Wrap Text
Condensed unaudited group results for the half year ended 29 February 2016
REDEFINE PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1999/018591/06
JSE share code: RDF ISIN: ZAE000190252
(“Redefine” or “the company” or “the group”)
(Approved as a REIT by the JSE)
Condensed unaudited group results for the half year ended 29 February 2016
Distribution of 41.7 cents
+6.9% in line with guidance
Market cap R58,2 billion
forward yield circa 7%
Developments of R4,2 billion
projects of R1,8 billion completed
Property assets R67,8 billion
+R0,5 billion
Quality of local assets improved
R1,3 billion sale of government-tenanted offices
International strategy extended
Acquisition of Euro1.2 billion Polish portfolio
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
29 February 28 February 31 August
2016 2015 2015
R000 R000 R000
Property portfolio 3 265 079 3 017 684 6 304 742
- Contractual rental income 3 266 801 2 937 252 6 141 437
- Straight-line rental income accrual (1 722) 80 432 163 305
Listed security income 42 834 137 334 344 229
Insurance proceeds received - 119 420 119 420
Fee income 70 423 12 374 44 800
Trading income/(loss) 294 1 270 (1 946)
Total income 3 378 630 3 288 082 6 811 245
Operating costs (1 123 576) (1 002 441) (2 084 709)
Administration costs (86 287) (105 963) (228 834)
Net operating profit 2 168 767 2 179 678 4 497 702
Change in fair value of properties, listed
securities and financial instruments (541 549) 733 521 2 242 360
Impairment of loans to joint ventures (111 095) - -
Amortisation of intangible assets (31 428) (31 428) (62 856)
Equity accounted profit 577 028 280 620 453 053
Profit from operations 2 061 723 3 162 391 7 130 259
Net interest (616 885) (656 093) (1 376 835)
- Interest paid (946 115) (783 798) (1 683 064)
- Interest received 329 230 127 705 306 229
Foreign exchange loss (471 988) (153 114) (223 072)
Profit before taxation 972 850 2 353 184 5 530 352
Taxation 67 700 (73 094) 170 662
Profit for the period/year 1 040 550 2 280 090 5 701 014
- Redefine shareholders 1 009 025 2 115 057 5 425 097
- Non-controlling interest (NCI) 31 525 165 033 275 917
Other comprehensive income/(loss) (restated) 1 541 328 (139 643) 522 382
Items that are or may be reclassified to
profit or loss
Exchange differences on translation of
foreign operations - subsidiaries 93 223 (1 409) (70 491)
Exchange differences on translation of
foreign operations - associates 1 448 105 (66 240) 592 873
Recycling of exchange differences on
translation on disposal/deemed disposal of
foreign subsidiary and associate - (71 994) -
Total comprehensive income for the
period/year (restated) 2 581 878 2 140 447 6 223 396
- Redefine shareholders 2 550 353 1 975 414 5 947 479
- NCI 31 525 165 033 275 917
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Unaudited Restated Restated
29 February 28 February 31 August
2016 2015 2015
R000 R000 R000
Opening balances 45 756 624 35 734 323 35 734 323
Total comprehensive income for the period/year 2 581 878 2 140 447 6 223 396
Issue of shares 978 435 3 336 287 11 179 971
Conversion of debentures to stated capital - (91) -
Transactions with NCI 105 355 (121 348) (4 265 020)
Cash adjustment on business combination - - 54 448
Share-based payment reserve (6 856) (240) 8 008
Distributions paid (1 823 935) (1 368 112) (3 178 502)
Total equity 47 591 501 39 721 266 45 756 624
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Unaudited Unaudited Audited
29 February 28 February 31 August
2016 2015 2015
R000 R000 R000
Cash generated from operations 2 257 006 1 639 360 4 201 916
Interest paid (946 115) (783 798) (1 683 064)
Interest received 329 230 127 705 306 229
Distributions paid (1 823 935) (1 368 112) (2 859 144)
Distributions to non-controlling interests - (106 000) (264 910)
Net cash outflow from operating activities (183 814) (490 845) (298 973)
Net cash outflow from investing activities (1 892 351) (4 102 997) (6 371 977)
Net cash inflow from financing activities 2 093 628 4 961 690 6 583 831
Net movement in cash and cash equivalents 17 463 367 848 (87 119)
Cash and cash equivalents at beginning of the
period/year 129 924 350 606 350 606
