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RIN - Redefine Properties International Limited - Preliminary Results Of

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RIN - Redefine Properties International Limited - Preliminary Results Of        
Redefine International Plc for the 11 month period ended 31 August 2010         
Redefine Properties International Limited                                       
(formerly Kalpafon Limited)                                                     
(Incorporated in the Republic of South Africa)                                  
(Registration number 2010/009284/06)                                            
JSE share code: RIN      ISIN Code:   ZAE000149282                              
31 AUGUST 2010                                                                  
Set out below is an announcement which was released by Redefine International   
plc, the AIM-listed subsidiary of RIN, on the Regulatory News Service ("RNS") of
the London Stock Exchange today.                                                
"Redefine International plc                                                     
("Redefine International", "the Group" or "the Company")                        
SALIENT FEATURES                                                                
-    Profit from core operations of GBP7.49 million (2009: GBP6.67 million), an 
    annualised increase of 22%.                                                 
-    Net loss per share of 2.46 pence (2009: 54.20 pence loss) after taking into
    account unrealised losses on investments of GBP10.94 million and interest   
    rate swaps of GBP1.76 million.                                              
-    Final dividend of 2.07 pence per share (2009: 1.31 pence).                 
-    NAV per share of 46.77 pence (2009: 58.43 pence).  Pro forma 47.02 pence   
    after capital raising.                                                      
-    Acquisition of 50% of Grand Arcade Shopping Centre, Wigan completed post   
    year end.                                                                   
-    Favourable restructuring of shopping centre senior debt completed post     
    period end.                                                                 
-    GBP33 million capital raising completed subsequent to the interim period.  
-    GBP53 million fully placed capital raising announced post period end.      
-    Shareholding in Cromwell Group, Australia increased to 19.9%.              
-    Exchange of contracts on GBP106 million hotel portfolio post period end.   
Gavin Tipper, chairman, commented:                                              
"Notwithstanding the continued volatility in international financial markets,   
the Group performed well and achieved some major milestones.  These included the
listing of its holding company on the JSE, a significant capital raising, the   
conclusion of the Aviva restructuring and an acquisition of a portfolio of hotel
For further information please contact:                                         
Redefine International plc                   + 27 (0)21 683 3829                
Gavin Tipper - Chairman                                                         
Matthew Fletcher/Karen Le Cannu              +44 (0)207 250 1446                
SINGER CAPITAL MARKETS LIMITED                                                  
Jeff Keating                            +44 (0)203 205 7500                     
About Redefine International:                                                   
1.   Redefine International is a property investment and development company    
which invests in commercial real estate primarily in the UK, Germany,       
    Switzerland and Australia, with a focus on retail, commercial and hotel     
    assets. Redefine International`s current investments are in the UK, Europe, 
    the Channel Islands and Australia and it will continue to source value-     
enhancing opportunities in these markets.                                   
2.   As at 31 August 2010 the Group had interests in 92 properties with a gross 
    rentable area of approximately 2.7million square feet and listed property   
    securities to the value of GBP93.7million, including:                       
-    Four 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;                                       
-    Five German based portfolios which include, shopping centres,          
         supermarkets, petrol stations and a medical centre;                    
    -    A supermarket and home depot centre in Switzerland;                    
    -    A 19.9% stake in the Cromwell Group ("Cromwell"), Australia; and       
-    A 21.7% stake in Wichford P.L.C. ("Wichford"), a London Stock Exchange 
         ("LSE") listed property investment company specialising in government  
3.   The strategy of the Group comprises four distinct yet complementary        
elements: stable income investments; major development projects; value-     
    enhancing projects and investments in property securities. The resources of 
    the Group are allocated across the three major geographies and within the   
    four property investment criteria with the aim of providing shareholders    
with a balanced exposure to lower risk, income-generating assets and assets 
    that have the potential to provide a higher capital return.                 
4.   The Group has an experienced board of eight non-executive directors (the   
    "Board"). Three of the Directors are connected to the Investment Manager,   
Redefine International Fund Managers Limited ("RIFM").                      
5.   Further information on Redefine International can be found at              
CHAIRMAN`S STATEMENT                                                            
The period under review, and in particular the six months since the interim     
results announcement, has been a very active time for the Group.                
