Wrap Text
Results for the six months ended 29 February 2016
REDEFINE INTERNATIONAL P.L.C.
(Incorporated in the Isle of Man)
(A UK-REIT incorporated in the Isle of Man)
(Registered number 010534V)
LSE share code: RDI
JSE share code: RPL
ISIN: IM00B8V8G91
(“Redefine International” or “the Company” or “the Group”)
RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2016
PORTFOLIO REPOSITIONED TO DELIVER RESILIENT INCOME GROWTH
Redefine International, a FTSE 250 income focused UK-REIT, today announces its results for the six
months ended 29 February 2016.
Financial Highlights
Six months Six months Full year
Income statement 29 February 2016 28 February 2015 31 August 2015
Earnings available for distribution (£m) 25.4 21.4 44.4
Earnings available for distribution per share (p) 1.7 1.6 3.2
Dividend per share (p) 1.625 1.6 3.25
Adjusted NAV per share (p) 40.9 41.3 41.7
Balance sheet
Portfolio valuation (incl. JV share, £m) 1,524.4 1,048.2 1,044.6
Loan-to-value (%) (1) 52.5 55.0 51.8
(1)
29 February 2016 LTV has been adjusted to reflect AUK completion on 1 March 2016 and excludes The Hague.
- 18.7% increase in earnings available for distribution to £25.4m (28 February 2015: £21.4m)
- Interim dividend of 1.625p per share, an increase of 1.6%
- Portfolio valuation increase of 2.0% like-for-like
- Adjusted NAV per share 40.9p (31 August 2015: 41.7p), a decrease of 1.9% primarily due to the
one-off impact of AUK portfolio acquisition costs
- Pro-forma LTV of 52.5% (31 August 2015: 51.8%)
- Reduction in the weighted average cost of debt by 30 bps to 3.6% (31 August 2015: 3.9%)
Operational Highlights
- Completion of transformational AUK portfolio acquisition, increasing the value of the portfolio to
£1.5bn and adding £28.6m of annualised gross rental income. A further uplift of £0.5m is now in
solicitors’ hands
- Successful equity placement, raising gross proceeds of £115.0m
- Valuation growth within the AUK portfolio of £4.6m since acquisition (excluding transaction costs)
- Disposal of 16 Grosvenor Street prior to completion of the AUK portfolio, realising an immediate
profit of £2.8m (excluding transaction costs)
- Sale of 10 petrol filling stations for £12.0m, 6.0% above August 2015 book value
- Occupancy improved by 80bps to 98.9% like-for-like
Greg Clarke, Chairman, commented:
“Over the past ten years Redefine International has transformed into an established FTSE 250 UK-
REIT with a market capitalisation in excess of £800 million. The focus of the last six months has been
on completing the £490 million AUK portfolio acquisition and commencing income enhancing asset
management initiatives. This off-market acquisition has brought the value of the Company’s assets to
in excess of £1.5 billion and is a demonstration of management’s ability to source, secure and
effectively execute high quality transactions.
I am extremely pleased with the support received from both existing and new shareholders during our
capital raise in February to part fund the AUK transaction. Given the prevailing volatile capital
markets, this is testament to the progress the business has made in reshaping its portfolio and capital
structure.”
Mike Watters, Chief Executive, commented:
“With the completion of the second tranche of the AUK transaction on 1 March 2016, we now have a
significantly better quality portfolio, underpinned by strong underlying property fundamentals, from
which we can, ultimately, produce better quality income. We are confident that our portfolio is now in a
robust position from which we can continue to deliver on our commitment to grow income as the
property cycle advances.
Further progress has been made in strengthening our balance sheet and reducing the cost of debt.
We have improved our weighted average cost of debt by 30bps to 3.6 per cent and, at current market
rates, we see scope to reduce it further, while at the same time efficiently decreasing leverage to
within our target range of 40 to 50 per cent.”
Results presentation
A meeting for analysts and investors will take place today at 9.00a.m. (UK time) at FTI Consulting,
200 Aldersgate, Aldersgate Street, London, EC1A 4HD. The presentation and a live webcast will be
available at 9.00a.m. (UK time), 10.00a.m. (SA time) today, which can be accessed via the homepage
of the Company's website: www.redefineinternational.com.
Conference call dial-in numbers
United Kingdom Local: +44 (0) 20 3059 8125
South Africa Local: +27 (0) 31 819 7008
Conference password: Redefine
For further information:
Redefine International P.L.C.
Mike Watters, Stephen Oakenfull, Janine Ackermann Tel: +44 (0) 20 7811 0100
FTI Consulting
UK Public Relations Adviser
Dido Laurimore, Claire Turvey, Ellie Sweeney Tel: +44 (0) 20 3727 1000
FTI Consulting
SA Public Relations Adviser
Max Gebhardt Tel: +27 (0) 11 214 2402
JSE Sponsor
Java Capital Tel: +27 (0) 11 722 3050
Operational & Strategic Review
Our markets
Our portfolio is now almost entirely focused on our core markets of the UK and Germany, Europe’s two strongest economies and
most liquid real estate markets. The AUK acquisition has improved the quality and income characteristics of our portfolio and has
brought greater exposure to areas of economic growth whilst delivering assets with strong underlying property fundamentals. Our
exposure to the retail, hotel and commercial sectors is supported by sector specialist asset managers, providing an enhanced
ability to allocate and recycle capital into new opportunities to grow income.
Dominant
Total portfolio by geography Regional
(incl. share of joint ventures) Greater German Shopping
by value Total London UK Big 6 UK South Big 5 Centres Other
(%) (%) (%) (%) (%) (%) (%)
UK Retail 36.4 10.5 0.7 3.3 - 18.0 3.9
UK Hotels 15.4 12.6 1.8 1.0 - - -
UK Commercial 27.3 6.1 5.8 7.8 - - 7.6
Europe 20.9 - - - 10.1 - 10.8
Total 100.0 29.2 8.3 12.1 10.1 18.0 22.3
The UK economy continues to show positive fundamentals with low unemployment, low inflation, nominal wage growth and
stronger retail sales. Notwithstanding this, current sentiment is weak, partly due to uncertainty around the pending EU referendum.
Our portfolio and its security of income is well placed to weather either referendum outcome, being relatively insulated, in terms of
the location of our assets and occupier exposure, from those sectors potentially most at risk such as financial services or London
offices. The economy in the Eurozone continues to recover gradually and we believe our German assets will benefit from continued
low interest rates and a pick-up in occupier demand.
We see supportive occupational markets across the majority of sectors in which we operate. Our regionally dominant shopping
centres are close to being fully occupied and are largely weighted towards non-discretionary consumer spending. Tenant demand
in sectors such as discount, convenience and leisure remains robust. At the majority of our newly acquired retail parks, we have
had encouraging occupier demand from national retailers with the total supply of retail space in the UK now at a 14 year low.
Our hotel portfolio, which is largely London focused, continues to benefit from strong demand and a positive outlook for 2016, in
spite of the softer start to the year. Average occupancy rates are expected to reach the highest levels for a decade which should
more than offset the anticipated increase in supply in 2016 onwards.
In our commercial portfolio, limited availability of grade A space, particularly in regional offices, is supportive of rental values. The
distribution sector is currently experiencing a positive structural change, with strong occupier demand and potential for further rental
growth.
Portfolio Overview
Our portfolio has been enhanced through active capital recycling and investment in good quality assets with strong property
fundamentals that can support sustainable income returns throughout the property cycle. This, combined with our strategic flexibility
to invest across sectors, underpins the success of our income focused total return strategy.
Portfolio Market Annualised Voids
Total portfolio by value 29 gross Net Re- (by
(incl. share of market February rental initial versionary lettable
joint ventures) value 2016 No. of Area income ERV yield yield WAULT area) Indexed
(%) (£m) Properties (m2) (£m) (£m) (%) (%) (yrs) (%) (%)
UK Retail 36.4 554.4 14 237,621 41.4 40.4 6.3 6.6 9.0 0.9 13.7
UK Hotels 15.4 235.4 9 41,323 15.0 15.0 6.0 6.0 10.8 - 5.4
UK Commercial 27.3 415.5 64 216,665 27.0 28.0 5.5 6.4 6.0 3.8 22.6
Total UK 79.1 1,205.3 87 495,609 83.4 83.4 6.0 6.4 8.4 2.0 15.1
Europe 20.6 314.1 87 198,621 20.9 20.8 5.6 5.6 6.8 1.8 97.7
Total (excl. non-
99.7 1,519.4 174 694,230 104.3 104.2 5.9 6.2 8.1 2.0 31.7
core assets)
Non-core portfolio 0.3 5.0 1 12,878 1.9 1.1 33.3 19.7 0.3 - 100.0
Total 100.0 1,524.4 175 707,108 106.2 105.3 6.0 6.3 7.9 1.9 32.9
Wholly owned 91.5 1,395.4 99 598,177 96.0 96.2 5.9 6.3 7.8 2.0 26.7
Held in joint
8.5 129.0 76 108,931 10.2 9.1 6.9 6.0 8.6 1.8 91.2
venture
The Group’s portfolio including our share of joint ventures increased by £4.8 million, £4.6 million being attributable to underlying
valuation growth recorded on the AUK portfolio. Early progress on AUK asset management initiatives are expected to provide
further valuation uplift.
Portfolio Market Annualised Voids
By value 29 gross (by
Top 10 Assets Market February rental Net initial Lettable
Value 2016 Area income yield WAULT area) Indexed
2
(%) (£m) (m ) (£m) (%) (yrs) (%) (%)
Grand Arcade, Wigan 6.6 100.5 43,491 7.9 6.4 9.5 0.8 17.0
Weston Favell, Northampton 5.7 87.4 28,451 6.5 6.9 7.8 0.8 48.7
St Georges, Harrow 4.8 73.2 20,202 4.6 5.2 5.0 0.9 18.9
Schloss Centre, Berlin 4.6 69.6 18,181 4.0 5.0 5.4 0.9 98.3
Bahnhof Altona, Hamburg 4.0 60.3 15,074 3.6 5.2 5.4 0.7 97.8
Banbury Cross Retail Park, Banbury 3.3 50.3 15,845 3.8 7.0 5.5 - 0.1
Charing Cross Road, London 3.2 49.0 3,776 1.8 2.6 5.7 - -
The Arches Retail Park, Watford 3.1 48.0 11,443 3.0 6.0 10.9 - -
Camino Park Distribution Centre, Crawley 2.8 42.0 32,664 2.4 5.3 3.4 7.8 -
Express Park Distribution Centre, Bridgewater 2.7 41.5 46,961 2.7 6.3 5.8 - -
Our top 10 assets by market value now include five material assets from the AUK transaction, which individually offer opportunities
to drive further income and capital growth.
Portfolio Total additional
by Occupancy No. of gross
Summary of leasing activity market (by lettable total No. of No. of annualised
value area) lease lettings & rent rental income
(%) (%) events renewals reviews (£m)
Like-for-like Retail 22.7 98.9 20 14 6 0.2
AUK Retail 13.7 99.6 3 2 1 0.3
UK Retail 36.4 99.2 23 16 7 0.5
UK Hotels 15.4 100.0 8 - 8 0.4
Like-for-like Commercial 10.4 99.8 5 2 3 0.3
AUK Commercial 16.9 94.2 4 2 2 0.4
UK Commercial 27.3 96.2 9 4 5 0.7
Total UK 79.1 98.0 40 20 20 1.6
Europe 20.9 98.3 53 18 35 -
Total 100.0 98.1 93 38 55 1.6
Successful leasing activity during the period delivered an additional £1.6 million of gross annualised rental income and £2.1 million
of net operating income, despite planned development work having some impact on new lettings and renewals at Weston Favell,
Northampton. Following confirmation from Northern Foods that it would exercise its break clause as expected, we are in the final
stages of negotiations with a replacement tenant in Crawley at the Camino Park Distribution Centre, which has seen strong
demand from the market.
Key leasing activity completed during the period:
- Delta 900, Swindon – new 15 year lease with Oxford Brookes University for 2,640 sqm (28,412 sqft) on an agreed rent of £0.3
million, 20.8 per cent above ERV.
- Banbury Cross Retail Park – new 10 year lease for 460 sqm (4,998 sqft) with Tapi, the carpet and flooring supplier, on an
agreed rent of £0.1 million which was in line with ERV. A lease renewal was also agreed with Poundstretcher at a rent of £0.2
million, 2.8 per cent ahead of ERV.
- Queens Drive, Kilmarnock – new 10 year lease for 1,390 sqm (15,000 sqft) with Smyths Toys on an agreed rent of £0.2 million
which was in line with ERV. The retail park is now fully occupied.
- Lochside View, Edinburgh – new 10 year lease for 1,040 sqm (11,202 sqft) with Origa on an agreed rent of £0.2 million, ahead
of ERV.
- Kingsthorne Industrial Park, Kettering – new 10 year lease for 1,183 sqm (12,737 sqft) with Rexson for an agreed rent of £0.1
million, in line with ERV and 17.9 per cent ahead of passing rent.
- Charing Cross Road, London – two rent reviews with Superdrug for 460 sqm (4,953 sqft) and Three Monkeys for 700 sqm
(7,571 sqft), were agreed totalling £0.8 million, £0.2 million above passing rent.
Resilient and secure income stream
We remain confident in our ability to deliver on our income commitments. Our above industry average WAULT of 8.1 years, for our
core portfolio, gives clear visibility on our future rental income and combined with our diverse and high quality tenant base, this
provides a resilient and secure income stream. In addition, less than 30 per cent of gross rental income is subject to break options
or expiries in the next five years with no more than 10 per cent expiring in any single year.
Gross annualised rental income by tenant
sector and geography
29 February 2016 Total (%) UK (%) Europe (%)
Hotels 14.1 14.1 -
Government 12.5 7.9 4.6
Home & DIY 9.1 7.2 1.9
Discounters 8.2 3.0 5.2
Leisure 7.8 6.7 1.1
Non-discretionary food & beverages 7.3 4.1 3.2
Department/Variety stores 5.0 5.0 -
Residual Portfolio 36.0 30.5 5.5
Total 100.0 78.5 21.5
Following the AUK transaction, our portfolio has a larger weighting towards economic growth areas. Although occupancy is high at
98.0 per cent, opportunities remain to reduce voids, particularly in the AUK regional offices. We are increasing our lettable area in
our shopping centres by utilising previously unused space with commercialisation initiatives, selective reconfiguration and
expansion opportunities. Over 30 per cent of our total portfolio is subject to indexed or fixed rental increases, mainly in the UK
Commercial and European portfolios.
Acquisitions
In March 2016 we concluded the AUK portfolio acquisition. This deal was secured off-market, a considerable achievement in an
environment which is highly competitive for such institutional quality assets. Our portfolio has now increased by approximately 50
per cent to £1.5 billion, adding a significant, resilient and long term rental stream with clearly identified additional income
opportunities to realise.
The acquisition enhances the overall quality of the portfolio, providing exposure to high quality assets in locations supported by
strong occupier demand that are capable of producing long term sustainable income returns throughout the property cycle.
Transformational AUK Acquisition
Portfolio Market Annualised Voids
by value 29 gross Net Re- (by
AUK portfolio market February rental initial versionary lettable
value 2016 No. of Area income ERV yield yield WAULT area)
(%) (£m) Properties (m2) (£m) (£m) (%) (%) (yrs) (%)
AUK Retail Parks 37.9 176.6 5 50,971 11.8 10.7 6.1 5.7 8.3 -
AUK Retail - Other 6.7 31.2 3 29,548 2.5 2.3 5.0 6.8 17.0 1.0
AUK Retail Portfolio 44.6 207.8 8 80,519 14.3 13.0 6.0 5.9 9.8 0.4
AUK Offices - Greater
10.5 49.0 1 3,776 1.8 2.3 2.6 4.5 5.7 -
London
AUK Offices - Regional 18.4 85.2 5 27,924 4.9 6.7 3.7 7.4 4.6 19.5
AUK Offices - Total 28.9 134.2 6 31,700 6.7 9.0 3.3 6.3 4.9 17.2
AUK Distribution 17.9 83.5 2 79,625 5.2 5.8 5.8 6.6 4.7 3.2
AUK Industrial and
8.6 39.9 3 25,394 2.4 2.1 5.6 5.1 7.8 -
Automotive
AUK Commercial
55.4 257.6 11 136,719 14.3 16.9 4.5 6.2 5.3 5.8
Portfolio
Total AUK Portfolio 100.0 465.4 19 217,238 28.6 29.9 5.0 6.1 7.5 3.0
Tranche I 54.0 251.2 10 154,431 17.3 16.6 6.3 6.2 7.7 1.8
Tranche II 46.0 214.2 9 62,807 11.3 13.3 3.7 5.9 7.3 8.7
Progress to date on the AUK portfolio asset management initiatives has exceeded management’s expectations, with discussions
and agreements ahead of the business plans for each property. The initial yield on acquisition was 5.0 per cent as previously
reported, will increase to a topped-up yield of 5.6 per cent following the early sale of 16 Grosvenor Street, successful letting activity
and the run off of rent free periods.
We remain confident in our ability to successfully execute the asset management opportunities we have identified. A further eight
leases covering 45,035 sqm (484,760 sqft) in the AUK portfolio are currently in solicitors’ hands, with almost all expected to be
signed with high quality national tenants for terms of at least 10 years. Following the completion of these leases an additional £0.5
million of annualised gross operating income will be generated and the retail parks and distribution portfolios will be fully occupied.
We are now presented with the welcome challenge of creating additional space in our portfolio to meet occupier demand. There are
ongoing discussions on the majority of the remaining 4,087 sqm (43,990 sqft) of vacant regional office space.
Key lease agreements currently in solicitors’ hands and expected to complete shortly:
- Banbury Cross Retail Park – three lease renewals for 3,160 sqm (34,018 sqft) and gross rent of £0.6 million, on average 11.4
per cent higher than ERV.
- Queens Drive, Kilmarnock – the retail park is now fully occupied with two additional pre-let units to be built (subject to planning)
to meet occupier demand.
- Omnibus, Reigate – 1,022 sqm (11,000 sqft) of the remaining 2,553 sqm (27,483 sqft) at an agreed rent above ERV.
- Camino Park, Crawley – a new lease agreement for 2,537 sqm (27,306 sqft) at a gross rent of £0.3 million, 12.7 per cent
above ERV. In addition, a lease renewal to Royal Mail for 20,534 sqm (221,037 sqft) on a five year term. Combined, the two
leasing transactions are expected to add an additional £0.4 million of net rental income.
- Express Park, Bridgewater – five year lease extension of a 12,407 sqm (133,550 sqft) unit at passing rent. Combined with the
Camino Park agreements this will increase the WAULT on our distribution portfolio by over 40 per cent to 6.6 years.
