TIDMRDF
RNS Number : 8085F
Redefine International PLC
03 May 2011
REDEFINE INTERNATIONAL PLC
("RI plc" or "the Company" and together with its subsidiaries
"the Group")
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY
2011
SALIENT FEATURES
Results
-- 322.7% increase in profit after tax for the interim
period.
-- Profit from core operations of GBP8.40 million (February
2010:GBP3.41 million), an increase of 146.3%
-- Fully diluted earnings per share of 2.17 pence (February
2010: 2.90 pence loss).
-- Interim dividend of 2.03 pence per share (February 2010:1.14
pence), an increase of 78.1%.
-- Fully diluted net asset value per share of 49.00 pence
(August 2010: 46.77 pence).
Development Highlights
-- Successful listing of parent company, Redefine Properties
International Limited, on the JSE Limited and raising of GBP86
million of new equity.
-- Agreement in principle reached to merge with Wichford
P.L.C.
-- Favourable long term restructuring of shopping centre senior
debt.
-- Successful GBP20 million capital raising post interim
period.
-- Shareholding in the Cromwell Group, Australia increased to
22.2% post interim period.
Acquisitions
-- 50% of Grand Arcade Shopping Centre, Wigan.
-- Completion of acquisition of GBP106 million Hotel Property
Portfolio.
-- 2 OBI properties in Germany.
-- Non-controlling shareholding in Swiss properties.
-- St Georges Shopping Centre in Harrow, United Kingdom post
interim period end.
Chairman's Statement
The period under review was an active and important one for the
Group. Most encouragingly the Group returned to overall
profitability with both operating profit and total profit being
positive for the first time since the 2008 credit crisis.
Through the listing on the JSE Limited ("JSE") of its parent
company, Redefine Properties International Limited ("RI Ltd"), the
Group was able to significantly strengthen its statement of
financial position, diversify its investment portfolio into hotel
properties and consolidate its strategic holding in the Cromwell
Group in Australia.
The Group's trading operations performed well and the
non-trading result was a net positive for the period. The trading
results were bolstered by rental income on a number of acquisitions
and tight cost containment. Non-trading results included some write
back of previous loses on interest rate swaps and mark-to-market
gains on a number of instruments. There were limited fair value
adjustments on the bulk of the Group's property portfolio as the
property sector continues to be impacted by liquidity
constraints.
Although it is early days, the new investment in hotel
properties has exceeded expectations and the outlook for the sector
and the Group's strategically located, quality hotel portfolio in
particular is very promising.
The Group however remains cautious about the general economic
environment for the remainder of the financial year. In the UK,
banks continue to reduce exposure to the property sector which will
limit any short- term increase in commercial property values
notwithstanding inflationary pressures.
Interest rates are expected to remain at relatively low levels
in both the UK and Europe in the near term, although the Investment
Manager is being cautious in its interest rate strategy and is
budgeting for increases in the bank rate over the next three
financial years.
The boards of Wichford P.L.C and RI plc have agreed in principle
to a combination of the two companies ("the Potential Merger"). An
announcement in this regard was made on 23 March 2011. Expectations
are that the Potential Merger will become effective, subject to the
necessary regulatory and shareholder approvals being obtained, by
the end of the third calendar quarter in 2011.
The Potential Merger is consistent with our strategy to build a
larger, more liquid company focused on diversified, income
producing investment properties. We believe that the enlarged
company will be well placed to deliver attractive cash returns for
investors and competitive total returns over the long-term.
On behalf of the Board
G R Tipper
Chairman
COMMENTARY
Introduction
RI plc is a property investment and development company which
owns investments in commercial and retail properties in the UK,
Switzerland, Germany and the Channel Islands, which provide
sustainable occupancy rates and income flows, together with
opportunities for development and value enhancement. The Company
also owns material investments in two listed companies being
Wichford P.L.C. in the United Kingdom (currently 21.7%) and the
Cromwell Group in Australia (22.2% post the interim period). It
recently extended its investment mandate to include investments in
hotel properties.
The Group's primary objective is to produce sustainable and
growing income for its investors. Underscoring this is RI plc's
pursuit of revenue enhancing opportunities that provide long term
capital growth and translate into increasing distributions to
shareholders.
Growth in income and distributions is achieved through:
-- organic growth from the core property portfolio;
-- increased distributions from strategic listed securities;
-- yield enhancing acquisitions and disposals;
-- development and redevelopment of properties to add value to
the property portfolio; and
-- containment of costs.
Financial Results
RI plc has declared a dividend of 2.03 pence per share for the
six months ended 28 February 2011, based on the distributable
earnings of GBP8.4 million. The interim dividend declaration
illustrates that the Company is on track to achieve the forecast
dividend for the year ended 31 August 2011 contained in the
Redefine Properties International Limited ("RI Ltd") JSE prospectus
issued on 23 August 2010 and reflects a steady operational
performance across the Group.
The Group produced a net profit for the period attributable to
equity holders of the parent of GBP9.5 million which represents an
increase of 347.7% over the corresponding 5 month interim period to
28 February 2010 and a 292.4% increase since the 31 August 2010
financial year end.
Gross rental income reflects a 60.1% pro-rata increase over the
31 August 2010 financial year,the majority of which is due to the
acquisition of the Hotel Property Portfolio and the OBI
properties.
Wichford P.L.C ("Wichford")
Wichford delivered a pleasing set of results for the financial
year ended 30 September 2010 and met the challenging targets set
out at the time of the rights issue in September 2009.
Earnings per share of 0.90 pence from the trading operations
reflected a 4.7% increase on last year. A final dividend of 0.33
pence per share was paid on 1 March 2011, resulting in income of
GBP761,548 for RI plc.
Further details of the Potential Merger can be found in the
Company's announcement published on the London Stock Exchange
Regulatory News Service on 23 March 2011.
Cromwell Group ("Cromwell")
The Company's investment in Cromwell showed a gain of
GBP11.5million since 31 August 2010 and continued to deliver a 10%
yield on the initial acquisition price.
Cromwell reported first half (period ended 31 December 2011)
operating earnings of AUS$32.9 million, or 3.7 cents per stapled
security and advised the market that it is on track to achieve full
year earnings of at least 7.0 cents per stapled security.In line
with its objective of increasing its presence in the Australian
property market, RI plc subscribed for a further 35 million
Cromwell stapled securities in March 2011, resulting in RI plc
holding 22.2% in Cromwell. The transaction consolidates the Group's
position as the largest security holder in Cromwell and provides
significant influence over the affairs of Cromwell.
Property Portfolio
In addition to the aggregate Wichford and Cromwell property
securities totalling GBP103million, as at 28 February 2011 the
Group had interests in 99 properties with a gross rentable area of
approximately 3.9million square feet. These include 4 UK shopping
centres; a large integrated UK town centre redevelopment project;
well let, low risk, stable income office and commercial properties
spread across the UK and Jersey; six German-based portfolios which
include, shopping centres, supermarkets, petrol stations and a
medical centre; anda supermarket and home depot centre in
Switzerland.
Sector Profile by Area
SECTORAL PROFILE BY GLA
--------------------------------------------------------------
Sector Number of properties GLA (square feet) %
------------- --------------------- ------------------ ----
Retail 38 2,138,199 55
Commercial 51 785,781 20
Offices 3 260,718 7
Other 2 488,134 12
------------- --------------------- ------------------ ----
94 3,672,832 94
Hotels 5 233,867 6
------------- --------------------- ------------------ ----
Total 99 3,906,699 100
------------- --------------------- ------------------ ----
Tenant Profile by Area
TENANT PROFILE BY GLA
-----------------------------------------------
Sector GLA (square feet) %
--------------------- ------------------ ----
National Multiples 2,407,897 62
Regional Multiples 866.530 22
Local & other 632,272 16
--------------------- ------------------ ----
Total 3,906,699 100
--------------------- ------------------ ----
Lease Expiry Profile
LEASE EXPIRY PROFILE (GLA Square Feet)
------------------------------------------------------------------------------
Retail Commercial Offices Hotels Other Total
---------- ---------- ----------- -------- -------- -------- -----------
0-5yrs 574,842 18,974 60,372 41,525 695,713
5-10yrs 475,951 - 79,726 - - 90,527 646,204
10-15yrs 428,581 596,710 55,402 233,867 20,066 1,334,626
15+ yrs 658,825 170,097 65,218 - 336,016 1,230,156
---------- ---------- ----------- -------- -------- -------- -----------
TOTAL 2,138,199 785,781 260,718 233,867 488,134 3,906,699
---------- ---------- ----------- -------- -------- -------- -----------
As at 28 February 2011, the Group's property portfolio was
valued at GBP510 million and had a vacancy rate of 1.6%.