The highlight was the listing of, and simultaneous significant capital raising  
by, Redefine Properties International Limited ("RIN") on the JSE Limited ("JSE")
on 7 September 2010.                                                            
RIN is the Company`s controlling shareholder and as at 31 August 2010 owned     
76.9% of the Company.  Redefine Properties Limited ("Redefine") in turn owned   
100% of RIN at 31 August 2010, having swapped its shareholding in the Company   
for linked units in RIN. Each linked unit comprises one share and one debenture 
in RIN. Currently, (post the listing of RIN on 7 September 2010) RIN owns 81.9% 
of the Company and Redefine in turn owns 57.2% of RIN.                          
Other highlights for the period included the finalisation of the Aviva          
restructuring for the shopping centre senior debt, the acquisition of a 50%     
interest in the Grand Arcade Shopping Centre, Wigan in September 2010, an       
increase in the investment in Cromwell in Australia (to 19.9%) and the exchange 
of contracts on the portfolio of hotels known as the "Splendid Hotel Portfolio".
Redefine International performed solidly at an operational level and exceeded   
the forecasts set out in the RIN fund raising prospectus dated 23 August 2010.  
The Group continues to be managed conservatively in light of the volatile on-   
going economic conditions.                                                      
The Group produced a profit from core operations for 11 months of GBP7.49       
million (2009: GBP6.67 million for 12 months).                                  
The Group`s stable income portfolios in both the UK and Europe performed solidly
in a challenging environment.  Cash flows were strong and tenant delinquencies  
and voids low. The vacancy rates are currently 2.84% and 2.06% by rentable area 
The UK shopping centre portfolio (including Grand Arcade Shopping Centre, Wigan,
which was acquired post period end) performed well. The vacancy rate for the    
portfolio is currently 1.36% by rentable area.                                  
Wichford`s operational performance was above expectations during the period but 
its share price performance has been weak due to the concerns over the impact of
the UK`s new coalition governments` austerity plans.                            
Net earnings were affected by an aggregate deficit on investment property       
valuations, losses on interest rate swap valuations and the write-down of the   
investment in Wichford to its share price at 31 August 2010.                    
The deficit on the investment property valuations related primarily to Delamere 
Place Crewe, a property held for redevelopment. The balance of the property     
portfolio showed a net increase in value.                                       
The losses on the interest rate swap valuations arose largely on two long term  
swaps.  While the losses have been accounted for, it is unlikely that similar   
term money of the same fixed rates would be available in the current market.    
Cromwell performed to expectations and the high dividend yield made a           
significant contribution to earnings.                                           
Wichford is exposed to a significant number of government leases and the        
company`s share price has been affected by the market`s concern over the        
possible impact of the government`s planned austerity measures.  The Investment 
Manager is confident that the parties to the Wichford leases and the tenure of  
these leases are such that the financial risk to the company of the austerity   
measures is low.  Despite the weakness in its share price, Wichford`s           
operational performance was above expectations during the period.               
The Board has declared a final dividend for the period of 2.07 pence per share  
which is subject to approval at an Extraordinary General Meeting ("EGM")        
scheduled to take place on 24 November 2010.  This will result in a total       
dividend per share for the period of 3.21 pence, an annualised yield of 6.5%    
based on the closing share price of 53.75 pence.                                
The dividend is offered to shareholders as a scrip dividend, with the ability to
elect a cash dividend alternative. Further details on the terms of the scrip    
dividend are set out in a separate circular and form of election which were sent
to all shareholders on 21 October 2010.                                         
The world`s advanced economies look likely to keep interest rates low for an    
extended period.  The UK is poised to experience an extended period of austerity
due to government cut backs in spending.  Inflation remains a risk in most      
advanced economies which should be positive for property in the medium term.    
The Group is well positioned due to the nature and geographical diversity of its
investment base.  Australia`s economy is growing strongly and should support    
Cromwell`s earnings growth going forward. Our European portfolio has been       
resilient and has benefitted from consumers trading down in the German economy. 