The portfolio value (excluding the impact of acquisition costs of £22.6 million) has increased by £4.6 million above the purchase
price, in addition to the Group’s share of realised profit of £2.8 million on disposal of 16 Grosvenor Street, with further value-adding
asset management opportunities still to be completed.
Disposals
A portfolio of ten petrol filling stations was sold during the period for £12.0 million, reflecting a 6.0 per cent premium to the year-end
book value. The Group’s remaining petrol filling station portfolio is let to BP with an average lease length of 16.7 years and subject
to fixed five yearly rental uplifts.
16 Grosvenor Street, which formed part of the second tranche of the AUK portfolio, was sold prior to the transaction’s completion
for £35.6 million, 22.8 per cent above the purchase price of £29.0 million.
Unlocking further value through selective high yielding development
Primark, Ingolstadt
The 5,200 sqm (56,000 sqft) redevelopment of a unit pre-let to Primark is on target to complete in late 2016. The existing H&M unit
is being reconfigured but continues to trade through the development period. The introduction of Primark will significantly
strengthen the retail offering in the town and surrounding areas, and encourage additional footfall. Once complete, the Primark
lease will deliver an additional €1.5 million of rental income per annum.
Weston Favell, Northampton
Following the acquisition of Weston Favell in December 2013, a phased redevelopment plan has been initiated to modernise the
centre. The first phase of the upgrade works commenced in January 2015 and is largely complete.
The development budget of £4.6 million allocated to the first phase primarily covers the reconfiguration of the ground floor space
and rebranding of the centre. These refurbishment and upgrade works are the first steps in enhancing the tenant profile which is
expected to result in increased footfall and rental appreciation.
UK Retail
The ongoing positive consumer environment is expected to support stable or improving sales for retailers in 2016 although margins
may be challenged following changes to the minimum wage and a business rates review. While the investment market for good
quality retail schemes remains active, a large number of shopping centres have been marketed since the middle of 2015 resulting
in a significant increase in investment supply which will need to be absorbed.
Portfolio Market Annualised Voids
by value 29 gross Net Re- (by
market February rental initial versionary lettable
value 2016 No. of Area income ERV yield Yield WAULT area) Indexed
2
UK Retail (%) (£m) Properties (m ) (£m) (£m) (%) (%) (yrs) (%) (%)
UK Shopping
Centres 62.5 346.6 6 157,102 27.1 27.4 6.5 7.0 8.6 1.1 20.9
UK Retail Parks 31.9 176.6 5 50,971 11.8 10.7 6.1 5.7 8.3 - -
UK Other Retail 5.6 31.2 3 29,548 2.5 2.3 5.0 6.8 17.0 1.0 -
UK Retail 100.0 554.4 14 237,621 41.4 40.4 6.3 6.6 9.0 0.9 13.7
Our UK shopping centres are close to full occupancy and we have seen restored confidence from national operators willing to take
additional space or renew leases. This increased demand, despite retailers remaining highly cost sensitive, demonstrates clear
signs of improvement in the sector. For the year ahead we see opportunities around modest rental growth, reconfiguration and
optimisation of space, further development and expansion activities as well as a drive on income from advertising and promotional
space.
Our newly acquired retail parks are fully occupied with strong tenant demand creating opportunities to add additional space or bring
in new retailers to improve footfall and trading.
The UK Retail portfolio decreased in value by £5.0 million or 1.4 per cent on a like-for-like basis. The change in value reflected an
outward yield shift of 20 bps and a like-for-like net rental income increase of 2.3 per cent.
UK Hotels
The UK Hotels portfolio has experienced another solid trading period. The outlook for limited service branded hotels remains
supportive of further income growth, with average occupancy rates for London hotels expected to reach 84 per cent in 2016, the
highest levels for a decade. Average daily rates in London are forecast to increase 2.2 per cent per annum.
Market
Portfolio Value Annualised Voids
By 29 gross Net Re- (by
Market February rental initial versionary lettable
Value 2016 No. of Area income ERV yield yield WAULT area) Indexed
UK Hotels (%) (£m) Properties (m2) (£m) (£m) (%) (%) (yrs) (%) (%)
Greater London &
UK South portfolio 82.2 193.6 7 29,426 12.3 12.3 6.0 6.0 9.8 - -
Edinburgh 12.0 28.1 1 7,250 2.0 2.0 6.7 6.7 10.0 - 4.4
RBDL Managed
Hotels 94.2 221.7 8 36,676 14.3 14.3 6.1 6.1 9.8 - 0.6
Enfield Travelodge 5.8 13.7 1 4,647 0.7 0.7 5.0 5.0 31.3 - 100.0
UK Hotels 100.0 235.4 9 41,323 15.0 15.0 6.0 6.0 10.8 - 5.4
The Company’s 25.3 per cent stake in RedefineBDL, the largest independent hotel management company in the UK, produced
distributable earnings of £1.2 million during the period.
Underlying trading results in the RedefineBDL managed portfolio remain robust with EBITDA figures for the period marginally
ahead of management forecasts and 6.1 per cent up on the comparative period last year. There have been strong performances by
the Crowne Plaza, Reading and DoubleTree by Hilton in Edinburgh. Our UK Hotels portfolio reduced in value by £0.6 million or 0.3
per cent on a like-for-like basis.
The Company’s 14.4 per cent investment in International Hotel Group Limited (“IHGL”) had a market value of £7.9 million at period
end, a 14.5 per cent increase on our investment. A further investment of £1.5 million was made post period end to provide
additional seed capital in support of identified investment opportunities. Our investment strategy in respect of IHGL is to support the
establishment of a focused hotel investment company with a wide investment remit that can leverage the RedefineBDL
management platform. We expect our shareholding to be diluted with further acquisition led growth in IHGL.
UK Commercial
Occupational markets have seen strong take-up combined with rental growth. This has been particularly evident in the distribution
sector with online retailing and parcel delivery resulting in a 46 per cent increase in the first two months of 2016. Take-up in the
office market remained strong across London, the South East and the key regional cities. Although careful asset selection in
regional centres remains an important consideration, demand is less widespread.
Investment activity across most commercial sectors has slowed ahead of the EU referendum, however this is off a high base and
investment levels are still above long term averages.
Portfolio Market Annualised Voids
by value 29 gross Net Re- (by
UK Commercial market February rental initial versionary lettable
(incl. share of value 2016 No. of Area income ERV yield yield WAULT area) Indexed
2
joint ventures) (%) (£m) Properties (m ) (£m) (£m) (%) (%) (yrs) (%) (%)
UK Offices -
Greater London 21.1 87.7 4 15,706 4.2 4.8 3.9 5.4 4.6 - 23.4
UK Offices -
Regions 38.8 161.1 20 79,269 12.3 13.0 6.0 7.7 4.7 7.1 18.5
UK Offices 59.9 248.8 24 94,975 16.5 17.8 5.2 6.9 4.7 5.9 19.7
UK Distribution 20.1 83.5 2 79,625 5.2 5.8 5.8 6.6 4.7 3.2 -
UK Industrial
and Automotive 20.0 83.2 38 42,065 5.3 4.4 5.9 4.8 11.6 - 53.7
UK Commercial 100.0 415.5 64 216,665 27.0 28.0 5.5 6.4 6.0 3.8 22.6
Wholly owned 97.2 403.7 63 213,912 26.2 27.2 5.4 6.4 5.9 3.8 23.3
Held in joint
ventures 2.8 11.8 1 2,753 0.8 0.8 6.7 6.6 8.3 - -
Leasing activity and rent reviews, particularly within the AUK portfolio, have been encouraging. Two recent rent reviews at Charing
Cross Road, London, which benefits from its proximity to Crossrail, were agreed at more than 29 per cent above passing rents. The
four regional offices acquired as part of the AUK portfolio had over 6,500 sqm (19.9 per cent) of vacant space on acquisition in
October 2015 between them. Since then, 1,040 sqm has been let in Lochside View, Edinburgh at two per cent above ERV. A
further 1,022 sqm is currently in solicitors’ hands and we continue to make good progress on the remainder of the vacant regional
office space.
The UK Commercial portfolio increased in value by £6.9 million or 4.6 per cent on a like-for-like basis. The increase in value was
supported by an inward yield shift of 26 bps points and a like-for-like net rental income increase of 0.3 per cent.
Europe
The German investment market has experienced high levels of activity, particularly in retail, where €19.4 billion was invested in
2015. As is currently being experienced in the UK, the recent uplift in values is likely to place increased emphasis on income
returns and rental growth potential. Interest rates remain at historic lows and look likely to remain at these rates for an extended
period of time.
The German economic recovery is expected to continue in 2016, albeit slowly. Growth is forecast to exceed that of the Eurozone
supported by improving employment figures and rising incomes.
Portfolio Market Annualised Voids
by value 29 gross Net Re- (by
Europe (incl. market February rental initial versionary lettable
share of joint value 2016 No. of Area income ERV yield yield WAULT area) Indexed
ventures) (%) (£m) Properties (m2) (£m) (£m) (%) (%) (yrs) (%) (%)
German
Shopping
Centres 46.2 145.0 3 44,537 7.9 8.8 4.5 5.2 5.4 0.8 98.1
German
Supermarkets
and Retail Parks 42.4 133.3 80 131,963 9.9 10.0 6.2 6.3 7.9 2.1 96.9
German Retail 88.6 278.3 83 176,500 17.8 18.8 5.3 5.7 6.7 1.7 97.4
German Offices 11.4 35.8 4 22,121 3.1 2.0 8.0 5.0 7.4 1.9 99.4
Europe (excl.
100.0 314.1 87 198,621 20.9 20.8 5.6 5.6 6.8 1.8 97.7
non-core)
Wholly owned 62.6 196.9 12 92,442 11.6 12.5 4.8 5.4 5.4 1.8 96.4
Held in joint
venture 37.4 117.2 75 106,179 9.3 8.3 6.9 6.0 8.7 1.9 99.3
Occupancy, excluding space under development, remains high at 98.2 per cent (August 2015: 98.2 per cent). The new 5,200 sqm
development at Ingolstadt is currently vacant but subject to a €1.5 million pre-let agreement with Primark.
The European portfolio increased in value by £19.8 million or 6.6 per cent on a like-for-like basis. In local currency terms the
portfolio valuation declined by 0.4 per cent reflecting a small decline in local currency net rental income.
Outlook
Redefine International has had a positive and extremely active start to the year. The AUK acquisition places the Company in a
stronger positon and our enlarged portfolio is fully aligned with the Group’s strategy of allocating capital to assets with income and
capital growth potential. We will continue to enhance the portfolio through value creation initiatives which are focused on increasing
income, together with active recycling of capital from underperforming and more mature assets into new opportunities. With the
disposal of non-core assets our portfolio is streamlined and has a clear focus on Europe’s two strongest economies.
We remain confident in our ability to deliver a resilient and secure income stream, despite the current economic and political
uncertainty surrounding the EU referendum in the UK. Our portfolio, diversified by both sector and geography, has limited exposure
to the financial services sector and is therefore likely to be relatively insulated from any potential referendum outcome.
It is likely that a low interest rate environment will prevail in the medium term and we plan to capitalise on this opportunity whilst at
the same time deleveraging our balance sheet to within our target LTV range of 40 to 50 per cent.
We believe an income driven total returns strategy is the right long term growth strategy for the Company, particularly at this point
in the property cycle, as sustainable cash-based rental returns are fundamental to long term total return performance and growth in
capital values.
Our target of growing the dividend ahead of inflation remains a clear focus. As we take a more active approach to capital recycling
and leverage reduction, it is necessary at this point in the property cycle to set medium term objectives to ensure we maintain
sufficient flexibility to align dividends with recurring earnings. The Group will target dividend growth of CPI plus one to two per cent
across the medium term.
Financial Review
Overview
The first half of 2016 has been characterised by the transformational AUK portfolio acquisition. The first tranche completed in
September and October 2015, with the second tranche completing on 1 March, immediately after the period end. Following the
AUK acquisition the Group’s property portfolio is now valued in excess of £1.5 billion.
In February 2016, to support the funding of tranche two, the Group completed a £115.0 million equity raise, placing 270.6 million
ordinary shares at a placing price of 42.5 pence per share. This was a particularly pleasing result in light of the prevailing market
backdrop.
Also in February, the Group disposed of ten petrol filling stations from its Malthurst portfolio for consideration of £12.0 million.
Associated debt of £6.5 million was prepaid at a cost of £0.2 million. At the point of disposal, the filling stations had been generating
annual rent of £0.9 million.
Pro-forma LTV remains broadly unchanged since year-end, however, our weighted average cost of debt continues to improve as
we take advantage of the ongoing favourable interest rate environment.
The Group seeks to use cash wisely and limit the impact of any cash drag on earnings. The timing of the February placement and
the immediate deployment of proceeds has ensured the cash drag which impacted the second half of 2015 has not reoccurred in
2016. With a conservative level of capital commitments, careful liquidity planning and the newly secured AUK facility (which
includes a revolving credit facility) the Group is able to balance the efficient use of cash with the need to maintain a degree of
financial flexibility.
The first half of the year saw a strengthening of the euro relative to sterling of some 6.6 per cent, reversing a significant proportion
of the decline experienced in 2015.
AUK portfolio acquisition
The AUK portfolio comprised of 20 properties at an initial market value of £489.9 million.
On 7 September 2015 the Group completed on the acquisition of the first of these properties, Banbury Cross Retail Park in
Oxfordshire, at a purchase price of £52.5 million and conditionally exchanged contracts for the acquisition of the remaining 19
properties. Banbury Cross Retail Park was funded entirely from existing cash resources and generates a gross annual income of
£3.8 million.
Due to the nature and size of the transaction, shareholder approval was sought for the acquisition of the remaining properties.
Shareholders approved the transaction at an Extraordinary General Meeting (“EGM”) on 25 September 2015, at which point the
contract became unconditional and the significant risks and rewards of ownership transferred.
As agreed with the vendor, the remaining properties were scheduled to complete in two tranches, the first of which comprising nine
properties, completed on 2 October 2015 at a purchase price of £203.5 million. This was funded by both existing cash resources
and £155.0 million drawn against a new £303.0 million facility which had been secured with a syndicate of four UK banks. An initial
margin of 2.1 per cent was payable. This is comprised of a £155.0 million term facility a £148.0 million revolving credit facility. The
nine properties acquired on this date generate gross annual income of £13.5 million.
On 21 December 2015, the Group announced it had exchanged contracts to sell one of the remaining ten properties it was due to
acquire as part of the second tranche, 16 Grosvenor Street, Mayfair. The property was sold for £35.6 million realising an immediate
profit for the Group of £2.8 million (including costs).
On 1 March 2016 the last nine properties were acquired at a purchase price of £204.7 million. The properties were funded by the
proceeds of the February 2016 equity raise and the drawing of £97.0 million of the £148.0 million revolving credit facility referred to
above. Following the completion of tranche two, the margin payable on the combined AUK facility reduced to 1.9 per cent.
Including costs, predominantly stamp duty land tax, the AUK portfolio was acquired for £483.4 million and is valued at £465.4
million at 29 February 2016. Acquisition costs of £22.6 million amounted to 4.9 per cent of the purchase price paid.
The second tranche of the acquisition completed on 1 March 2016 (post period end). The entire portfolio has been reflected on the
Group’s balance sheet at 29 February 2016 with the resultant payable due, as the significant risks and rewards of ownership had
transferred in September 2015. This is in line with the Group’s accounting policy. For this reason, the Group again presents a pro-
forma calculation of LTV to illustrate the position as though the transaction had completed on 29 February 2016.
Basis of presentation
Internally the Board focuses on and reviews information and reports prepared on a proportionately consolidated basis, which
includes the Group’s share of joint ventures. To align with the way the Group is managed, this financial review presents the
performance and position of the Group on that basis.
Income statement
In addition to EPRA earnings, the Group presents an underlying calculation of earnings. The Directors consider that this
presentation provides useful information as it removes certain exceptional items and fair value changes and better reflects the
underlying performance of the business.
EPRA earnings decreased by 4.5 per cent to £23.1 million or 1.5 pence per share (28 February 2015: 1.8 pence) primarily as a
result of the gain recorded on extinguishment of debt in the prior period. Underlying earnings increased 5.6 per cent to £22.6
million, a £1.2 million increase relative to the comparative period. The inclusion of a non-recurring profit on disposal of 16
Grosvenor Street, Mayfair of £2.8 million contributed to an 18.7 per cent increase in distributable earnings when compared to the
first half of 2015. The inclusion of this opportunistic profit (which was realised pre-completion) goes some way towards normalising
distributable earnings during the period for the impact of the phased completion of the AUK portfolio.
29 February 2016 28 February 2015
Presented on a proportionately Joint Group Joint Group
consolidated basis IFRS Ventures Total IFRS Ventures Total
£m £m £m £m £m £m
Gross rental income 40.2 4.7 44.9 35.0 2.9 37.9
Property operating expenses (2.5) (0.5) (3.0) (2.6) (0.1) (2.7)
Net rental income 37.7 4.2 41.9 32.4 2.8 35.2
Other income 1.3 0.5 1.8 1.7 0.3 2.0
Administrative and other expenses (5.2) (0.3) (5.5) (5.5) (0.2) (5.7)
Net operating income 33.8 4.4 38.2 28.6 2.9 31.5
Investment income - - - 3.7 - 3.7
Net finance costs (13.4) (2.0) (15.4) (14.4) (1.2) (15.6)
Gain on extinguishment of debt - - - 3.5 - 3.5
Fair value (loss) / gain on property (17.3) (0.5) (17.8) 8.6 0.3 8.9
Gain on disposal of investment
property 3.4 - 3.4 - - -
Fair value gain on investment in listed
securities 1.0 - 1.0 4.0 - 4.0
Fair value movement on derivatives (2.5) (1.4) (3.9) (0.5) (0.5) (1.0)
Tax, NCI and other 1.8 (0.5) 1.3 1.8 (1.5) 0.3
IFRS profit attributable to
shareholders 6.8 - 6.8 35.3 - 35.3
Adjustments:
Fair value loss / (gain) on property 17.8 (8.9)
Gain on disposal of investment
property (3.4) -
Fair value gain on listed securities (1.0) (4.0)
Fair value movement on derivatives 3.9 1.0
Tax, NCI and other (1.0) 0.8
EPRA earnings 23.1 24.2
Adjustments:
Debt fair value adjustments 1.1 1.7
Hague & Delta non-distributable
earnings (0.7) (0.7)
Gain on extinguishment of debt - (3.5)
Tax, NCI and other (0.9) (0.3)
Underlying earnings 22.6 21.4
Profit on disposal of 16 Grosvenor
Street (non-recurring) 2.8 -
Distributable earnings 25.4 21.4
Diluted weighted average ordinary
shares in issue (millions) 1,494.8 1,311.6
Distributable earnings per share
(pence) 1.7 1.6
EPRA earnings per share (pence) 1.5 1.8
Following the disposal of the Group’s investment in an Australian listed security (“Cromwell”) and the subsequent recycling of
capital into the first tranche of the AUK portfolio acquisition, gross rental income has increased by £7.0 million with a reduction in
investment income from Cromwell of £3.7 million.
