Wrap Text
Condensed unaudited Group results for the six months ended 28 February 2019
REDEFINE PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1999/018591/06
JSE share code: RDF ISIN: ZAE000190252
Debt company code: BIRDF
(Redefine or the Company or the Group)
(Approved as a REIT by the JSE)
Condensed unaudited Group results
for the six months ended 28 February 2019
Highlights
Active portfolio margin maintained at 82.2%
Deployed R3.5 billion into property assets
Moody's investment grade credit rating reaffirmed
Top employer status maintained
Sipho Pityana appointed as independent non-executive Chairman
Commentary
Profile
Redefine is a leading South African-based Real Estate Investment Trust (REIT), with a diverse, property
asset platform valued at R92.0 billion (FY18: R91.3 billion). Redefine's portfolio is anchored domestically
in directly held retail, office and industrial properties, and is complemented by property investments in
Poland, the United Kingdom (UK) and Australia.
Redefine's primary goal is to grow and improve cash flows, which will deliver quality earnings, growth
in distributions, and sustain long-term growth in total returns for shareholders.
Redefine is listed on the Johannesburg Stock Exchange (JSE), has a market capitalisation of R57.0 billion
(FY18: R56.2 billion) and is ranked in the JSE Top 40 index. By volume, Redefine shares are
among the most actively traded on the JSE, making it a highly liquid single entry point for investors to
gain exposure to domestic and multiple international real estate markets.
At 28 February 2019, Redefine's diversified local property assets were valued at R72.9 billion
(FY18: R72.4 billion). The Group's international real estate investments, valued at R19.1 billion
(FY18: R18.9 billion) represented 20.7% (FY18: 20.7%) of total property assets, providing geographic
diversification into the Polish, UK, Australian and African markets.
Financial results
The Redefine board of directors has declared a distribution of 49.19 (HY18: 47.30) cents per share for
the six months ended 28 February 2019, an increase of 4.0% (HY18: 5.5%) on the previous comparable
period which is in line with market guidance. Total revenue and gross distributable income showed
growth of 11.7% (HY18: 9.6%) and 4.8% (HY18: 8.6%) respectively.
Redefine's property portfolio contributed 97.8% (HY18: 98.0%) of total revenue, with the remaining 2.2%
(HY18: 2.0%) arising from investment income.
The operating cost margin declined marginally to 34.7% (HY18: 33.9%) of contractual rental income.
Net of electricity and utility recoveries, operating costs were 16.8% (HY18: 17.3%) of contractual rental
income.
Redefine's international property investments contributed 25.4% (HY18: 25.3%) to distributable income.
28 February 28 February
2019 2018
% %
Property cost-to-income ratios
Gross cost-to-income ratio 34.7 33.9
Net cost-to-income ratio 16.8 17.3
Total cost-to-income ratios
Gross cost-to-income ratio 38.2 36.4
Net cost-to-income ratio 21.6 20.9
The above cost-to-income ratios are calculated in accordance with the SA REIT Association's Best
Practice Recommendations.
Changes in fair value
The Group's property portfolio was independently valued by external valuers at 28 February 2019
resulting in a net increase in value of R185.4 million (HY18: R1.3 billion). In terms of IAS 40 and
IFRS 13, Redefine's investment properties are measured at fair value through profit or loss using
valuation inputs which are categorised as level 3 in the fair value hierarchy. There were no transfers
between levels 1, 2 and 3 during the year.
The exchangeable bonds issued by Redefine were fair valued at 28 February 2019 resulting in a
R146.8 million (HY18: R174.5 million) decrease in the liability. The exchangeable bonds are measured
at fair value through profit and loss. The fair value is determined with reference to the Bloomberg
Valuation Service price and has been classified as level 1.
The fair value of the investment in listed securities decreased by R645.7 million (HY18: R257.7 million)
mainly driven by the decrease in the Delta Property Fund Limited ("Delta") share price. The Group's
derivatives, which protect the Group against adverse movements in interest and foreign exchange
rates, were valued using the swap curve and forward pricing methods respectively, resulting in a
decrease of R365.0 million (HY18: R397.1 million) in the Group's liabilities. In terms of IFRS 9 and IFRS
13, Redefine's listed security investments and derivatives are measured at fair value through profit or
loss and are categorised as level 1 and level 2 respectively.
The balance of the fair value movements relates to gains on foreign unlisted investments of
R103.8 million (HY18: R11.8 million).
South African property portfolio
The active portfolio vacancy rate increased during the period to 5.7% (FY18: 4.5%). Leases covering
225 363m(2) (HY18: 269 209m(2)) were renewed during the year at an average rental decrease of 6.0%
(HY18: 0.3% increase) while the tenant retention rate was a pleasing 96.6% (HY18: 94.7%). A further
231 354m(2) (HY18: 205 213m(2)) was let across the portfolio. The student accommodation portfolio
had an average occupancy of 79.0% (FY18: 91.7%) as at 28 February 2019. Net arrears amounted to
R90.9 million (HY18: R76.0 million), representing 11.5% (HY18: 10.1%) of gross monthly rentals.
GEOGRAPHIC SPREAD BY VALUE
Gauteng 73%
Cape 18%
KwaZulu-Natal 4%
Other 5%
SECTORAL SPREAD BY VALUE
Retail 39%
Office 37%
Industrial 19%
Specialised 5%
*Specialised includes a hospital, a hotel and student accommodation.
LEASE EXPIRY PROFILE BY GLA (m(2))
Office Retail Industrial Specialised Total
Monthly 87 055 50 947 29 839 - 167 841
2019 69 680 48 388 86 588 - 204 656
2020 194 592 205 084 170 387 167 570 230
2021 149 301 217 124 181 695 27 330 575 450
2022 163 225 245 643 272 872 380 682 120
2023 96 374 168 129 104 515 - 369 018
Beyond 2023 339 093 394 254 954 189 - 1 687 536
Vacancy 203 102 63 173 33 287 1 908 301 470
1 302 422 1 392 742 1 833 372 29 785 4 558 321
WEIGHTED AVERAGE VACANCY PER SECTOR
Strategic vacancies
28 February Vacant
2019 before properties Vacant
strategic under properties 28 February 31 August
Sector vacancies redevelopment held-for-sale 2019 2018
Office 15.6% 1.9% 1.6% 12.1% 9.5%
Retail 4.6% - - 4.6% 4.5%
Industrial 1.8% - - 1.8% 1.0%
Specialised 6.4% - - 6.4% -
6.6% 0.5% 0.4% 5.7% 4.5%
Redefine continues to advance its strategy of diversifying, growing and improving the quality of the
property portfolio. Management's primary focus domestically was on protecting, expanding and
improving existing well-located properties mainly through development and redevelopment activities.
Acquisitions: Two industrial properties with a total GLA of 17 215m(2) were acquired for an aggregate
purchase consideration of R130.0 million, at an average yield of 9.7%.
New developments: Developments with a total value of R1.7 billion and an initial yield of 8.6% were
completed during the period. Infrastructure projects at the S&J Jupiter site and Matlosana Mall were
completed costing R87.6 million. Projects in progress total R943.7 million at an average initial yield of
8.9%. In addition, infrastructure projects totalling R272.2 million for the S&J and Atlantic Hills sites
are currently under way.
Redevelopments: Projects in progress total R791.1 million with an average initial yield of 6.0%. Future
committed projects total R68.1 million with a projected initial yield of 3.0%.
Held-for-trading: During the period, two parcels of vacant land which had been classified as held-for-
trading were disposed of for a consideration of R65.2 million realising a profit of R23.2 million. Subject
to the usual conditions precedent, Redefine has agreed to dispose of a further R15.1 million of vacant
land after the period-end.
Disposals: Five properties with a GLA of 66 948m(2), which no longer served Redefine's investment
criteria, were disposed of during the year to various buyers for an aggregate consideration of
R390.0 million, at an average yield of 9.8%. Redefine disposed of 50.0% of its share in the newly
developed Loftus Hotel for R45.5 million as well as a portion of land for R24.4 million. Agreements,
subject to the usual conditions precedent, were concluded for the disposal of eight properties for an
aggregate consideration of R383.4 million covering a GLA of 55 406m(2) at an average yield of 6.1% and
one portion of vacant land for a total consideration of R42.0 million.
Student accommodation: The development of Roscommon House in Claremont, which partially
opened for trading during February 2019, has 582 beds with a total development cost of R231.7 million
and an projected yield of 10.0%. Paton House in Pietermaritzberg, a future committed project, at a
cost of R108.1 million has an estimated initial yield of 10.6% and 538 beds. Subject to town planning
approval, Redefine plans to develop phase 2 of Yale Village in Johannesburg at a cost of R53.9 million
on an 8.9% initial yield and 196 beds. During the period, a property was purchased for R33.0 million
which will be developed in the future.