Acquisitions and Disposals
OBI properties
On 2 December 2010, RI plc announced the effective 50%
acquisition of two properties located in Herzogenrath and
Schwandorf, Germany ("the OBIproperties").
The OBI properties are leased to OBI on 15 year leases. OBI is
Germany's leading DIY chain with over 530 stores throughout Europe,
employs over 38,000 employees and turnover of approximately EUR5.9
billion in 2009. There are 3 other tenants, all national German
chains, which account for approximately 10% of the rental income of
the OBI properties.
The OBI properties were acquired for a purchase price of EUR23
million. The OBI properties are funded through a senior debt
facility of EUR16.7 million with a term of 7 years and an interest
rate of 1.3% above Euribor. An interest rate instrument is
currently being negotiated to fix the interest rate.
Swiss properties
In February 2011, RI plc acquired the remaining 19.54% of
Kalihora Holdings Limited ("Kalihora") which it did not already
hold for a total purchase price of GBP1,007,160. The total purchase
price was settled by a placement of 1,694,000 new RI plc shares at
a subscription price of 54.5 pence per share with the
non-controlling shareholders of Kalihora ("the Placing"). The
balance of the purchase price of GBP83,930 was settled in cash.
Kalihora, a company that owns two COOP stores in Switzerland,
was 80.46% owned by the Company, prior to the Placing.
Hotel properties
RI plc completed the acquisition of the Splendid Hotel Portfolio
("the Hotel Property Portfolio") on 30 November 2010. The Hotel
Property Portfolio includes the following hotels:
-- Holiday Inn Brentford Lock, Brentford, London;
-- Express by Holiday Inn Limehouse, London;
-- Express by Holiday Inn Park Royal, North Acton, London;
-- Express by Holiday Inn Royal Docks, London; and
-- Express by Holiday Inn Southwark, London.
The total consideration payable after acquisition costs was
GBP112 million.
The Hotel Property Portfolio is an exceptional acquisition, as
not only is it London based, but its track record of occupancy and
revenue are exemplary.
A lease agreement has been entered into with Redefine Hotel
Management Limited ("RHML"), a subsidiary of the Investment
Manager. RHML has the expertise and resources necessary to
effectively operate and manage the Hotel Property Portfolio.
Streatham Disposal
An agreement was exchanged on 16 December 2010 for the disposal
of Ciref Streatham Limited, a subsidiary company that owns two
properties in Streatham, South London. The base sale price of
GBP4.85 million is slightly below the book value of the properties;
however the Company will receive an additional payment should the
purchaser sell the total site for more than an agreed amount. No
value has been attributed to the potential additional consideration
in the interim financial statements. Payment of the base sale price
is due 24 months after exchange.
JSE Listing of RI Ltd
The Company's controlling shareholder Redefine Properties
Limited transferred its shareholding in RI plc to a South African
subsidiary RI Ltd with effect from 1 August 2010 in exchange for
linked units in RI Ltd. The linked units comprise one share
indivisibly linked to one debenture in RI Ltd. RI Ltd was
successfully listed on the JSE on 7 September 2010. The listing was
preceded by a capital raising with some GBP84 million being raised
in the process and was well received by the South African
investment community. RI Ltd's sole asset comprises its
shareholding in RI plc with each RI Ltd linked unit effectively
equating to one share in RI plc.
Borrowings
The restructuring of the senior debt of the Shopping Centre
Portfolio, as set out in the Annual report, has allowed the Group
to extend its average debt expiry profile and the absence of loan
to value covenants is an asset in the current economic
environment.
From a UK perspective, RI plc has a conservative debt profile
with a current overall loan-to-value ratio of circa 61%.
Market Overview
The three major economies in which the Group operates showed
mixed economic conditions during the period under review.
In the UK GDP shrank by 0.5% in Q4 of 2010 (Source: UK Office
for National Statistics), but is expected to grow during Q1 2011.
The Bank of England is being squeezed by an above target inflation
rate and a below target growth rate and is expected to err on
supporting growth at the expense of a slightly higher inflation
rate over the medium-term. Consumer confidence is fragile and
although business confidence appears to be building, the economy is
likely to move sideways for the remainder of this financial year.
Growth in rentals is therefore expected to remain subdued, with the
result that cash flow and yield will be the predominant
determinants of property returns during this period.
UK banks continue to be net negative lenders to the property
sector, effectively putting a limit on short term capital growth.
More positively, Jones Lang Lasalle recently published an estimate
that equity investors currently have more than GBP52 billion
earmarked for the UK commercial property market. This fresh equity
could materially alleviate any short-to-medium-term refinancing
pressures for commercial property loans, and support UK commercial
property prices.
In Germany and Switzerland the economic recovery continues to
gain momentum and the European Central Bank has commenced the
tightening phase with a 25 basis point increase announced on 7
April 2011. Properties held by the Group in these geographical
regions continue to perform well.
In Australia the economic recovery is proceeding strongly with
the Central Bank already having increased interest rates four times
since the interest rate cycle bottomed.
Prospects
As a consequence of the emergence from the deep recession caused
by the global financial crisis (albeit it at different rates in
different countries and regions), the ultra-loose monetary policy
implemented by the world's leading central banks is expected to be
phased out in the months and years ahead.
The higher nominal interest rate environment, together with
higher inflation and government austerity measures, will be the
biggest factors influencing property returns. The Investment
Manager, Redefine International Fund Managers ("RIFM"), believes
that the Group's current investment portfolio is well diversified
and defensive; and is well placed to weather these short term
pressures and provide solid returns to shareholders in the medium
to long term.
Factors such as rental indexations to the Consumer Price Index
and the Retail price Index as well as long term fixed rate debt and
lease contracts will benefit the Group during the economic
adjustment period ahead.
Economic growth is expected to revert to trend once the
austerity and other measures have had time to feed through the
system.
On a more positive note, the forecasts for hotel income in the
period ahead are very encouraging and hence bode well for RI plc's
annual operating lease review of its investment in the hotel
property portfolio. PriceWaterhouseCoopers LLP ("PwC") in their
recent "UK Hotels Forecast 2011 and 2012" make the following
comment:
"... the performance for 2010 was better than our original
forecast, closing an exceptional year for London with overall
Revenue per available room ("RevPAR") growth of 11.4%. Given the
better than expected finish to 2010, our 2011 forecast for London
is now for slightly lower RevPAR growth of 8.3%, reflecting harder
comparatives and above average levels of new supply; slower growth
but no re-Olympic dip.
We have introduced some new analysis this time showing how
performance compares to a 22 year long term real RevPAR average.
This shows that London has remained above the long term average of
GBP83.20 throughout the downturn (albeit only just in 2009) and is
now heading into very positive territory."
Dividend
The Board has declared an interim dividend of 2.03 pence per
share. The dividend will be payable to RI plc shareholders in
accordance with the abbreviated timetable set out below:
Last day to trade "cum" dividend Monday, 9 May 2011
"Ex" dividend Wednesday, 11 May
2011
Record date Friday, 13 May 2011
Payment date Thursday, 26 May
2011
Statement of Directors' Responsibilities in respect of the
interim financial report
Each of the directors confirms that, to the best of each
person's knowledge and belief
a. the condensed consolidated interim financial statements
comprising the condensed consolidated statement of comprehensive
income, the condensed consolidated statement of financial position,
the condensed consolidated statement of changes in equity, the
condensed consolidated statement of cash flows and related notes
have been prepared in accordance with IAS 34 Interim Financial
Reporting.
b. the interim financial report includes the information content
and presentation requirements of paragraphs 4.2.3, 4.2.4, 4.2.6,
4.2.7, 4.2.8, 4.2.9 and 4.2.10 of the United Kingdom Listing
Authority Disclosure and Transparency Rules.