The UK shopping centre portfolio financing has been restructured and is set for 
solid medium term growth as these assets become increasingly difficult to       
The Company will continue to pursue a broad investment strategy that focuses on 
assets that provide a strong yield, at low risk and with the likelihood of      
capital enhancement.  The listing of RIN is expected to provide major benefits  
to the Group`s growth objectives.                                               
Gavin Tipper                                                                    
INVESTMENT MANAGER`S REVIEW                                                     
The Group 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 Group also owns investments in two listed companies 
being Wichford in the UK and Cromwell in Australia.  It recently extended its   
investment mandate to include limited service hotels.                           
Redefine International has an investment management agreement with RIFM, a      
British Virgin Islands registered and regulated Fund Manager.  In terms of the  
agreement with the Group, RIFM is responsible for the investment and management 
of the Group`s assets.                                                          
Group Strategy                                                                  
The Group is a hybrid property fund with exposure to a broad range of           
properties, listed property securities and geographical areas.                  
The Group`s strategy is to provide investors with strong investment returns and 
a balanced exposure to lower risk income generating-assets and opportunities    
that will provide a higher capital return.                                      
In implementing its strategy, the Group contemplates available opportunities and
future undertakings that will yield satisfactory returns at acceptable risk     
levels. In making investments the Group seeks to achieve a reasonable level of  
diversification across types of assets and geographies.                         
The Group has historically selected property investments on the basis of four   
-    stable income investments that produce a stable, predictable and low risk  
income stream but where there are opportunities to enhance the value of the 
-    major development projects which provide opportunities for considerable    
    redevelopment and where major parts of the developments can be pre-let to   
businesses with strong rental covenants. These are multi-year projects      
    which generally require high levels of funding and which may be delayed in  
    difficult markets to reduce risk;                                           
-    value enhancing projects which are smaller properties that can be converted
on a relatively low risk basis to provide premium commercial space;         
-    investments in property securities which are acquired when their value is  
    considered superior to physical property.  These investments are often of a 
    strategic nature where the shareholding can be used to unlock value in      
underlying property assets or significant influence can be exerted through  
    Board representation or through management.                                 
These criteria continue to be applied, however the Group will increasingly look 
at other property investments as markets recover. Investments outside the above 
criteria will only be made where risk adjusted returns are satisfactory and the 
Group has the resources necessary to extract an above-market return from the    
The Group`s investments currently fall into three major geographies (UK, Western
Europe and Australia). The Group`s investments are managed and resources        
allocated according to five reportable segments, being UK Portfolio, Shopping   
Centres, European Portfolio, Wichford and Cromwell. Cognisance is taken of the  
levels of investment in each category, by geography, and concentration risk is  
avoided or managed, where necessary.                                            
Portfolio Details                                                               
The Group`s investment portfolio consisted of a portfolio of properties and a   
portfolio of listed securities. At 31 August 2010, the Group held an interest in
twenty-six investments in fixed and listed property assets located within the   
UK, Switzerland, Germany, the Channel Islands and Australia.                    
Details of the investments are set out below;                                   
NAME/(LOCATION)          CATEGO  USE/TYPE        VALUE     %                    
RY                      (GBP      OWNED                 
Delamere Place, Crewe    SII/MD  Retail Centre   22.70**   90.78                
(UK)                     P                                                      
Streatham Retail Parade  MDP     Office, Retail  6.55**    100.0                
& Wentworth House (UK)           & Residential             0                    
Birchwood Shopping       SII     Retail Centre   30.00     100.0                
Centre, Warrington (UK)                                    0                    
West Orchards Shopping   SII     Retail Centre   45.00     81.07                
Centre, Coventry (UK)                                                           
Byron Place Shopping     SII     Retail Centre   16.7      100.0                
Centre, Seaham (UK)                                        0                    
Kwik-Fit Portfolio (UK)  SII     Motor &         13.65     84.23                
Newington House Ltd,     SII     Office          10.15     76.73                
Southwark (UK)                                                                  
Malthurst Portfolio      SII     Motor &         23.93     84.00                