Sustainability: Redefine has continued to invest in long-term renewable energy solutions and has
added an additional 1MWp of Solar PV capacity increasing our total capacity to 23,5 MWp. We will
continue with similar investments in the second half of the year and plan to pilot energy storage
technologies as another alternative in the second half of 2019. We continue to pursue green building
certifications and have recently submitted 30 buildings for Existing Building Performance Green Star
ratings, the largest ever single batch submission received by the GBCSA. We continue to implement
energy and water efficiency projects to reduce our impact on precious natural resources as is evident
in our reported energy savings of 7 182 MWh in 2018.
International property portfolio
Redefine continues to progress its strategy of geographic diversification and exploiting attractive yield
spreads in hard currency markets.
The Polish Logistics Platform's active portfolio vacancy was 6.8% (FY18: 1.5%) at 28 February 2019.
New developments: In Poland, phase 1 of the Strykow development, with a GLA of 77 673m(2) was
completed during the period at a total cost of EUR35.6 million (R564.6 million) and an initial yield of 6.3%.
A further three of the exclusive priority right development projects agreed with Panattoni Development
Europe sp.zo.o are in progress, with a total GLA of 143 664 m(2) and a total estimated development cost
of EUR98.8 million (R1.6 billion) and is expected to achieve an initial income yield of 6.8%.
Student accommodation: Redefine has continued with the development of its Australian student
accommodation investment through its 90% beneficial interest in Journal Student Accommodation
Fund. The Leicester Street development was completed during the period, at a total cost of R1.3 billion
(AUD130.0 million) and began trading in February 2019 with 804 beds with an average occupancy rate
of 78.0%. The Swanston Street facility at a total development cost of R1.1 billion (AUD110.0 million),
will have 587 beds and it is anticipated that it will be completed in time for the 2020 student intake.
LEASE EXPIRY PROFILE BY GLA (m(2))
Logistics platform
2019 40 181
2020 34 420
2021 39 701
2022 91 891
2023 42 085
Beyond 2023 116 233
Vacancy 26 673
391 184
Investments in associates and joint ventures
2019 2018
Carrying Shares Carrying Shares
value held value held
Stock exchange R'000 % R'000 %
EPP LuxSE and JSE 7 498 902 44.4 6 996 725 39.0
RDI REIT Plc (RDI) LSE and JSE 3 355 288 29.4 3 958 407 29.4
Oando Wings Development Limited Not listed 453 242 39.9 553 498 38.9
11 307 432 11 508 630
EPP: During January 2019, Redefine acquired an additional 44 291 338 shares for a total consideration
of R1.0 billion (EUR64.9 million). Subsequent to the reporting period, on 24 April 2019, EPP conducted
an accelerated book build and issued 77 956 989 new shares. On 3 May 2019, Redefine acquired an
additional 44 291 339 shares for a total consideration of R1.0 billion (EUR64.9 million) bringing its effective
shareholding to 45.4%.
RDI: In accordance with IAS 36 Impairment of Assets and given the prolonged decline in the share
price of RDI as well as the existence of other impairment indicators, the carrying value of RDI
was subject to impairment testing, by comparing the carrying amount to the recoverable amount,
being value-in-use. A discounted cash flow calculation was performed considering the forecasted
future expected cash flows which were discounted at relevant market rates in order to calculate
the value-in-use. The carrying amount of RDI was accordingly impaired by R194.0 million (FY18:
R753.8 million).
Equity-accounted profit: The equity-accounted profit decreased substantially from the prior
comparable period, mainly due to the sale of Cromwell and Cromwell Partner's Trust during 2018.
Exchange rates: The Rand appreciated when compared to the prior period and as a result, Redefine's
proportionate share of the underlying foreign currency denominated associates' net assets decreased.
This decrease was largely neutralised by the natural hedge created by the foreign currency denominated
debt held against these assets, as it decreased similarly.
28 February 31 August
Foreign currency 2019 2018
AUD 9.9668 10.6736
EUR 15.8708 17.1709
GBP 18.5624 19.1406
USD 13.9515 14.7074
Interest-bearing borrowings
Redefine's interest-bearing borrowings (net of cash and cash equivalents and including the fair value
of cash settled hedges) represented 42.3% (FY18: 40.0%) of the value of its property asset platform
at 28 February 2019. The Group's property asset platform is made up of property, listed and unlisted
property shares, loans receivable, and interests in associates and joint ventures. The average cost of
Rand-denominated funding is 9.2% (FY18: 9.3%), interest rates are hedged on 79.2% (FY18: 81.9%) of
local borrowings for an average period of 2.6 years (FY18: 2.3 years). Including foreign currency debt
and derivatives, the average cost of debt is 6.2% (FY18: 6.3%). Interest rates are hedged on 78.2%
(FY18: 81.2%) of total borrowings for an average period of 2.9 years (FY18: 2.8 years). The interest cover
ratio (which includes equity-accounted dividends and listed security income) is 4.6x (FY18: 4.3x).
Redefine had unutilised committed bank facilities of R5.8 billion (FY18: R3.8 billion) at 28 February
2019 which provides assurance that the Group will be able to meet its short-term commitments.
Moody's credit rating
On 23 April 2019, Moody's issued its latest credit opinion for Redefine and confirmed the rating as
follows:
Global long-term: Baa3
Global short-term: P-3
National long-term: Aa1.za
National short-term: P-1.za
Outlook: Stable
Moody's has maintained a Baa3 long-term global rating for the EUR150.0 million senior secured
exchangeable bonds issued by Redefine.
Equity raises
There were no share issues during the period and given Redefine's share price at the time, the Board
resolved not to offer a dividend reinvestment alternative to shareholders for the December 2018
dividend payment.
Capital commitments
Capital development commitments outstanding amount to R3.1 billion (FY18: R3.2 billion). Future
commitments will be funded by undrawn banking facilities and proceeds from capital recycling
activities.
Broad-based black economic empowerment (B-BBEE)
Redefine is currently rated as a level three (FY18: level four) B-BBEE contributor under the revised
Property Sector codes that were promulgated during 2017. Redefine will continue to actively contribute
to the growth of the organisation and country by conducting its business in a manner that promotes
transformation and further aims to maintain its rating through sustainable and inclusive business
practices.
Prospects
While policy and political uncertainty has somewhat decreased, decision-makers have adopted a "wait
and see" approach, until after the elections to make long-term decisions. Broad-based weakness in
business confidence is a persistent trend which is fuelled by the the slow pace of structural reforms,
power blackouts and higher inflationary pressures. Household consumption remains constrained by
the VAT increase from 14% to 15%, exorbitant fuel price increases and the recently announced increase
in electricity tariffs. Dampened confidence and floundering investment spending are negative factors
for local property fundamentals as-well-as economic growth in the medium term. With this backdrop
we believe that our purpose-driven strategic approach remains appropriate for the environment in
which we are operating.
We are pleased to report that Redefine has delivered its market guidance of 4% growth (49.19 cents
per share) in distribution per share for the first half of 2019. We anticipate maintaining this growth rate
for the full 2019 financial year.
There is one certainty and that is that it will remain an uncertain environment in which to operate
for some time to come. Uncertainty delivers challenges, but through a purpose-driven strategy,
Redefine is well-positioned to take advantage of the resultant opportunities and we remain focused on
what matters most (operate efficiently, invest strategically, optimise capital, engage talent and grow
reputation) to stay a step ahead of the unexpected.
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. Redefine's use of
distribution per share as a relevant measure of financial performance remains unchanged from prior
years.
Declaration of a cash dividend
The Board have declared a gross dividend of 49.19000 cents per share for the six months ended
28 February 2019 (the dividend).
In accordance with Redefine's status as a REIT, shareholders are advised that the dividend meets the
requirements of a "qualifying distribution" for the purposes of section 25BB of the Income Tax Act,
No. 58 of 1962 (Income Tax Act). The distribution on the shares will be deemed to be a dividend for
South African tax purposes, in terms of section 25BB of the Income Tax Act.
The dividend received by or accrued to South African tax residents must be included in the gross
income of such shareholders and will not be exempt from income tax (in terms of the exclusion to
the general dividend exemption, contained in paragraph (aa) of section 10(1)(k)(i) of the Income Tax
Act) because it is a dividend distributed by a REIT. This dividend is, however, exempt from dividend
withholding tax in the hands of South African tax resident shareholders, provided that the South African
resident shareholders provided the following forms to their Central Securities Depository Participant
(CSDP) or broker, as the case may be, in respect of uncertificated shares, or the company, in respect
of certificated shares:
(a) a declaration that the dividend is exempt from dividends tax; and
(b) a written undertaking to inform the CSDP, broker or the company, as the case may be, should the
circumstances affecting the exemption change or the beneficial owner cease to be the beneficial
owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Shareholders
are advised to contact their CSDP, broker or the company, as the case may be, to arrange for the
abovementioned documents to be submitted prior to payment of the dividend, if such documents have
not already been submitted.