On Behalf of the Board
GR Tipper JH Ruddy
Non- Executive Director Non-Executive Director
3 May 2011
Auditors' Independent review report to Redefine International
plc
We have been engaged by the Company to review the condensed
consolidated interim financial statements in the interim financial
report for the six months ended 28 February 2011 which comprises
the condensed consolidated statement of comprehensive income, the
condensed consolidated statement of financial position, the
condensed consolidated statement of cash-flows, the condensed
consolidated statement of changes in equity and the related
explanatory notes.
We have read the other information contained in the interim
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with the
terms of our engagement letter. Our review has been undertaken so
that we might state to the Company those matters we are required to
state to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Directors' Responsibility
The interim financial report is the responsibility of, and has
been approved by, the Directors. As disclosed in Note 1, the annual
financial statements of the Group are prepared in accordance with
IFRSs. The Directors are responsible for ensuring that the
condensed set of financial statements included in this interim
financial report has been prepared in accordance with IAS 34
Interim Financial Reporting.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed consolidated interim financial statements in the
interim financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated interim
financial statements in the interim report for the six months ended
28 February 2011 is not prepared, in all material respects, in
accordance with IAS 34.
Darina Barrett 3 May 2011
Senior Statutory Auditor
For and on behalf of KPMG
1 Harbourmaster Place
IFSC
Dublin 1
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
Notes GBP'000 GBP'000 GBP'000
--------------------------------- ------ ---------- ---------- -----------
Revenue
Gross rental income 11,588 5,690 13,267
Investment income 6 3,875 99 2,560
Other income 7 994 163 673
--------------------------------- ------ ---------- ---------- -----------
Total revenue 16,457 5,952 16,500
--------------------------------- ------ ---------- ---------- -----------
Expenses
Administrative expenses (252) (166) (466)
Investment management and
professional fees (2,083) (1,820) (3,406)
Property operating expenses (1,595) (852) (1,661)
--------------------------------- ------ ---------- ---------- -----------
Net operating income 12,527 3,114 10,967
--------------------------------- ------ ---------- ---------- -----------
Gains/(losses) from financial
assets and liabilities 8 17,100 1,469 (544)
Equity accounted loss 9 (6,784) (1,448) (3,525)
Impairment of loans to joint
ventures (15) (762) (598)
Net fair value losses on
investment property 12 (6,802) (2,583) (2,167)
Amortisation of intangible
assets - (157) (345)
--------------------------------- ------ ---------- ---------- -----------
Profit/(loss) from operations 16,026 (367) 3,788
--------------------------------- ------ ---------- ---------- -----------
Interest income 10 3,194 1,497 3,381
Interest expense 11 (9,320) (5,283) (12,363)
Share based payment 18 (294) - -
Foreign currency (loss)/gain (143) 6 (6)
--------------------------------- ------ ---------- ---------- -----------
Profit/(loss) before tax 9,463 (4,147) (5,200)
--------------------------------- ------ ---------- ---------- -----------
Taxation (193) (15) (200)
--------------------------------- ------ ---------- ---------- -----------
Profit/(loss) after tax 9,270 (4,162) (5,400)
--------------------------------- ------ ---------- ---------- -----------
Profit/(loss) attributable to:
Equity holders of the parent 9,457 (3,818) (4,915)
Non-controlling interest (187) (344) (485)
--------------------------------- ------ ---------- ---------- -----------
9,270 (4,162) (5,400)
--------------------------------- ------ ---------- ---------- -----------
Other comprehensive income
Foreign currency translation on
foreign operations -
subsidiaries 153 319 (43)
Foreign currency translation on
foreign operations - joint
ventures 44 (393) (217)
Share of foreign currency
movement recognised in
associate undertaking 779 - (1,494)
Share of cash flow hedge reserve
movement recognised in
associate undertaking 2,459 - 155
--------------------------------- ------ ---------- ---------- -----------
Total comprehensive income for
the period 12,705 (4,236) (6,999)
--------------------------------- ------ ---------- ---------- -----------
Total comprehensive income
attributable to:
Equity holders of the parent 12,882 (3,884) (6,498)
Non-controlling interest (177) (352) (501)
--------------------------------- ------ ---------- ---------- -----------
12,705 (4,236) (6,999)
--------------------------------- ------ ---------- ---------- -----------
Distributable earnings (not
reviewed)
Net operating income 12,527 3,114 10,967
Operating income from equity
accounted entities 1,206 2,915 4,010
Straight line rental income
accrual 131 - 113
Acquisition costs on financial
assets 171 1,166 1,610
Gain on redemption of loans and
borrowings 912 - -
Interest income 3,194 1,496 3,619
Interest expense (9,176) (5,283) (12,363)
Foreign exchange loss (143) 6 (6)
Taxation (193) (15) (200)
--------------------------------- ------ ---------- ---------- -----------
Distributable earnings 8,629 3,399 7,750
Attributable to non-controlling
interest (232) 15 (257)
--------------------------------- ------ ---------- ---------- -----------
Distributable earnings
attributable to shareholders 8,397 3,414 7,493
--------------------------------- ------ ---------- ---------- -----------
Actual number of shares in issue
('000) 17 412,899 238,484 304,706
Number of shares in issue ('000)
with capital instrument
conversion 17 439,487 - -
Weighted number of shares in
issue ('000) 20 407,121 131,873 199,492
Basic earnings/(loss) per share
(pence) 20 2.32 (2.90) (2.46)
Diluted earnings/(loss) per
share (pence) 20 2.17 (2.90) (2.46)
Distributable earnings per share
(pence) 2.03 1.43 2.46
--------------------------------- ------ ---------- ---------- -----------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Reviewed Audited
6 months 5 months 11 months
28 Feb 28 Feb 31 Aug
2011 2010 2010
Notes GBP'000 GBP'000 GBP'000
---------------------------- ------ ------------ ------------ ------------
Assets
Non-current assets
Investment property 12 348,183 182,786 227,675
Long-term receivables 13 87,809 41,789 48,160
Investments designated at
fair value 14 86,958 43,381 75,139
Intangible assets 575 7,172 7,559
Investments in joint
ventures 15 2,647 2,554 2,041
Investments in associates 16 16,731 21,525 18,923
---------------------------- ------ ------------ ------------ ------------
Total non-current assets 542,903 299,207 379,497
---------------------------- ------ ------------ ------------ ------------
Current assets
Trade and other receivables 19,288 9,813 13,233
Cash and cash equivalents 10,763 24,387 35,411
---------------------------- ------ ------------ ------------ ------------
Total current assets 30,051 34,200 48,644
---------------------------- ------ ------------ ------------ ------------
Total assets 572,954 333,407 428,141
---------------------------- ------ ------------ ------------ ------------
EQUITY AND LIABILITIES
Capital and reserves
Share capital 17 4,129 2,385 3,047
Share premium 261,923 179,893 211,359
Capital instrument 18 13,294 - -
Retained earnings (73,865) (74,511) (78,327)
Other reserves 9,852 7,944 6,427
---------------------------- ------ ------------ ------------ ------------
Total equity attributable
to equity shareholders 215,333 115,711 142,506
Non-controlling interest 5,172 2,561 2,254
---------------------------- ------ ------------ ------------ ------------
Total equity 220,505 118,272 144,760
---------------------------- ------ ------------ ------------ ------------
Non-current liabilities
Loans and borrowings 19 309,187 161,444 167,263
Current liabilities
Loans and borrowings 19 20,267 43,028 100,003
Trade and other payables 22,995 10,663 16,115
---------------------------- ------ ------------ ------------ ------------
Total current liabilities 43,262 53,691 116,118
---------------------------- ------ ------------ ------------ ------------
Total liabilities 352,449 215,135 283,381
---------------------------- ------ ------------ ------------ ------------
Total equity and