As illustrated below, on a like-for-like basis, gross rental income fell by 0.8 per cent when compared to the first half of 2015. The 4.6
per cent fall in like-for-like income in Europe was the result of the average euro rate applied to income generated in the first half of
2016 being weaker than that applied in the first half of 2015.
Presented on a proportionately consolidated basis Gross rental Gross rental
income income
Six months to Six months to Local
29 February 28 February currency
2016 2015 Change Change
£m £m % %
UK Retail 12.9 13.1 (1.2) (1.2)
UK Hotels 6.5 6.3 3.0 3.0
UK Commercial 6.6 6.5 0.7 0.7
UK Total 26.0 25.9 0.3 0.3
Europe 7.0 7.3 (4.6) (0.8)
Like-for-like gross rental income 33.0 33.2 (0.8) 0.1
Acquisitions 11.7 1.4
Disposals - 2.9
Development 0.2 0.4
Total gross rental income 44.9 37.9
Property operating expenses and administrative costs remain in line with the first half of 2015. On a full year basis we would expect
these costs to increase marginally alongside the expansion in the Group’s activities.
Although the weighted average cost of debt has reduced, net finance costs have remained in line with the prior period due to the
higher average level of net debt, primarily following the completion of the first tranche of the AUK acquisition.
A fair value loss of £17.8 million was incurred on the Group’s property portfolio. The loss is the result of underlying valuation gains
of £4.8 million being offset by £22.6 million relating to acquisition costs on the entire AUK portfolio. Capex during the period
amounted to £4.2 million. This was invested in UK Retail (£1.9 million), mainly at Weston Favell, UK Hotels (£1.3 million), primarily
extending the Travelodge at Enfield, and in Europe (£1.0 million), largely at Ingolstadt.
Gains on disposal of investment property of £3.4 million arose following the sale of ten petrol filling stations in February 2016 and
an early opportunity to realise value from within the AUK portfolio in December 2015 when 16 Grosvenor Street was sold post
exchange but pre-completion.
During the period the Group cumulatively invested £6.9 million in International Hotel Group Limited, a hotel and leisure focused
property investment company. A fair value gain of £1.0 million was recognised at period end. At 29 February 2016 the Group’s
investment represented 14.4 per cent of the company’s issued share capital.
As a UK Real Estate Investment Trust (“REIT”), the Group pays tax directly on its European earnings and any UK non-property
residual income under REIT rules along with withholding taxes and, where applicable, capital gains taxes. During the period to 29
February 2016, a net current tax credit of £0.7 million arose as a result of an over-provision of £1.1 million on the capital gains tax
due on disposal of the Group’s Swiss portfolio in 2015. This was offset by underlying taxes charged on foreign earnings and non-
qualifying UK income of £0.4 million.
Balance sheet
EPRA adjusted, diluted net assets per share (“EPRA NAV”) decreased by 1.7 per cent to 40.3 pence (31 August 2015: 41.0
pence). Adjusting for the result of non-recourse negative equity, adjusted NAV of 40.9 pence decreased by 0.8 pence or 1.9 per
cent since year-end. The underlying valuation growth of £4.8 million in the property portfolio was offset by the £22.6 million of
acquisition costs incurred on the AUK transaction which resulted in a net valuation loss of £17.8 million (representing 1.0 pence per
share). This loss is offset by currency translation gains recorded on the Group’s net investment in Europe (representing 0.2 pence
per share).
In February 2016, the Group completed the placing of 270.6 million ordinary shares at a placing price of 42.5 pence per share (a
1.9 per cent premium to the 31 August 2015 net asset value) raising gross proceeds of £115.0 million. Placing costs totalling £5.9
million included £2.5 million paid to Redefine Properties Limited, the Company’s largest shareholder, for underwriting £70.0 million
of the equity raise. Redefine Properties Limited subscribed for £34.6 million of the gross equity raised, maintaining its proportional
30.07 per cent shareholding.
The capital raise generated net proceeds of £109.1 million and completed on 23 February 2016.
29 February 2016 31 August 2015
Presented on a proportionately consolidated Joint Group Join Group
basis IFRS Ventures Total IFRS Ventures Total
£m £m £m £m £m £m
Investment Property 1,406.2 129.0 1,535.2 934.4 121.5 1,055.9
Net debt (523.7) (69.4) (593.1) (466.3) (65.8) (532.1)
AUK Tranche 2 payable (209.3) - (209.3) - - -
Cromwell & Swiss sale proceeds due - - - 102.6 - 102.6
Other assets, liabilities and NCI 31.3 (59.6) (28.3) 27.3 (55.7) (28.4)
IFRS NAV 704.5 - 704.5 598.0 - 598.0
Fair value of derivatives 3.9 4.5
Deferred tax 4.3 2.4
EPRA NAV 712.7 604.9
Per share disclosure
Fully diluted number of ordinary shares outstanding
(million) 1,767.8 1,475.9
EPRA NAV per share (pence) 40.3 41.0
Non-recourse negative equity (pence) (1) 0.6 0.7
Adjusted NAV per share (pence) 40.9 41.7
(1)
As a result of the non-recourse nature of the debt relating to the Justice Centre in The Hague, Netherlands, a negative equity position of 0.6
pence per share has been adjusted for to arrive at an Adjusted NAV measure
Investment Property
On a like-for-like basis the UK portfolio experienced little valuation growth in the first half of 2016 due to the headwinds experienced
in the retail investment market offsetting the more resilient commercial property sector. UK Retail has underperformed other real
estate sectors since the start of 2015 with IPD suggesting capital growth of just one per cent being achieved in the last calendar
quarter of 2015, falling to nil in February 2016.
The November 2015 terrorist atrocities in Paris impacted UK Hotels with a softening in occupancy from late November, which
continued into January 2016. The resilience of the UK market has seen occupancy return to normalised levels during February
2016.
European valuations also experienced little growth in underlying currency terms, but with a strengthening in the euro there has
been a significant reversal of 2015 losses in sterling terms.
Presented on a proportionately consolidated Market value Market value Valuation(1) Local
basis currency
29 February 31 August
2016 2015 Gain/(loss) Gain/(loss) Gain/(loss)
£m £m £m % %
UK Retail 346.6 349.6 (5.0) (1.4) (1.4)
UK Hotels 235.4 234.7 (0.6) (0.3) (0.3)
UK Commercial 157.9 150.9 6.9 4.6 4.6
UK Total 739.9 735.2 1.3 0.2 0.2
Europe 319.1 298.1 19.8 6.6 (0.4)
Like-for-like property portfolio 1,059.0 1,033.3 21.1 2.0
Acquisitions 465.4 -
Disposals - 11.3
Total property portfolio 1,524.4 1,044.6
(1)
Valuation includes the effect of capital expenditure, amortisation of head leases, lease incentives and foreign currency translation where
applicable.
Debt and Gearing
Adjusting for the completion of the second tranche of the AUK acquisition and The Hague, balance sheet leverage at 29 February
2016 would have been 52.5 per cent (31 August 2015: 51.8 per cent).
Following the sale of the investment in Cromwell and the Swiss property portfolio in September 2015, the Group repaid its AUD 50
million Australian facility and its CHF 16 million Swiss facility. These facilities had attracted interest rates of 7.3 per cent and 2.0 per
cent respectively. Break costs incurred totalled £0.6 million.
In February 2016, following the sale of ten petrol filling stations, £6.5 million was prepaid against the Malthurst facility. This facility
attracts interest at 4.2 per cent and break costs of £0.2 million were incurred.
The Group utilises derivative instruments, including interest rate swaps and interest rate caps, to manage its interest rate exposure.
At 29 February 2016, the net fair value liability of the Group’s share of derivative financial instruments was £3.9 million (31 August
2015: £4.5m).
Redefine International has a hedging policy which requires at least 75 per cent of all interest rate exposures exceeding one year to
be on a fixed or capped rate basis. For facilities with interest rate swaps or caps attached, the interest rates are fixed or capped for
the duration of the facility. The changes in the fair value of the Group’s hedging instruments have been recognised in the income
statement.
Key financing statistics 29 February 31 August
Presented on a proportionately consolidated basis Proforma(1) 2016 2015
(£m) £m £m
Nominal value of drawn debt 842.4 760.7 636.8
Cash and short-term deposits (43.1) (157.2) (95.9)
Net debt 799.3 603.5 540.9
Property portfolio at market value 1,519.3 1,524.4 1,044.6
Loan-to-value (%) 52.5 39.6 51.8
Weighted average debt maturity (years) 7.4 7.5 7.8
Weighted average interest rate (%) 3.5 3.6 3.9
Debt with interest rate protection (%) 93.2 95.3 94.7
(1)
Adjusted to incorporate the completion of the second tranche of the AUK portfolio acquisition on 1 March 2016 and exclude The Hague.
Cash flow
Cash flow from operating activities increased £0.7 million to £16.8 million for the period, largely due to the increase in rental
income.
During the period, £157.4 million was applied towards investing activities. This was primarily the result of the acquisition of tranche
one of the AUK Portfolio, including Banbury Cross (£272.1 million), offset by proceeds received from the sale of Cromwell, the
Swiss assets, ten petrol filling stations and other non-current assets held for sale (£114.6 million).
Financing activities generating £200.4 million were mainly the result of the equity placement (net proceeds of £110.2 million) and
borrowings drawn to finance the first tranche of the AUK acquisition (£155.0 million). These were offset by debt repayments and
prepayments (£44.4 million) and cash dividends paid (£13.2 million).
Following the equity placement, cash on hand at 29 February 2016 was £155.1 million. Upon completion of the second tranche of
the AUK acquisition on 1 March 2016, cash on hand fell to £42.8 million.
Principal risks and uncertainties
The Directors have concluded that there has been no significant change in the principal risks and uncertainties faced by the Group,
neither is there anticipated to be a significant change during the remaining six months to 31 August 2016. Full disclosure of risks
and uncertainties faced are set out in the 2015 Annual Report.
Dividends
The Directors have declared an interim dividend for the period of 1.625 pence per share. This reflects an increase of 1.6 per cent
on the first interim dividend paid in respect of 2015 and an annualised yield of 8.1 per cent based on EPRA NAV, 7.6 per cent when
compared to the Group’s share price at 29 February 2016.
The Company proposes offering shareholders the option of receiving a cash dividend or a scrip dividend by way of an issue of new
Redefine International P.L.C shares. The details of the tax components of the dividend and the timetable have been announced
separately today. The dividend payment date is set for 6 June 2016 to shareholders on the register at 20 May 2016.
In respect of the second interim dividend for the year ended 31 August 2015 which was paid to shareholders in December 2015,
the scrip take up of 47 per cent resulted in a cash saving of £11.2 million.
D Grant
26 April 2016
Directors’ Responsibilities
Statement of Directors’ responsibilities
The Directors are responsible for preparing the condensed consolidated interim financial statements, in accordance with applicable
laws and regulations.
The Directors confirm that to the best of their knowledge:
- the condensed consolidated interim financial statements have been prepared in accordance with IAS 34 ’Interim Financial
Reporting’;
- the condensed consolidated interim financial statements include a true and fair view of the information required by Sections
DTR 4.2.7R and DTR 4.2.8R of the Disclosure and Transparency Rules of the United Kingdom’s Financial Conduct Authority.
The operating and financial review refers to important events which have taken place during the period.
Related party transactions are set out in note 24 to the condensed consolidated interim financial statements.
By order of the Board
Mike Watters Donald Grant
Chief Executive Chief Financial Officer
26 April 2016
INDEPENDENT REVIEW REPORT TO REDEFINE INTERNATIONAL P.L.C.
Introduction
We have been engaged by Redefine International P.L.C. (“the Company”) to review the condensed set of consolidated financial
statements in the half-yearly financial report for the six months ended 29 February 2016 which comprise the condensed
consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated
balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows
and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies with the information in the set of consolidated financial
statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the
requirements of the Disclosure and Transparency Rules (“the DTR”) of the UK’s Financial Conduct Authority (“the UK FCA”). Our
review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company for our review work, for this report, or for the conclusions we have reached.
Directors’ responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for
preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in Note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as issued by IASB.
The directors are responsible for ensuring that the set of financial statements included in this half-yearly financial report have been
prepared in accordance with IAS 34 Interim Financial Reporting as issued by IASB.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of consolidated financial statements in the half-
yearly financial report based on our review.
Scope of review
We conducted our review in accordance with the Financial Reporting Council’s International Standard on Review Engagements
(UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of
interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might
be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial
statements in the half-yearly report for the six months ended 29 February 2016 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as issued by IASB and the DTR of the UK FCA.
N Marshall
For and on behalf of KPMG
Chartered Accountants
1 Harbourmaster Place
IFSC
Dublin 1
Ireland
26 April 2016
CONDENSED CONSOLIDATED INCOME STATEMENT for the six months ended 29 February 2016
Re-presented (1)
Reviewed Reviewed Re-presented (1)
Six months Six months Audited
ended ended Year ended
29 February 28 February 31 August
2016 2015 2015
Continuing operations Note £m £m £m
Revenue 3 41.5 40.4 79.7
Rental income 40.2 35.0 68.3
Rental expense (2.5) (2.6) (5.3)
Net rental income 37.7 32.4 63.0
Other income 1.3 1.7 3.9
Administrative costs and other fees 4 (5.2) (5.5) (11.1)
Net operating income 33.8 28.6 55.8
(Loss) / gain on revaluation of investment property (17.3) 10.5 31.5
Gain on disposal of investment property 3.4 - -
Gain on extinguishment / acquisition of debt 5 - 3.5 29.8
Gain on bargain purchase of subsidiary 6 - 0.2 0.2
Loss on disposal of subsidiaries 7 - - (0.3)
Distributions received from investment at fair value - 3.7 7.5
Gain on revaluation of investment at fair value 1.0 4.0 -
Loss on disposal of investment at fair value 12 - - (17.6)
Gain on disposal of joint venture - 0.6 0.6
Amortisation of intangible assets (0.1) (0.1) (0.2)
Loss on revaluation of non-current assets held for sale - (1.9) (1.9)
Gain on disposal of non-current assets held for sale 0.2 - 0.6
Foreign exchange gain 2.7 1.3 2.5
Profit from operations 23.7 50.4 108.5
Net finance expense 8 (13.4) (14.4) (27.5)
Other finance income and expenses 9 (0.8) - -
Change in fair value of derivative financial instruments (2.5) (0.5) 0.7
7.0 35.5 81.7
Impairment of loans to joint ventures (0.7) (1.2) (3.8)
Share of post-tax profit from joint ventures 0.9 4.0 5.5
Share of post-tax profit from associate 1.2 0.2 0.6
Profit before tax 8.4 38.5 84.0
Taxation 10 (0.1) (1.7) (6.1)
Profit for the period 8.3 36.8 77.9
Profit attributable to:
Equity holders of the Parent 6.8 35.3 70.6
Non-controlling interests 1.5 1.5 7.3
8.3 36.8 77.9
Basic earnings per share (pence) 25 0.5p 2.7p 5.1p
Diluted earnings per share (pence) 25 0.5p 2.7p 5.1p
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
(1)
Comparative information has been re-presented to ensure consistency with the current period. There has been no restatement of information
reported, with changes in presentation only.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the six months ended 29 February 2016
Reviewed Reviewed
Six months Six months Audited
ended ended Year ended
29 February 28 February 31 August
2016 2015 2015
Continuing operations £m
Note £m £m
Profit for the period 8.3 36.8 77.9
Other comprehensive income / (expense)
Items that are or may be subsequently reclassified to the income statement:
Transfer of foreign currency translation reserve to the income
statement on disposal of subsidiaries 7 - - 0.8
Transfer of foreign currency translation reserve to the income
statement on disposal of joint venture - (0.1) (0.1)
Foreign currency translation on foreign operations -
subsidiaries 2.4 (5.1) (3.7)
Foreign currency translation on foreign operations -
joint ventures 0.9 (1.1) (1.1)
Total other comprehensive income / (expense) 3.3 (6.3) (4.1)
Total comprehensive income for the period 11.6 30.5 73.8
Total comprehensive income attributable to:
Equity holders of the Parent 10.1 29.0 66.9
Non-controlling interests 1.5 1.5 6.9
11.6 30.5 73.8
T
he accompanying notes form an integral part of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED BALANCE SHEET as at 29 February 2016
Reviewed Audited
29 February 31 August
2016 2015
Note £m £m
Non-current assets
Investment property 11 1,406.2 934.4
Investment at fair value through profit or loss 12 7.9 -
Investment in joint ventures 13 15.3 14.6
Loans to joint ventures 13 34.2 33.6
Investment in associate 14 7.8 8.0
Intangible assets 1.4 1.5
Property, plant and equipment 0.2 0.1
Derivative financial instruments 1.7 1.8
Total non-current assets 1,474.7 994.0
Current assets
Trade and other receivables 15 36.0 139.2
Cash and cash equivalents 16 155.1 93.6
Total current assets 191.1 232.8
Total assets 1,665.8 1,226.8
Non-current liabilities
Borrowings, including finance leases 18 (613.0) (520.5)
Derivative financial instruments (4.6) (3.4)
Deferred tax 19 (3.0) (2.2)
Total non-current liabilities (620.6) (526.1)
Current liabilities
Borrowings, including finance leases 18 (65.8) (39.4)
Derivative financial instruments - (0.9)
Trade and other payables 20 (235.3) (23.6)
Total current liabilities (301.1) (63.9)
Total liabilities (921.7) (590.0)
Net assets 744.1 636.8
Equity
Share capital 21 141.3 117.9
Other components of equity 563.2 480.1
Total attributable to equity holders of the Parent 704.5 598.0
Non-controlling interests 39.6 38.8
Total equity
744.1 636.8
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
The condensed consolidated interim financial statements were approved by the Board of Directors on 26 April 2016 and were
signed on its behalf by:
Mike Watters Donald Grant
Chief Executive Chief Financial Officer
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 29 February 2016
Total
Foreign attributable
Reverse currency to equity Non-
Share Share acquisition Retained Other translation holders of controlling Total
Note capital premium reserve loss reserves reserve the Parent interests equity
£m £m £m £m £m £m £m £m £m
Balance at 1 September 2015 117.9 395.0 134.3 (48.8) 2.0 (2.4) 598.0 38.8 636.8
Profit for the period - - - 6.8 - - 6.8 1.5 8.3
Foreign currency translation on foreign operations -