Dividends received by non-resident shareholders will not be taxable as income and instead will be
treated as an ordinary dividend which is exempt from income tax in terms of the general dividend
exemption in section 10(1)(k)(i) of the Income Tax Act. Assuming dividend withholding tax will
be withheld at a rate of 20% (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), the net dividend amount due to non-resident shareholders is 39.35200 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) a declaration that the distribution is subject to a reduced rate as a result of the application of a
DTA; and
(b) a written undertaking to inform their CSDP, broker or the company, as the case may be, should
the circumstances affecting the reduced rate change or the beneficial owner cease to be the
beneficial owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Non-resident
shareholders are advised to contact their CSDP, broker or the company, as the case may be, to
arrange for the abovementioned documents to be submitted prior to payment of the distribution if
such documents have not already been submitted, if applicable.
The dividend is payable to Redefine's shareholders in accordance with the timetable set out below:
Last date to trade cum dividend Tuesday, 21 May 2019
Shares trade ex dividend Wednesday, 22 May 2019
Record date Friday, 24 May 2019
Payment date Monday, 27 May 2019
Shareholders may not dematerialise or rematerialise their shares between Wednesday, 22 May 2019
and Friday, 24 May 2019, both days inclusive. Payment of the dividend will be made to shareholders
on Monday, 27 May 2019. In respect of dematerialised shareholders, the dividend will be transferred
to the CSDP accounts/broker accounts on Monday, 27 May 2019. Certificated shareholders' dividend
payments will be deposited on or about Monday, 27 May 2019.
Shares in issue at the date of declaration of dividend: 5 765 799 764
Redefine's income tax reference number: 917/852/484/0
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.
Edcon
Redefine has elected to participate in the restructuring of Edcon Limited, providing an equity contribution
of approximately R54.6 million. This has been done as part of a binding agreement concluded with all
relevant stakeholders to restructure and recapitalise Edcon. Redefine will receive 100% of its rental
due from Edcon on 56 788 m2, representing the in-force leases for profitable Edcon stores. In addition
to the equity contribution, Redefine has also agreed to participate as either a delayed or reduction
landlord over a two-year period, in respect of leases totalling 21 972 m2. These leases will either expire
or Redefine has the right to take back the space prior to expiry, once a replacement tenant has been
secured, subject to a three-month notice period. This is a non-adjusting event.
Change in auditors
At the annual general meeting held on 14 February 2019, shareholders approved the appointment of
PricewaterhouseCoopers Inc., together with John Bennett as the designated audit partner as auditors
of Redefine.
Change in directorate
During the period, Bernie Nackan and Sindi Zilwa stepped down from the board. Redefine thanks
them for their valuable contributions during their terms of office and wishes them well in their future
endeavours.
With effect from 3 May 2019, we welcome Sipho Pityana who has been appointed to the board of
directors as the independent non-executive chairman. Marc Wainer will remain on the board as an
executive director and the board of directors thanks Marc for his valuable contribution, unstinting
leadership and guidance since founding Redefine and wishes him well in his new role.
Basis of preparation
These condensed consolidated unaudited interim financial statements are prepared in accordance with
International Financial Reporting Standards, IAS 34 Interim Financial Reporting, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as
issued by the Financial Reporting Standards Council, and the requirements of the Companies Act of
South Africa and the JSE Listings Requirements. The accounting policies applied in preparing these
interim financial statements are in terms of International Financial Reporting Standards and are
consistent with those applied in the previous financial statements except for the changes in accounting
policy relating to the new standards and interpretations which became effective to the Group for the
financial year beginning 1 September 2018 (refer to page 36).
Significant judgement, estimates and assumptions
The preparation of interim financial statements in conformity with IFRS requires management to
make judgements, estimates and assumptions that affect amounts reported in the interim financial
statements. Actual results may differ from these estimates. Judgement, estimates and assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which they were revised and in any future periods affected.
Key judgements, estimates and assumptions which have the most significant effect on the interim
financial statements include:
- valuation of investment properties and properties under development;
- impairment of investments in associates; and
- significant influence and control assessment.
The directors of Redefine take full responsibility for the preparation of this report and that the selected
financial information has been correctly extracted from the underlying consolidated financial statements.
LC Kok (CA(SA)), Redefine's financial director, was responsible for supervising the preparation of these
condensed consolidated interim financial statements. These condensed consolidated interim financial
statements for the period ended 28 February 2019 have not been reviewed or reported on by Redefine's
independent external auditors.
By order of the Board
6 May 2019
Redefine Properties Limited
Statement of profit or loss and other comprehensive income
for the six months ended 28 February 2019
Unaudited Unaudited Audited
28 February 28 February 31 August
Figures in R'000 2019 2018 2018
Revenue
Property portfolio revenue 4 298 646 3 855 362 8 133 099
- Contractual rental income 4 143 598 3 855 469 7 879 370
- Straight-line rental income accrual 155 048 (107) 253 729
Investment income 96 341 77 763 308 223
Total revenue 4 394 987 3 933 125 8 441 322
Costs
Operating costs (1 439 880) (1 306 237) (2 637 956)
Administration costs (178 342) (124 798) (365 144)
Net operating profit 2 776 765 2 502 090 5 438 222
Other gains 48 785 19 901 245 470
Loss on disposal of interest in associate - (52 514) (57 787)
Changes in fair values 155 291 1 659 102 1 679 220
Amortisation of intangible asset (31 428) (31 428) (62 856)
Impairments (199 553) (494 395) (1 053 753)
Equity-accounted profit (net of taxation) 155 353 1 548 314 2 541 427
Profit before finance costs and taxation 2 905 213 5 151 070 8 729 943
Net interest costs (682 857) (779 752) (1 511 179)
- Interest income 472 963 467 959 919 828
- Interest expense (1 155 820) (1 247 711) (2 431 007)
Foreign exchange gains/(losses) 138 241 552 024 (69 254)
Profit before taxation 2 360 597 4 923 342 7 149 510
Taxation 46 680 (199 150) (532 682)
Profit for the period/year 2 407 277 4 724 192 6 616 828
Attributable to:
- Redefine Properties Limited shareholders 2 372 840 4 690 515 6 575 079
- Non-controlling interests 34 437 33 677 41 749
Other comprehensive income (940 494) (717 260) 1 469 289
Items that may not be reclassified subsequently to profit or loss
Share of revaluation of property, plant and equipment
of an associate - 4 311 4 126
Items that are or may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations:
- Subsidiaries (184 940) (66 689) 155 016
- Associates (755 554) (654 882) 942 336
Reclassification of foreign currency differences on loss - - 367 811
Total comprehensive income for the period/year 1 466 783 4 006 932 8 086 117
Attributable to:
- Redefine Properties Limited shareholders 1 444 243 3 982 564 8 035 162
- Non-controlling interests 22 540 24 368 50 955
Earnings per share
- Basic 43.91 88.43 123.07
- Diluted 43.80 88.20 123.01
Statement of financial position
as at 28 February 2019
Unaudited Unaudited Audited
28 February 28 February 31 August
Figures in R'000 2019 2018 2018
ASSETS
Non-current assets 95 994 497 87 288 727 95 843 287
Investment properties 75 614 607 65 910 557 74 395 956
- Fair value of investment properties 68 734 414 59 514 237 66 271 904
- Straight-line rental income accrual 2 351 720 1 944 111 2 197 947
- Properties under development 4 528 473 4 452 209 5 926 105
Listed securities 1 284 349 1 196 341 1 935 843
Goodwill and intangible assets 5 714 777 5 777 633 5 746 203
Investment in associates and joint ventures 11 307 432 11 429 435 11 508 630
Derivative assets 109 095 126 373 34 754
Loans receivable 1 430 437 2 638 095 1 930 342
Other financial assets 318 844 131 059 218 890
Property, plant and equipment 214 956 79 234 72 669
Current assets 2 721 249 1 816 024 2 300 847
Properties held-for-trading 523 759 122 294 28 943
Trade and other receivables 879 886 949 881 1 076 079
Loans receivable 891 539 41 711 767 806
Other financial assets - 253 875 -
Derivative assets 44 162 124 822 6 041
Taxation receivable 1 311 - -
Cash and cash equivalents 380 592 323 441 421 978
Non-current assets held-for-sale 455 408 4 304 959 549 089
Total assets 99 171 154 93 409 710 98 693 223
EQUITY AND LIABILITIES
Equity 56 900 378 55 684 140 58 149 200
Shareholders' interest 56 404 502 55 265 885 57 677 363
Stated capital 44 329 101 43 411 827 44 329 101
Accumulated profit 12 293 025 13 328 202 12 617 787
Other reserves (217 624) (1 474 144) 730 475
Non-controlling interests 495 876 418 255 471 837
Non-current liabilities 35 599 730 27 667 420 35 513 831
Interest-bearing borrowings 31 716 141 24 503 385 31 151 253
Interest-bearing borrowings at fair value 2 355 961 2 079 117 2 502 753
Derivative liabilities 627 306 272 059 907 687
Other financial liabilities 82 492 11 638 86 167
Deferred taxation 817 830 801 221 865 971
Current liabilities 6 671 046 10 058 150 5 030 192
Trade and other payables 1 550 764 1 300 759 2 278 322
Interest-bearing borrowings 4 806 572 8 100 433 2 469 899
Interest accrual on interest-bearing borrowings 270 251 382 800 262 081
Derivative liabilities 31 149 19 112 13 852
Other financial liabilities 12 310 253 875 -
Taxation payable - 1 171 6 038
Total equity and liabilities 99 171 154 93 409 710 98 693 223
Number of shares in issue^ ('000) 5 404 403 5 321 701 5 404 403
Net asset value per share
(excluding deferred tax and NCI) (cents) 1 058.81 1 053.56 1 083.25
Net tangible asset value per share (excluding deferred tax,
NCI and goodwill and intangible assets) (cents) 953.07 944.99 976.93
^ Net of 361 396 896 (HY18 and FY18: 361 396 896) treasury shares.