Translation effects on cash and cash
equivalents of foreign operations 18 048 (259 960) (133 563)
Cash and cash equivalents at end of the
period/year 165 435 458 494 129 924
DISTRIBUTABLE INCOME ANALYSIS
Local International Total
R000 R000 R000
Contractual rental income (excluding
straight-line rental accrual) 3 266 801 - 3 266 801
Listed security income 42 834 - 42 834
Fee income 15 423 55 000 70 423
Trading income 294 - 294
Total income 3 325 352 55 000 3 380 352
Operating costs (1 123 576) - (1 123 576)
Administration costs (76 867) (9 420) (86 287)
Distributable equity income from interest in
associates - 327 377 327 377
Realised foreign exchange losses - (9 359) (9 359)
Net interest (656 855) 39 970 (616 885)
Net distributable income before taxation and
NCI 1 468 054 403 568 1 871 622
Current tax (18) (30 969) (30 987)
NCI's share of distributable income (2 676) - (2 676)
Distributable income before distributable
income adjustments 1 465 360 372 599 1 837 959
Below the line-distributable income
adjustments:
- Pre-acquisition distribution received - 22 778 22 778
- Antecedent distribution 20 014 - 20 014
- Accrual for listed security income 4 187 6 868 11 055
- Transaction costs relating to business acquisitions 3 298 - 3 298
Distributable income 1 492 859 402 245 1 895 104
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited Restated Restated
29 February 28 February 31 August
2016 2015 2015
R000 R000 R000
ASSETS
Non-current assets 71 297 705 60 337 456 68 076 575
Investment properties 49 646 148 45 112 759 49 898 869
- Fair value of investment properties 46 011 097 42 172 722 46 589 717
- Straight-line rental income accrual 1 435 040 1 294 417 1 436 762
- Properties under development 2 200 011 1 645 620 1 872 390
Listed securities 1 336 848 3 933 827 988 793
Goodwill and intangible assets 5 335 620 5 297 248 5 367 047
Interest in associates and joint ventures 13 192 453 4 717 068 10 434 484
Interest rate swaps 340 315 - 93 150
Loans receivable 1 319 517 1 182 520 1 184 924
Other financial assets - 2 462 -
Guarantee fees receivable 97 760 50 000 73 760
Property, plant and equipment 29 044 41 572 35 548
Current assets 1 715 285 1 862 822 1 422 776
Properties held-for-trading - 18 677 1 080
Trade and other receivables 726 402 819 341 617 964
Loans receivable 767 738 504 926 587 440
Interest rate swaps 9 648 - -
Listed security income receivable 46 062 61 384 86 368
Cash and cash equivalents 165 435 458 494 129 924
Non-current assets held-for-sale 1 503 210 464 648 1 289 612
Total assets 74 516 200 62 664 926 70 788 963
EQUITY AND LIABILITIES
Equity 47 591 501 39 721 266 45 756 624
Shareholders' interest 47 454 622 36 661 987 45 756 624
Stated capital 34 716 446 25 894 246 33 738 010
Reserves 12 738 176 10 767 741 12 018 614
Non-controlling interest 136 879 3 059 279 -
Non-current liabilities 25 290 539 18 760 397 21 894 566
Interest-bearing liabilities 25 054 170 18 032 530 21 602 140
Interest rate swaps 27 105 158 767 -
Other financial liabilities 33 033 22 507 17 507
Deferred taxation 176 231 546 593 274 919
Current liabilities 1 634 160 4 183 263 3 137 773
Trade and other payables 1 276 212 1 183 027 1 106 230
Interest-bearing liabilities 320 873 2 948 477 1 980 226
Interest rate swaps 9 322 - 10 488
Other financial liabilities - 19 832 18 437
Taxation payable 27 753 31 927 22 392
Total equity and liabilities 74 516 200 62 664 926 70 788 963
Net asset value per share (excluding
deferred tax and NCI)(cents) 1 048,07 989,94 1 034,74
Net tangible asset value per share
(excluding deferred tax and
NCI)(cents) 930,67 849,01 914,09
HEADLINE EARNINGS AND DISTRIBUTABLE INCOME RECONCILIATION
Unaudited Unaudited Audited
29 February 28 February 31 August
2016 2015 2015
R000 R000 R000
Profit for the year attributable to Redefine
shareholders 1 009 025 2 115 057 5 425 097
Change in fair value of properties (net of
deferred taxation and NCI) 789 397 (254 843) (2 111 739)
Insurance proceeds received - (119 420) (119 420)
Headline earnings attributable to Redefine
shareholders 1 798 422 1 740 794 3 193 938
Change in fair value of listed securities and
