watters
*Independent
" British
@Irish
#German
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:
B Baker
5 November 2015
Date: 05/11/2015 07:15:00 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.