Statement of changes in equity
for the six months ended 28 February 2019
Foreign
currency Share-based Share of Non-
Accumulated translation payment associates' Shareholders' controlling
Figures in R'000s Stated capital profit reserve reserve reserves interest interests Total equity
Balance as at 31 August 2017 43 070 822 11 137 593 (814 377) 52 875 (11 176) 53 435 737 350 448 53 786 185
Total comprehensive income for the period - 4 690 515 (712 262) - 4 311 3 982 564 24 368 4 006 932
Profit for the period - 4 690 515 - - - 4 690 515 33 677 4 724 192
Other comprehensive income for the period - - (712 262) - 4 311 (707 951) (9 309) (717 260)
Transactions with owners (contributions and distributions) 341 005 (2 499 370) - (10 971) 17 456 (2 151 880) - (2 151 880)
Issue of ordinary shares 341 005 - - - - 341 005 - 341 005
Dividends - (2 495 166) - - - (2 495 166) - (2 495 166)
Recognition of share-based payments - (5 999) - (10 971) - (16 970) - (16 970)
Disposal of investment in associates - 1 795 - - (1 795) - - -
Share of post-acquisition change in net assets of associate - - - - 19 251 19 251 - 19 251
Transactions with owners (changes in ownership interests) - (536) - - - (536) 43 439 42 903
Disposal of subsidiary with NCI - - - - - - 60 689 60 689
Acquisition of subsidiary with NCI - (536) - - - (536) (17 250) (17 786)
Balance as at 28 February 2018 43 411 827 13 328 202 (1 526 639) 41 904 10 591 55 265 885 418 255 55 684 140
Total comprehensive income for the period - 1 884 564 2 168 219 - (185) 4 052 598 26 587 4 079 185
Profit for the period - 1 884 564 - - - 1 884 564 8 072 1 892 636
Other comprehensive income for the period - - 2 168 219 - (185) 2 168 034 18 515 2 186 549
Transactions with owners (contributions and distributions) 917 274 (2 531 960) - 16 459 20 126 (1 578 101) (75 125) (1 653 226)
Issue of ordinary shares 917 274 - - - - 917 274 - 917 274
Dividends - (2 536 086) - - - (2 536 086) (75 125) (2 611 211)
Recognition of share-based payments - - - 16 459 - 16 459 - 16 459
Disposal of investment in an associate - 4 126 - - (4 126) - - -
Share of post-acquisition change in net assets of associate - - - - 24 252 24 252 - 24 252
Transactions with owners (changes in ownership interests) - (63 019) - - - (63 019) 102 120 39 101
Acquisitions of subsidiary with NCI - (63 019) - - - (63 019) (63 815) (126 834)
Disposal of subsidiary with NCI - - - - - - 165 935 165 935
Balance as at 31 August 2018 44 329 101 12 617 787 641 580 58 363 30 532 57 677 363 471 837 58 149 200
Total comprehensive income for the period - 2 372 840 (928 597) - - 1 444 243 22 540 1 466 783
Profit for the period - 2 372 840 - - - 2 372 840 34 437 2 407 277
Other comprehensive income for the period - - (928 597) - - (928 597) (11 897) (940 494)
Transactions with owners (contributions and distributions) - (2 697 221) - (19 960) 458 (2 716 723) - (2 716 723)
Dividends - (2 691 392) - - - (2 691 392) - (2 691 392)
Recognition of share-based payments - (5 829) - (19 960) - (25 789) - (25 789)
Disposal of associate - - - - - - - -
Share of post-acquisition change in net assets of associate - - - - 458 458 - 458
Transactions with owners (changes in ownership interests) - (381) - - - (381) 1 499 1 118
Acquisitions of subsidiary with NCI - (381) - - - (381) 1 499 1 118
Balance as at 28 February 2019 44 329 101 12 293 025 (287 017) 38 403 30 990 56 404 502 495 876 56 900 378
Unaudited Unaudited Audited
28 February 28 February 31 August
Figures in R'000 2019 2018 2018
Dividend per share (cents) 49.19 47.30 97.10
Interim^ 49.19 47.30 47.30
Final - - 49.80
^ The interim dividend is declared post the reporting period and is therefore a non-adjusting subsequent event.
Statement of cash flows
for the six months ended 28 February 2019
Unaudited Unaudited Audited
28 February 28 February 31 August
Figures in R'000 2019 2018 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 2 178 064 2 662 365 6 399 525
Interest received 352 624 414 351 738 279
Interest paid (1 150 849) (1 201 611) (2 602 039)
Taxation refunded/(paid) 6 725 (46 005) (569 083)
Dividends and interest received from associates
and joint ventures 477 217 597 794 1 016 328
Net cash inflow from operating activities 1 863 781 2 426 894 4 983 010
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition and development of investment properties (2 413 067) (2 146 115) (5 879 783)
Acquisition of property, plant and equipment (9 079) (8 202) (13 720)
Acquisition of other financial assets - (137 211) (138 315)
Acquisition of subsidiary (net of cash acquired) - - (1 231 495)
Investments in associates and joint ventures (1 016 750) (175 055) (987 570)
Proceeds on disposal of investment properties 547 895 2 293 983 2 826 030
Proceeds on disposal of non-current assets held-for-sale
(other than investment property) - - 3 888 275
Proceeds on disposal of listed securities 5 794 - 33 789
Proceeds on the disposal of property, plant and equipment - - 249
Proceeds on disposal of shares in associates and joint ventures - 165 730 2 007 117
Other financial liabilities raised on investments made 3 848 - 44 257
Loans receivables repaid 663 039 30 732 369 496
Loans receivables advanced (282 058) (927 377) (1 016 073)
Net cash outflow from investing activities (2 500 378) (903 515) (97 743)
CASH FLOWS FROM FINANCING ACTIVITIES
Shares issued - 341 005 1 258 279
Dividends paid (2 691 392) (2 495 166) (5 031 252)
Shares issued to non-controlling interests 1 498 60 689 148 685
Disposal of non-controlling interests (381) (17 784) (66 681)
Dividends paid to non-controlling interests - - (75 125)
Loans repaid to non-controlling interests 1 707 - -
Interest-bearing borrowings raised 4 342 752 3 569 782 8 329 784
Interest-bearing borrowings repaid (1 021 128) (2 817 054) (9 072 536)
Net cash inflow/(outflow) from financing activities 633 056 (1 358 528) (4 508 846)
Net (decrease)/increase in cash and cash equivalents (3 541) 164 851 376 421
Cash and cash equivalents at the beginning of the year 421 978 180 661 180 661
Effect of foreign currency exchange fluctuations (37 845) (22 071) (135 104)
Cash and cash equivalents at end of period/year 380 592 323 441 421 978
Earnings and headline earnings
for the six months ended 28 February 2019
Unaudited Unaudited Audited
28 February 28 February 31 August
Figures in R'000 2019 2018 2018
EARNINGS AND HEADLINE EARNINGS
Reconciliation of basic earnings to headline earnings
Profit for the period/year attributable to Redefine
shareholders 2 372 840 4 690 515 6 575 079
Change in fair value of properties (net of NCI) (166 066) (1 289 607) (2 571 822)
- Change in fair value of properties (185 406) (1 313 449) (2 594 040)
- Non-controlling interest 19 340 23 842 22 218
Bargain purchase on acquisition of associate - (11 595) (78 127)
Bargain purchase on acquisition of subsidiaries (net of NCI) - - (13 392)
- Bargain purchase on acquisition of subsidiaries - - (14 097)
- Non-controlling interest - - 705
Loss on disposal of interest in associates - 52 514 57 787
Profit on dilution of ownership interest in an associate - (43 515) 123 403
Adjustment of measurements, included in equity-accounted
earnings of associates (net of tax) (250 210) (1 099 970) (1 467 593)
- Adjustment of measurements, included in equity-
accounted earnings of associates (351 862) (1 401 382) (1 651 975)
- Tax adjustment 101 652 301 412 184 382
Impairments 199 553 494 395 1 053 753
Headline earnings attributable to Redefine shareholders 2 156 117 2 792 737 3 679 088
Actual number of shares in issue ('000)* 5 404 403 5 321 701 5 404 403
Weighted average number of shares in issue ('000)* 5 404 403 5 304 452 5 342 395
Diluted weighted average number of shares in issue ('000)* 5 420 708 5 318 597 5 356 688
Continued and discontinued earnings per share (cents)
Basic earnings per share 43.91 88.43 123.07
Diluted earnings per share 43.80 88.20 123.01
Headline earnings per share 39.90 52.65 68.87
Diluted headline earnings per share 39.80 52.52 68.70
* Net of 361 396 896 (HY18 and FY18: 361 396 896) treasury shares.