financial instruments (net of deferred taxation) (145 404) (478 118) (532 016)
Impairment of loans to joint ventures 111 095 - -
Amortisation of intangible assets (net of
deferred taxation) 13 828 22 628 45 256
Transactions costs relating to business acquisitions 3 298 - 4 874
Antecedant distribution 20 014 137 101 209 474
Accrual for listed security income 11 055 - 13 751
Straight-line rental income accrual 1 722 (80 432) (163 305)
Unrealised foreign exchange loss 462 629 152 322 233 848
Fair value adjustments of associates and NCI
(other than investment property) (404 333) (34 980) 160 558
NCI portion of Fountainhead distributable
income for the period 1 March 2015 to 3 August 2015 - - 101 917
Pre-acquisition distribution received 22 778 6 565 21 520
Distributable income 1 895 104 1 465 880 3 289 815
Six months ended February 1 895 104 1 465 880 1 465 880
Six months ended August - - 1 823 935
Total distributions 1 895 104 1 465 880 3 289 815
Actual number of shares in issue (000)* 4 544 612 3 758 667 4 448 623
Weighted number of shares in issue (000)* 4 496 090 3 656 134 3 798 575
Diluted number of shares in issue (000)* 4 496 090 3 795 745 3 798 575
Basic earnings per share (cents) 22.44 57.85 142.82
Diluted earning per share (cents)** 22.44 55.72 142.82
Headline earnings per share (cents) 40.00 47.61 84.08
Diluted headline earnings per share (cents)** 40.00 45.86 84.08
Distribution per share (cents) 41.70 39.00 80.00
* Excludes 305,876,766 (2015: 5,876,766) treasury shares, 300 million held by the Redefine Empowerment
Trust since second half 2015
** In the current period there were no dilutionary shares in issue
CONDENSED SEGMENTAL ANALYSIS
Office Retail Industrial Specialised Fountainhead Total
R000 R000 R000 R000 R000 R000
Six months ended 29 February 2016
Contractual rental income^ 1 251 006 1 372 182 588 821 54 792 - 3 266 801
Operating costs (404 374) (533 582) (166 708) (18 912) - (1 123 576)
Net property income 846 632 838 600 422 113 35 880 - 2 143 225
Investment property portfolio# 18 383 199 20 409 300 9 261 752 895 096 - 48 949 347
Six months ended 28 February 2015
Contractual rental income^ 880 092 875 239 420 118 - 761 803 2 937 252
Operating costs (292 518) (348 976) (113 222) - (247 725)* (1 002 441)
Net property income 587 574 526 263 306 896 - 514 078 1 934 811
Investment property portfolio# 11 829 222 12 048 698 8 132 372 - 11 921 495 43 931 787
Year ended 31 August 2015
Contractual rental income^ 2 009 643 1 859 390 886 976 3 646 1 381 782 6 141 437
Operating costs (669 542) (733 126) (230 003) (5) (452 033)* (2 084 709)
Net property income 1 340 101 1 126 264 656 973 3 641 929 749 4 056 728
Investment property portfolio# 18 355 620 20 622 822 9 917 549 420 100 - 49 316 091
^ Excluding straight-line rental income accrual
# Excluding properties under development and held-for-trading. Properties classified as held-for-sale are included
* Excludes property management fees reversed on consolidation of R20 726 000 which was not allocated to office,
retail, industrial or specialised segment
PROFILE
Redefine is an internally managed Real Estate Investment Trust (REIT) with a primary goal of growing and
improving cash flow to deliver quality earnings, which will underpin sustained growth in distributions,
and support growth in total return per share. Redefine is listed on the Johannesburg Stock Exchange (JSE)
with a market capitalisation of R58.2 billion and is included in the JSE Top 40 index. Redefine manages a
diversified property asset platform with a value of R67,8 billion, comprising local and international
property investments. Redefine's shares are among the most actively traded in the REIT sector, making
it a highly liquid single entry point for gaining exposure to quality domestic properties and a spread of
multiple international commercial real estate markets.
At 29 February 2016, Redefine's diversified, local property portfolio was valued at R54,3 billion.
The group's international real estate investments, valued at R13,5 billion represent 19.9% of total
property assets and provide geographic diversification into the UK, German and Australian property markets.