liabilities 572,954 333,407 428,141
---------------------------- ------ ------------ ------------ ------------
Net asset value per share
(pence) 52.15 48.52 46.77
---------------------------- ------ ------------ ------------ ------------
Fully diluted net asset
value per share (pence) 49.00 48.52 46.77
---------------------------- ------ ------------ ------------ ------------
Number of ordinary shares
in issue at period end 17 412,898,995 238,483,821 304,706,406
---------------------------- ------ ------------ ------------ ------------
Number of ordinary shares
in issue with conversion
of capital instrument 17,18 439,486,995 238,483,821 304,706,406
---------------------------- ------ ------------ ------------ ------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
Notes GBP'000 GBP'000 GBP'000
--------------------------------- ------ ---------- ---------- -----------
Cash flows from operating
activities
Profit/(loss) before tax 9,463 (4,147) (5,200)
Adjusted for:
Negative goodwill
Amortisation and impairment of
intangible assets - 157 345
Net fair value losses on
investment property 12 6,802 2,583 2,167
Exchange rate losses/(gains) 143 (6) 6
Share based payments 294 - -
Losses from financial assets and
liabilities 8 (17,100) (1,469) 544
Equity accounted losses from
associates 6,784 1,448 3,525
Impairment of loans to joint
ventures 15 762 598
Investment income 6 (3,875) (99) (2,560)
Finance income 10 (3,194) (1,497) (3,381)
Finance expense 11 9,320 5,283 12,363
Cash generated by operations 8,652 3,015 8,407
--------------------------------- ------ ---------- ---------- -----------
Changes in working capital 1,705 (938) 279
--------------------------------- ------ ---------- ---------- -----------
Cash generated by operations 10,357 2,077 8,686
--------------------------------- ------ ---------- ---------- -----------
Interest paid (7,710) (5,849) (12,257)
Taxation paid (193) (15) (200)
Net cash generated
from/(utilised in) operating
activities 2,454 (3,787) (3,771)
--------------------------------- ------ ---------- ---------- -----------
Cash flows from investing
activities
Dividend income 5,040 - 1,395
Distribution from associates and
joint ventures - - 1,849
Interest income 822 1,444 1,158
Purchase of investment
properties (132,141) (112) (527)
Investment in associates and
joint ventures (1,916) (21,560) (22,885)
Acquisition of non-controlling
interests (84) - (390)
Disposal of investment property (641)
Decrease/(Increase) in loans to
joint ventures & associates 35 (3,261) (1,504)
Increase in loans to related
parties - 626 -
Purchases of financial assets 14 - (40,267) (72,188)
Restricted cash balances 18,442 - (18,442)
Net cash utilised in investing
activities (110,443) (63,130) (111,534)
--------------------------------- ------ ---------- ---------- -----------
Cash flows from financing
activities
Repayment of loans and
borrowings (37,637) (1,056) (2,648)
Proceeds from loans and
borrowings 88,847 - 13,610
Dividends paid to equity
shareholders (4,786) (869) (3,465)
Dividends paid to
non-controlling interests (45) (14) (14)
Proceeds from issue of share
capital 53,115 77,377 112,642
Share issue costs written off (2,631) - (3,260)
Unsettled balances from
non-controlling shareholders 4,700 - -
Additional contribution from
non-controlling shareholders 500 - 247
--------------------------------- ------ ---------- ---------- -----------
Net cash generated from
financing activities 102,063 75,438 117,112
--------------------------------- ------ ---------- ---------- -----------
Net(decrease)/increase in cash (5,926) 8,521 1,807
Effect of exchange rate
fluctuations on cash held (280) 334 (370)
Net cash at the beginning of the
period 16,969 15,532 15,532
Net cash at the end of the
period 10,763 24,387 16,969
--------------------------------- ------ ---------- ---------- -----------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total Attrib-
Share Capital utable To Non-
Share Prem- Treasury Instru- Retained Other Equity Control-ling Total
Capital ium Shares ment Earnings Reserves Share-holders Interest Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- -------- --------- -------- --------- --------- -------------- ------------- --------
Balance at 1
October 2008 739 104,127 (61) - (69,717) 8,010 43,098 2,512 45,610
Total loss for
the period - - - - (3,818) - (3,818) (344) (4,162)
Effective
portion of cash
flow hedges from
associates - - - - - - - - -
Foreign currency
translation
effect - - - - - (66) (66) (8) (74)
----------------- -------- -------- --------- -------- --------- --------- -------------- ------------- --------
Total
comprehensive
income - - - - (3,818) (66) (3,884) (352) (4,236)
Shares issued 1,646 78,091 - - - - 79,737 - 79,737
Share issue
costs - (2,264) - - - - (2,264) - (2,264)
Dividend paid to
equity
stakeholders - (61) 61 - (966) - (966) - (966)
Dividend paid to
non-controlling
interests - - - - - - - (14) (14)
Increase in
non-controlling
interest - - - - (10) - (10) 10 -
Increase in
non-controlling
shareholder
balances - - - - - - - 405 405
----------------- -------- -------- --------- -------- --------- --------- -------------- ------------- --------
Balance at 28
February 2010 2,385 179,893 - - (74,511) 7,944 115,711 2,561 118,272
----------------- -------- -------- --------- -------- --------- --------- -------------- ------------- --------
Total loss for
the period - - - - (1,097) - (1,097) (141) (1,238)
Effective
portion of cash
flow hedges
from
associates - - - - - 155 155 - 155
Foreign currency
translation
effect - - - - - (1,672) (1,672) (8) (1,680)
----------------- -------- -------- --------- -------- --------- --------- -------------- ------------- --------
Total
comprehensive
income - - - - (1,097) (1,517) (2,614) (149) (2,763)
Shares issued 662 32,462 - - - - 33,124 - 33,124
Share issue
costs - (996) - - - - (996) - (996)
Dividend paid to
equity
stakeholders - - - - (2,719) - (2,719) - (2,719)
Increase in
non-controlling
shareholder
balances - - - - - - - (158) (158)
Balance at 31
August 2010 3,047 211,359 - - (78,327) 6,427 142,506 2,254 144,760
----------------- -------- -------- --------- -------- --------- --------- -------------- ------------- --------
Total profit
for the period - - - - 9,457 - 9,457 (187) 9,270
Effective
portion of cash
flow hedges
from
associates - - - - - 2,459 2,459 2,459
Foreign currency
transaction
effect - - - - - 966 966 10 976
----------------- -------- -------- --------- -------- --------- --------- -------------- ------------- --------
Total
comprehensive
income - - - - 9,457 3,425 12,882 (177) 12,705
Shares issued 1,078 52,961 - - - - 54,039 - 54,039
Share issue
costs (2,631) - - - - (2,631) - (2,631)
Dividend paid to
equity
stakeholders 4 234 - - (5,024) - (4,786) - (4,786)
Dividend paid to
non-controlling
interests - - - - - - - (46) (46)
Group
acquisition of
non-controlling
interest - - - - 29 - 29 (457) (428)
Convertible
shares to be
issued - - - 13,000 - - 13,000 - 13,000
Share based
payment - - - 294 - - 294 - 294
Contribution of
non-controlling
shareholders - - - - - - - 3,598 3,598
Balance at 28
February 2011 4,129 261,923 - 13,294 (73,865) 9,852 215,333 5,172 220,505
----------------- -------- -------- --------- -------- --------- --------- -------------- ------------- --------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The unaudited condensed consolidated interim financial
statements of the Company for the six months ended 28 February 2011
consolidate the Company and its subsidiaries (together referred to
as the 'Group'). They are presented in pound sterling which
represents the functional currency of the Company and are rounded
to the nearest thousand. The condensed consolidated interim
financial statements are prepared on the historical cost basis
except for the following assets and liabilities which are stated at
fair value: investment properties and financial instruments at fair
value through profit or loss.
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets
and liabilities, income and expenses. Actual results may differ
materially from these estimates. In preparing these interim
financial statements, the significant judgements made by management
in applying the Company's accounting policies and the key sources
of estimation uncertainty relate to the valuation of investment
property detailed in note 3.
These condensed consolidated financial statements have been
prepared on a going concern basis as the Directors consider this
the most appropriate basis.