Segmental analysis
for the six months ended 28 February 2019
Figures in R'000s Office Retail Industrial Specialised Head office Local International Total
STATEMENT OF FINANCIAL POSITION
Investment properties 25 368 759 27 683 324 12 314 487 2 608 888 - 67 975 458 3 110 676 71 086 134
Properties under development 244 232 247 415 1 236 889 240 840 - 1 969 376 2 559 097 4 528 473
Listed securities - - - - 406 728 406 728 877 621 1 284 349
Goodwill and intangible assets 1 913 810 2 883 662 510 710 60 888 345 707 5 714 777 - 5 714 777
Investment in associates and joint ventures - - - - - - 11 307 432 11 307 432
Loans receivable - - - - 1 446 030 1 446 030 875 946 2 321 976
Non-current assets held-for-sale 307 581 42 000 75 844 - - 425 425 29 983 455 408
Properties held-for-trading - - 95 628 428 131 - 523 759 - 523 759
Property, plant and equipment 100 947 - - 42 108 62 687 205 742 9 214 214 956
Other assets - - - - 1 025 367 1 025 367 708 523 1 733 890
Total assets 27 935 329 30 856 401 14 233 558 3 380 855 3 286 519 79 692 662 19 478 492 99 171 154
Interest-bearing borrowings - - 29 498 238 29 498 238 7 024 475 36 522 713
Interest-bearing borrowings at fair value - - - - - - 2 355 961 2 355 961
Other liabilities - - - - 2 387 040 2 387 040 1 005 062 3 392 102
Total liabilities - - - - 31 885 278 31 885 278 10 385 498 42 270 776
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Contractual rental income 1 409 725 1 693 046 710 689 135 376 - 3 948 836 194 762 4 143 598
Straight-line rental income accrual 17 636 30 937 68 448 (9 300) - 107 721 47 327 155 048
Investment income - - - - 63 842 63 842 32 499 96 341
Total revenue 1 427 361 1 723 983 779 137 126 076 63 842 4 120 399 274 588 4 394 987
Operating costs (437 279) (668 852) (206 254) (56 345) - (1 368 730) (71 150) (1 439 880)
Administration costs - - - - (135 586) (135 586) (42 756) (178 342)
Net operating profit 990 082 1 055 131 572 883 69 731 (71 744) 2 616 083 160 682 2 776 765
Other gains - - - - 38 394 38 394 10 391 48 785
Loss on disposal of interests in associates and joint ventures - - - - - - - -
Changes in fair values 103 215 (190 871) 212 640 69 544 (605 422) (410 894) 566 185 155 291
Amortisation of intangible assets - - - - (31 428) (31 428) - (31 428)
Impairments - - - - (5 544) (5 544) (194 009) (199 553)
Equity-accounted profit (net of taxation) - - - - - - 155 353 155 353
Profit before finance costs and taxation 1 093 297 864 260 785 523 139 275 (675 744) 2 206 611 698 602 2 905 213
Interest income - - - - 405 602 405 602 67 361 472 963
Interest expense - - - - (990 690) (990 690) (165 130) (1 155 820)
Foreign exchange losses - - - - - - 138 241 138 241
Profit before taxation 1 093 297 864 260 785 523 139 275 (1 260 832) 1 621 523 739 074 2 360 597
Taxation - - - - (18 249) (18 249) 64 929 46 680
Profit for the period 1 093 297 864 260 785 523 139 275 (1 279 081) 1 603 274 804 003 2 407 277
Non-controlling interests - - - - (31 127) (31 127) (3 310) (34 437)
Profit for the period attributable to Redefine Properties Limited shareholders 1 093 297 864 260 785 523 139 275 (1 310 208) 1 572 147 800 693 2 372 840
Segmental analysis
for the six months ended 28 February 2018
Figures in R'000s Office Retail Industrial Specialised Head office Local International Total
STATEMENT OF FINANCIAL POSITION
Investment properties 22 307 903 25 948 577 11 049 015 2 152 853 - 61 458 348 - 61 458 348
Properties under development 1 088 276 758 270 1 457 795 372 482 - 3 676 823 775 386 4 452 209
Listed securities - - - - 972 259 972 259 224 082 1 196 341
Goodwill and intangible assets 1 913 810 2 883 662 510 710 60 888 408 563 5 777 633 - 5 777 633
Investment in associates and joint ventures - - - - - - 11 429 435 11 429 435
Loans receivable - - - - 1 843 503 1 843 503 836 303 2 679 806
Non-current assets held-for-sale 498 000 - 32 000 - - 530 000 3 774 959 4 304 959
Properties held-for-trading - - 122 294 - - 122 294 - 122 294
Property, plant and equipment - - - - 78 001 78 001 1 233 79 234
Other assets - - - - 1 703 389 1 703 389 206 062 1 909 451
Total assets 25 807 989 29 590 509 13 171 814 2 586 223 5 005 715 76 162 250 17 247 460 93 409 710
Interest-bearing borrowings - - - - 24 836 992 24 836 992 7 766 826 32 603 818
Interest-bearing borrowings at fair value - - - - - - 2 079 117 2 079 117
Other liabilities - - - - 3 042 635 3 042 635 - 3 042 635
Total liabilities - - - - 27 879 627 27 879 627 9 845 943 37 725 570
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Contractual rental income 1 423 920 1 656 213 663 873 108 112 - 3 852 118 3 351 3 855 469
Straight-line rental income accrual (36 681) 7 806 37 277 (8 509) - (107) - (107)
Investment income - - - - 75 188 75 188 2 575 77 763
Total revenue 1 387 239 1 664 019 701 150 99 603 75 188 3 927 199 5 926 3 933 125
Operating costs (447 094) (633 416) (179 866) (44 078) - (1 304 454) (1 783) (1 306 237)
Administration costs - - - - (113 683) (113 683) (11 115) (124 798)
Net operating profit 940 145 1 030 603 521 284 55 525 (38 495) 2 509 062 (6 972) 2 502 090
Other gains - - - - 11 350 11 350 8 551 19 901
Loss on disposal of interests in associates and joint ventures - - - - - - (52 514) (52 514)
Changes in fair values 286 925 1 102 642 (54 644) 17 353 (41 141) 1 311 135 347 967 1 659 102
Amortisation of intangible assets - - - - (31 428) (31 428) - (31 428)
Impairments - - - - - - (494 395) (494 395)
Equity-accounted profit (net of taxation) - - - - - - 1 548 314 1 548 314
Profit before finance costs and taxation 1 227 070 2 133 245 466 640 72 878 (99 714) 3 800 119 1 350 951 5 151 070
Interest income - - - - 409 650 409 650 58 309 467 959
Interest expense - - - - (1 083 116) (1 083 116) (164 595) (1 247 711)
Foreign exchange gains - - - - - - 552 024 552 024
Profit before taxation 1 227 070 2 133 245 466 640 72 878 (773 180) 3 126 653 1 796 689 4 923 342
Taxation - - - - (10 812) (10 812) (188 338) (199 150)
Profit for the period 1 227 070 2 133 245 466 640 72 878 (783 992) 3 115 841 1 608 351 4 724 192
Non-controlling interests - - - - (34 047) (34 047) 370 (33 677)
Profit for the period attributable to Redefine Properties Limited shareholders 1 227 070 2 133 245 466 640 72 878 (818 039) 3 081 794 1 608 721 4 690 515
Segmental analysis
for the six months ended 31 August 2018
Figures in R'000s Office Retail Industrial Specialised Head office Local International Total
STATEMENT OF FINANCIAL POSITION
Investment properties 23 818 094 27 441 765 11 386 868 2 457 628 - 65 104 355 3 365 496 68 469 851
Properties under development 1 653 690 243 316 1 675 229 498 586 - 4 070 821 1 855 284 5 926 105
Listed securities - - - - 990 083 990 083 945 760 1 935 843
Goodwill and intangible assets 1 913 810 2 883 662 510 710 60 888 377 133 5 746 203 - 5 746 203
Investment in associates and joint ventures - - - - - - 11 508 630 11 508 630
Loans receivable - - - - 1 693 533 1 693 533 1 004 615 2 698 148
Non-current assets held-for-sale 378 851 84 610 23 874 - - 487 335 61 754 549 089
Properties held-for-trading - - 28 943 - - 28 943 - 28 943
Property, plant and equipment - - - - 72 037 72 037 632 72 669
Other assets - - - - 1 123 260 1 123 260 634 482 1 757 742
Total assets 27 764 445 30 653 353 13 625 624 3 017 102 4 256 046 79 316 570 19 376 653 98 693 223