Redefine has a 30.1% equity interest, with a value of R5,9 billion, in Redefine International PLC (RI PLC)
which is listed on both the London Stock Exchange and the JSE. Redefine co-owns with RI PLC a German retail
portfolio valued at R805 million. In addition, Redefine has a R6,5 billion presence in the Australian property
market through a direct 50% interest in North Sydney's landmark tower, Northpoint, as well as a holding of
25.5% in Cromwell Property Group (Cromwell), one of the leading property groups listed on the Australian
Stock Exchange.
FINANCIAL RESULTS
Redefine's directors have declared a distribution of 41,7 (2015: 39,0) cents per share for the six months
ended 29 February 2016, an increase of 6.9% on the comparable period, which is at the top end of market guidance.
In Rand terms, distributable income for the period increased by 29.3% (2015: 31.4%) benefiting from a number
of substantial quality acquisitions made in recent years.
Property portfolio income for the period contributed 96.6% (2015: 95.2%) of total revenue (excluding
insurance proceeds received), income from listed securities 1.3% (2015: 4.3%), and fee and trading income
of 2.1% (2015: 0.5%). Operating costs were 34.4% (2015: 34.1%) of contractual rental income (excluding
straight-line rental income accruals) - with the increase resulting mainly from increased administered
costs. Net of electricity and utility recoveries, operating costs were 17.6% (2015: 17.8%) of contractual
rental income. Redefine's international property investments contributed 21.2% (2015: 16.5%) of distributable
income.
CHANGES IN FAIR VALUES
The group's property portfolio was internally valued by the directors at 29 February 2016 producing a net
decrease in value of R605,9 million - a consequence of widening capitalisation rates following the upward
trajectory of the interest rate cycle. In terms of IAS 40 and IFRS 13, Redefine's investment properties
are measured at fair value and are categorised as level 3 investments. There were no transfers between
levels 1, 2 and 3 during the period. The investment in listed securities decreased in value by R166,6 million
during the period. The balance of R230,9 million relates to the increase in the mark-to-market of the
group's interest rate swaps, which protect the group against adverse interest rate movements. In terms of
IAS 39 and IFRS 13, Redefine's listed securities and interest rate swaps are measured at fair value through
profit or loss and are categorised as level 1 and level 2 investments respectively. There were no transfers
between levels 1, 2 and 3 during the period.
PROPERTY PORTFOLIO
The overall portfolio vacancy rate deteriorated marginally during the period by 0.3% to 5.7% (2015: 5.4%).
Leases covering 282 070m2 were renewed at an average rental increase of 4.3%, with the retention rate a
pleasing 83%. A further 171 832m2 was let across the portfolio.
PORTFOLIO SPLIT BY TENANT TYPE
Multi 68.4%
Single 31.6%
SECTORAL SPREAD BY GLA
Office 30.5%
Retail 27.6%
Industrial 41.3%
Specialised 0.6%
GEOGRAPHIC SPREAD BY GLA
Gauteng 65.6%
Cape Town 17.9%
Kwa-Zulu Natal 7.5%
Other 9.0%
LEASE EXPIRY PROFILES BY GLA
Office Retail Industrial Specialised Total
Monthly 77 497 38 380 38 904 - 154 781
2016 167 457 105 204 120 991 - 393 652
2017 317 263 218 182 162 679 - 698 124
2018 238 567 204 221 184 427 - 627 215
2019 114 986 150 669 124 577 - 390 232
2020 116 032 164 841 166 282 - 447 155
Beyond 2020 187 206 315 572 995 088 26 970 1 524 836
Vacancy 193 481 82 600 121 554 - 397 635
1 412 489 1 279 669 1 914 502 26 970 4 633 630
VACANCY BY GLA
29 February
2016 before
strategic Strategic 29 February 31 August
Vacancy per sector vacancies vacancies* 2016 2015
Office 13.7% 8.4% 9.1% 8.5%
Retail 6.4% 1.9% 4.5% 4.3%
Industrial 6.3% 2.1% 4.2% 3.8%
Specialised 0.0% 0.0% 0.0% 0.0%
8.6% 3.4% 5.7% 5.4%
* Strategic vacancies include properties held for sale and properties under development. Since
29 February 2016 vacancy has improved to 5.2%
Net arrears improved to R34 million (31 August 2015: R42 million). Net arrears represent 6.0%
(31 August 2015: 8.3%) of gross monthly rental.
REDEFINE'S PROPERTY PORTFOLIO STRATEGY
Redefine continues to deliver on its strategy of diversifying, growing and improving the quality of its
property portfolio. During the period, management's primary domestic portfolio focus was on protecting,
expanding and improving existing well-located properties.
