RDI.L Regulatory News (RDI)

REDEFINE INTERNATIONAL P.L.C.

("Redefine International" or the "Company" or the "Group")

(Registration number 010534V)

LSE share code: RDI

JSE share code: RPL

ISIN: IM00B8BV8G91

RESULTS FOR THE YEAR ENDED 31 AUGUST 2015

PORTFOLIO EXPANDED AND REPOSITIONED FOR GROWTH

Redefine International, the FTSE 250 income focused UK-REIT, which has a primary listing on the London Stock Exchange and a secondary listing on the Johannesburg Stock Exchange, today announces its results for the year ended 31 August 2015.

Highlights

Financial

· Earnings available for distribution increased 13.6% to £44.4 million (2014: £39.1 million)

· Second interim dividend of 1.65p per share taking full year dividends to 3.25p per share (2014: 3.20p per share), an increase of 1.6%

· Adjusted NAV per share 41.7p (2014: 40.5p), an increase of 3.0%

· Balance sheet strengthened with Group LTV reduced to 40.7% (2014: 48.1%)

· Weighted average cost of debt reduced by 30bps to 3.9% (2014: 4.2%)

· Cash and available facilities of £95.9 million (2014: £91.3 million)

Operating

· Portfolio repositioned enhancing quality and reinforcing geographic focus

· Remaining shareholding in Cromwell sold, realising net proceeds of £57.1 million

· Over £145 million of capital recycled following disposal of non-core assets

· Occupancy increased to 98.1% (2014: 97.6%)

· €157 million acquisition of German retail portfolio in joint venture with Redefine Properties

· Acquisition of DoubleTree by Hilton, Edinburgh for £25.3 million

· Transformational acquisition of £490 million AUK Portfolio post year end

Corporate

· Successful equity placement generating gross proceeds of £70.9 million

· Board strengthened with the appointment of Robert Orr as a Non-Executive Director

· Appointment of Donald Grant as CFO

Greg Clarke, Chairman, commented:

"This has been another active and successful year for Redefine International. The management team is continuing to drive the Company forward and has effectively executed our strategy to reposition the portfolio for future growth. Once the transactions have completed, the addition of the AUK assets, together with the other improvements made throughout the year, provide us with a significantly enhanced portfolio, both in terms of quality and geography, and we are looking to the future with renewed confidence to build on the Company's income potential."

Mike Watters, Chief Executive, commented:

"Following a busy year which has been defined by a major refocusing of the business, we have announced a solid set of results, which show an increase in earnings and NAV as well as reduced leverage. Our continued disciplined investment approach, following the successful equity raise completed in March 2015, has meant that a large cash balance was held throughout the second half of the financial year causing a temporary cash drag on earnings available for distribution. However this cash, together with the proceeds of the Cromwell share sale, has now been deployed in the AUK transaction, and our confidence, given the quality of the enlarged portfolio and the outlook for the business is reflected in an increased dividend of 3.25p per share for the year."

Meeting, webcast and conference call

A meeting for analysts and investors will take place today at 09.00 (UK local time) at FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. The meeting can also be accessed via a conference call dial in facility and webcast link, starting at 09.00am (UK time) 11.00am (SA time), using the details below. The presentation will be made available on the Company's website http://www.redefineinternational.com/investor-relations/financial-reports.

Conference call

Dial in numbers: United Kingdom Local +44(0)20 3427 1912 and South Africa Local +2711 019 7076

Confirmation Code: 3704024

Webcast link: http://webcasting.brrmedia.co.uk/broadcast/55fbd0d4635d4f936e4a13e6

For further information, please contact:

Chief Executive's Report

This has been another active year for the Company with significant levels of capital recycling to consolidate and reposition our portfolio for future growth.

Our investment and geographic focus have been significantly enhanced following the sale of our remaining shareholding in the Cromwell Group and the sale of our Swiss properties. The portfolio is now entirely focused on our core markets of the UK and Germany, Europe's two strongest economies and its most liquid real estate markets.

The property investment market remained highly competitive for good quality assets throughout the year. We continued our disciplined investment approach with the deployment of the £70.0 million of new equity raised in March 2015.

This approach, and therefore, the time taken to secure the Aegon ("AUK") portfolio, has impacted this year's results with the Company holding large cash balances throughout the second half of the year.