subsidiaries - - - - - 2.4 2.4 - 2.4
Foreign currency translation on foreign operations -
joint ventures 13 - - - - - 0.9 0.9 - 0.9
Total comprehensive income for the period - - - 6.8 - 3.3 10.1 1.5 11.6
Transactions with equity holders of the Parent
Shares issued for cash 21 21.7 87.4 - - - - 109.1 - 109.1
Dividends paid - - - (13.2) - - (13.2) - (13.2)
Scrip dividends 21 1.7 9.5 - (11.2) - - - - -
Fair value of share-based payments - - - - 0.5 - 0.5 - 0.5
23.4 96.9 - (24.4) 0.5 - 96.4 - 96.4
Changes in ownership interest in subsidiaries
Decrease in non-controlling interests - - - - - - - (0.2) (0.2)
Dividends paid to non-controlling interests - - - - - - - (0.5) (0.5)
- - - - - - - (0.7) (0.7)
Balance at 29 February 2016 141.3 491.9 134.3 (66.4) 2.5 0.9 704.5 39.6 744.1
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 28 February 2015
Total
Foreign attributable
Reverse currency to equity Non-
Share Share acquisition Retained Other translation holders of controlling Total
Note capital premium reserve loss reserves reserve the Parent interests equity
£m £m £m £m £m £m £m £m £m
Balance at 1 September 2014 103.7 314.5 134.3 (74.2) 1.5 1.3 481.1 28.6 509.7
Profit for the period - - - 35.3 - - 35.3 1.5 36.8
Transfer of foreign currency translation reserve to income
statement on disposal of joint venture - - - - - (0.1) (0.1) - (0.1)
Foreign currency translation on foreign operations -
subsidiaries - - - - - (5.1) (5.1) - (5.1)
Foreign currency translation on foreign operations -
joint ventures - - - - - (1.1) (1.1) - (1.1)
Total comprehensive income for the period - - - 35.3 - (6.3) 29.0 1.5 30.5
Transactions with equity holders of the Parent
Dividends paid - - - (10.4) - - (10.4) - (10.4)
Scrip dividends 21 1.9 9.8 - (11.7) - - - - -
Fair value of share-based payments - - - - 0.3 - 0.3 - 0.3
1.9 9.8 - (22.1) 0.3 - (10.1) - (10.1)
Changes in ownership interest in subsidiaries
Additional equity investment by non-controlling interest - - - - - - - 3.5 3.5
- - - - - - - 3.5 3.5
Balance at 28 February 2015 105.6 324.3 134.3 (61.0) 1.8 (5.0) 500.0 33.6 533.6
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 August 2015
Total
Foreign attributable
Reverse currency to equity Non-
Share Share acquisition Retained Other translation holders of controlling Total
Note capital premium reserve loss reserves reserve the Parent interests equity
£m £m £m £m £m £m £m £m £m
Balance at 1 September 2014 103.7 314.5 134.3 (74.2) 1.5 1.3 481.1 28.6 509.7
Profit for the year - - - 70.6 - - 70.6 7.3 77.9
Transfer of foreign currency translation reserve to income
statement on disposal of subsidiaries 7 - - - - - 0.8 0.8 - 0.8
Transfer of foreign currency translation reserve to income
statement on disposal of joint venture 13 - - - - - (0.1) (0.1) - (0.1)
Foreign currency translation on foreign operations -
subsidiaries - - - - - (3.3) (3.3) (0.4) (3.7)
Foreign currency translation on foreign operations -
joint ventures 13 - - - - - (1.1) (1.1) - (1.1)
Total comprehensive income for the year - - - 70.6 - (3.7) 66.9 6.9 73.8
Transactions with equity holders of the Parent
Shares issued for cash 21 10.5 59.5 - - - - 70.0 - 70.0
Dividends paid - - - (20.5) - - (20.5) - (20.5)
Scrip dividends 21 3.7 21.0 - (24.7) - - - - -
Fair value of share-based payments - - - - 0.5 - 0.5 - 0.5
14.2 80.5 - (45.2) 0.5 - 50.0 - 50.0
Changes in ownership interest in subsidiaries
Decrease in non-controlling interests - - - - - - - (0.2) (0.2)
Additional equity investment by non-controlling interest - - - - - - - 3.5 3.5
- - - - - - - 3.3 3.3
Balance at 31 August 2015 117.9 395.0 134.3 (48.8) 2.0 (2.4) 598.0 38.8 636.8
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the six months ended 29 February 2016
Re-presented (1)
Reviewed Reviewed Re-presented (1)
Six months Six months Audited
ended ended Year ended
29 February 28 February 31 August
2016 2015 2015
Continuing operations Note £m £m £m
Cash generated from operations 27 31.5 26.5 54.3
Interest received 1.4 1.2 5.2
Interest paid (13.0) (10.3) (26.0)
Tax paid (3.1) (1.3) (1.6)
Net cash inflow from operating activities 16.8 16.1 31.9
Cash flows from investing activities
Net cash outflow on business combinations - (1.9) (1.9)
Disposal of subsidiaries 7 - - 4.9
Purchase of investment property (272.1) (28.1) (31.4)
Disposal of investment property 34.2 8.6 16.3
Distributions received from investments at fair value - 3.7 7.5
Disposal of investment at fair value 12 80.2 - -
Acquisition of investment at fair value 12 (6.9) - -
Increase in loans to joint ventures (0.5) (13.6) (37.0)
Decrease in loans to joint ventures 13 1.4 - -
Distributions received from joint ventures 1.1 0.2 3.7
Distributions received from associate 1.4 0.4 0.5
Disposal of non-current assets held for sale 0.2 35.1 35.1
Purchase of plant and equipment (0.1) (0.1) -
Decrease in long-term receivables - 1.6 1.6
Increase in loans to related parties (2.0) (10.9) (21.5)
Decrease in loans to related parties 5.7 - -
Net cash outflow from investing activities (157.4) (5.0) (22.2)
Cash flows from financing activities
Issue of share capital 115.0 - 70.9
Share issue costs paid (4.8) - (0.9)
Proceeds from borrowings 155.0 39.0 39.0
Repayment of borrowings (44.4) (75.7) (95.8)
Payment of Aviva profit share - (0.4) (1.4)
Other finance expenses (3.1) - -
Derivative financial instruments purchased and settled (2.4) - -
Dividends paid to equity holders (13.2) (10.4) (20.5)
Payments to non-controlling interests (0.7) - -
Contributions from non-controlling interests - 3.5 3.3
Movement in restricted cash and cash equivalents (1.0) (0.9) (1.3)
Net cash inflow / (outflow) from financing activities 200.4 (44.9) (6.7)
Net increase / (decrease) in unrestricted cash and cash equivalents 59.8 (33.8) 3.0
Effect of exchange rate fluctuations on cash and cash equivalents 0.7 (1.2) (1.1)
Unrestricted cash and cash equivalents at 1 September 85.7 83.8 83.8
Unrestricted cash and cash equivalents at end of period 146.2 48.8 85.7
Restricted cash and cash equivalents 8.9 7.5 7.9
Cash and cash equivalents at the end of the period 155.1 56.3 93.6
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
(1)
Comparative information has been re-presented to ensure consistency with the current period. There has been no restatement of information
reported, with changes in presentation only.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the six months ended 29 February 2016
1. GENERAL INFORMATION
Redefine International P.L.C was incorporated in the Isle of Man on 28 June 2004 (Registered Number: 111198C) and was re-
registered under the Isle of Man Companies Act 2006 on 3 December 2013 (Registered Number: 010534V).
The Company holds a primary listing on the Main Market of the London Stock Exchange (“LSE”) and a secondary listing on the
Main Board of the Johannesburg Stock Exchange (“JSE”).
On 4 December 2013, the Company converted to a UK-REIT and moved its tax residence from the Isle of Man to the United
Kingdom (“UK”).
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 STATEMENT OF COMPLIANCE
These condensed consolidated interim financial statements (hereafter ‘interim financial statements’) for the six months ended 29
February 2016, have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ (“IAS 34”) as issued by the
International Accounting Standards Board (“IASB”).
Selected explanatory notes are included to explain events and transactions that are significant to understanding the changes in
financial position and performance of the Group since the last annual consolidated financial statements as at and for the year
ended 31 August 2015.
The financial information contained in these interim financial statements does not constitute a complete set of financial statements
(including all comparative figures and all required notes) and does not include all of the information required for full annual financial
statements prepared in accordance with International Financial Reporting Standards (“IFRS”). The interim financial statements
should therefore be read in conjunction with the consolidated financial statements as at and for the year ended 31 August 2015
which are available at the Group’s website www.redefineinternational.com.
The accounting policies applied by the Group in the interim financial statements are the same as those applied by the Group in its
audited consolidated financial statements as at and for the year ended 31 August 2015 as set out on pages 77-81 of the 2015
Annual Report. No new standards have been adopted during the period.
The following are the relevant new standards, amendments and interpretations that have been issued but are not yet effective or
have not been adopted early:
IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations (amendment)
IFRS 7 Financial Instruments: Disclosures (amendment)
IFRS 9 Financial Instruments (amendment)
IFRS 10 Consolidated Financial Statements (amendment) (“IFRS 10”)
IFRS 12 Disclosure of Interests in Other Entities (amendment)
IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases
IAS 7 Statement of Cash Flows (amendment)
IAS 12 Income Taxes (amendment)
IAS 16 Property, Plant and Equipment (amendment)
IAS 19 Employee Benefits (amendment)
IAS 27 Separate Financial Statements – Investment Entities (amendment)
IAS 28 Investments in Associates (amendment) (“IAS 28”)
IAS 34 Interim Financial Reporting (amendment)
IAS 38 Intangible Assets (amendment)
2.2 BASIS OF PREPARATION
The interim financial statements are presented in Great British Pounds, which is the functional currency of the Company and the
presentational currency of the Group, rounded to the nearest hundred thousand pounds. They are prepared using the historical
cost basis except for investment property, certain assets held for sale, derivative financial instruments and financial instruments
designated at fair value through profit and loss.
GOING CONCERN
The Directors are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future
and for this reason the interim financial statements have been prepared on a going concern basis.
2.3 KEY JUDGEMENTS AND ESTIMATES
The preparation of the interim financial statements in conformity with IFRS requires the use of judgements and estimates that affect
the reported amounts of assets and liabilities at the reporting date and the reported amounts of revenues and expenses during the
period. Although these estimates are based on the Directors’ best knowledge of the amount, event or actions, actual results may
differ materially from those estimates.
The principal areas where such judgements and estimates have been made are detailed below:
2.3.1 INVESTMENT PROPERTY VALUATION
The Group uses valuations performed by independent valuers in accordance with IFRS 13 ‘Fair Value Measurement‘ (“IFRS 13”)
as the fair value of its investment property. The valuations are based upon assumptions including estimated rental values, future
rental income, anticipated maintenance costs, future development costs and appropriate discount rates. The valuers also make
reference to market evidence of transaction prices for similar properties. Further details are provided in Note 11.
2.3.2 CLASSIFICATION OF THE GROUP’S INVESTMENT IN INTERNATIONAL HOTEL GROUP LIMITED (“IHGL”) AT FAIR VALUE THROUGH
PROFIT OR LOSS
On 14 October 2015, the Group acquired, by way of private placement, 3.8 million shares in the newly listed IHGL for £3.8 million.
On the date of listing this represented 25.4 per cent of the entity’s issued share capital and the investment was classified as an
associate on initial recognition. On 20 October 2015, the Group ceased to recognise IHGL as an associate when its shareholding
was diluted to 13.2 per cent. The degree of judgement is however increased given that the Company currently has representation
on IHGL’s Board of Directors. In concluding that significant influence over the operation of IHGL did not exist, the Group has
considered, with reference to paragraphs 5-9 of IAS 28, the directors’ duties, the size of the shareholding, the nature of the
directorship and the expertise of other directors. Furthermore the Company does not have a right to appoint or replace a director.
Having considered all the facts and circumstances the Directors believe that the designation of the Company’s residual investment
at fair value through profit or loss is appropriate.
2.3.3 CLASSIFICATION OF INVESTMENT PROPERTY FOR UK HOTELS
The UK Hotel properties are held for capital appreciation and to earn rental income. Apart from one hotel, the properties have been
let to Redefine Hotel Management Limited (“RHML”) and Redefine Earls Court Management Limited (“RECML”) for rent which is
subject to annual review. The annual review takes into account the forecast EBITDA for the hotel portfolio when setting the revised
rental level. RHML and RECML operate the hotel business and are exposed to the fluctuations in the underlying trading
performance of the hotels. They are responsible for the day to day upkeep of the properties and retain the key decision making
responsibility for the businesses.
The Group holds a 25.3 per cent shareholding in Redefine BDL Hotel Group Limited (“RedefineBDL”), which in turn owns RHML
and RECML. Having considered the guidance in IFRS 10, the respective rights of each of the shareholders in RedefineBDL and the
size of the Group’s shareholding relative to other shareholders, management have determined that the Group does not control
RedefineBDL and hence does not control RHML or RECML.
Aside from the payment of rental income to the Group, which resets annually, and the Group’s shareholding in RedefineBDL, the
Group is not involved with the hotel management business and there are limited transactions between the two entities. As a result,
the hotel properties are classified as investment property in line with IAS 40.
2.3.4 PROPERTY ACQUISITIONS
Where properties are acquired through the acquisition of corporate interests, the Directors have regard to the substance of the
assets and activities of the acquired entity in determining whether the acquisition represents the acquisition of a business.
Where such acquisitions are not judged to be an acquisition of a business the transactions are accounted for as if the Group had
acquired the underlying property directly. Accordingly, no goodwill arises. The cost of the corporate entity is allocated between the
identifiable assets and liabilities of the entity based on their relative fair values at the acquisition date.
Corporate acquisitions are otherwise accounted for as business combinations.
3. SEGMENTAL REPORTING
As required by IFRS 8 ‘Operating Segments’ (“IFRS 8”), the information provided to the Board, which is the Chief Operating
Decision Maker, can be classified into the following segments:
UK Retail: the Group’s portfolio of wholly owned shopping centres and retail parks;
UK Hotels: the Group’s hotel portfolio which comprises eight hotels in Greater London and South East, England and
one hotel in Edinburgh, Scotland. The Group holds a 25.3 per cent associate interest in RedefineBDL which
leases and manages all of the Group’s hotel properties except for the Enfield Travelodge. During the period
the Group acquired a cumulative 14.4 per cent interest in IHGL, a hotel and leisure focused property
investment company listed on the Euro MTF Market of the Luxembourg Stock Exchange (“LUXSE”) and the
AltX of the JSE;
UK Commercial: the Group’s portfolio of offices, motor trade, logistics distribution centres and roadside service stations;
Europe: the Group’s properties in Continental Europe, located primarily in Germany. The portfolio comprises
shopping centres, discount supermarkets and Government-let offices;
Cromwell: relates to the Group’s investment in the Cromwell Property Group, Australia, which was disposed of during
the 2015 financial year and is presented for comparative purposes only; and
Other: the Group’s holding and management companies that carry out the head office and centralised asset
management activities of the Group.
Management information, as presented to the Chief Operating Decision Maker, is prepared on a proportionately consolidated basis.
Segmental reporting is therefore reported in line with management information, with the Group’s share of joint ventures presented
line-by-line. Joint venture adjustments are disclosed to reconcile segmental performance and position to the condensed
consolidated financial statements. Comparative information has been aligned to ensure consistent disclosure.
FOR THE SIX MONTHS ENDED 29 FEBRUARY 2016
Joint
UK UK UK Venture IFRS
Retail Hotels Commercial Europe Other Total Adj Total
Continuing operations £m £m £m £m £m £m £m £m
Revenue
Rental income 17.4 7.2 9.6 10.7 - 44.9 (4.7) 40.2
(1)
Other income - - 0.5 0.4 0.9 1.8 (0.5) 1.3
Revenue 17.4 7.2 10.1 11.1 0.9 46.7 (5.2) 41.5
Rental income 17.4 7.2 9.6 10.7 - 44.9 (4.7) 40.2
Rental expense (1.7) - (0.3) (1.0) - (3.0) 0.5 (2.5)
Net rental income 15.7 7.2 9.3 9.7 - 41.9 (4.2) 37.7
(1)
Other income - - 0.5 0.4 0.9 1.8 (0.5) 1.3
(Loss) / gain on revaluation of investment property (20.8) (0.6) 4.9 (1.3) - (17.8) 0.5 (17.3)
Gain / (loss) on disposal of investment property - - 3.4 - - 3.4 - 3.4
Gain on revaluation of investment at fair value - 1.0 - - - 1.0 - 1.0
Gain on disposal of non-current assets held for sale - - 0.2 - - 0.2 - 0.2
Foreign exchange gain - - - - 0.3 0.3 - 0.3
Finance income - - - - 2.0 2.0 - 2.0
Finance expense (8.0) (1.9) (3.1) (4.4) - (17.4) 2.0 (15.4)
Other finance expenses (0.7) - (0.1) - - (0.8) - (0.8)
Change in fair value of derivative financial (1.0) 0.2 (1.9) (1.2) - (3.9) 1.4 (2.5)
instruments
Share of post-tax profit from associate - 1.2 - - - 1.2 - 1.2
Total per reportable segments (14.8) 7.1 13.2 3.2 3.2 11.9 (0.8) 11.1
Unallocated income and expenses:
Administrative costs and other fees (5.5) 0.3 (5.2)
Amortisation of intangible assets (0.1) - (0.1)
Profit before tax 6.3 (0.5) 5.8
Taxation (0.3) 0.2 (0.1)
6.0 (0.3) 5.7
IFRS equity accounted items:
Impairment of loans to joint ventures - (0.7) (0.7)
Share of post-tax profit from joint ventures - 0.9 0.9
Foreign exchange gain on loan to joint venture 2.4 - 2.4
(2)
Reversal of losses restricted in joint ventures (0.1) 0.1 -
Profit for the period 8.3 - 8.3
Joint
AS AT 29 FEBRUARY 2016
UK Venture IFRS
UK Retail UK Hotels Commercial Europe Total Adj Total
£m £m £m £m £m £m £m
Summary Balance Sheet
Investment property 560.1 235.8 418.6 320.7 1,535.2 (129.0) 1,406.2
Investment at fair value through profit or loss - 7.9 - - 7.9 - 7.9
Investment in associate - 7.8 - - 7.8 - 7.8
Trade and other receivables 4.2 11.1 1.4 4.0 20.7 (1.0) 19.7
Cash and cash equivalents 13.1 1.5 6.2 10.4 31.2 (2.1) 29.1
Borrowings, including finance leases (283.8) (109.9) (147.9) (208.7) (750.3) 71.5 (678.8)
Trade and other payables (59.9) (1.0) (165.0) (5.2) (231.1) 3.2 (227.9)
Segmental net assets 233.7 153.2 113.3 121.2 621.4 (57.4) 564.0
Unallocated assets and liabilities:
Other non-current assets 1.6 - 1.6
Trade and other receivables 16.3 - 16.3
Cash and cash equivalents 126.0 - 126.0
Net derivative financial instruments (7.4) 4.5 (2.9)
(3)
Other non-current liabilities (11.9) 8.9 (3.0)
Trade and other payables (8.2) 0.8 (7.4)
737.8 (43.2) 694.6
IFRS equity accounted items:
Investment in joint ventures - 15.3 15.3
Loans to joint ventures - 34.2 34.2
Fair value of retained joint venture interest 1.4 (1.4) -
Cumulative losses restricted in joint ventures(2) 4.9 (4.9) -
Net assets 744.1 - 744.1
(1)
Other income includes management fee income from joint ventures of £0.3 million. Please refer to Note 24 for further details.