Interest-bearing borrowings - - - - 27 723 196 27 723 196 5 897 956 33 621 152
Interest-bearing borrowings at fair value - - - - - - 2 502 753 2 502 753
Other liabilities - - - - 3 504 246 3 504 246 915 872 4 420 118
Total liabilities - - - - 31 227 442 31 227 442 9 316 581 40 544 023
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Contractual rental income 2 917 649 3 297 234 1 340 892 262 405 - 7 818 180 61 190 7 879 370
Straight-line rental income accrual 122 316 41 504 106 396 (16 487) - 253 729 - 253 729
Investment income - - - - 157 574 157 574 150 649 308 223
Total revenue 3 039 965 3 338 738 1 447 288 245 918 157 574 8 229 483 211 839 8 441 322
Operating costs (876 054) (1 277 879) (368 808) (96 689) - (2 619 430) (18 526) (2 637 956)
Administration costs - - - - (219 753) (219 753) (145 391) (365 144)
Net operating profit 2 163 911 2 060 859 1 078 480 149 229 (62 179) 5 390 300 47 922 5 438 222
Other gains - - - - 170 113 170 113 75 357 245 470
Loss on disposal of interests in associates and joint ventures - - - - - - (57 787) (57 787)
Changes in fair values 876 727 1 555 349 298 296 102 918 (461 651) 2 371 639 (692 419) 1 679 220
Amortisation of intangible assets - - - - (62 856) (62 856) - (62 856)
Impairments - - - - - - (1 053 753) (1 053 753)
Equity-accounted profit (net of taxation) - - - - - - 2 541 427 2 541 427
Profit before finance costs and taxation 3 040 638 3 616 208 1 376 776 252 147 (416 573) 7 869 196 860 747 8 729 943
Interest income - - - - 788 109 788 109 131 719 919 828
Interest expense - - - - (2 110 628) (2 110 628) (320 379) (2 431 007)
Foreign exchange losses - - - - - - (69 254) (69 254)
Profit before taxation 3 040 638 3 616 208 1 376 776 252 147 (1 739 092) 6 546 677 602 833 7 149 510
Taxation - - - - 51 640 51 640 (584 322) (532 682)
Profit for the year 3 040 638 3 616 208 1 376 776 252 147 (1 687 452) 6 598 317 18 511 6 616 828
Non-controlling interests - - - - (50 390) (50 390) 8 641 (41 749)
Profit for the year attributable to Redefine Properties Limited shareholders 3 040 638 3 616 208 1 376 776 252 147 (1 737 842) 6 547 927 27 152 6 575 079
Segmental analysis
Reconciliation of profit for the period/year to distributable earnings
Unaudited Unaudited Audited
February February August
Figures in R'000 2019 2018 2018
Profit for the period/year attributable to Redefine shareholders 2 372 840 4 690 515 6 575 079
Change in fair value (net of NCI) (135 950) (1 635 260) (1 657 002)
Straight-line rental income accrual (net of NCI) (152 682) 107 (253 729)
Gain on bargain purchase (net of NCI) - - (13 392)
Amortisation of intangible assets 31 428 31 428 62 856
Impairments 199 553 494 395 1 053 753
Capital gains taxation (41 180) - 511 429
Deferred taxation (net of NCI) (25 251) 158 960 (46 538)
Net unrealised foreign exchange losses/(gains) and realised
foreign currency translations reserve (net of NCI) (137 375) (462 153) 138 624
Distribution adjustment to equity accounted profit/loss 396 440 (860 269) (1 359 487)
Loss on disposal of interest in associate and joint venture - 52 514 57 787
Transaction costs relating to business acquisitions (net of NCI) 13 325 - 90 107
Antecedent distribution - 27 170 39 628
Accrual for listed security income (REIT distribution declared
post-year-end) (703) 8 680 19 926
Cornwall interest 27 959 15 328 25 005
Accrual for Chariot income 110 022 7 192 18 762
MA Afrika interest - - 7 192
Dipula BEE Trust profit share adjustment - 7 479 (42 521)
Distributable income for the period/year 2 658 426 2 536 086 5 227 479
Interim 2 658 426 2 536 086 2 536 085
Final - - 2 691 394
Actual number of shares in issue ('000)
Interim 5 404 403 5 361 701 5 361 701
Final - - 5 404 403
Distribution per share (cents) 49.19 47.30 97.10
Interim 49.19 47.30 47.30
Final - - 49.80
Distributable income analysis
Figures in R'000s South Africa International Total
Contractual rental income
(excluding straight-line rental accrual) 3 948 836 194 762 4 143 598
Investment income 63 842 32 499 96 341
Total revenue 4 012 678 227 261 4 239 939
Operating costs (1 368 730) (71 150) (1 439 880)
Administration costs (135 586) (42 756) (178 342)
Net operating profit 2 508 362 113 355 2 621 717
Other gains 38 394 10 391 48 785
Distributable equity income - 551 793 551 793
Net distributable profit before finance costs and taxation 2 546 756 675 539 3 222 295
Net interest costs (585 088) (97 769) (682 857)
- Interest income 405 602 67 361 472 963
- Interest expense (990 690) (165 130) (1 155 820)
Net distributable foreign exchange gain - 1 253 1 253
Net distributable profit before taxation 1 961 668 579 023 2 540 691
Current taxation and withholding taxation - (22 040) (22 040)
Net income from operations before non-controlling
interest share 1 961 668 556 983 2 518 651
Non-controlling interest share of distributable income (8 208) (3 211) (11 419)
Net income before distributable adjustments 1 953 460 553 772 2 507 232
Below the line distributable income adjustments:
- Accrual for listed security income - (703) (703)
- Accrual for chariot income - 110 022 110 022
- Transaction costs 2 082 11 834 13 916
- Cornwall interest 27 959 - 27 959
Distributable income 1 983 501 674 925 2 658 426
Financial instruments and investment property fair value disclosure
CATEGORIES OF FINANCIAL INSTRUMENTS Unaudited 28 February 2019 Unaudited 28 February 2018 Audited 31 August 2018
At fair value At fair value At fair value
Loans and through profit Loans and through profit Loans and through profit
Figures in R'000 receivables or loss Total receivables or loss Total receivables or loss Total
Financial assets
Listed securities - 1 284 349 1 284 349 - 1 196 341 1 196 341 - 1 935 843 1 935 843
Derivative assets - 153 257 153 257 - 251 195 251 195 - 40 795 40 795
Loans receivable 2 157 604 164 372 2 321 976 2 679 806 - 2 679 806 2 698 148 - 2 698 148
Other financial assets - 318 844 318 844 - 384 934 384 934 - 218 890 218 890
Trade and other receivables 666 426 - 666 426 752 099 - 752 099 811 917 - 811 917
Cash and cash equivalents 380 592 - 380 592 323 441 - 323 441 421 978 - 421 978
3 204 622 1 920 822 5 125 444 3 755 346 1 832 470 5 587 816 3 932 043 2 195 528 6 127 571
Unaudited 28 February 2019 Unaudited 28 February 2018 Audited 31 August 2018
Other At fair value Other At fair value Other At fair value
financial through profit financial through profit financial through profit
Figures in R'000 liabilities or loss Total liabilities or loss Total liabilities or loss Total
Financial liabilities
Interest-bearing borrowings 36 522 713 - 36 522 713 32 603 818 - 32 603 818 33 621 152 - 33 621 152
Interest-bearing borrowings at fair value - 2 355 961 2 355 961 - 2 079 117 2 079 117 - 2 502 753 2 502 753
Interest accrual on interest-bearing borrowings 270 251 - 270 251 382 800 - 382 800 262 081 - 262 081
Derivative liabilities - 658 455 658 455 - 291 171 291 171 - 921 539 921 539
Other financial liabilities 43 372 51 430 94 802 253 875 - 253 875 34 880 51 287 86 167
Trade and other payables 1 367 787 - 1 367 787 1 095 835 - 1 095 835 1 993 143 - 1 993 143
38 204 123 3 065 846 41 269 969 34 336 328 2 370 288 36 706 616 35 911 256 3 475 579 39 386 835
For all financial instruments carried at amortised cost, interest is market related and, therefore, the amortised cost
reasonably approximates the fair value.