Acquisitions: Redefine acquired and transferred three properties, with a GLA of 17 186m2, during the period,
for an aggregate consideration of R185,0 million, at an initial yield of 9.6%. Redefine also acquired a 40%
undivided share in predominantly vacant retail land in Soweto for R56,4 million, with a developable land
area of 344 328m2 (Redefine's share: 137 731m2). Subsequent to the reporting period, Redefine acquired two
properties, for an aggregate consideration of R268,5 million, at an initial yield of 5.3% and GLA of 11 587m2
and also acquired a 50.1% undivided share in vacant industrial land in Cape Town for R108,2 million with a gross
building area of 446 530m2 (Redefine's share: 227 730m2).
Developments: Redevelopment projects in the existing portfolio with an approved value of R1,3 billion at an
average yield of 7.0% are in progress. New development projects covering 138 144m2 of GLA with an approved
value of R1,1 billion at an average yield of 9.3%, are presently in progress. Projects totalling R1,8 billion
were completed during the period.
Disposals: 10 properties with a GLA of 136 010m2, which did not meet Redefine's investment strategy, were
disposed of during the year to various buyers for an aggregate consideration of R1,2 billion, at an average
yield of 8.0%. In addition, agreements, subject to conditions precedent, were concluded for the disposal of
properties for an aggregate consideration of R300,0 million, with a GLA of 82 773m2.
Government-tenanted offices: Redefine concluded an agreement with Delta Property Fund Limited (Delta) to
acquire a total of 15 Redefine properties with a GLA of 191 567m2 at an average yield of 16,4% for R1,3
billion in exchange for 162,043,079 Delta shares. The effective date of the transaction was 1 April 2016.
Redefine will dispose of the balance of its government-tenanted portfolio on a deal-by-deal basis.
Student accommodation: With effect from 1 September 2015, Redefine acquired a 51% equity interest in
Respublica Student Living (Pty) Ltd (RSL) for R109 million at an initial yield of 10%. RSL owns and
manages student accommodation facilities with a current capacity of 2 734 beds. RSL acquired, subject
to conditions precedent, a property in Midrand, for an aggregate consideration of R460 million, at an
initial yield of 11.1% and a bed capacity of 953. Hatfield Square, one of Redefine's secondary office
assets, is being converted by RSL into student accommodation at a cost of R757 million with a bed
capacity of 2 200 beds.
Sustainability: As part of Redefine's focus on sustainability and cost efficiency, various
energy-efficient and sustainable building technologies are being implemented in new developments as well
as in existing buildings, including the installation of solar PV and smart metering of electricity and
water. To protect income, Redefine has taken steps to ensure that there is uninterrupted electricity supply
at a number of its key retail properties.
LISTED SECURITIES
Redefine currently owns 11.5% of Emira Property Fund Limited, 12.3% of Arrowhead Properties Limited acquired
through the disposal of Cleary Park and holds 27.9% of newly listed International Hotel Group Limited.
INTERESTS IN SIGNIFICANT ASSOCIATES AND JOINT VENTURES
RI PLC: On 16 February 2016, RI PLC undertook a capital raise in which Redefine participated and acquired
81,4 million additional RI PLC shares for a consideration of R762 million. During the period, Redefine also
participated in RI PLC's dividend re-investment scheme and elected to receive 6,4 million shares. Currently
Redefine owns 30.1% of RI PLC, which is equity accounted. Cromwell: Currently Redefine owns 25.5% of Cromwell,
which is equity accounted.
ACQUISITION OF INTEREST IN ECHO PRIME PROPERTIES (EPP)
As more fully set out in a SENS announcement published on 1 March 2016, Redefine significantly extended
its international strategy, which is centred on geographic diversification and exploiting attractive initial
yield spreads, via an initial 75% investment into a Euro1.2 billion high-yielding commercial platform comprising
18 properties in the Polish market. It is Redefine's intention to reduce its shareholding to approximately 50%
through the immediate on-sale of just over 25% of EPP's shares.
Antitrust clearance by the European Union, which was a key condition precedent, was obtained on 28 April 2016.
The transaction is now expected to be completed at the end of May 2016 on the fulfilment of the remaining
conditions precedent. Redefine's consideration price will be funded by offshore bridge funding with a
12-month term, and it is anticipated that this bridge funding will in due course be settled through a number
of alternatives being considered such as proceeds from a possible placement by Redefine of bonds convertible
into Redefine ordinary shares or similar instruments.
FUNDING
Redefine's debt represented 37.2% (2015: 36.4%) of the value of its property assets as at 29 February 2016.