(2)
As detailed in Note 13, the Group’s interest in certain joint ventures has reduced to £nil in the condensed consolidated interim financial
statements in line with IAS 28. On a proportionate basis, the Group’s share of these joint ventures is included line-by-line. The cumulative losses of
these joint ventures that the Group has not recognised and the movements therein during each reporting period are presented to reconcile
segmental information to the IFRS statements.
(3)
The joint venture adjustment in respect of other non-current liabilities differs from that disclosed on a total basis in Note 13 (£46.4 million), as
shareholder loans included in the latter of £37.5 million eliminate on proportionate consolidation.
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2015
Joint
UK UK UK Cromwell Venture IFRS
Retail Hotels Commercial Europe (disposed) Other Total Adj Total
Continuing operations £m £m £m £m £m £m £m £m £m
Revenue
Rental income 13.5 6.8 7.4 10.2 - - 37.9 (2.9) 35.0
(1)
Other income - - 0.8 - - 1.2 2.0 (0.3) 1.7
Distributions received from investment at
fair value - - - - 3.7 - 3.7 - 3.7
Revenue 13.5 6.8 8.2 10.2 3.7 1.2 43.6 (3.2) 40.4
Rental income 13.5 6.8 7.4 10.2 - - 37.9 (2.9) 35.0
Rental expense (1.7) - (0.3) (0.7) - - (2.7) 0.1 (2.6)
Net rental income 11.8 6.8 7.1 9.5 - - 35.2 (2.8) 32.4
(1)
Other income - - 0.8 - - 1.2 2.0 (0.3) 1.7
Gain / (loss) on revaluation of investment
property 5.1 - 6.3 (0.6) - - 10.8 (0.3) 10.5
Gain on extinguishment / acquisition of
debt - - - 3.5 - - 3.5 - 3.5
Gain on bargain purchase of subsidiary - - - 0.2 - - 0.2 - 0.2
Distributions received from investment at
fair value - - - - 3.7 - 3.7 - 3.7
Gain on revaluation of investment at fair
value - - - - 4.0 - 4.0 - 4.0
Gain on disposal of joint venture - - - 0.6 - - 0.6 - 0.6
Loss on revaluation of non-current assets
held for sale - - (1.9) - - - (1.9) - (1.9)
Foreign exchange gain - - - - 2.8 0.6 3.4 (2.1) 1.3
Finance income - - - - - 0.5 0.5 - 0.5
Finance expense (6.8) (2.0) (2.3) (4.0) (1.0) - (16.1) 1.2 (14.9)
Change in fair value of derivative financial
instruments - (0.2) (0.6) (0.2) - - (1.0) 0.5 (0.5)
Share of post-tax profit from associate - 0.2 - - - - 0.2 - 0.2
Total per reportable segments 10.1 4.8 9.4 9.0 9.5 2.3 45.1 (3.8) 41.3
Unallocated income and expenses:
Administrative costs and other fees (5.7) 0.2 (5.5)
Amortisation of intangible assets (0.1) - (0.1)
Profit before tax 39.3 (3.6) 35.7
Taxation (1.7) - (1.7)
37.6 (3.6) 34.0
IFRS equity accounted items:
Impairment of loans to joint ventures - (1.2) (1.2)
Share of post-tax profit from joint ventures - 4.0 4.0
Reversal of losses restricted in joint
ventures(2) (0.8) 0.8 -
Profit for the period 36.8 - 36.8
AS AT 28 FEBRUARY 2015
Joint
UK UK UK Cromwell Venture IFRS
Retail Hotels Commercial Europe (disposed) Total Adj Total
£m £m £m £m £m £m £m £m
Summary Balance Sheet
Investment property 346.7 221.6 147.9 300.4 - 1,016.6 (111.8) 904.8
Investment at fair value through profit or loss - - - - 101.8 101.8 - 101.8
Investment in associate - 7.9 - - - 7.9 - 7.9
Trade and other receivables 2.5 6.1 1.9 7.0 - 17.5 (5.0) 12.5
Cash and cash equivalents 9.9 1.4 5.1 6.0 0.5 22.9 (1.4) 21.5
Non-current assets held for sale 5.5 - 15.0 27.6 - 48.1 - 48.1
Borrowings, including finance leases (217.6) (109.8) (113.1) (217.2) (25.2) (682.9) 73.5 (609.4)
Trade and other payables (9.2) (5.2) (7.1) (8.2) (1.9) (31.6) 4.9 (26.7)
Segmental net assets 137.8 122.0 49.7 115.6 75.2 500.3 (39.8) 460.5
Unallocated assets and liabilities:
Other non-current assets 1.8 - 1.8
Trade and other receivables 12.8 - 12.8
Cash and cash equivalents 34.8 - 34.8
Net derivative financial instruments (9.1) 5.4 (3.7)
Other non-current liabilities (7.1) 5.2 (1.9)
Trade and other payables (5.0) 1.0 (4.0)
528.5 (28.2) 500.3
IFRS equity accounted items:
Investment in joint ventures - 12.4 12.4
Loans to joint ventures - 20.9 20.9
(2)
Cumulative losses restricted in joint ventures 5.1 (5.1) -
Net assets 533.6 - 533.6
(1)
Other income includes management fee income from joint ventures of £0.1 million.
(2)
As detailed in Note 13, the Group’s interest in certain joint ventures has reduced to £nil in the condensed consolidated interim financial
statements in line with IAS 28. On a proportionate basis, the Group’s share of these joint ventures is included line-by-line. The cumulative losses of
these joint ventures that the Group has not recognised and the movements therein during each reporting period are presented to reconcile
segmental information to the IFRS statements.
FOR THE YEAR ENDED 31 AUGUST 2015
Joint
UK UK UK Cromwell Venture IFRS
Retail Hotels Commercial Europe (disposed) Other Total Adj Total
Continuing operations £m £m £m £m £m £m £m £m £m
Revenue
Rental income 26.5 13.3 14.5 21.3 - - 75.6 (7.3) 68.3
(1)
Other income - - 1.0 - - 2.9 3.9 - 3.9
Distributions received from investment at fair
value - - - - 7.5 - 7.5 - 7.5
Revenue 26.5 13.3 15.5 21.3 7.5 2.9 87.0 (7.3) 79.7
Rental income 26.5 13.3 14.5 21.3 - - 75.6 (7.3) 68.3
Rental expense (3.3) - (0.7) (2.0) - - (6.0) 0.7 (5.3)
Net rental income 23.2 13.3 13.8 19.3 - - 69.6 (6.6) 63.0
(1)
Other income - - 1.0 - - 2.9 3.9 - 3.9
Gain on revaluation of investment property 11.5 13.9 9.4 0.7 - - 35.5 (4.0) 31.5
Gain on extinguishment / acquisition of debt - - 23.0 6.8 - - 29.8 - 29.8
Gain on bargain purchase of subsidiary - - - 0.2 - - 0.2 - 0.2
Loss on disposal of subsidiaries - - - (0.3) - - (0.3) - (0.3)
Distributions received from investment at fair
value - - - - 7.5 - 7.5 - 7.5
Loss on disposal of investment at fair value - - - - (17.6) - (17.6) - (17.6)
Gain on disposal of joint venture - - - 0.6 - - 0.6 - 0.6
Loss on revaluation of non-current assets held
for sale - - (1.9) - - - (1.9) - (1.9)
Gain on disposal of non-current assets held for
sale - 0.6 - - - - 0.6 - 0.6
Foreign exchange (loss) / gain - - - - 4.8 (1.7) 3.1 - 3.1
Finance income - - - - - 2.8 2.8 - 2.8
Finance expense (13.6) (4.3) (4.6) (9.1) (1.9) - (33.5) 3.2 (30.3)
Other finance expenses - - - (3.6) - - (3.6) 3.6 -
Change in fair value of derivative financial
instruments (0.2) 0.7 (0.5) 0.7 0.1 - 0.8 (0.1) 0.7
Share of post-tax profit from associate - 0.6 - - - - 0.6 - 0.6
Total per reportable segments 20.9 24.8 40.2 15.3 (7.1) 4.0 98.1 (3.9) 94.2
Unallocated income and expenses:
Administrative costs and other fees (11.4) 0.3 (11.1)
Amortisation of intangible assets (0.2) - (0.2)
Profit before tax 86.5 (3.6) 82.9
Taxation (6.9) 0.8 (6.1)
79.6 (2.8) 76.8
IFRS equity accounted items:
Impairment of loans to joint ventures - (3.8) (3.8)
Share of post-tax profit from joint ventures - 5.5 5.5
Foreign exchange loss on loan to joint venture (0.6) - (0.6)
(2)
Reversal of losses restricted in joint ventures (1.1) 1.1 -
Profit for the year 77.9 - 77.9
AS AT 31 AUGUST 2015 Joint
UK UK UK Cromwell Venture IFRS
Retail Hotels Commercial Europe (disposed) Total Adj Total
£m £m £m £m £m £m £m £m
Summary Balance Sheet
Investment property 355.4 235.1 165.7 299.7 - 1,055.9 (121.5) 934.4
Investment in associate - 8.0 - - - 8.0 - 8.0
Trade and other receivables 3.0 9.5 1.1 28.7 80.2 122.5 (3.7) 118.8
Cash and cash equivalents 8.7 0.2 6.0 11.0 0.6 26.5 (2.3) 24.2
Borrowings, including finance leases (216.5) (109.8) (83.0) (195.5) (23.2) (628.0) 68.1 (559.9)
Trade and other payables (5.0) (1.3) (1.6) (7.6) (1.5) (17.0) 2.4 (14.6)
Segmental net assets 145.6 141.7 88.2 136.3 56.1 567.9 (57.0) 510.9
Unallocated assets and liabilities:
Other non-current assets 1.6 - 1.6
Trade and other receivables 20.4 - 20.4
Cash and cash equivalents 69.4 - 69.4
Net derivative financial instruments (6.0) 3.5 (2.5)
(3)
Other non-current liabilities (10.9) 8.7 (2.2)
Trade and other payables (11.6) 2.6 (9.0)
630.8 (42.2) 588.6
IFRS equity accounted items:
Investment in joint ventures - 14.6 14.6
Loans to joint ventures - 33.6 33.6
Fair value of retained joint venture interest 1.2 (1.2) -
(2)
Cumulative losses restricted in joint ventures 4.8 (4.8) -
Net assets 636.8 - 636.8
(1)
Other income includes management fee income from joint ventures of £0.8 million. Please refer to Note 24 for further details.
(2)
As detailed in Note 13, the Group’s interest in certain joint ventures has reduced to £nil in the condensed consolidated interim financial
statements in line with IAS 28. On a proportionate basis, the Group’s share of these joint ventures is included line-by-line. The cumulative losses of
these joint ventures that the Group has not recognised and the movements therein during each reporting period are presented to reconcile
segmental information to the IFRS statements.
(3)
The joint venture adjustment in respect of other non-current liabilities differs from that disclosed on a total basis in Note 13 (£44.9 million), as
shareholder loans included in the latter of £36.2 million eliminate on proportionate consolidation.
4. ADMINISTRATIVE COSTS AND OTHER FEES
Reviewed Reviewed Audited
29 February 28 February 31 August
2016 2015 2015
£m £m £m
Administrative and other operating expenses 4.2 3.4 7.0
Investment adviser and professional fees 1.0 2.1 4.1
Administrative costs and other fees 5.2 5.5 11.1
5. GAIN ON EXTINGUISHMENT / ACQUISITION OF DEBT
Reviewed Reviewed Audited
29 February 28 February 31 August
2016 2015 2015
£m £m £m
Extinguishment of residual debt - - 23.0
Gain on acquisition of external borrowings - 3.5 3.5
Release of finance lease liability - - 3.3
Gain on extinguishment / acquisition of debt - 3.5 29.8
As further discussed in Note 17, the Group restructured the £114.6 million Delta facility in October 2012. Following the orderly
disposal of all properties during the 2015 financial year (three of which were purchased from the security pool by the Group) on 25
August 2015 the Group was released from all residual obligations arising under the agreement. As a result, a gain of £23.0 million
was recognised at year-end 31 August 2015, representing the write-off of the residual debt.
By way of loan assignment, on 15 October 2014 the Group acquired loans with a face value of €14.5 million secured by a portfolio
of German properties owned by the Group. This resulted in a gain of €4.5 million (£3.5 million) in the financial statements for the
year ended 31 August 2015.
Furthermore, on disposal of the Swiss properties during the 2015 financial year, the outstanding finance lease liability of £3.3
million was released to the income statement.
6. BUSINESS COMBINATIONS
There were no business combinations during the six months ended 29 February 2016.
On 19 December 2014, the Group acquired an additional 44.9 per cent shareholding in Ciref Premium Holdings Limited (previously
named Ciref Nepi Holdings Limited) from its joint venture partner, New Europe Property (BVI) Limited for a consideration of €3.6
million (£2.8 million). Ciref Premium Holdings Limited, through its wholly owned subsidiaries, owns six properties in Germany
collectively known as the Premium Portfolio. This acquisition brought the Group’s interest in Ciref Premium Holdings Limited to 93.9
per cent and it is accounted for as a subsidiary undertaking from the acquisition date, i.e. the date control was obtained, in line with
IFRS 10. The fair value of assets and liabilities acquired by the Group and the net cash flow summarised in the table below are
unchanged from the 28 February 2015 disclosures:
Audited
31 August
2015
£m
Fair value of identifiable assets and liabilities
Investment property (including finance leases) 26.1
Trade and other receivables 0.1
Cash and cash equivalents 0.9
Borrowings (including finance leases) (19.6)
Trade and other payables (including derivatives) (1.4)
6.1
Fair value of consideration transferred
Cash consideration (2.8)
Fair value of existing 50% of shareholding and loan (3.1)
(5.9)
Gain on bargain purchase of subsidiary 0.2
Ciref Premium Holdings Limited
The fair value of the investment property was determined by the Directors having regard to the 31 August 2014 independent
valuation and movements in the market up to the date of acquisition.
The fair value of loans and borrowings was determined with reference to market interest rates available for similar debt instruments.
The fair value of trade receivables and trade payables was determined based on the terms of the underlying transactions and was
for the most part deemed to approximate their carrying value.
The gain on bargain purchase needs to be considered in light of the downward fair value movement on loans to Ciref Premium
Holdings Limited of £0.7 million included in the impairment of loans to joint ventures disclosed in Note 13 to the financial
statements. If the acquisition had occurred on 1 September 2014, management estimates that consolidated revenue for the Group
in 2015 would have been £79.4 million and consolidated profit for the year ended 31 August 2015 would have been £103.6 million.
In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition
would have been the same if the acquisition had occurred at the beginning of the year.
7. DISPOSAL OF SUBSIDIARIES
No entities were disposed of during the six months ended 29 February 2016.
During the year ended 31 August 2015, the Group reduced its shareholding in the following subsidiaries to 50 per cent and 53 per
cent respectively:
- Ciref Berlin 1 Limited
- CEL Portfolio 2 Limited & Co.KG
These entities are now accounted for as jointly controlled entities in accordance with IFRS 11 ‘Joint Arrangements’ (“IFRS 11”),
within the Leopard Portfolio, the details of which are disclosed in Note 13.
The impact of the disposal on the Group and the net cash flow is shown below:
Audited
31 August
2015
£m
Assets
Investment property (11.5)
Cash (0.3)
Trade and other receivables (0.5)
Liabilities
Trade and other payables 0.1
Borrowings 3.0
Net assets disposed (9.2)
Cash consideration 4.9
Carrying amount of non-controlling interest 0.1
Fair value of retained joint venture interest 1.2
Fair value of retained loan to joint venture 3.5
Total consideration 9.7
Less:
Transfer of FCTR to income statement on disposal of foreign operation (0.8)
Loss on disposal of subsidiaries (0.3)
The net loss presented in the table above is made up of a gain of £0.7 million on the Ciref Berlin 1 Limited transaction and a loss of
£1.0 million on the CEL Portfolio 2 Limited & Co.KG transaction, including £3.4 million and £1.3 million in respect of the fair value of
the investments and loans retained in the former subsidiaries respectively. In line with the underlying commercial arrangements, the
Directors considered these two transactions together.
8. NET FINANCE EXPENSE
Reviewed Reviewed Audited
29 February 28 February 31 August
2016 2015 2015
£m £m £m
Finance income on bank deposits 0.1 0.1 0.5
Finance income on loans to related parties 1.9 0.4 2.3
Finance income 2.0 0.5 2.8
Finance expense on secured bank loans (13.1) (12.7) (25.1)
Amortisation of debt issue costs (0.7) (0.8) (1.5)
Accretion of fair value adjustments (1.1) (1.1) (2.7)
Finance lease interest (0.5) (0.3) (1.0)
Finance expense (15.4) (14.9) (30.3)
Net finance expense (13.4) (14.4) (27.5)
9. OTHER FINANCE INCOME AND EXPENSES
Reviewed Reviewed Audited
29 February 28 February 31 August
2016 2015 2015
£m £m £m
Aviva profit share 0.7 0.4 1.4
Re-measurement of Aviva profit share liability - (0.4) (1.4)
Refinancing costs 0.1 - -
Other finance income and expenses 0.8 - -
10. TAXATION
a) Tax recognised in income:
Reviewed Reviewed Audited
29 February 28 February 31 August
2016 2015 2015
£m £m £m
Current income tax
Income tax in respect of current period 0.4 - 3.8
Withholding tax - 0.5 0.8
Adjustments in respect of prior periods (1.1) - -
Deferred tax
Origination and reversal of temporary differences 0.8 1.2 1.5
Income tax charge 0.1 1.7 6.1
No tax was recognised in equity or other comprehensive income during the period (28 February 2015: £nil, 31 August 2015: £nil).
b) Reconciliation
The tax rate for the period is lower than the standard rate of corporation tax in the UK of 20% (28 February 2015: 21%, 31 August
2015: 20.58%). The differences are explained below:
Reviewed Reviewed Audited
29 February 28 February 31 August
2016 2015 2015
£m £m £m
Profit before tax 8.4 38.5 84.0
Profit before tax multiplied by standard rate of corporation tax 1.7 8.0 17.3
Effect of:
- gain on extinguishment / acquisition of debt - (0.7) (6.1)
- loss / (gain) on revaluation of exempt investment property 4.1 (2.2) (6.5)
- gain on disposal of exempt investment property (0.7) - -
- gain on revaluation of investment at fair value - (0.8) -
- loss on disposal of investment at fair value - - 3.6
- loss on revaluation of non-current assets held for sale - 0.4 0.4
- change in fair value of derivative financial instruments 0.5 0.1 (0.1)
- income not subject to UK income tax (5.2) (4.0) (6.0)
- adjustments in respect of prior periods (1.1) - -
- non-resident landlord tax attributable to non-controlling interest 0.2 - -
- unutilised losses carried forward 0.6 - -
- other taxable income - - 2.7
- expenses not deductible for tax - 0.4 -
- withholding tax - 0.5 0.8
Tax charge for the period 0.1 1.7 6.1
In the reconciliation above, the effective tax rate of the Group was 1.2% (28 February 2015: 4.4%, 31 August 2015: 7.2%).