Financial instruments and investment property fair value disclosure
FAIR VALUE HIERARCHY FOR FINANCIAL INSTRUMENTS AND INVESTMENT PROPERTY
IFRS 13 requires that an entity discloses for each class of financial instrument and investment property
measured at fair value, the level in the fair value hierarchy into which the fair value measurements are
categorised in their entirety.
The fair value hierarchy reflects the significance of the inputs used in making fair value measurements.
The level in the fair value hierarchy within which the fair value measurement is categorised in its
entirety shall be determined on the basis of the lowest level input that is significant to the fair value
measurement in its entirety.
The table below analyses financial instruments and investment property carried at fair value.
The fair value hierarchy has the following levels:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).
There have been no transfers between level 1, level 2 and level 3 during the period under review.
The table below analyses financial instruments and investment property carried at fair value.
FAIR VALUE HIERARCHY FOR FINANCIAL INSTRUMENTS AND INVESTMENT PROPERTY
Unaudited 28 February 2019
Figures in R'000 Fair value Level 1 Level 2 Level 3
Assets
Investment properties* 76 070 015 - - 76 070 015
Listed securities 1 284 349 1 284 349 - -
Derivative assets 153 257 - 153 257 -
Loans receivable 164 372 - - 164 372
Other financial assets 318 844 - - 318 844
77 990 837 1 284 349 153 257 76 553 231
Liabilities
Interest-bearing borrowings at fair value 2 355 961 2 355 961 - -
Derivative liabilities 658 455 - 658 455 -
Other financial liabilities 51 430 - - 51 430
3 065 846 2 355 961 658 455 51 430
Unaudited 28 February 2018
Figures in R'000 Fair value Level 1 Level 2 Level 3
Assets
Investment properties* 66 507 567 - - 66 507 567
Listed securities 1 196 341 1 196 341 - -
Derivative assets 251 195 - 251 195 -
Loans receivable - - - -
Other financial assets 384 934 253 875 - 131 059
68 340 037 1 450 216 251 195 66 638 626
Liabilities
Interest-bearing borrowings at fair value 2 079 117 2 079 117 - -
Derivative liabilities 291 171 - 291 171 -
Other financial liabilities - - - -
2 370 288 2 079 117 291 171 -
Financial instruments and investment property fair value disclosures
Audited 31 August 2018
Figures in R'000 Fair value Level 1 Level 2 Level 3
Assets
Investment properties* 74 945 045 - - 74 945 045
Listed securities 1 935 843 1 935 843 - -
Derivative assets 40 795 - 40 795 -
Loans receivable - - - -
Other financial assets 218 890 - - 218 890
77 140 573 1 935 843 40 795 75 163 935
Liabilities
Interest-bearing borrowings at fair value 2 502 753 2 502 753 - -
Derivative liabilities 921 539 - 921 539 -
Other financial liabilities 51 287 - - 51 287
3 475 579 2 502 753 921 539 51 287
* Including properties under development and non-current assets (properties) held for sale.
LEVEL 3 RECONCILIATION
Unaudited 28 February 2019
Gain/(loss)
Balance at in profit Balance
beginning Acquisitions/ or loss for at end
Figures in R'000 of year (disposals) the period of period
Investment properties 68 469 851 2 178 851 437 432 71 086 134
Properties under development 5 926 105 (982 332) (415 300) 4 528 473
Investment property held-for-sale 549 089 (116 478) 22 797 455 408
Loans receivable - 164 372 - 164 372
Other financial assets 218 890 - 99 954 318 844
Other financial liabilities 51 287 - 143 51 430
75 215 222 1 244 413 145 026 76 604 661
Unaudited 28 February 2018
Gain/(loss)
Balance at in profit Balance
beginning Acquisitions/ or loss for at end
Figures in R'000 of year (disposals) the period of period
Investment properties 59 243 224 976 121 1 239 003 61 458 348
Properties under development 3 948 869 632 669 (129 329) 4 452 209
Investment property held-for-sale 2 403 756 (1 879 414) 72 668 597 010
Other financial assets - 142 869 (11 810) 131 059
Other financial liabilities - - - -
65 595 849 (127 755) 1 170 532 66 638 626
Audited 31 August 2018
Gain/(loss)
Balance at in profit or Balance
beginning Acquisitions/ loss for at end
Figures in R'000 of year (disposals) the year of year
Investment properties 59 243 224 6 375 969 2 850 658 68 469 851
Properties under development 3 948 869 2 009 233 (31 997) 5 926 105
Investment property held-for-sale 2 403 756 (2 124 317) 269 650 549 089
Other financial assets - 143 973 74 917 218 890
Other financial liabilities - 23 826 27 461 51 287
65 595 849 6 428 684 3 190 689 75 215 222
The fair value gains and losses are included in the change in fair values line in profit or loss.
Financial instruments and investment property fair value disclosure
Details of valuation techniques
The valuation techniques used in measuring fair values at 29 February 2019 for financial instruments
and investment property measured at fair value in the statement of financial position, as well as the
significant unobservable inputs used is disclosed below. There have been no significant changes in
valuation techniques and inputs since 31 August 2018.
Financial instruments
LISTED SECURITIES
Closing market price on the relevant exchange.
INTEREST-BEARING BORROWINGS AT FAIR VALUE
The exchangeable bond's fair value is determined with reference to the quoted Bloomberg Valuation
Service (BVAL) price.
FOREIGN EXCHANGE OPTIONS
The fair value is determined using quoted forward exchange rates at the reporting date and present
value calculations based on high credit quality yield curves in the respective currencies.
INTEREST RATE SWAPS
The fair value is calculated as the present value of the estimated future cash flows. Estimates of
the future floating-rate cash flows are based on quoted swap rates, futures prices and interbank
borrowing rates. Estimated cash flows are discounted using a yield curve constructed from similar
sources, which reflects the relevant benchmark interbank rate used by market participants for this
purpose when pricing interest rate swaps. The fair value estimate is subject to a credit risk adjustment
that reflects the credit risk of the Group and of the counterparty. This is calculated based on credit
spreads derived from current credit default swap or bond prices.
CROSS-CURRENCY INTEREST RATE SWAPS
The fair value is calculated by discounting the future cash flows using the swap curve of the respective
currencies at the dates when the cash flows will take place.
LOANS RECEIVABLE
The fair value is calculated by discounting the future cash flows using a risk-adjusted discount rate.
UNLISTED SECURITIES
The adjusted net asset value method is used to determine the fair value, i.e. the fair value is measured
based on the fair value of the investee's assets and liabilities.
PROFIT PARTICIPATION LIABILITY
The adjusted net asset value method is used to determine the fair value of the liability, i.e. the fair value
is measured based on 5% of the underlying Chariot investment.
Investment property
The valuation policy adopted by management is to revalue investment property at each reporting date,
valued externally for both interim reporting and financial year-end reporting. The changes in fair value
from the previous reporting period are analysed by management. Current market-related assumptions
were applied to the risks in rental streams of properties. Discount rates in the respective sectors are
disclosed below. At the reporting date, the key assumptions used by the Group in determining fair value
were in the following ranges for the Group's portfolio of properties:
Unobservable inputs Unaudited Unaudited Audited
(% unless otherwise stated) 28 February 2019 28 February 2018 31 August 2018
Expected market rental growth 3.00 - 6.00 4.00 - 6.00 3.00 - 6.00
Expected expense growth 6.50 - 8.00 7.00 - 9.00 6.50 - 8.00
Occupancy rate 94.47 95.05 95.68
Vacancy periods 0 - 12 months 0 - 12 months 0 - 12 months
Rent-free periods 0 - 3 months 0 - 3 months 0 - 6 months
Office sector
Discount rate 10.00 - 17.50 9.98 - 18.00 10.00 - 17.00
Exit capitalisation rate 7.50 - 12.25 7.50 - 13.00 7.50 - 13.25
Bulk rate R2 000 - R4 725 p/m2 R R1 750 - R5 400 p/m2 R R2 000 - R4 725 p/m2
Retail sector
Discount rate 12.00 - 17.00 11.04 - 18.00 11.75 - 17.00
Exit capitalisation rate 7.25 - 12.00 7.00 - 12.00 7.25 - 12.00
Bulk rate R330 - R4 000 p/m2 R R1 200 - R3 000 p/m2 R330 - R4 000 p/m2
Industrial sector
Discount rate 13.00 - 15.50 13.25 - 18.00 13.00 - 16.00
Exit capitalisation rate 8.00 - 12.00 8.00 - 13.00 8.00 - 11.50
Bulk rate R60 - R1 900 p/m2 R643 - R2 500 p/m2 R60 - R1 900 p/m2
Specialised sector
Discount rate 14.00 - 14.50 14.00 - 16.50 14.00 - 14.50
Exit capitalisation rate 9.50 - 10.50 8.00 - 10.50 9.50 - 10.50
International sector
Core yield 6.25 - 7.50 N/A 6.25 - 7.50
Discount rate 6.25 - 7.50 N/A 6.25 - 7.50
Financial instruments and investment property fair value disclosures
Measurement of fair value
Valuation techniques
All external valuations were completed using the following methods of valuation:
Investment property - Discounted cash flow method
The valuation model generates a net present value (NPV) for each property by discounting forecasted
future cash flows and a residual value at the end of the cash flow projections period by the discount
rate of each property. The residual value is calculated by capitalising the net income forecasted for the
12-month period immediately following the final year of the cash flow at the exit capitalisation rate.