The consolidated financial statements of the Group as at and for
the year ended 31 August 2010 are available upon request from the
Company's Registered Office at Channel House, Green Street, St,
Helier, Jersey JE2 4UH or at www.redefineinternational.je.
Statement of compliance
These condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted by EU. They do not include all of the information
required for full annual financial statements, and should be read
in conjunction with the consolidated financial statements of the
Group as at and for the period ended 31 August 2010.
Both interim figures for the six months ended 28 February 2011
and the comparative amounts for the five months ended 28 February
2010 are unaudited. Both sets of interim figures have however been
reviewed by the Auditors. The summary financial statements for the
year ended 31 August 2010, as presented in the condensed
consolidated interim financial statements, represent an abbreviated
version of the Group's full accounts for that period, on which
independent auditors issued an unqualified audit report. The
financial information presented herein does not amount to statutory
financial statements.
The condensed consolidated interim financial statements were
approved by the Board of Directors on 14 April 2011.
2. Significant accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those
applied by the Group in its audited financial statements as at and
for the year ended 31 August 2010, except for the additional
accounting policies noted below:
Capital instrument
A financial instrument or its component parts is classified on
initial recognition as a financial liability, a financial asset or
an equity instrument in accordance with the substance of the
contractual arrangement.
An instrument is classified as equity where there is no
contractual obligation to deliver cash or another financial asset
to another party, or to exchange financial assets or financial
liabilities with another party under potentially unfavourable
conditions (for the issuer of the instrument) or where the
instrument will or may be settled for a fixed number of the
entity's own equity instruments.
Equity instruments are recognised initially at their fair value
with any directly attributable costs allocated to the instrument.
The equity instrument is not re-measured subsequent to initial
recognition.
Payments in relation to the capital instrument are deemed to be
share based payments and are recorded in the statement of
comprehensive income due to the unavoidable nature of the
obligation. See note 18 for further details.
Restructured debt
A financial liability is derecognised when it is extinguished
(i.e. it is discharged, cancelled or expires) which may happen when
a payment is made to the lender, the borrower legally is released
from primary responsibility for the financial liability or where
there is an exchange of debt instruments with substantially
different terms or a substantial modification of the terms of an
existing debt instrument.
Any difference between the carrying amount of the original
liability and the consideration paid is recognised in profit or
loss. The consideration paid includes non-financial assets
transferred and the assumption of liabilities, including the new
modified financial liability. Any new financial liability
recognised is measured initially at fair value. Any costs or fees
incurred are recognised as part of the gain or loss on
extinguishment and do not adjust the carrying amount of the new
liability.
3. Significant accounting judgements, estimates and
assumptions
Investment property valuation
The property valuations continue to be prepared in a period of
market uncertainty. The current turmoil in the world's financial
markets has resulted in commercial and residential properties
selling in much reduced quantities with virtually little or no
market activity in some areas. Many vendors are choosing not to go
to the market until conditions improve. Many purchasers are
choosing not to buy now in the expectation that market conditions
will continue to deteriorate and they will be able to purchase more
favourably in the future. Other transactions are failing due to the
current difficulty in funding acquisitions. The lack of market
activity and the resulting lack of market evidence means that it is
generally not possible to value properties with as high a degree of
certainty as would be the case in a more stable market with a good
level of market evidence.
The best evidence of fair value is current prices in an active
market for similar lease and other contracts. In the absence of
such information, the Group determines the amount within a range of
reasonable estimates.
The Group considers information from a variety of sources
including:
- independent valuers;
- current prices in an active market for properties of a
different nature, condition or location, adjusted for those
differences;
- recent prices from similar properties in less active markets,
with adjustments to reflect any changes in economic conditions;
- discounted cash flow projections based on reliable estimates
of future cash flows, derived from the terms of any existing leases
and from external evidence such as current market rents for similar
properties in the same location and condition, and using discount
rates that reflect current market assessments.
4. Taxation
The Group is exempt from all forms of taxation in Jersey,
including income, capital gains and withholding taxes. In
jurisdictions other than Jersey, foreign taxes will, in some cases,
be withheld at source on dividends and interest received by the
Group. Other than Germany, Switzerland and, as described below
certain UK capital gains, gains derived by the Group in such
jurisdictions will generally be exempt from foreign income or
withholding taxes at source.
Income tax expense
The Group invests in UK property and therefore is liable to
income tax in the UK on the net rental profits. The current rate of
UK income tax for a non-resident company is 20%. Based on current
UK law, certain joint ventures in the Group will be subject to UK
capital gains tax, or corporation tax on capital gains, on the
realisation of UK investment property gains.
The Group invests in Swiss property and therefore is liable to
cantonal and federal taxes in Switzerland. The rates depend largely
on the canton in which the property is situated and the property
values. The effective rates of tax range from 22% to 25%.
The Group also invests in German properties held either in
corporates or partnerships. The effective rate of tax ranges from
18.463% to 25% and the rate of capital gains tax on future
disposals ranges from 15.825% to 20%.
Provision has been made for deferred capital gains tax in all
relevant entities, where taxable temporary differences arise.
All current year taxes arise in jurisdictions outside
Jersey.
The Group's investment in the Australian resident Cromwell
Property Group is held through an Irish Section 110 company.
Un-franked dividends received from the Cromwell Group are subject
to an Australian withholding tax of 7.5%.
Deferred taxation
As the majority of the Group's assets (owned through subsidiary
and jointly controlled entities) are currently reflected at fair
values below their purchase prices, and a significant portion of
property assets are owned by companies in zero capital gains tax
jurisdictions, the consequences of recovery through use and
ultimately sale creates a deferred tax asset.
The deferred tax asset is limited to the amount of any deferred
tax liability raised, being that portion of the deferred tax asset
that is recoverable. The net effect of GBPnil is therefore
reflected in the Consolidated Statement of Financial Position.
Recovery of these deferred tax assets is dependent on the
generation of sufficient future taxable income. In order to
recognise an asset, it must be probable that deductible temporary
differences in excess of existing taxable temporary differences
will be available at the date the taxable differences reverse.
The most significant asset in this case is investment property,
which is expected to be recovered through a combination of use
(rental to third parties) and ultimately by sale. In determining
the amount of deferred tax to be calculated, accounting standards
require:
i) the revaluation of land to be separated from that of the
buildings and deferred tax to be computed using the consequences of
sale; and
ii) in respect of the buildings, management is required to
estimate the expected period of use until sale and an estimated
sales value (residual). The temporary difference is then split
between a use and a sale component and the respective tax
consequences applied to each component.
5. Segment reporting
The Group's identified reportable segments are the geographical
locations in which it operates, which are generally managed by
separate management teams. As required by IFRS 8, Operating
Segments, the segmental analysis below follows the information
provided to the Board of directors, who are the Chief Operating
Decision Makers.