On 4 December 2013 the Group converted to a UK-REIT. As a result, the Group does not pay UK Corporation Tax on the profits
and gains from qualifying rental business in the UK provided it meets certain conditions. Non-qualifying profits and gains of the
Group continue to be subject to corporation tax.
In order to retain REIT status, certain ongoing criteria must be maintained. The main criteria are as follows:
- at the start of each accounting period, the assets of the tax exempt business must be at least 75 per cent of the total value of
the Group’s assets;
- at least 75 per cent of the Group’s total profits must arise from the tax exempt business; and
- at least 90 per cent of the income from tax exempt business must be distributed.
The Directors intend that the Group should continue as a REIT for the foreseeable future, with the result that deferred tax is no
longer recognised on temporary differences relating to the property rental business which is within the REIT structure.
11. INVESTMENT PROPERTY
UK UK UK
Retail Hotel Commercial Europe Total Freehold Leasehold
29 February 2016 £m £m £m £m £m £m £m
Opening carrying value at 1 September 2015 355.4 235.1 153.8 190.1 934.4 642.6 291.8
Additions from acquisition of property 213.1 - 276.6 - 489.7 407.9 81.8
(1)
Acquisition costs 10.5 - 12.1 - 22.6 20.1 2.5
Capitalised expenditure 1.9 1.3 - 1.0 4.2 3.1 1.1
Disposals through the sale of property - - (40.3) - (40.3) (10.7) (29.6)
Disposal of head leases - - (0.4) - (0.4) - (0.4)
(Loss) / gain on revaluation of investment
property (1) (20.8) (0.6) 5.0 (0.9) (17.3) (16.3) (1.0)
Foreign exchange movement in foreign
operations - - - 13.3 13.3 12.2 1.1
IFRS carrying value at 29 February 2016 560.1 235.8 406.8 203.5 1,406.2 1,058.9 347.3
Adjustments:
Minimum payments under head leases (7.9) (0.4) (3.1) (1.6) (13.0) - (13.0)
Tenant lease incentives 2.2 - - - 2.2 0.7 1.5
Market value at 29 February 2016 554.4 235.4 403.7 201.9 1,395.4 1,059.6 335.8
Joint Ventures
Share of joint ventures investment property
(Note 13) - - 11.8 117.2 129.0 126.3 2.7
Market value at 29 February 2016
(on a proportionately consolidated basis) 554.4 235.4 415.5 319.1 1,524.4 1,185.9 338.5
(1)
A loss of £17.3 million was recognised during the period as a result of the significant acquisition costs of £22.6 million incurred on the acquisition
of the AUK portfolio. Excluding these acquisition costs there was a net gain on revaluation of £5.3 million across the total portfolio.
UK UK UK
Retail Hotels Commercial Europe Total Freehold Leasehold
31 August 2015 £m £m £m £m £m £m £m
Opening carrying value at 1 September 2014 345.8 194.2 131.4 221.1 892.5 590.1 302.4
Additions from acquisition of property - 27.0 - - 27.0 27.0 -
Additions from acquisition of subsidiaries (Note
6) - - - 26.1 26.1 24.1 2.0
Capitalised expenditure 3.6 - 0.1 0.7 4.4 3.0 1.4
Disposals through the sale of property (5.5) - (1.9) (26.5) (33.9) (9.7) (24.2)
Disposals through the sale of subsidiaries (Note
7) - - - (11.5) (11.5) (11.5) -
Transfer from assets held for sale (Note 17) - - 14.9 - 14.9 13.4 1.5
Gain / (loss) on revaluation of investment
property 11.5 13.9 9.3 (3.2) 31.5 21.5 10.0
Foreign exchange movement in foreign
operations - - - (16.6) (16.6) (15.3) (1.3)
IFRS carrying value at 31 August 2015 355.4 235.1 153.8 190.1 934.4 642.6 291.8
Adjustments:
Minimum payments under head leases (7.9) (0.4) (3.5) (1.6) (13.4) - (13.4)
Tenant lease incentives 2.1 - - - 2.1 0.6 1.5
Market value at 31 August 2015 349.6 234.7 150.3 188.5 923.1 643.2 279.9
Joint Ventures
Share of joint ventures investment property
(Note 13) - - 11.9 109.6 121.5 119.0 2.5
Market value at 31 August 2015
(on a proportionately consolidated basis) 349.6 234.7 162.2 298.1 1,044.6 762.2 282.4
The tables on the previous page present both segmental and market value investment property information prepared on a proportionately
consolidated basis. This format is for informational purposes only as it is not a requirement of IFRS but is used in reports presented to the Group’s
Chief Operating Decision Maker.
In accordance with IAS 40 Investment Property: Paragraph 14, judgement is needed to determine whether a property qualifies as
an investment property. The Group has developed criteria so that it can exercise its judgement consistently in recognising
investment property. These include, inter alia, property held for long-term capital appreciation, property owned (or under finance
leases) and leased out under one or more operating leases; and property that is being constructed or developed for future use as
an investment property. The recognition and classification of property as investment property principally assumes that the Group
does not retain significant exposure to the variation in cash flows arising from the underlying operations of properties. Investment
property comprises a number of commercial and retail properties that are leased to third parties. The hotel properties are held for
capital appreciation and to earn rental income. The properties have been let to RHML and RECML for a fixed rent which is subject
to annual review. The annual rent review takes into account the forecast EBITDA for the hotel portfolio when setting the revised
rental level.
As detailed in the key judgements and estimates in Note 2.3.3, aside from the payment of rental income to the Group, which resets
annually, and their shareholding in RedefineBDL, Redefine International is not involved in the hotel management business and
there are limited transactions between Redefine International and RHML and RECML. As a result, hotel properties are classified as
investment property in line with IAS 40.
The Group was contractually committed to expenditure of £12.8 million for the future development and enhancement of investment
property at 29 February 2016.
Rental expense in the consolidated income statement relates solely to income generating properties.
The carrying amount of investment property is the fair value of the property as determined by appropriately qualified independent
valuers. Valuations are based on what is determined to be the highest and best use. When considering the highest and best use a
valuer will consider, on a property by property basis, and in limited circumstances, in aggregation with other assets, its actual and
potential uses which are physically, legally and financially viable. Where the highest and best use differs from the existing use, the
valuer will consider the cost and the likelihood of achieving and implementing this change in arriving at its valuation.
The fair value of the Group’s property for the period ended 29 February 2016 was assessed by the valuers in accordance with the
Royal Institute of Chartered Surveyors (“RICS”) standards and IFRS 13.
The valuations performed by the independent valuers are reviewed internally by senior management and by the Audit and Risk
Committee. This includes discussion of the assumptions used by the external valuers, as well as a review of the resulting
valuations.
Technique
The fair value of the property portfolio has been determined using either a discounted cash flow or a yield capitalisation technique,
whereby contracted and market rental values are capitalised at a market capitalisation rate. The resulting valuations are cross-
checked against the net initial yield and the fair market values per square foot derived from comparable recent market transactions.
The valuation technique described above is consistent with IFRS 13 and uses significant “unobservable” inputs. Valuation
techniques can change from year-to-year depending on prevailing circumstances and the property’s highest and best use at the
balance sheet date.
The Group considers that all of its investment property falls within ‘Level 3’, as defined by IFRS 13 (refer to Note 23). Accordingly,
there has been no transfer of property within the fair value hierarchy over the period.
12. INVESTMENT AT FAIR VALUE THROUGH PROFIT OR LOSS
The following table details the movement in investments designated at fair value:
Reviewed Audited
29 February 31 August
2016 2015
£m £m
Opening balance at 1 September - 97.8
Transfer from investment in associate (Note 14) 3.8 -
Additions of investment at fair value 3.1 -
Disposal of investment at fair value - (80.2)
Gain on revaluation of investment at fair value 1.0 -
Loss on disposal of investment at fair value - (17.6)
Closing balance 7.9 -
The Group disposed of its shareholding of 172,833,576 securities in Cromwell on 31 August 2015 at a price of AUD $1.00 per
share. The total consideration for the share disposal of AUD $172.8 million (£80.2 million), receivable at year-end 31 August 2015
(Note 15), was received on 3 September 2015. No capital gains tax arose on the disposal.
As at 29 February 2016, the Group’s investment at fair value of £7.9 million relates to its shareholding in IHGL, acquired for a total
cost of £6.9 million. As at 29 February 2016, the Company’s investment had reduced to 14.4 per cent. Refer to Note 2.3.2 for
further information on the classification of IHGL as an investment at fair value through profit or loss at 29 February 2016.
13. INVESTMENT IN AND LOANS TO JOINT VENTURES
Reviewed Audited
29 February 31 August
2016 2015
Investment in joint ventures £m £m
Opening balance at 1 September 14.6 15.2
Increase in interest - 1.2
Disposal of joint venture on acquisition of additional shareholding - (2.6)
Share of post-tax profit from joint ventures 0.9 5.5
Foreign currency gain / (loss) recognised through the FCTR 0.9 (1.1)
Distributions received from joint ventures (1.1) (3.6)
Closing balance 15.3 14.6
Reviewed Audited
29 February 31 August
2016 2015
Loans to joint ventures £m £m
Opening balance at 1 September 33.6 1.2
Reclassification of amounts owing to joint ventures (0.2) -
Increase in loan 0.5 37.0
Impairment of loans to joint ventures (0.7) (3.8)
Repayments received from joint ventures (1.4) (0.2)
Foreign currency gain / (loss) recognised in the income statement 2.4 (0.6)
Closing balance 34.2 33.6
The Group’s joint ventures consist of the following investments as presented in the tables of this note:
Material
(i) 49% interest in Wichford VBG Holding S.a.r.l., a joint venture with Menora Mivtachim, which ultimately owns government-let
properties in Dresden, Berlin, Stuttgart and Cologne, Germany. Following an assessment of the rights of each shareholder
under the shareholder agreement this entity is deemed to be a joint venture of the Group;
(ii) 50.5% interest in RI Menora German Holdings S.a.r.l., a joint venture with Menora Mivtachim, which ultimately owns
properties in Waldkraiburg, Hucklehoven and Kaiserslautern, Germany. Notwithstanding the economic shareholding the
contractual terms provide for joint control and so the Company is not deemed to control the entity; and
(iii) 50% interest in Leopard Holding Germany 1 S.a.r.l, Leopard German Property Ed1, Ed2, Ed3 and Ed4, LGP ME1 and ME2
S.a.r.l. and LGP Ed2 GmbH & Co KG, a joint venture with Redefine Properties Limited, the Company’s largest shareholder.
These companies hold 56 retail properties in Germany comprising a mix of stand-alone supermarkets, food-store anchored
retail parks and cash and carry stores. Collectively known as the Leopard Portfolio, the joint venture also includes two
entities in which the Group previously held a 100% ownership interest, Ciref Berlin 1 Limited and CEL Portfolio 2 Limited &
Co.KG.
RI Menora German Holdings S.a.r.l. and Wichford VBG Holding S.a.r.l. both have accounting year ends of 31 December which
differs from the year-end of the Group, the purpose of which is to align with the year-end of the joint venture partner, Menora
Mivtachim.
Other
(iv) 50% in 26 Esplanade No 1 Limited, a joint venture with Rimstone Limited, which ultimately owns an office building in St.
Helier, Jersey;
(v) 50% in Pearl House Swansea Limited, a joint venture with Sandgate Properties Limited, which owned a long leasehold retail
interest in Swansea, Wales (the joint venture properties were sold on 11 August 2015);
(vi) 50% in Swansea Estates Limited, a joint venture with Sandgate Properties Limited, which owned a long leasehold retail
interest in Swansea, Wales (the joint venture properties were sold on 11 August 2015); and
(vii) 50% in Ciref Crawley Limited, a joint venture with Graymont Limited. The joint venture properties in Crawley, Surrey were
sold on 20 November 2014.
Joint ventures classified as ‘Other’ are carried at £nil value in the opening balance of the Group’s financial statements at 1
September 2015 and which remain at £nil at 29 February 2016. These investments are in a net liability position with the cumulative
losses exceeding the cost of the Group’s investment. The Group does not recognise losses below its original cost in these
investments but continues to impair any loans advanced to their recoverable amounts in line with IAS 28. These losses amounted
to £4.9 million at 29 February 2016 (31 August 2015: £4.8 million).
Acquisition of Joint Ventures
On 29 January 2015 the Group, in joint venture with Redefine Properties Limited, the Company’s largest shareholder, acquired an
interest in Leopard Germany Holding 1 S.a.r.l and Leopard German Property ED1, 2, 3 and 4 and ME1 and ME2 S.a.r.l. and ED2
GmbH & Co KG. These companies hold 56 retail properties in Germany. Consideration for the acquisition was €57.4 million (£43.1
million) which was funded equally by the Company and Redefine Properties Limited. The Company’s investment in these joint
ventures is in the form of:
1) An interest in the share capital of the joint venture companies; and
2) Loans advanced to the joint venture entities. These loans bear interest at between 4.75 per cent and 7 per cent and have
remaining maturities of 10 years.
Included in the Leopard Portfolio are two entities in which the Group previously held 100 per cent ownership interest, Ciref Berlin 1
Limited and CEL Portfolio 2 Limited & Co.KG. Now reported as part of jointly controlled entities, both were accounted for as
disposed subsidiaries during the 2015 financial year (Note 7).
Disposal of Joint Ventures
On 19 December 2014, the Group acquired an additional 44.9 per cent shareholding in Ciref Premium Holdings Limited (previously
named Ciref Nepi Holdings Limited) from its joint venture partner, New Europe Property (BVI) Limited for a consideration of €3.6
million (£2.8 million) bringing the Group’s interest in Ciref Premium Holdings Limited to 93.9 per cent. See Note 6 for further details
of the acquisition.
In the 2015 financial statements, the Group recognised a gain on the disposal of this joint venture of £0.5 million being the
difference between the carrying value of the joint venture on the date of the disposal and the fair value of Group’s share of net
assets. An amount of £0.1 million relating to the foreign currency translation reserve was also recycled to the income statement on
the deemed sale of the Group’s interest in the joint venture resulting in an overall gain of £0.6 million.
Summarised Financial Information
The summarised financial information of the Group’s material joint ventures are set out separately below:
RI Elimination
Wichford Menora of joint
VBG German venture
Holding Holdings Leopard partners’ Proportionate
S.a.r.l. S.a.r.l. Portfolio Other Total interest Total
29 February 2016 £m £m £m £m £m £m £m
Percentage ownership interest 49% 50.5% 50%
Summarised Income Statement
Rental income 2.9 0.8 5.2 0.7 9.6 (4.9) 4.7
Rental expense (0.1) (0.1) (0.8) - (1.0) 0.5 (0.5)
Net rental income 2.8 0.7 4.4 0.7 8.6 (4.4) 4.2
Other income - - - 1.0 1.0 (0.5) 0.5
Administrative costs and other fees (0.4) (0.1) (0.2) - (0.7) 0.4 (0.3)
Net operating income 2.4 0.6 4.2 1.7 8.9 (4.5) 4.4
(Loss) / gain on revaluation of investment property (0.3) 0.2 (0.6) (0.3) (1.0) 0.5 (0.5)
Net finance expense (0.5) (0.2) (3.0) (0.3) (4.0) 2.0 (2.0)
Change in fair value of derivative financial (0.1) - (1.4) (1.3) (2.8) 1.4 (1.4)
instruments
Profit / (loss) before tax 1.5 0.6 (0.8) (0.2) 1.1 (0.6) 0.5
Taxation (0.3) - (0.1) - (0.4) 0.2 (0.2)
Profit / (loss) for the period 1.2 0.6 (0.9) (0.2) 0.7 (0.4) 0.3
Reconciliation to Group:
Elimination of joint venture partners’ interest (0.6) (0.3) 0.4 0.1 (0.4) 0.4 -
Reversal of losses restricted in joint ventures - - - (0.1) (0.1) - (0.1)
Impairment of loans to joint ventures - - 0.5 0.2 0.7 - 0.7
Share of post-tax profit from joint ventures 0.6 0.3 - - 0.9 - 0.9
Summarised Balance Sheet
Investment property 73.1 24.1 138.7 23.5 259.4 (130.4) 129.0
Derivative financial instruments - - 0.2 - 0.2 (0.1) 0.1
Trade and other receivables 0.4 0.8 0.6 0.2 2.0 (1.0) 1.0
Cash and cash equivalents 1.8 0.1 2.1 0.3 4.3 (2.2) 2.1
Total assets 75.3 25.0 141.6 24.0 265.9 (133.7) 132.2
Borrowings (44.0) (13.8) (67.9) (18.1) (143.8) 72.3 (71.5)
Derivative financial instruments (0.9) (0.3) (0.1) (8.0) (9.3) 4.7 (4.6)
Other non-current liabilities (8.6) (0.4) (77.2) (6.8) (93.0) 46.6 (46.4)
Trade and other payables (3.5) (0.5) (3.0) (1.0) (8.0) 4.0 (4.0)
Total liabilities (57.0) (15.0) (148.2) (33.9) (254.1) 127.6 (126.5)
Net assets / (liabilities) 18.3 10.0 (6.6) (9.9) 11.8 (6.1) 5.7
Reconciliation to Group:
Elimination of joint venture partners’ interest (9.3) (5.1) 3.3 5.0 (6.1) 6.1 -
Fair value of retained joint venture interest (Note 7) - - 1.4 - 1.4 - 1.4
Loan to joint ventures (1) - - 37.5 3.4 40.9 - 40.9
Impairment of loans to unrecognised joint ventures - - - (3.4) (3.4) - (3.4)
Cumulative losses restricted (2) - - - 4.9 4.9 - 4.9
Carrying value of joint ventures (including 9.0 4.9 35.6 - 49.5 - 49.5
loans)
(1)
Loan to joint ventures includes the opening balance, any advances or repayments and foreign currency movements during the period.