(UK)                             Ancillary                                      
98-100 Main Street,      SII     Retail          1.13      71.43                
Banstead (UK)                                                                   
26 The Esplanade, St     SII     Offices         23.70     50.00                
Helier (Jersey)                                                                 
Co-Op Store              SII     Supermarket &   17.471    80.46                
(Switzerland)                    Home Depot                                     
Drinkgern, Lidl &        SII     Retail Centres  18.302    92.71                
Aachen Portfolio                                                                
Inkstone Portfolio       SII     Retail Centres  8.972     55.17                
Bremenvorde Portfolio    SII     Retail Centres  3.842     92.71                
Premium Portfolio        SII     Retail Centres  27.752    92.71                
(Germany)                                                  *                    
Lindenhof Portfolio      SII     Retail Centre   6.002     75.08                
Churchill Court,         SII/VE  Offices         16.60     50.00                
Crawley (UK)             P                                 *                    
15-17 The Square,        VEP     Residential     0.61      60.42                
Petersfield (UK)                                                                
Pearl House, Swansea     VEP     Retail &        1.97      50.00                
(UK)                             Residential                                    
7-11 High Street,        VEP     Retail &        2.90      61.36                
Reigate (UK)                     Offices,                                       
Regal Walk, Margate      VEP     Retail Centre   4.00      25.00                
Stafford Redevelopment   VEP     Development     1.43      84.23                
(UK)                             Property                  *                    
Stockport Redevelopment  VEP     Development     0.93      84.23                
(UK)                             Property                  *                    
Alpha Property Fund      PS      Unlisted        0.22      1.04                 
(UK)                             Property                                       
Wichford P.L.C. (UK)     PS      Listed Property 18.923    21.73                
Cromwell Group           PS      Listed Property 74.784    19.85                
(Australia)                      Company                                        
*    % ownership of the Group which owns 50% of the property                    
**   Properties held for redevelopment included at Directors` valuation,        
1    Functional currency is Swiss Franc (CHF), converted at a period-end closing
rate of 1.56 CHF:1 GBP                                                      
2    Functional currency is EURO, converted at a period-end closing rate of 1.20
    EURO:1 GBP                                                                  
3    Market value as at 31 August 2010                                          
4    Market value as at 31 August 2010, functional currency is Australian Dollar
("AUD"), converted at a year-end closing rate of 1.72 AUD:1 GBP                 
MDP - Major Development Project              SII - Stable Income Investment     
VEP - Value Enhancing Project                PS - Property Security             
Market Overview                                                                 
In the UK, commercial property valuations have stabilised and expectations are  
that 2011 will show positive returns from both an income and capital point of   
view.  There are however downside risks, the most important being credit        
availability from banks.  The latest data available from the Bank of England    
showed that in August 2010 the net lending flow to the property sector was      
negative GBP1.1 billion (taking the cumulative outflow for 12 months to negative
GBP7.7 billion).                                                                
Interest rates are expected to remain low for an extended period, and should UK 
banks fulfil their commitment to provide commercial property funding (albeit at 
broadly flat rates),  this should limit any major downside risk in the UK.      
In Europe, the Company only has investments in the stronger geographical        
locations (Switzerland and Germany) which are proving to be very resilient.     
Economic growth forecasts are also encouraging.                                 
In Australia, the Central Bank has begun a tightening of monetary policy in the 
face of strong growth in the economy.  With demand for mineral products strong  
around the world, Australia is expected to continue to perform well.            
JSE Listing of RIN                                                              
The Company`s controlling shareholder Redefine transferred its shareholding in  
Redefine International to a South African subsidiary RIN with effect from 1     
August 2010 in exchange for linked units in RIN. The linked units comprise one  
share and one debenture in RIN. RIN was successfully listed on the JSE on 7     
September 2010.  The investment opportunity was well received by the South      
African investment community and justified the decision to pursue a listing     
which was preceded by a capital raising of some GBP84 million being raised in   
the listing process.  RIN is a property loan stock company which has shares     
linked to debentures to create linked units. RIN`s sole asset comprises its     
shareholding in Redefine International with each RIN linked unit effectively    
equating to one share in Redefine International.                                