The discount rate applied by each valuator is determined by adding a growth rate per property, base
on forecasted market-related rental increases, to the determined capitalisation rate per property. The
discount rate is then tested for reasonableness by benchmarking the rate against recent comparable
sales and surveys prepared by MSCI/South African Property Owners Association (MSCI/SAPOA).
The capitalisation rate is dependent on a number of factors, such as location, the condition of the
improvements, current market conditions the lease covenants and the risk inherent in the property,
which is also tested for reasonableness by benchmarking against recent comparable sales and surveys
prepared by MSCI/SAPOA.
INVESTMENT PROPERTY - TOPSLICE METHOD
A certain selection of properties are valued using the topslice method, which is a combination of the
income capitalisation method and discounted cash flow method, adopted by CBRE sp.zo.o. - Poland.
This method is based on the premise that it is necessary to distinguish between market related rentals
which are sustainable in the long term and rentals that are above market related rates and which are
not sustainable in the long-term.
A sustainable value is calculated by firstly capitalising the core/market related income by the core
yield. Secondly, a topslice value is added by discounting the incremental income that is above market
back to the present day for the period of the lease at the topslice discount rate. The valuer assumes
that market rentals and outgoings remain constant during the lease period and, as a result, does not
incorporate a market growth component that is typically found in a discounted cash flow valuation.
PROPERTIES UNDER DEVELOPMENT - COMPARABLE SALES METHOD
Properties under development comprise of the cost of land and development, and are measured at fair
value. Fair value is based on the costs incurred up to the date of valuation. Undeveloped land is valued
in terms of the internationally accepted and preferred method of comparison. This involves the use of
recent comparable transactions as a basis for the valuation. Bulk rates are determined for the land
that has been zoned.
INTER-RELATIONSHIP BETWEEN KEY UNOBSERVABLE INPUTS AND FAIR VALUE MEASUREMENT
The estimated fair value would increase/(decrease) if:
- Expected market rental growth was higher/(lower);
- Expected expense growth was lower/(higher);
- Vacant periods were shorter/(longer);
- Occupancy rate was higher/(lower);
- Rent-free periods were shorter/(longer);
- Discount rate was lower/(higher);
- Exit capitalisation rate was lower/(higher);
- Capitalisation rate was lower/(higher);
- Bulk rate was higher/(lower); or
- Core yield was lower/(higher).
New standards and interpretations adopted
IFRS 9, Financial Instruments
CLASSIFICATION AND MEASUREMENT OF FINANCIAL ASSETS
IFRS 9 contains a new classification and measurement approach for financial assets that reflects the
business model in which assets and their cash flow characteristics are managed. IFRS 9 contains
three principal classification categories for financial assets - Amortised cost, Fair value through other
comprehensive income (FVOCI) and Fair value through profit or loss (FVPL).
With exception of certain vendor loans of the Group, the measurement categories of financial
instruments remained the same on the date of intitial application, 1 September 2018.
Vendor loans
The Group's business model is achieved by collecting the contractual cash flows.
Where the contractual cash flows of the Vendor loans consist solely of principal and interest, the Group
continued to classify and measure these loans at Amortised cost.
Where the contractual cash flows of the Vendor loans did not consist solely of principle and interest,
the Group reclassified and measured these Vendor loans to FVPL.
IAS 39 IFRS 9
31 August 2018 1 September 2018
R'000 Amortised cost Amortised cost FVPL
Loans receivable 2 698 148 2 506 038 192 110
IMPAIRMENT OF FINANCIAL ASSETS
IFRS 9 replaces the 'incurred loss' model in IAS 39 with a forward-looking 'expected credit loss' (ECL)
model. The new impairment model applies to financial assets measured at amortised cost or FVOCI.
Under IFRS 9, loss allowances will be measured on either of the following basis:
- 12-month ECLs: these are ECLs that result from possible default events within the 12 months after
the reporting date; or
- Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of
a financial instrument.
Lifetime ECL measurement applies if the credit risk of a financial asset at the reporting date has
increased significantly since initial recognition and 12-month ECL measurement applies if it has not.
An entity may determine that a financial asset's credit risk has not increased significantly if the asset
has low credit risk at the reporting date. However, lifetime ECL measurement always applies for trade
receivables and contract assets without a significant financing component.
From 1 September 2018 the Group has the following types of financial assets that are subject to
IFRS 9's new expected credit loss model:
- loans receivable carried at amortised costs;
- trade receivable; and
- cash and cash equivalents.
The Group assesses on a forward-looking basis the expected credit losses associated with its loans
receivable carried at amortised cost. The Group uses three main parameters to measure ECL on loans
receivable carried at amortised cost. These are the probability of default (PD), loss given default (LGD)
and exposure at default (EAD).
For trade receivables, the Group applies the IFRS 9 simplified impairment provision matrix based on
historical credit loss experiences to estimate lifetime ELC for all trade receivables.
ECLs are calculated by applying a loss ratio to the aged balance of the trade receivables at each
reporting date. The loss ratio is calculated according to the ageing of credit by applying historic/proxy
write-offs to the payment profile of the credit population. The historic loss ratio is then adjusted for
forward looking information to determine the ECL for the portfolio of trade receivables at the reporting
period to the extent that there is a strong correlation between the forward looking information and the
ECL.
While loan receivables at amortised costs, trade receivables and cash and cash equivalents are subject
to the impairment requirements of IFRS 9, the impact of IFRS 9 expected credit losses compared to the
loss allowance recognised based on IAS 39 was not material and did not lead to an adjustment of the
accumulated profit as at 1 September 2018.
REFINANCING OF FINANCIAL LIABILITIES
There was no impact from the adoption of IFRS 9 on the financial liabilities of the Group.
IFRS 15, Revenue from Contracts with Customers
IFRS 15 is effective for annual periods beginning on or after 1 January 2018, replacing the existing
revenue standards and the related interpretations. The standard sets out the requirements for
recognising revenue that applies to all contracts with customers, except for contracts that are within
the scope of the standards on leases, insurance contracts or financial instruments.
The Group adopted IFRS 15 on 1 September 2018 and, as permitted by IFRS 15, did not restate its
comparative financial results. The standard does not apply to revenue associated with leases and
financial instruments, and therefore does not impact the majority of the Group's revenue.
Revenue from lease components includes rent. Revenue recognition remains consistent with the
accounting policies outlined in the most recent audited annual consolidated financial statements.
Revenue related to the services component of the Group's leases are accounted for in accordance
with IFRS 15. These services consist primarily of operating costs recoveries for which the revenue is
recognized over time, typically as the costs are incurred, which is when the services are provided. This
IFRS 15 treatment is the same as that applied previously under IAS 18.
The adoption of IFRS 15 did not have an impact on the timing of recognition or measurement of revenue
and was limited to additional disclosure on the disaggregation of the Group's various revenue streams.
Unaudited Unaudited
R'000 February 2019 February 2018
Gross rental income (IAS 17) 3 247 752 3 083 621
Operating costs recoveries (IFRS 15) 895 846 771 848
Contractual rental income 4 143 598 3 855 469
Redefine Properties Limited
Executive directors:
AJ Konig (Chief executive officer)
LC Kok (Financial director)
M Wainer (Executive director)
Non-executive directors:
SM Pityana (Chairman)*
ASP Dambuza*
B Mathews (Lead Independent and Deputy Chairperson)*
HK Mehta
LJ Sennelo*
M Barkhuysen*
NB Langa-Royds*
* Independent
Registered office:
Rosebank Towers, Office Level 5, 19 Biermann Avenue, Rosebank 2196
(PO Box 1731, Parklands 2121)
Transfer secretaries:
Computershare Investor Services Proprietary Limited
Sponsor:
Java Capital
Company secretary:
B Baker
Independent auditors:
PricewaterhouseCoopers Inc.
www.redefine.co.za
Date: 06/05/2019 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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