(2)
Cumulative losses restricted represent the Group’s share of losses in joint ventures which exceed the cost of the Group’s investment. As a result,
the carrying value of the investment is £nil in accordance with the requirements of IAS 28.
RI Elimination
Wichford Menora of joint
VBG German venture
Holding Holdings Leopard partners’ Proportionate
S.a.r.l. S.a.r.l. Portfolio Other Total interest Total
31 August 2015 £m £m £m £m £m £m £m
Percentage ownership interest 49% 50.5% 50%
Summarised Income Statement
Rental income 6.0 1.6 5.2 2.1 14.9 (7.6) 7.3
Rental expense (0.1) (0.1) (1.0) (0.1) (1.3) 0.6 (0.7)
Net rental income 5.9 1.5 4.2 2.0 13.6 (7.0) 6.6
Administrative costs and other fees (0.2) (0.2) (0.1) (0.1) (0.6) 0.3 (0.3)
Net operating income 5.7 1.3 4.1 1.9 13.0 (6.7) 6.3
Gain on revaluation of investment property 2.7 2.0 2.9 0.5 8.1 (4.1) 4.0
Net finance expense (1.2) (0.6) (2.7) (1.7) (6.2) 3.0 (3.2)
Other finance expenses - - (7.2) - (7.2) 3.6 (3.6)
Change in fair value of derivative financial 0.1 0.3 0.1 (0.3) 0.2 (0.1) 0.1
instruments
Profit / (loss) before tax 7.3 3.0 (2.8) 0.4 7.9 (4.3) 3.6
Taxation - (0.5) (2.0) 0.6 (1.9) 1.1 (0.8)
Profit / (loss) for the year 7.3 2.5 (4.8) 1.0 6.0 (3.2) 2.8
Reconciliation to Group:
Elimination of joint venture partners’ interest (3.8) (1.2) 2.2 (0.4) (3.2) 3.2 -
Reversal of losses restricted in joint ventures - - - (1.1) (1.1) - (1.1)
Impairment of loans to joint ventures - - 2.6 1.2 3.8 - 3.8
Share of post-tax profit from joint ventures 3.5 1.3 - 0.7 5.5 - 5.5
Summarised Balance Sheet
Investment property 68.6 22.3 129.7 23.8 244.4 (122.9) 121.5
Derivative financial instruments 0.1 - 0.5 - 0.6 (0.3) 0.3
Trade and other receivables 6.1 0.7 0.3 0.4 7.5 (3.8) 3.7
Cash and cash equivalents 0.8 0.1 3.7 - 4.6 (2.3) 2.3
Total assets 75.6 23.1 134.2 24.2 257.1 (129.3) 127.8
Borrowings (41.2) (13.0) (62.5) (20.3) (137.0) 68.9 (68.1)
Derivative financial instruments (0.8) (0.3) - (6.6) (7.7) 3.9 (3.8)
Other non-current liabilities (9.5) (0.5) (74.0) (6.1) (90.1) 45.2 (44.9)
Trade and other payables (6.1) (0.3) (2.7) (0.9) (10.0) 5.0 (5.0)
Total liabilities (57.6) (14.1) (139.2) (33.9) (244.8) 123.0 (121.8)
Net assets / (liabilities) 18.0 9.0 (5.0) (9.7) 12.3 (6.3) 6.0
Reconciliation to Group:
Elimination of joint venture partners’ interest (9.2) (4.5) 2.5 4.9 (6.3) 6.3 -
Fair value of retained joint venture interest (Note 7) - - 1.2 - 1.2 - 1.2
Loan to joint ventures (1) - - 36.2 3.1 39.3 - 39.3
Impairment of loans to unrecognised joint ventures - - - (3.1) (3.1) - (3.1)
Cumulative losses restricted (2) - - - 4.8 4.8 - 4.8
Carrying value of joint ventures (including 8.8 4.5 34.9 - 48.2 - 48.2
loans)
(1)
Loan to joint ventures includes the opening balance, any advances or repayments and foreign currency movements during the period.
(2)
Cumulative losses restricted represent the Group’s share of losses in joint ventures which exceed the cost of the Group’s investment. As a result,
the carrying value of the investment is £nil in accordance with the requirements of IAS 28.
14. INVESTMENT IN ASSOCIATE
Reviewed Audited
29 February 31 August
2016 2015
£m £m
Opening balance at 1 September 8.0 8.0
Additions 3.8 -
Transfer to investment at fair value through profit or loss (Note 12) (3.8) -
Share of post-tax profit from associate 1.2 0.6
Distributions received from associate (1.4) (0.6)
Closing balance 7.8 8.0
At 29 February 2016, investment in associate relates to the Group’s 25.3 per cent shareholding in RedefineBDL.
On 14 October 2015, the Company acquired, by way of private placement, 3.8 million shares in the newly listed IHGL for £3.8
million. On the date of listing this represented 25.4 per cent of the entity’s issued share capital. On 20 October 2015, this interest
was diluted to 13.2 per cent and thus re-classified as an investment at fair value through profit or loss (Note 12).
Summarised Financial Information
The summarised financial information of the associate is set out below.
Reviewed Audited
29 February 31 August
2016 2015
£m £m
Summarised Income Statement
Revenue 11.9 8.3
Other income - 2.7
Expenses (5.9) (8.2)
Net operating income 6.0 2.8
Finance income 0.2 0.5
Finance expense (0.2) (0.5)
Profit before tax 6.0 2.8
Taxation (1.1) (0.3)
Profit for the period 4.9 2.5
Share of post-tax profit from associate 1.2 0.6
Summarised Balance Sheet
Non-current assets 7.6 6.7
Intangible asset 28.1 28.1
Trade and other receivables 6.1 6.4
Cash and cash equivalents 6.1 8.1
Total assets 47.9 49.3
Non-current liabilities (0.8) (0.8)
Current liabilities (16.2) (17.0)
Total liabilities (17.0) (17.8)
Net assets 30.9 31.5
Elimination of third party interest in net assets (23.1) (23.5)
Carrying value of investment 7.8 8.0
15. TRADE AND OTHER RECEIVABLES
Reviewed Audited
29 February 31 August
2016 2015
£m £m
Consideration receivable in respect of Cromwell disposal proceeds - 80.2
Consideration receivable in respect of Swiss disposal proceeds - 22.4
Consideration outstanding on disposed subsidiaries - 1.0
Amounts receivable from related parties (Note 24) 26.5 28.9
Rent receivable 2.7 2.6
Prepayments and accrued income 1.5 0.5
Tenant lease incentives 2.2 2.1
Other receivables 3.1 1.5
Trade and other receivables 36.0 139.2
16. CASH AND CASH EQUIVALENTS
Reviewed Audited
29 February 31 August
2016 2015
£m £m
Bank balances 146.2 65.3
Call deposits - 20.4
Unrestricted cash and cash equivalents 146.2 85.7
Restricted cash and cash equivalents 8.9 7.9
Cash and cash equivalents 155.1 93.6
At 29 February 2016, there was £8.9 million (31 August 2015: £7.9 million) of cash and cash equivalents to which the Group did not
have instant access. This balance includes £5.3 million (31 August 2015: £5.3 million) held with Aviva in relation to the
developments in Birchwood Warrington Limited and the proposed developments in Grand Arcade Wigan Limited and Weston
Favell Limited.
The remaining £3.6 million (31 August 2015: £2.6 million) restricted cash balance relates to rental income received into restricted
bank accounts out of which interest and other related expenses are paid. At 29 February 2016, trade and other payables include
accrued interest on bank debt facilities of £2.5 million (31 August 2015: £2.0 million) against which the restricted cash balances will
be applied.
Cash and available facilities at 29 February 2016 was £206.1 million (31 August 2015: £93.6 million). On a proportionate basis, the
Group’s share of cash and available facilities at 29 February 2016 was £208.2 million (31 August 2015: £95.9 million)
17. NON-CURRENT ASSETS HELD FOR SALE
Subsidiaries Property Total
£m £m £m
Opening balance at 1 September 2014 - 51.9 51.9
Additions 8.8 - 8.8
Transfers to investment property (Note 11) - (14.9) (14.9)
Disposals (8.8) (35.1) (43.9)
Loss on revaluation of non-current assets held for sale - (1.9) (1.9)
Closing balance at 31 August 2015 and 29 February 2016 - - -
The Group considers that all non-current assets held for sale fall within ‘Level 3’, as defined by IFRS 13 (refer to Note 23).
Accordingly, there has been no transfer within the fair value hierarchy over the period.
The Group restructured the £114.6 million Delta facility in October 2012 requiring it to meet certain disposal targets. In line with this
agreement, the Group disposed of ten regional office properties within the Delta portfolio for an aggregate consideration of £35.1
million on 7 October 2014. The proceeds of these sales were utilised to reduce the Delta facility loan balance. In April and May
2015, the Group then acquired the remaining three Delta properties from the security pool with the related proceeds applied to the
repayment of debt and the assets being transferred to investment property, as also referenced in Note 11.
The Group also acquired and disposed of two hotels during the 2015 financial year. These were held in subsidiaries and due to the
short-term nature of the investments were classified as assets held for sale. Their disposal on the 28 August 2015 resulted in a net
gain of £0.6 million at year-end.
On 4 December 2015, the Group acquired Circuit Limited for £nil consideration and advanced a loan of £2.0 million to the
company. Circuit Limited holds the freehold interest in a commercial property in Dudley, West Midlands. Circuit Limited was
acquired exclusively with a view to subsequent re-sale and was therefore classified as held-for-sale on acquisition. On 11
December 2015, the Group exchanged contracts with Koral Bay Limited to dispose of the company for £0.2 million and to novate
the loan advanced of £2.0 million. The sale completed on 22 March 2016 but as there were no significant conditions, the sale was
recognised on exchange and the Group realised a profit of £0.2 million (after transaction costs). The Group earned rental income of
£0.1 million from the underlying property during the period of ownership.
18. BORROWINGS, INCLUDING FINANCE LEASES
Reviewed Audited
29 February 31 August
2016 2015
£m £m
Non-current
Bank loans 600.5 506.6
Less: unamortised debt issue costs (4.0) (1.8)
Aviva profit share 4.2 3.0
Finance leases 12.3 12.7
Total non-current borrowings, including finance leases 613.0 520.5
Current
Bank loans 65.7 38.0
Less: unamortised debt issue costs (1.2) (1.1)
Vendor loan 0.6 0.6
Aviva profit share - 1.2
Finance leases 0.7 0.7
Total current borrowings, including finance leases 65.8 39.4
Total borrowings, including finance leases 678.8 559.9
As part of the terms of the Aviva debt restructure in 2013, Aviva have retained the right to participate in 50 per cent of the income
and capital growth generated by Grand Arcade Wigan (after all costs, expenses and interest). This profit share is a financial liability
since it varies in relation to a non-financial variable specific to a party to the contract. It has been recognised initially at fair value
and thereafter will be carried at amortised cost.
Finance lease liabilities are in respect of leasehold interests in investment and development property. They are effectively secured
obligations, as the rights to the leased asset revert to the lessor in the event of default.
Loans
All of the Group’s borrowings are secured over investment property of £1,380.2 million (31 August 2015: £923.1 million) and are
measured at amortised cost. Exposure to interest rate and currency risks arises in the normal course of the Group's business,
therefore derivative financial instruments are used to reduce exposure to fluctuations in interest rates.
29 February 2016 31 August 2015
Carrying Nominal Fair Carrying Nominal Fair
Value Value Value Value Value Value
£m £m £m £m £m £m
Non-current liabilities
Bank loans 600.5 620.8 630.2 506.6 527.5 520.8
Less: unamortised debt issue costs (4.0) - - (1.8) - -
Total non-current loan borrowings 596.5 620.8 630.2 504.8 527.5 520.8
Current liabilities
Bank loans 65.7 67.8 55.4 38.0 40.2 36.4
Less: unamortised debt issue costs (1.2) - - (1.1) - -
Vendor loan 0.6 0.6 0.6 0.6 0.6 0.6
Total current loan borrowings 65.1 68.4 56.0 37.5 40.8 37.0
Loan borrowings 661.6 689.2 686.2 542.3 568.3 557.8
The Group considers that all loan borrowings fall within ‘Level 3’, as defined by IFRS 13 (refer to Note 23). Fair value has been
determined based on discounting the cash flows under the relevant agreements at a market interest rate for similar debt
instruments. The market interest rate has been determined having regard to the term, duration and security arrangements of the
relevant loans and an estimation of the current rates charged in the market for similar instruments issued to companies of similar
sizes.
The maturity of loan borrowings gross of unamortised debt issue costs is as follows:
Reviewed Audited
29 February 31 August
2016 2015
£m £m
Non-current
Between one year and five years 178.7 228.2
More than five years 421.8 278.4
600.5 506.6
Current
Less than one year 66.3 38.6
66.3 38.6
Certain borrowing agreements contain financial and other covenants that, if contravened, could alter the repayment profile.
19. DEFERRED TAX
The recognised deferred tax liability and movement during the period was as follows:
Reviewed Audited
29 February 31 August
2016 2015
£m £m
Opening balance at 1 September 2.2 0.7
Deferred tax recognised on non-UK investment property 0.6 1.5
Deferred tax recognised on investment at fair value 0.2 -
Closing balance 3.0 2.2
Net deferred tax assets not recognised amounted to £11.7 million (31 August 2015: £15.7 million).
20. TRADE AND OTHER PAYABLES
Reviewed Audited
29 February 31 August
2016 2015
£m £m
AUK Tranche II completion 209.3 -
Rent received in advance 4.6 3.1
Trade payables 2.0 2.8
Amounts payable to related parties (Note 24) 0.2 0.4
Accrued interest 2.5 2.0
Taxes payable 4.0 9.8
Other payables 12.7 5.5
Trade and other payables 235.3 23.6
21. SHARE CAPITAL AND SHARE PREMIUM
AUTHORISED
Authorised
Number of Share Capital
Shares £m
- At 31 August 2015 1,800,000,000 144.0
- At 29 February 2016 3,000,000,000 240.0
Ordinary shares of 8 pence each (31 August 2015: 8 pence each)
ISSUED, CALLED UP AND FULLY PAID
Share Share
Number of Shares capital premium
£m £m
31 August 2014 1,296,097,349 103.7 314.5
Scrip dividend – December 2014 23,811,486 1.9 9.8
Share Placement – March 2015 131,414,138 10.5 59.5
Scrip dividend – June 2015 23,008,358 1.8 11.2
31 August 2015 1,474,331,331 117.9 395.0
Scrip dividend – December 2015 21,235,556 1.7 9.5
Share Placement – February 2016 270,588,236 21.7 87.4
29 February 2016 1,766,155,123 141.3 491.9
SHARE CAPITAL AND SHARE PREMIUM
In October 2014 the Company declared a second interim dividend of 1.7p per share in respect of the six months ended 31 August
2014 and offered shareholders an election to receive either a scrip dividend by way of an issue of new Redefine International
shares credited as fully paid up or a cash dividend. The Company received election forms from shareholders holding 748.7 million
ordinary shares of 8p each representing a 58 per cent take up by shareholders, for which 23.8 million scrip dividend shares were
issued in December 2014.
In March 2015, the Company completed a placing of 131.4 million new ordinary shares of 8p each for an aggregate nominal value
of £10.5 million. The placing generated proceeds of £70.0 million (net of costs).
In April 2015, the Company declared an interim dividend of 1.6p per share in respect of the six months ended 28 February 2015
and offered shareholders an election to receive either a scrip dividend by way of an issue of new Redefine International shares
credited as fully paid up or a cash dividend. The Company received election forms from shareholders holding 866.4 million ordinary
shares of 8p each representing a 60 per cent take up by shareholders, for which 23.0 million scrip dividend shares were issued in
June 2015.
In October 2015, the Company declared a second interim dividend of 1.65p per share in respect of the six months ended 31 August
2015 and again offered shareholders an election to receive either a scrip dividend by way of an issue of new Redefine International
shares credited as fully paid up or a cash dividend. The Company received election forms from shareholders holding 699.1 million
ordinary shares of 8p each representing a 47 per cent take up by shareholders, for which 21.2 million scrip dividend shares were
issued in December 2015.
In February 2016, the Company completed a placing of 270.6 million new ordinary shares of 8p each for an aggregate nominal
value of £21.7 million. The placing generated proceeds of £109.1 million (net of costs).
22. RESERVES
REVERSE ACQUISITION RESERVE
The reverse acquisition reserve of £134.3 million arose on the reverse acquisition of Wichford P.L.C (subsequently renamed
Redefine International) by Redefine International Holdings Limited (“RIHL”) and comprises the difference between the capital
structure of the Company and RIHL.
OTHER RESERVES
Share-Based Payment Reserve
The share-based payment reserve at 29 February 2016 of £1.5 million (31 August 2015: £1.0 million) arises from conditional
awards of shares in the Company made to certain employees and the Executive Directors. The awards will vest on the third
anniversary of grant, subject to market based performance conditions.
Other Reserves
These reserves of £1.0 million (31 August 2015: £1.0 million) arose from the acquisition of subsidiaries.
FOREIGN CURRENCY TRANSLATION RESERVE
The foreign currency translation reserve at 29 February 2016 of £0.9 million (31 August 2015: debit of £2.4 million) represents
exchange differences arising from the translation of the net investment in foreign operations.
23. FAIR VALUE OF FINANCIAL INSTRUMENTS
BASIS FOR DETERMINING FAIR VALUES
The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making
the measurements.
Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.
Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This
category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for
identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant
inputs are directly or indirectly observable from market data.
Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation
technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s
valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant
unobservable adjustments or assumptions are required to reflect differences between the instruments.
Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer
price quotations. For all other financial instruments the Group determines fair values using net present value and discounted cash
flow models and comparisons to similar instruments for which market observable prices exist. Assumptions and inputs used in
valuation techniques include risk-free and benchmark interest rates, credit spreads and other premia used in estimating discount
rates, foreign currency exchange rates and expected price volatilities and correlations. The objective of valuation techniques is to
arrive at a fair value determination that reflects the price of the financial instrument at the reporting date that would have been
determined by market participants acting at arm’s length.
The Group uses widely recognised valuation models for determining the fair value of common and more simple financial
instruments such as interest rate swaps that use only observable market data and require little management judgement and
estimation. Observable prices and model inputs are usually available in the market for simple over the counter derivatives, e.g.
interest rate swaps. Availability of observable market prices and model inputs reduces the need for management judgement and
estimation and also reduces the uncertainty associated with determination of fair values. Availability of observable market prices
and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions
in the financial markets.