The average cost of funding is 8.5% (2015: 8.4%) - interest rates are fixed on 79.3% (2015: 81.3%) of
borrowings for an average period of 2,4 years (2015: 2,8 years). The interest cover ratio (which includes
equity accounted profit and listed security income) is 3.7 (2015: 3.4).
During the period, Redefine conserved R979 million in cash through the issue of 96 million shares under the
distribution reinvestment alternative, which was taken up by 51.5% of shareholders.
Moody's credit rating: The rating was refreshed during March 2016 and remains unchanged as follows:
Global long-term Baa3 Global short-term P-3
National long-term A3.za National short-term P-2.za
CONTINGENCIES AND COMMITMENTS
At 29 February 2016, Redefine had guarantees and suretyships in respect of its Black Economic Empowerment
initiatives amounting to R175 million (2015: R195 million). Capital commitments outstanding (excluding EPP)
amount to R2,2 billion (2015: R2,2 billion) and committed property acquisitions totalled R377 million
(2015: R415 million). Future commitments will be funded by undrawn banking facilities and the acquisition
of EPP will be funded by an initial bridging facility of Euro250 million.
BROAD-BASED BLACK ECONOMIC EMPOWERMENT
Redefine has achieved a Level 3 BBBEE contributor rating, significantly bolstering its empowerment
credentials compared to the previous Level 6 status.
PROSPECTS
Domestically challenging property fundamentals are anticipated to persist across all sectors, principally
due to electricity tariff increases, exceptionally weak business and consumer confidence, potentially
long-term damage to the agricultural sector from the drought, major downsizing in the mining sector
(despite some relief from the weaker currency and improvement in commodity prices), political uncertainty
and labour unrest. We see little prospect of a catalyst for significant change in local business conditions
in the short to medium term.
On the international front, the trend of lower interest rates and elusive growth are set to continue.
Attractive initial yield spreads and investing in offshore markets that offer growth through expansion
works for Redefine with the local swings covered by international round-abouts.
Redefine's diversified asset base, combined with management's relentless focus on disciplined execution
of its strategic priorities will drive achievement of its long term goals. Excluding accretive income
benefits from the EPP transaction, we are confident of achieving distribution per share growth of 6% to
7% for the full 2016 financial year. The completion of the EPP transaction at the end of May 2016 is
anticipated to yield accretive earnings of 1 cent per share in the second financial half of 2016.
This forecast is predicated on the assumption that current trading conditions will prevail.
Forecast rental income is based on contractual terms and anticipated market-related renewals.
The forecast has not been reviewed or reported on by the group's independent external auditors.
DECLARATION OF A CASH DIVIDEND WITH THE ELECTION TO REINVEST THE CASH
DIVIDEND IN RETURN FOR REDEFINE SHARES
The directors of Redefine have declared an interim cash dividend of 41,70000 cents per share, for the
half year ended 29 February 2016, from the company's distributable income (the cash dividend).
Shareholders will be entitled, in respect of all or part of their shareholdings, to elect to reinvest
the cash dividend in return for Redefine shares (the share reinvestment alternative), failing which they
will receive the cash dividend of 41,70000 cents per share that will be paid to those shareholders not
electing to participate in the share reinvestment alternative.
A circular providing further information in respect of the cash dividend and share reinvestment alternative
will be posted to Redefine shareholders on 6 May 2016.
Shareholders who have dematerialised their shares through a Central Securities Depository Participant (CSDP)
or broker should instruct their CSDP or broker with regard to their election in terms of the custody
agreement entered into between them and their CSDP or broker.
SALIENT DATES AND TIMES
The salient dates and times for the cash dividend and share reinvestment
alternative are as set out below.
Salient dates and times 2016
Circular and form of election posted to shareholders Friday, 6 May
Finalisation information including the share ratio and price per share
published on SENS Friday, 13 May
Last day to trade in order to participate in the election to receive shares
in terms of the share reinvestment alternative or to receive a cash
dividend (LDT) Friday, 20 May
Shares trade ex dividend Monday, 23 May
Listing of maximum possible number of shares under the share reinvestment
alternative Wednesday, 25 May
Last day to elect to receive shares in terms of the share reinvestment
alternative or to receive a cash dividend (no late forms of election will
be accepted) at 12:00 (SA time) Friday, 27 May
Record date for the election to receive shares in terms of the share
reinvestment alternative or to receive a cash dividend (record date) Friday, 27 May
Announcement of results of cash dividend and share reinvestment alternative
released on SENS Monday, 30 May
Cash dividend paid to certificated shareholders on or about Monday, 30 May
Accounts credited by CSDP or broker to dematerialised shareholders with the
cash dividend payment Monday, 30 May
Share certificates posted to certificated shareholders on or about Wednesday, 1 June
Accounts updated with the new shares (if applicable) by CSDP or broker to
dematerialised shareholders Wednesday, 1 June
Adjustment to shares listed on or about Friday, 3 June
Notes:
Shareholders electing the share reinvestment alternative are alerted to
the fact that the new shares will be listed on LDT + 3 and that these new
shares can only be traded on LDT + 3, due to the fact that settlement of
the shares will be three days after the record date, which differs from
the conventional one day after record date settlement process.