Issue of Equity                                                                 
As at the date of this announcement, the Company has issued a total of          
168,069,337 new shares to RIN subsequent to the interim period, as set out      
13 July 2010        :    60,000,000 at 50 pence per share                       
17 August 2010      :    6,000,000 at 50 pence per share                        
7 September 2010    :    102,069,337 at 50 pence per share                      
                        period end)                                             
These shares do not rank for the dividend declared for the period to 31 August  
On 7 September 2010 the Company placed a further 4 million shares to investors  
at an issue price of 52 pence per share.  These shares rank for the dividend    
declared for the period to 31 August 2010.                                      
As at the date of this announcement, Redefine International had 410,775,743     
shares in issue of which RIN holds 81.9%.  As at 31 August 2010 Redefine held   
57.2% of RIN giving it an effective holding in Redefine International of        
Acquisitions and Disposals                                                      
The following acquisitions and disposals were made subsequent to the interim    
period and prior to 31 August 2010:                                             
United Kingdom                                                                  
On 25 March 2010 the Company paid GBP1.1million to acquire the remaining 50%    
beneficial interest in the Byron Place Shopping Centre.                         
On 15 July 2010 the Company increased its stake in the Birchwood Shopping Centre
from 33.33% to 100%.  The acquisition was secured by way of a capitalisation in 
Birchwood Warrington Limited of a GBP531,850 debt due to the Company.           
On 13 July 2010, the Company acquired 69,333,333 new Cromwell stapled securities
at a price of AUD 0.75 per security for a total cost of approximately GBP30     
million.  The securities were acquired "cum div" with a AUD 0.02 per stapled    
security dividend for the period ended 30 September 2010.                       
Redefine International subsequently followed its rights in the Cromwell rights  
issue and acquired a further 4,750,000 stapled securities at AUD 0.72 per       
stapled security ("ex div").  The Company currently owns 178,833,333 stapled    
securities valued at approximately GBP74.8 million at 31 August 2010.  This     
equates to a holding of 19.9% in Cromwell.                                      
The historic dividend yield on this investment has been in excess of 10% .      
The investment in TYS, British Virgin Islands was disposed of during the period 
at book value.                                                                  
The following transactions occurred post 31 August 2010:                        
United Kingdom                                                                  
Acquisition of a 50% share in the Grand Arcade Shopping Centre, Wigan ("Grand   
Arcade") a 425,000 square feet shopping centre. It is the dominant centre in    
Wigan, and houses retailers such as Debenhams, BHS, Marks & Spencer, HMV, Top   
shop and 46 other tenants. Grand Arcade is one of the first carbon neutral      
shopping centres with natural ventilation and a strong commitment to recycling. 
A total investment of GBP7 million was made by the Group into Grand Arcade as   
part of the overall Aviva debt restructuring (see below).                       
Contracts have been exchanged to acquire an effective 50% interest in two       
properties located in Herzogenrath and Schwandorf in Germany, which are leased  
to OBI. OBI is Germany`s largest DIY chain. The Group will acquire a 50% equity 
interest in 2 companies whose sole assets comprise each of the OBI properties.  
The properties are leased to OBI on 15 year leases (commencing 2009) and have an
aggregate lease area of 20,000 square meters with 640 parking bays. The gross   
purchase price of the properties held within the acquired companies is Euro23   
million. Bank debt of Euro16.7 million, has been secured, which will be used to 
partly fund the purchase price.                                                 
This is expected to be an earnings enhancing long term secure investment with a 
historic yield of close to 8%.                                                  
Aviva Transaction                                                               
Agreements between Aviva Commercial Finance Limited ("Aviva") and subsidiaries  
of Redefine International in relation to the restructuring of the senior debt   
facilities on the Birchwood Shopping Centre Warrington; Delamere Place Shopping 
Centre, Crewe; West Orchards Shopping Centre Coventry; Byron Place Shopping     
Centre Seaham; and the Grand Arcade Shopping Centre Wigan ("the Shopping Centre 
Portfolio"), was completed on 13 September 2010.                                
As part of the restructuring, Company Voluntary Arrangements were successfully  
implemented on the two companies that own the Grand Arcade, prior to Redefine   
International acquiring a 50% shareholding.                                     
The amended and restated loan terms                                             
As the restructuring of the debt was only completed after the period end, a     
substantial portion of the debt is reflected as current in the financial        
statements.  This will be reclassified in the next financial report to reflect  
the long term nature of the Group`s obligations.                                
Details of the current and r