The relevant revenue, assets and capital expenditure are set out
below:
i) Information about reportable segments
UK Shopping European
Portfolio Centres Portfolio Wichford Cromwell Hotels Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ---------- ---------- ---------- --------- --------- ---------- ----------
At 28 February
2011
Rental income 1,924 4,612 3,009 - - 2,043 11,588
Investment
income - - - - 3,875 - 3,875
Net fair value
gains/(losses)
on investment
property (115) (5,556) 457 - - (1,588) (6,802)
Gains/(losses)
from financial
assets and
liabilities 4,642 - 756 - 10,350 1,352 17,100
Equity
accounted
losses 121 (1,878) 403 (5,430) - - (6,784)
Impairment of
loans to joint
ventures (15) - - - - - (15)
Interest income 849 1,168 - - - 790 2,807
Interest
expense (606) (3,851) (1,085) - - (1,577) (7,119)
Share based
payment - (294) - - - - (294)
Property
operating
expenses (94) (1,196) (305) - - - (1,595)
Investment
property 52,290 108,914 76,379 - - 110,600 348,183
Investments
designated at
fair value 478 - - - 85,128 1,352 86,958
Investment in
joint
ventures 809 - 1,838 - - - 2,647
Investment in
associates - - - 16,731 - - 16,731
Loans and
receivables 27,974 25,335 - - - 34,500 87,809
Loans and
borrowings (46,467) (116,547) (58,995) - - (107,445) (329,454)
At 28 February
2010
Rental income 1,561 2,281 1,848 - - - 5,690
Investment
income - - - - 99 - 99
Net fair value
gains/(losses)
on investment
property 721 (1,000) (2,304) - - - (2,583)
Gains/(losses)
from financial
assets and
liabilities (1,191) (93) - 2,753 - 1,469
Equity
accounted
losses (468) (1,100) (710) 830 - - (1,448)
Impairment of
loans to joint
ventures (603) (159) - - - - (762)
Interest income 1,190 - - - - - 1,190
Interest
expense -
secure bank
loans (1,049) (1,910) (921) - - - (3,880)
Property
operating
expenses (127) (541) (184) - - - (852)
Investment
property 58,582 67,960 56,244 - - - 182,786
Investments
designated at
fair value 361 - - - 43,020 - 43,381
Investment in
joint
ventures 978 - 1,576 - - - 2,554
Investment in
associates - - - 21,525 - - 21,525
Loans and
receivables 33,389 8,400 - - - - 41,789
Loans and
borrowings (74,864) (81,334) (48,274) - - - (204,472)
At 31 August
2010
Rental income 3,532 5,745 3,990 - - - 13,267
Investment
income - - - - 2,560 - 2,560
Net fair value
gains/(losses)
on investment
property 691 (703) (2,155) - - - (2,167)
Gains/(losses)
from financial
assets and
liabilities (2,766) - (350) - 2,572 - (544)
Equity
accounted
losses (615) (1,016) (786) (1,108) - - (3,525)
Impairment of
loans to joint
ventures (598) - - - - - (598)
Interest income 1,714 909 - - - - 2,623
Interest
expense -
secure bank
loans (2,238) (4,934) (1,989) - - - (9,161)
Property
operating
expenses (177) (1,029) (455) - - - (1,661)
Investment
property 58,913 114,439 54,323 - - - 227,675
Investments
designated at
fair value 362 - - - 74,777 - 75,139
Investment in
joint
ventures 650 - 1,391 - - - 2,041
Investment in
associates - - - 18,923 - - 18,923
Loans and
receivables 31,426 16,734 - - - - 48,160
Loans and
borrowings (99,868) (133,941) (33,457) (267,266)
---------------- ---------- ---------- ---------- --------- --------- ---------- ----------
ii) Reconciliation of reportable segment profit or loss
Reviewed Reviewed Audited
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
---------------------------------------- --------- --------- ---------
Rental income
Total rental income for reported
segments 11,588 5,690 13,267
Profit or loss
Investment income 3,875 99 2,560
Net fair value losses on investment
property (6,802) (2,583) (2,167)
Gains/(losses) from financial assets
and liabilities 17,100 1,469 (544)
Equity accounted losses (6,784) (1,448) (3,525)
Impairment of loans to joint ventures (15) (762) (598)
Interest income 2,807 1,190 2,623
Interest expense - secure bank loans (7,119) (3,880) (9,161)
Share based payment (294) - -
Property operating expenses (1,595) (852) (1,661)
---------------------------------------- --------- --------- ---------
Total profit/(loss) per reportable
segments 12,761 (1,077) 794
---------------------------------------- --------- --------- ---------
Other profit or loss - unallocated
amounts
Other income 994 163 673
Administrative expenses (252) (166) (466)
Investment management and professional
fees (2,083) (1,820) (3,406)
Amortisation of intangible assets (157) (345)
Interest income 387 307 758
Interest expense (2,201) (1,403) (3,202)
Foreign exchange gain/(loss) (143) 6 (6)
---------------------------------------- --------- --------- ---------
Consolidated profit/(loss) before
income tax 9, 463 (4,147) (5,200)
---------------------------------------- --------- --------- ---------
6. Investment income
Reviewed Reviewed Audited
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
------------------------------------------- --------- --------- ---------
Dividends received from equity securities
designated at fair value through
profit or loss 3,875 99 2,560
------------------------------------------- --------- --------- ---------
Total investment income 3,875 99 2,560
------------------------------------------- --------- --------- ---------
7. Other income
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
----------------------- ---------- ---------- -----------
Fee income 857 - 420
Other property income 137 163 253
----------------------- ---------- ---------- -----------
994 163 673
----------------------- ---------- ---------- -----------
8. Gains/(losses) from financial assets and liabilities
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
--------------------------------------- ---------- ---------- -----------
Fair value through profit or loss
Equity investments - realised - 72 72
- unrealised 10,350 2,753 2,572
Derivative financial instruments 6,321 77 (1,755)
Financial assets carried at amortised
cost
Impairment of loans and receivables (484) (1,433) (1,433)
Financial liabilities carried at
amortised cost
Redemption of loans and borrowings 913 - -
--------------------------------------- ---------- ---------- -----------
Net gain/(loss) from financial assets
and liabilities 17,100 1,469 (544)
--------------------------------------- ---------- ---------- -----------
9. Equity accounted losses
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
--------------------------------------- ---------- ---------- -----------
Equity accounted losses consist
of the following:
Investment in joint ventures (see
Note 15) (1,316) (2,278) (2,415)
Investment in associates (see Note
16) (3,335) 2,687 5,368
Investment in associates - impairment
(see Note 16) (2,133) (1,857) (6,478)
--------------------------------------- ---------- ---------- -----------
Total equity accounted losses (6,784) (1,448) (3,525)
--------------------------------------- ---------- ---------- -----------
10. Interest income
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
---------------------------------- ---------- ---------- -----------
Interest income on bank deposits 101 158 454
Interest receivable on mezzanine
financing 3,093 1,339 2,927
---------------------------------- ---------- ---------- -----------
Total interest income 3,194 1,497 3,381
---------------------------------- ---------- ---------- -----------
11. Interest expense
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
----------------------------------------- ---------- ---------- -----------
Interest expense at amortised cost:
Interest expense on secured bank
loans (6,330) (4,136) (9,161)
Interest expense on other financial
liabilities (140) - (663)
Interest payable on mezzanine financing (2,850) (1,147) (2,539)
----------------------------------------- ---------- ---------- -----------
Total interest expense (9,320) (5,283) (12,363)
----------------------------------------- ---------- ---------- -----------
12. Investment property
The book cost of properties as at 28 February 2010 was
GBP371,524,441 (2010: GBP190,799,975). The carrying amount of
investment property, apart from the investment property on which
development is planned at Delamere Place Crewe, is the fair value
of the property as determined annually by a registered independent
appraiser having an appropriate recognised professional
qualification and recent experience in the location and category of
the property being valued. The carrying amount of the investment
property at Delamere Place Crewe is the fair value as determined by
directors' valuation.
Fair values were determined having regard to recent market
transactions for similar properties in the same location as the
Group's investment property. The valuers have also considered the
rental status of each property and current market yields. The Group
is also exposed to the risks associated with investment property
held within joint venture and associated entities, which are equity
accounted.
The Directors have estimated the recoverable value of the
property under development based on expected/agreed development
plans and have made a number of assumptions in deriving this value,
including, in their view, various reasonable long-term assumptions
relating to likely interest rates and the ultimate rental potential
of the development and likely expected yields in the range of
6%-8%. Based on these calculations, which, given current market
conditions and the uncertainties in projecting these assumptions
forward, are subjective, the directors have valued the property
under development at GBP17.15 million (31 Aug 2010: GBP22.7
million).
Investment property comprises a number of commercial and retail
properties that are leased to third parties. All investment
properties are income generating, as is the investment property on
which development is planned.
Property operating expenses in the income statement of
comprehensive income relate solely to income generating
properties.
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
--------------------------------------- ---------- ---------- -----------
Opening balance 227,675 186,021 186,021
Properties acquired during the
period 132,141
Capitalised expenditure - 112 527
Impact of acquisition of subsidiaries - - 46,100
Properties disposed of during the
period (6,543) - -
Foreign exchange movement in foreign
operations 1,712 (764) (2,806)
Net fair value losses on investment
property (6,802) (2,583) (2,167)
--------------------------------------- ---------- ---------- -----------
Closing balance 348,183 182,786 227,675
--------------------------------------- ---------- ---------- -----------
Acquisitions (at cost)
Redefine Hotel Holdings Limited 112,188 - -
ITB Reinheim B.V. (OBI Portfolio) 19,953 - -
132,141 - -
--------------------------------------- ---------- ---------- -----------
The above acquisitions are properties held in companies in which
other investors own a percentage of the shares. These external
shareholdings and related inflows of cash have been recorded as
non-controlling interests.