The tables below present information about the Group’s financial assets and liabilities measured at fair value as of 29 February
2016 and 31 August 2015.
Total
Level 1 Level 2 Level 3 Fair Value
£m £m £m £m
29 February 2016
Financial assets
Investment at fair value (Note 12) 7.9 - - 7.9
Derivative financial assets - 1.7 - 1.7
7.9 1.7 - 9.6
Financial liabilities
Derivative financial liabilities - (4.6) - (4.6)
- (4.6) - (4.6)
31 August 2015
Financial assets
Derivative financial assets - 1.8 - 1.8
- 1.8 - 1.8
Financial liabilities
Derivative financial liabilities - (4.3) - (4.3)
- (4.3) - (4.3)
No financial instruments were transferred between levels during the year.
The newly acquired investment in IHGL has been categorised as a Level 1 investment and priced using quoted prices in an active
market; the Euro MTF Market of the LUXSE.
Interest rate swaps and caps have been categorised as Level 2 as although they are priced using directly observable inputs, the
instruments are not traded in an active market.
As stated in Note 11 and 18 respectively, the Group considers all investment property and loan borrowings to be categorised as
Level 3.
For loans to joint ventures, trade and other receivables, cash and cash equivalents, finance leases and trade and other payables, it
is considered that their carrying values are deemed to be a reasonable approximation of fair value.
24. RELATED PARTY TRANSACTIONS
Related parties of the Group include associate undertakings and joint ventures, Directors and key management personnel and
connected parties, the major shareholder Redefine Properties Limited (“RPL”) as well as entities connected through common
directorships.
Reviewed Audited
29 February 31 August
2016 2015
£m £m
Related Party Transactions
Rental income
RedefineBDL 7.2 13.3
Other income
Leopard Portfolio 0.2 0.6
Wichford VBG Holding S.a.r.l. 0.1 0.1
RI Menora German Holdings S.a.r.l. - 0.1
0.3 0.8
Gain on disposal of non-current assets held for sale
International Hotel Group Limited - 0.6
Finance income
Leopard Portfolio 1.4 1.4
Redefine Hotel Holdings Limited (non-controlling shareholder) 0.4 0.9
International Hotel Group Limited 0.1 -
1.9 2.3
Related Party Outstanding Balances
Loans to joint ventures
Leopard Portfolio 34.2 33.6
Trade and other receivables
Redefine Hotel Holdings Limited (non-controlling shareholder) 13.7 13.3
RedefineBDL 9.1 8.4
International Hotel Group Limited 2.1 5.7
Wichford VBG Holding S.a.r.l. 1.1 0.7
Leopard Portfolio 0.5 0.8
26.5 28.9
Trade and other payables
26 The Esplanade No 1 Limited - 0.2
RI Menora German Holdings S.a.r.l. 0.2 0.2
0.2 0.4
Related Party Equity Transactions
Redefine Properties Limited 34.6 21.3
DIRECTORS
The remuneration paid to Non-Executive Directors for the period ended 29 February 2016 was £0.2 million (31 August 2015: £0.3
million) which represents Director’s Fees only.
Executive Directors represent key management personnel.
The remuneration paid to Executive Directors for the period ended 29 February 2016 was £1.2 million (31 August 2015: £1.7
million), representing salaries, benefits and bonuses.
5.0 million contingent share awards were issued to Executive Directors during the period (31 August 2015: 3.4 million). The share-
based payment charge associated with the contingent share awards was £0.5 million (31 August 2015: £0.5 million).
Certain Directors participated in the February Share Placing as follows:
Number of Percentage
Number of ordinary shares of enlarged
Name placing held on share capital
shares admission (%)
Mike Watters 352,941 6,515,638 0.37
Adrian Horsburgh 10,000 10,000 0.00
Robert Orr 23,529 23,529 0.00
Gavin Tipper 100,000 508,630 0.03
Marc Wainer 195,000 1,676,545 0.09
REDEFINE PROPERTIES LIMITED
During the period, the Group paid RPL a fee of £2.5 million in consideration for supporting the AUK Portfolio acquisition by way of
irrevocably subscribing for up to £70.0 million in the capital raise. RPL was allocated 81,373,179 shares, representing 30.07 per
cent of the total placing and this equated to an aggregate amount of £34.6 million of the total funds raised.
25. EARNINGS PER SHARE
Earnings per share is calculated on the weighted average number of shares in issue and the profit attributable to shareholders.
Reviewed Reviewed Audited
29 February 28 February 31 August
2016 2015 2015
£m £m £m
Profit attributable to equity holders of the Parent 6.8 35.3 70.6
Number of ordinary shares
- in issue 1,766.2 1,319.9 1,474.3
- Weighted average 1,493.4 1,307.3 1,383.3
- Diluted weighted average 1,494.8 1,311.6 1,384.9
Earnings per share (pence)
- Basic 0.5p 2.7p 5.1p
- Diluted 0.5p 2.7p 5.1p
Profit attributable to equity holders of the Parent 6.8 35.3 70.6
Group Adjustments:
Loss / (gain) on revaluation of investment property 17.3 (10.5) (31.5)
Gain on disposal of investment property (3.4) - -
Loss on revaluation of non-current assets held for sale - 1.9 1.9
Gain on disposal of non-current asset held for sale (0.2) - -
Gain on revaluation of investment at fair value (1.0) (4.0) -
Loss on disposal of investment at fair value - - 17.6
Change in fair value of derivative financial instruments 2.5 0.5 (0.8)
Termination of derivative financial instruments 0.1 - -
Amortisation of intangible assets 0.1 - -
Capital gains tax (refund) / charge on disposal of Swiss properties (1.1) - 3.2
Deferred tax adjustments 0.8 1.2 2.2
Joint Venture Adjustments:
Loss / (gain) on revaluation of investment property 0.5 (0.3) (4.0)
Change in fair value of derivative financial instruments 1.4 0.5 (0.1)
Termination of derivative financial instruments - - 1.1
Deferred tax adjustments 0.1 - -
(1)
Elimination of joint venture unrecognised losses (0.8) (0.4) -
Non-Controlling Interest Adjustments:
(Loss) / gain on revaluation of investment property (0.1) - 4.0
Change in fair value of derivative financial instruments 0.1 - 0.2
EPRA Earnings 23.1 24.2 64.4
EPRA Earnings per share (pence) 1.5p 1.8p 4.7p
Diluted EPRA Earnings per share (pence) 1.5p 1.8p 4.7p
Reviewed Reviewed Audited
29 February 28 February 31 August
2016 2015 2015
£m £m £m
EPRA Earnings 23.1 24.2 64.4
Straight-lining of rental income and other 1.0 5.0 6.7
Accretion of fair value adjustments 1.1 1.1 2.7
Foreign exchange gain (2.7) (1.3) (2.5)
Fair value of share based payment 0.5 0.3 0.5
Cromwell dividends to date of disposal - - 1.3
Gain on extinguishment / acquisition of debt - (3.5) (29.8)
Hague and Delta non-distributable earnings (0.7) (0.7) (1.3)
Joint ventures distributable adjustments 0.7 (3.2) 3.5
Non-controlling interests distributable adjustments (0.4) (0.5) (1.1)
Underlying Earnings 22.6 21.4 44.4
Non-recurring gain on disposal of investment property 2.8 - -
Distributable Earnings 25.4 21.4 44.4
Distributable Earnings per share (pence) 1.7p 1.6p 3.2p
Dividend per share (pence) 1.625p 1.60p 3.25p
First interim dividend per share (pence) 1.625p 1.60p 1.60p
Second interim dividend per share (pence) - - 1.65p
The figures at 28 February 2015 have been restated in-line with EPRA Reporting, Best Practice Recommendations (December 2014).
(1)
As per Note 13, the Group has ceased to recognise certain joint ventures classified as ‘Other’ in the IFRS statements as their cumulative losses
exceed the cost of the Group’s investment. This adjustment eliminates the restricted losses for the period attributable to those joint ventures.
Headline earnings per share is calculated in accordance with Circular 2/2015 issued by the South African Institute of Chartered
Accountants (SAICA), a requirement of the Group’s JSE listing. This measure is not a requirement of IFRS.
Reviewed Reviewed Audited
29 February 28 February 31 August
2016 2015 2015
£m £m £m
Profit attributable to equity holders of the Parent 6.8 35.3 70.6
Group Adjustments:
Loss / (gain) on revaluation of investment property 17.3 (10.5) (31.5)
Gain on disposal of investment property (3.4) - -
Gain on bargain purchase of subsidiary - (0.2) (0.2)
Loss on disposal of subsidiaries - - 0.3
Gain on disposal of non-current assets held for sale (0.2) - (0.6)
Loss on revaluation of non-current assets held for sale - 1.9 1.9
Deferred tax 0.6 1.2 1.5
Gain on disposal of joint venture - (0.6) (0.6)
Joint Venture Adjustments:
Loss / (gain) on revaluation of investment property 0.5 0.3 (4.0)
Deferred tax 0.1 - -
(1)
Elimination of joint venture unrecognised losses (0.1) - -
Non-Controlling Interest Adjustments:
(Loss) / gain on revaluation of investment property (0.1) - 4.0
Headline Earnings attributable to equity holders of the Parent 21.5 27.4 41.4
Headline earnings per share (pence)
- Basic 1.4p 2.1p 3.0p
- Diluted 1.4p 2.1p 3.0p
The figures at 28 February 2015 have been restated to align to Circular 2/2015, as issued by the South African Institute of Chartered Accountants
(SAICA).
(1)
As per Note 13, the Group has ceased to recognise certain joint ventures classified as ‘Other’ in the IFRS statements as their cumulative losses
exceed the cost of the Group’s investment. This adjustment eliminates the restricted losses for the period attributable to those joint ventures.
26. NET ASSET VALUE PER SHARE
Reviewed Audited
29 February 31 August
2016 2015
£m £m
Net assets attributable to equity holders of the Parent 704.5 598.0
Number of ordinary shares 1,766.2 1,474.3
Diluted number of shares 1,767.8 1,475.9
Net asset value per share (pence):
- Basic 39.9p 40.6p
- Diluted 39.9p 40.5p
Net assets attributable to equity holders of the Parent 704.5 598.0
Group Adjustments:
Fair value of derivative financial instruments 2.9 4.3
Deferred tax adjustments 3.0 2.2
Joint Venture Adjustments:
Fair value of derivative financial instruments 4.5 3.5
(1)
Elimination of unrecognised derivative financial instruments (4.0) (3.3)
Deferred tax adjustments 1.4 0.2
Non-Controlling Interest Adjustments:
Fair value of derivative financial instruments 0.5 -
Deferred tax adjustments (0.1) -
EPRA adjusted NAV 712.7 604.9
EPRA adjusted, diluted NAV per share (pence) 40.3p 41.0p
EPRA adjusted NAV 712.7 604.9
Group Adjustments:
Fair value of derivative financial instruments (2.9) (4.3)
Excess of fair value of debt over carrying value (19.4) -
Deferred tax adjustments (3.0) (2.2)
Joint Venture Adjustments:
Fair value of derivative financial instruments (4.5) (3.5)
(1)
Elimination of unrecognised derivative financial instruments 4.0 3.3
Deferred tax adjustments (1.4) (0.2)
Non-Controlling Interest Adjustments:
Fair value of derivative financial instruments (0.5) -
Deferred tax adjustments 0.1 -
EPRA adjusted NNNAV 685.1 598.0
EPRA adjusted, diluted NNNAV per share (pence) 38.8p 40.5p
(1)
As per Note 13, the Group has ceased to recognise certain joint ventures classified as ‘Other’ in the IFRS statements as their cumulative losses
exceed the cost of the Group’s investment. This adjustment eliminates the derivative financial instruments attributable to those joint ventures from
the proportionate adjustments.
27. CASH GENERATED FROM OPERATIONS
Reviewed Reviewed Audited
29 February 28 February 31 August
2016 2015 2015
Continuing operations Note £m £m £m
Cash flows from operating activities
Profit before tax 8.4 38.5 84.0
Adjustments for:
Straight lining of rental income 0.2 0.7 0.1
Depreciation 0.1 0.1 0.1
Loss / (gain) on revaluation of investment property 17.3 (10.5) (31.5)
Gain on disposal of investment property (3.4) - -
Gain on extinguishment / acquisition of debt 5 - (3.5) (29.8)
Gain on bargain purchase of subsidiary 6 - (0.2) (0.2)
Loss on disposal of subsidiaries 7 - - 0.3
Distributions received from investment at fair value - (3.7) (7.5)
Gain on revaluation of investment at fair value (1.0) (4.0) -
Loss on disposal of investment at fair value 12 - - 17.6
Gain on disposal of joint venture - (0.6) (0.6)
Amortisation of intangible asset 0.1 0.1 0.2
Loss on revaluation of non-current assets held for sale - 1.9 1.9
Gain on disposal of non-current assets held for sale (0.2) - (0.6)
Foreign exchange gain (2.7) (1.3) (2.5)
Net finance expense 8 13.4 14.4 27.5
Other finance income and expenses 9 0.8 - -
Change in fair value of derivative financial instruments 2.5 0.5 (0.7)
Impairment of loans to joint ventures 0.7 1.2 3.8
Share of post-tax profit from joint ventures (0.9) (4.0) (5.5)
Share of post-tax profit from associate (1.2) (0.2) (0.6)
Fair value of share-based payments 0.5 0.3 0.5
34.6 29.7 56.5
Changes in working capital (3.1) (3.2) (2.2)
Cash generated from operations 31.5 26.5 54.3
28. CONTINGENCIES, GUARANTEES AND COMMITMENTS
At 29 February 2016, the Group was contractually committed to expenditure of £17.1 million, of which £12.8 million was committed
to the future development and enhancement of investment property (31 August 2015: £13.7 million).
As part of the Aviva debt restructure in 2013, Aviva have the right to a maximum of 50 per cent of any future sale proceeds,
generated by a sale of the Grand Arcade Wigan, in excess of the outstanding balance of the related debt at the date of valuation.
Aviva also have an option to participate in the capital appreciation of the property once the market value exceeds £90.0 million,
which they have not exercised. At the balance sheet date, a maximum contingent liability of £13.8 million would arise as a result of
these rights.
29. SUBSEQUENT EVENTS
On 1 March 2016, the Group completed on the acquisition of the final nine properties included within the second tranche of the
AUK Portfolio at a purchase price of £204.7 million (£213.2 million including costs). The acquisition was funded from the proceeds
of the February 2016 placing and a drawdown of £97.0 million from the £148.0 million revolving credit facility secured against the
portfolio. While completion occurred on 1 March, the acquisition of the second tranche has been reflected on the Group’s balance
sheet at 29 February 2016 as the significant risks and rewards of ownership had transferred to the Group on unconditional
exchange in September 2015.
On 31 March 2016 the Company acquired an additional 1.5 million shares in the International Hotel Group Limited for £1.5 million
increasing its interest in the listed hotel and leisure group to 15.3 per cent. No change in the Group’s influence is deemed to have
occurred.
On 8 April 2016, the Group refinanced its loan with HSH Nordbank in respect of the Einkaufszentrum Schloss-Strassen-Center,
Berlin. Break costs of €0.1 million were incurred in renegotiating the terms and €5.5 million was repaid to reduce the principal
outstanding to €62.0 million which is now subject to an all-in rate of 1.95 per cent per annum with maturity in April 2021.
Glossary
Adjusted NAV EPRA NAV adjusted for the result of any non-recourse negative equity positions
AGM The Annual General Meeting of the Company
Aviva Aviva Commercial Finance Limited
Board The Board of Directors of Redefine International P.L.C.
CPI Consumer Price Index
Cromwell Cromwell Property Group is an Australian Securities Exchange listed stapled
security (ASX:CMW) comprising the Cromwell Corporation Limited and Cromwell
Property Securities Limited, which acts as the responsible entity of the Cromwell
Diversified Property Trust. www.cromwell.com.au.
EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation
EGM An Extraordinary General Meeting of the Company
EPRA European Public Real Estate Association
EPRA Earnings Earnings from operational activity.
EPRA NAV European Public Real Estate Association Net Asset Value
EPRA NNNAV European Public Real Estate Association Triple Net Asset Value
ERV The estimated market rental value of lettable space which could reasonably be
expected to be obtained on a new letting or rent review.
Exceptional items Exceptional items are those items that in the Directors’ view are required to be
separately disclosed by virtue of their size or incidence to enable a full
understanding of the Group’s financial performance.
FCTR Foreign Currency Translation Reserve
German Big 5 Berlin, Dusseldorf, Hamburg, Frankfurt and Munich
IHGL International Hotel Group Limited
IPD Investment Property Databank
JSE JSE Limited, licensed as an exchange and a public company incorporated in terms
of the laws of South Africa and the operator of the Johannesburg Stock Exchange.
Like-for-like income Income generated by assets which were held by the Group throughout both the
current and comparable periods and for which there has been no significant
development which materially impacts upon income.
Like-for-like property Property which has been held at both the current and previous balance sheet date
and used to illustrate change in comparable capital values.
LSE The London Stock Exchange plc.
LUXSE The Luxembourg Stock Exchange
LTV Loan to value. A ratio of debt divided by the market value of investment property.
NAV Net Asset Value
Net debt Total borrowings less cash and cash equivalents
Net initial yield Annualised income based on passing rent less non-recoverable operating expenses
expressed as a percentage of the market value of the property.
Redefine International, the Redefine International P.L.C., also referred to as the “Company” and all its
Company or the Group subsidiaries and group undertakings, are collectively referred to as the “Group”.
RPL or Redefine Properties Redefine Properties Limited, listed on the JSE, 30.07% shareholder of the Company
Reversionary yield The anticipated yield to which the initial yield will rise (or fall) once the rent reaches
the ERV.
Topped-up net initial yield Net initial yield adjusted for the expiration of rent free periods or other incentives.
Total return The growth in NAV per share plus dividends per share paid during the period.
UK Big 6 The “Big 6” UK regional cities (Birmingham, Bristol, Edinburgh, Glasgow,
Manchester and Leeds).
UK-REIT A UK Real Estate Investment Trust. A REIT must be a publicly quoted company with
at least three-quarters of its profits and assets derived from a qualifying property
rental business. Income and capital gains from the property rental business are
exempt from tax but the REIT is required to distribute at least 90% of those profits to
shareholders. Corporation tax is payable on non-qualifying activities in the normal
way.
Underlying Earnings Profit available for distribution after removing unrealised profits, losses and certain
exceptional items, representing the underlying performance of the business.
WAULT Weighted average unexpired lease term
Disclaimer
This release includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance or achievements of Redefine International P.L.C.
to be materially different from any future results, performance or achievements expressed or implied by such forward-looking
statements. Any information contained in this release on the price at which shares or other securities in Redefine International
P.L.C. have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide
to future performance.
26 April 2016
Date: 26/04/2016 08:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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