Shares may not be dematerialised or rematerialised between Monday, 23 May
2016 and Friday, 27 May 2016, both days inclusive.
The above dates and times are subject to change. Any changes will be
released on SENS.
TAX IMPLICATIONS
Redefine was granted REIT status by the JSE with effect from 1 September 2013 in line with
the REIT structure as provided for in the Income Tax Act, 58 of 1962, as amended (the Income
Tax Act) and section 13 of the JSE Listings Requirements.
The REIT structure is a tax regime that allows a REIT to deduct qualifying distributions paid
to investors, in determining its taxable income.
The cash dividend of 41,70000 cents per share meets the requirements of a qualifying
distribution for the purposes of section 25BB of the Income Tax Act (a qualifying distribution)
with the result that:
- Qualifying distributions received by resident Redefine shareholders must be included
in the gross income of such shareholders (as a non-exempt dividend in terms of
section 10(1)(k)(aa) of the Income Tax Act), with the effect that the qualifying
distribution is taxable as income in the hands of the Redefine shareholder. These
qualifying distributions are however exempt from dividends withholding tax, provided
that the South African resident shareholders provided the following forms to their
CSDP or broker, as the case may be, in respect of uncertificated shares, or the
company, in respect of certificated shares:
- a declaration that the dividends are exempt from dividends tax; and
- a written undertaking to inform the CSDP, broker or the company, as the case may
be, should the circumstances affecting the exemption change or the beneficial
owner cease to be the beneficial owner, both in the form prescribed by the
Commissioner for the South African Revenue Service.
Shareholders are advised to contact their CSDP, broker or the company, as the
case may be, to arrange for the above mentioned documents to be submitted
prior to payment of the distribution, if such documents have not already been
submitted.
- Qualifying distributions received by non-resident Redefine shareholders will not be
taxable as income and instead will be treated as ordinary dividends but which are
exempt in terms of the usual dividend exemptions per section 10(1)(k) of the Income
Tax Act. It should be noted that until 31 December 2013, qualifying distributions
received by non-residents were not subject to dividends withholding tax. Since
1 January 2014 any qualifying distribution will be subject to dividends withholding
tax at 15%, unless the rate is reduced in terms of any applicable agreement for the
avoidance of double taxation (DTA) between South Africa and the country of residence
of the shareholder. Assuming dividends withholding tax will be withheld at a rate of
15%, the net dividend amount due to non-resident shareholders is 35,44500 cents per
share. A reduced dividend withholding rate in terms of the applicable DTA, may only
be relied upon if the non-resident shareholder has provided the following forms to
their CSDP or broker, as the case may be, in respect of uncertificated shares, or the
company, in respect of certificated shares:
- a declaration that the dividend is subject to a reduced rate as a result of the
application of a DTA; and
- a written undertaking to inform their CSDP, broker or the company, as the case
may be, should the circumstances affecting the reduced rate change or the
beneficial owner cease to be the beneficial owner both in the form prescribed
by; the Commissioner for the South African Revenue Service.
Non-resident shareholders are advised to contact their CSDP, broker or the
company, as the case may be, to arrange for the above mentioned documents
to be submitted prior to payment of the dividend if such documents have not
already been submitted, if applicable.
Shareholders are advised that in electing to participate in the share reinvestment
alternative, pre-taxation funds are utilised for the reinvestment purposes and that
taxation will be due on the total cash dividend amount of 41,70000 cents per share.
OTHER INFORMATION
- The ordinary issued share capital of Redefine is 4 850 488 789 ordinary shares of no par value before
any election to reinvest the cash dividend.
- Income tax reference number of Redefine: 917/852/484/0.
The cash dividend or share reinvestment alternative may have tax implications for resident as well as
non-resident shareholders. Shareholders are therefore encouraged to consult their professional advisers
should they be in any doubt as to the appropriate action to take.