Disposals
Ciref Streatham Limited (6,543) - -
------------------------ --------
13. Long term receivables
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
------------------------------------- ---------- ---------- -----------
Security deposits with banks 464 5,181 4,306
Amounts due from joint ventures 116 616 116
Amounts due from Corovest Mezzanine
Capital Limited 87,229 35,992 43,738
---------- ---------- -----------
Loans 104,892 53,640 61,386
Impairment (17,663) (17,648) (17,648)
---------- ---------- -----------
87,809 41,789 48,160
------------------------------------- ---------- ---------- -----------
14. Investments designated at fair value
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
-------------------------------------- ---------- ---------- -----------
Opening balance 75,139 290 290
Acquisitions during the period - 40,267 72,188
Fair value adjustments (refer note
8) 10,350 2,753 2,572
Foreign exchange movement in foreign
investments - 71 89
Derivative financial instruments 1,469 - -
Closing balance 86,958 43,381 75,139
-------------------------------------- ---------- ---------- -----------
Investments designated at fair value represent the Group's
19.59% holding in the Cromwell Property Group and derivative
financial instruments. The stapled securities were valued at AUD
0.76 per security on 28 February 2011.
The investment in the Cromwell Property Group was translated at
an exchange rate of GBP1 : AUD1.60 on 28 February 2011.
15. Investments in joint ventures
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
------------------------------------- ---------- ---------- -----------
Opening balance 2,041 5,008 5,008
Increase in investment 1,878 217 153
Equity accounted loss (1,316) (2,278) (2,415)
Change in fair value due to foreign
currency translation 44 (393) (217)
Distribution received from joint
ventures - - (488)
Closing balance 2,647 2,554 2,041
------------------------------------- ---------- ---------- -----------
The increase in investment in joint ventures represents the
costs involved in investment in Redefine Wigan Limited, the company
which holds 100% of the Grand Arcade Shopping Centre in Wigan,
Lancashire.
16. Investments in associates
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
--------------------------------------- ---------- ---------- -----------
Opening balance 18,923 - -
Investment at cost including goodwill 38 21,343 22,732
Change in fair value due to foreign
currency translation - (1) 1
Equity accounted (loss)/profit (3,335) 2,687 5,368
Share of foreign currency movement
recognised 779 - (1,494)
Share of cash flow hedge reserve
movement recognised 2,459 - 155
Impairment of investment (2,133) (1,857) (6,478)
Distribution received from associates - (647) (1,361)
--------------------------------------- ---------- ---------- -----------
Closing balance 16,731 21,525 18,923
--------------------------------------- ---------- ---------- -----------
The Group holds an investment of 21.73% in Wichford, an
investment property company listed on the main market of the London
Stock Exchange. The closing price of Wichford on 28 February 2011
was 7.25p per share, a total fair value of GBP16.73 million at the
period end.
17. Capital and reserves
Share capital and share premium
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
---------------------------------------- ---------- ---------- -----------
Authorised
1,000,000,000 ordinary shares of
GBP0.01 each 10,000 10,000 10,000
---------------------------------------- ---------- ---------- -----------
eIssued
412,898,995 ordinary shares of GBP0.01
each
(Feb 2010: 238,483,821 shares of
GBP0.01 each, August 2010:304,706,406
shares of GBP0.01 each) 4,129 2,385 3,047
---------------------------------------- ---------- ---------- -----------
4,129 2,385 3,047
---------------------------------------- ---------- ---------- -----------
In issue at beginning of period 304,706 73,760 73,760
Shares issued 107,764 164,524 230,416
Shares issued as scrip dividend 429 92 422
Treasury shares issued - 108 108
---------------------------------------- ---------- ---------- -----------
Net Shares in issue at the end of
the period 412,899 238,484 304,706
Shares to be issued as a result
of the capital instrument (see note
18) 26,588 - -
---------------------------------------- ---------- ---------- -----------
Number of ordinary shares in issue
with conversion of capital instrument 439,487 238,484 304,706
---------------------------------------- ---------- ---------- -----------
On 7 September 2010 the Company issued 106,069,337 shares for a
total consideration of GBP53.11million.
On 4 February 2011 the Company issued 1,694,000 shares for a
total consideration of GBP923,000 to facilitate the buyout of the
non-controlling shareholders in Kalihora Holdings Limited.
Distributions
On 26 November 2010 the Company distributed the 2010 final
dividend of 2.07p per share (February 2010: 1.31p per share). The
dividend was settled by GBP4,785,331 in cash and by issuing 429,252
shares at a price of 54.6p per share.
18. Capital instrument
As part of the Aviva debt restructuring RI plc has entered into
a GBP13 million facility (the "convertible loan") with Aviva. The
capital instrument incurs a charge of 6% per annum, which is rolled
up until payment at the Company's discretion or conversion. The
capital plus rolled up charge is repayable at the Company's
discretion in cash or through conversion to shares 3 years after
the date of the agreement or on any earlier date if there is an
event of default.
Should the capital instrument together with charges not be
repaid, RI plc will be required to issue shares ("conversion
shares") to discharge the outstanding amount due, the number of
which is calculated by dividing the outstanding amount by 50 pence
per ordinary share in RI plc.
The new capital instrument is an equity instrument under IAS 32
as it is to be settled in either cash or a fixed number of equity
shares at the discretion of the company. The fixed number of shares
to be issued changes over time but is fully predetermined based on
the time the company chooses to settle the instrument. The
additional shares that arise over time are charged to profit or
loss in each period as a share based payment charge and is credited
to the equity reserve.
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
-------------------------- ---------- ---------- -----------
Opening balance - - -
Capital instrument issued 13,000 - -
Share based payment 294 - -
Closing balance 13,294 - -
-------------------------- ---------- ---------- -----------
Based on the closing balance additional shares of 26,588,000 are
required to be issued to settle the obligation under the capital
instrument.
19. Loans and borrowings
19.1 Secured
Audited
11
Reviewed Reviewed months
6 months 5 months ended
Loan ended 28 ended 28 31 Aug
interest Year of Feb 2011 Feb 2010 2010
Property rate Currency maturity GBP'000 GBP'000 GBP'000
----------------------------------- --------- --------- --------- --------- --------- --------
Gibson Property Holdings
Limited 6.37%* GBP 2029 11,128 11,265 11,197
LIBOR +
Newington House Limited 2.50% GBP 2013 6,609 6,779 6,699
LIBOR +
Ciref Reigate Limited 2.50% GBP 2015 2,500 2,980 2,980
Base +
Kalihora Holdings Limited 1.20% CHF 2018 11,917 12,101 12,618
LIBOR +
Ciref Streatham Limited 1.25% GBP 2009 - 3,078 1,400
LIBOR +
CirefMalthurst Limited 0.95% GBP 2014 - 18,000 17,913
Delamere Place Crewe
Limited 6.49% GBP 2011 17,150 17,150 17,150
West Orchards Coventry
Limited 6.29% GBP 2035 49,212 56,284 56,183
Byron Place Seaham
Limited 6.44% GBP 2031 15,193 15,203
Birchwood Warrington
Limited 6.10% GBP 2035 16,457 29,307
EURIBOR
Ciref Berlin 1 Limited + 1.2% EUR 2013 15,782 16,910 15,399
Ciref German Portfolio EURIBOR
Limited + 1.2% EUR 2013 3,365 3,559 3,281
InkstoneGrundstucksverwaltung
Limited &Co. KG 5.75%* EUR 2012 3,506 3,742 3,434
InkstoneZweiGrundstucksverwaltung
Limited
& Co. KG 5.91%* EUR 2012 3,898 4,184 3,837
CEL Portfolio Limited
& Co. KG 4.95%* EUR 2014 4,305 4,553 4,208
EURIBOR
ITB Herzogenrath B.V. + 1.3% EUR 2016 7,795 - -
EURIBOR
ITB Schwandorf B.V. + 1.3% EUR 2016 6,447 - -
Redefine Hotel Holdings LIBOR +
Limited 2.45% GBP 2015 68,445 - -
----------------------------------- --------- --------- --------- --------- --------- --------
Total Bank loans 243,709 160,585 200,809
----------------------------------- --------- --------- --------- --------- --------- --------
Loans secured by cash
deposits 7.00%* GBP 2012 650 5,915 5,040
Coronation Capital
Limited 6%** GBP 2011 596 - 13,600
Corovest Mezzanine 7.10%* -
Capital Limited 10% GBP 2012 82,520 32,225 40,423
CEL Portfolio Limited
& Co. KG 0%* GBP 2029 664 695 644
Total secured loans 328,139 199,420 260,516
----------------------------------- --------- --------- --------- --------- --------- --------
All bank loans are secured over investment property, and bear
interest at the specified interest rates.