DIVIDEND DECLARATION AFTER REPORTING DATE
In line with IAS 10 Events after the Reporting Period, the declaration of the dividend occurred after the
end of the reporting period, resulting in a non-adjusting event which is not recognised in the financial
statements.
PRIOR YEAR RESTATEMENT
The group's accounting policy for investments in associates and joint ventures is to use the equity method,
whereby the investments are initially recognised at cost and increased or decreased by the group's share of
post-acquisition profits or losses and other comprehensive income.
In prior periods, the group did not include its share of the associate's other comprehensive income when
applying the equity method. Accordingly, these results are restated with the change applied retrospectively.
The change is of a non-cash flow nature and has no effect on the distributable income or profit or loss.
We believe this change will give a fairer reflection of the economic substance of investments, particularly
where those investments operate in foreign currencies and will provide more relevant information to the
users of the financial statements.
(i) Consolidated statement of financial position
Impact of restatement
As previously
reported Adjustment As restated
R000 R000 R000
28 February 2015
Interest in associates and joint ventures 4 751 352 (34 284) 4 717 068
Total assets 62 699 210 (34 284) 62 664 926
Reserves 10 802 025 (34 284) 10 767 741
Equity 39 755 550 (34 284) 39 721 266
Net asset value per share (excluding deferred
tax and NCI) (cents) 990,85 0.91 989.94
Net tangible asset value per share (excluding
deferred tax and NCI) (cents) 849,92 0.91 849.01
31 August 2015
Interest in associates and joint ventures 9 823 319 611 165 10 434 484
Total assets 70 177 798 611 165 70 788 963
Reserves 11 407 449 611 165 12 018 614
Equity 45 145 459 611 165 45 756 624
Net asset value per share (excluding deferred
tax and NCI) (cents) 1021,00 13.74 1 034.74
Net tangible asset value per share (excluding
deferred tax and NCI) (cents) 900,35 13.74 914.09
(ii) Consolidated statement of comprehensive income
Impact of restatement
As previously
reported Adjustment As restated
R000 R000 R000
28 February 2015
Exchange differences on translation of
foreign operations - associates (33 570) (32 670) (66 240)
Other comprehensive loss (106 973) (32 670) (139 643)
Total comprehensive income for the period 2 173 117 (32 670) 2 140 447
Total comprehensive income for the period
- attributable to Redefine shareholders 2 008 084 (32 670) 1 975 414
31 August 2015
Exchange differences on translation of
foreign operations -
associates (19 906) 612 779 592 873
Other comprehensive (loss)/income (90 397) 612 779 522 382
Total comprehensive income for the year 5 610 617 612 779 6 223 396
Total comprehensive income for the year
- attributable to Redefine shareholders 5 334 700 612 779 5 947 479
There is no impact on the group's basic or diluted earnings per share and no impact on the
total operating, investing or financing cash flows for the period/year ended 28 February 2015
and 31 August 2015.
EXTERNAL AUDITORS
The appointment of KPMG Inc as the group's external auditors commencing for the
financial year ending 31 August 2016 was confirmed by shareholders at the annual
general meeting held on 18 February 2016.
BASIS OF PREPARATION
The unaudited condensed consolidated half year financial statements are prepared in
accordance with International Financial Reporting Standard, IAS 34 Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by Financial Reporting Standards
Council, the JSE Listings Requirements and the requirements of the Companies Act
of South Africa. The accounting policies applied in the preparation of these half year
financial statements are in terms of International Financial Reporting Standards and
are consistent with those applied in the previous annual financial statements.
Leon Kok (CA (SA)), Redefine's financial director, was responsible for supervising the
preparation of these condensed consolidated half year financial statements, which have
not been reviewed or audited by Redefine's independent external auditors.
By order of the Board
Redefine Properties Limited
4 May 2016
Executive directors: M Wainer (Chairman), A J König (CEO), L C Kok (FD),
D H Rice+ (COO), M J Ruttell@
Non-executive directors: M Barkhuysen*, N B Langa-Royds*, H K Mehta*, P Langeni*,
B Nackan (Lead independent)*, D A Nathan*, G Z Steffens#*, M J Watters
*Independent +British @Irish #German
Registered office: 3rd Floor, Redefine Place, 2 Arnold Road, Rosebank, 2196.
(PO Box 1731, Parklands, 2121)
Transfer secretaries: Computershare Investor Services Proprietary Limited
Sponsor: Java Capital
Company secretary: B Baker
5 May 2016
Date: 05/05/2016 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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