* Fixed rates for between 2 and 23 years
19.2 Unsecured
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
---------------------------------------- ---------- ---------- -----------
Non-controlling shareholder loans - 627 643
Derivatives 1,315 4,425 6,107
---------------------------------------- ---------- ---------- -----------
Total unsecured loans 1,315 5,052 6,750
---------------------------------------- ---------- ---------- -----------
Non-current liabilities
Secured bank loans 307,872 156,392 160,513
Unsecured shareholder loans - 627 643
Derivatives 1,315 4,425 6,107
---------------------------------------- ---------- ---------- -----------
Total non-current loans and borrowings 309,187 161,444 167,263
---------------------------------------- ---------- ---------- -----------
The maturity of non-current borrowings
is as follows:
Between 1 year and 5 years 117,442 90,801 95,133
More than 5 years 191,745 70,643 72,130
---------------------------------------- ---------- ---------- -----------
309,187 161,444 167,263
---------------------------------------- ---------- ---------- -----------
Current liabilities
Current portion of secured bank
loans 20,267 43,028 100,003
---------------------------------------- ---------- ---------- -----------
Total current loans and borrowings 20,267 43,028 100,003
---------------------------------------- ---------- ---------- -----------
Total loans and borrowings 329,454 204,472 267,266
---------------------------------------- ---------- ---------- -----------
As detailed in the Annual Report for the period ended 31 August
2010, a number of the debt facilities were restructured in the six
month period to 28 February 2011. This debt restructuring was
accounted for in line with the accounting policy detailed in note
2.
20. Earnings per share
Reviewed Reviewed Audited
6 months 5 months 11 months
ended ended ended
28 Feb 28 Feb 31 Aug
2011 2010 2010
GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ---------- -----------
Net profit/(loss) attributable to
shareholders
(Basic and diluted) 9,457 (3,818) (4,915)
Number of ordinary shares ('000)
In issue 412,899 238,484 304,706
- Weighted average 407,121 131,873 199,492
- Weighted average (diluted) 435,807 131,873 199,492
---------- ---------- -----------
- Weighted average 407,121 131,873 199,492
- Effect of conversion of capital
instrument 28,686 - -
---------- ---------- -----------
Earnings/(loss) per share (pence)
- Basic 2.32 (2.90) (2.46)
- Diluted 2.17 (2.90) (2.46)
----------------------------------- ---------- ---------- -----------
21. Interest rate risk
The Group uses interest rate swaps to hedge exposure to the
variability in cash flows on floating rate debt, caused by the
movements in the market rates of interest. The table below details
the interest rate swaps held by the Group:
Audited
11
Reviewed Reviewed months
Nominal 6 months 5 months ended
Loan Fixed ended 28 ended 28 31 Aug
Hedged Interest Year Of Feb 2011 Feb 2010 2010
Company GBP'000 Rate Currency Maturity GBP'000 GBP'000 GBP'000
---------------- -------- --------- --------- --------- --------- --------- --------
Subsidiaries 20,000 5.17% GBP 2011 - (2,241) (3,989)
CirefMalthurst
Limited 2,500 2.03% GBP 2015 49 (86) (43)
Ciref Reigate
Limited 6,609 1.54% GBP 2013 67 (195) (64)
Newington House
Limited 8,352 4.61% EUR 2014 (634) (916) (947)
Ciref Berlin 1
Limited 7,462 4.20% EUR 2014 (470) (683) (734)
Ciref Berlin 1
Limited 3,352 4.20% EUR 2014 (211) (304) (330)
Ciref German
Portfolio
Limited 68,445 2.20% GBP 2015 1,351 - -
Redefine Hotel
Holdings
Limited 20,000 5.17% GBP 2011 - (2,241) (3,989)
-------- --------- --------- --------
116,720 151 (4,425) (6,107)
-------- --------- --------- --------
Held in joint
ventures
Ciref Jersey
Limited 18,500 5.48% GBP 2027 (3,808) (3,486) (5,343)
Ciref Jersey
Limited 1,800 4.80% GBP 2027 (196) (191) (378)
Premium
Portfolio
Limited & Co.
KG 5,388 4.13% EUR 2014 (379) (475) (565)
Premium
Portfolio
Limited & Co.
KG 17,671 4.23% EUR 2014 (1,319) (1,642) (1,925)
Churchill Court
Limited 10,238 5.08% GBP 2018 (1,088) (1,625) (1,657)
-------- --------- --------- --------
53,597 (6,790) (7,419) (9,868)
-------- --------- --------- --------
22. Post balance sheet events
On 24 February 2011, RI plc announced that it had entered into a
call option agreement to subscribe for 35 million Cromwell stapled
securities. The call option was exercised by Cromwell on 2 March
2011 following which the Group now holds 22.2% of the issued
stapled securities in Cromwell.
On 23March 2011 RI plc announced that it had reached an in
principle understanding with Wichford regarding a potential
combination of the two companies ("the Potential Merger"). Further
details of the Potential Merger can be found in the Company's
announcement published on the London Stock Exchange Regulatory News
Service. The Potential Merger is subject to various regulatory and
shareholder approvals being obtained.
On 5 April 2011, RI plc acquired St Georges Harrow Limited for
an effective purchase price of GBP25 million. St Georges Harrow
Limited completed the acquisition of the St Georges Shopping Centre
in Harrow, United Kingdom on 27 April 2011 for a purchase price of
GBP68 million (including transaction costs). Senior debt has been
secured on favourable terms with Landesbank Berlin AG.
On 26 April 2011 RI plc announced an issue of 39,283,188 new
ordinary shares at an average price of GBP0.52 per share (the "New
Shares"). The New Shares were admitted to trading on AIM on the 27
April 2011 and these New Shares rank pari passu in all respects
with the existing ordinary shares in issue.
23. Guarantees and Capital Commitments
The Group has capital commitments of GBP6 million in respect of
capital expenditure contracted for at the interim reporting date
but not yet incurred, for investment property redevelopment.
3 May 2011
REDEFINE INTERNATIONAL PLC
(Incorporated in Jersey, Channel Islands, United Kingdom)
(Registration number 91277)
LSE share code RDF ISIN :GB00B13PT348
("RI plc" or "the Company" and together with its subsidiaries
"the Group")
Directors
Gavin Tipper* (Non-executive Chairman), Michael Watters(...) ,
Andrew Rowell(...) , Michael Farrow*, Gregory Heron*, John Ruddy*,
Peter Todd*, Marc Wainer(...)
(...) Non-executive directors
* Independent non-executive directors
Registered Office
Channel House, Green Street, St Helier, Jersey, JE2 4UH
Company Registrar
Capita Registrars (Jersey) Limited
Company Secretary
Consortia Partnership Limited
Nominated Adviser and Broker
Singer Capital Markets Limited
For further information please contact:
REDEFINE INTERNATIONAL PLC + 27 (0)21 683 3829
Gavin Tipper - Chairman
www.redefineinternational.je
SINGER CAPITAL MARKETS LIMITED
Jeff Keating +44 (0)203 205 7500
www.singercm.com
POWERSCOURT
Matthew Fletcher/Karen Le Cannu +44 (0)207 250 1446
www.powerscourtmedia.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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