Our portfolio is anticipated to exceed £1.5 billion following the conclusion of the AUK transaction. We believe this acquisition will enhance the quality of our portfolio, provide improved returns and growth prospects, and cement our position as a leading FTSE 250 income focused UK-REIT.

Results

Earnings available for distribution increased to £44.4 million (2014: £39.1 million). Underlying distributable earnings per share declined 2.0% to 3.2p which, given the impact of the cash drag from the delayed investment of the equity raise, was in line with expectations. The additional shares in issue during the second half of the year impacted underlying distributable EPS by c. 0.11-0.15 pence per share.

Adjusted NAV increased 3.0% to 41.7p which included a net negative foreign exchange impact on the market value of our portfolio of £19.9 million or 1.4p per share. Underlying property valuations, excluding the effect of foreign exchange movements, increased by £33.6 million or 3.5%.

Dividends

The Board has declared a second interim dividend of 1.65p to be paid on 4 December 2015 which, together with the interim dividend of 1.60p per share, gives a total dividend for the year of 3.25p, a 1.6% increase on last year (2014: 3.20p).

Operational highlights

Occupancy across the portfolio improved to 98.1% (2014: 97.6%) reflecting stronger occupier demand across our portfolio. The majority of our shopping centres in the UK are now close to being fully occupied, creating opportunities to drive rental income. 

Our average unexpired lease term now stands at 8.7 years with lease expiries over the next five years totalling only 31.1% of gross rental income. Our occupiers are diversified across different sectors and markets providing a risk averse and resilient income stream.

The UK Hotel portfolio produced another strong set of results both in terms of income and capital growth. The Company's associate, RedefineBDL Hotel Group Limited ("RedefineBDL"), established International Hotel Group Limited ("IHGL") a separate hotel investment company listed on the JSE and LUX, which will be used to acquire hotel assets and assist in the growth of the RedefineBDL management platform. The Company has invested £3.8 million by way of a private placement in IHGL.

AUK acquisition

We exchanged contracts in September 2015 to acquire the AUK portfolio for £437.2 million and Banbury Cross Retail Park for £52.5 million, from the same vendor, the Aegon UK Property Fund. These acquisitions are expected to be transformational for the Company, supporting our strategy to generate consistent and growing income returns. 

The AUK portfolio acquisition is split into two tranches; Tranche 1 comprises nine properties for a purchase price of £203.5 million and Tranche 2 comprises ten properties for a purchase price of £233.7 million. The acquisition of Banbury Retail Park and Tranche 1 have completed since year end and were funded through existing cash resources and a partial drawdown of a newly secured £303.0 million bank facility.

The funding of Tranche 2 will be supported by new equity, asset sales and bank debt. The decision to raise new equity will be subject to market conditions to ensure that any equity raise is in the best interests of shareholders. Redefine Properties has provided an irrevocable commitment to subscribe for £70.0 million of any associated equity capital raise. In addition, should an equity capital raise not proceed, Redefine Properties has provided a £135.0 million loan facility which may be utilised to fund Tranche 2 and repaid within three months of utilisation, or otherwise converted into equity in the transaction (at cost) to form a 50/50 joint venture.

These options provide the Company with security over funding the transaction and maximum flexibility. 

Outlook

Following a period of growth and capital recycling, we are now focused on consolidating recent acquisitions and driving income growth from the portfolio. We will continue to sell mature assets that have successfully fulfilled their business plans and to recycle capital into assets with better long term growth prospects.

We are actively assessing options around our long term capital structure to ensure that we have access to varied sources of cost efficient funding which also provide operational flexibility. Our recent growth has significantly enhanced our options in this regard. Balance sheet leverage is expected to increase temporarily following the AUK transaction, however, we are committed to maintaining leverage within our target range of 40-50%, with consideration for where we are in the property cycle. We have successfully reduced our weighted average cost of debt by 30 bps to 3.9% and will continue to take advantage of the current low interest rate environment to refinance near term debt maturities at lower "all-in" interest rates.

We have made key appointments in senior positions to support the growth of the Company and welcome Donald Grant as our new CFO. Donald brings a wealth of experience having held senior finance positions in the financial services and listed real estate sector.

We are confident that the actions we are taking will continue to drive the growth of the Company and deliver consistent and growing income returns.

Mike Watters

Chief Executive

28 October 2015

Strategic Report

Our markets

The investment market, both in the UK and Germany, continues to benefit from strong demand, albeit that levels of investment have normalised following record investment volumes in the second quarter of 2015. International investors continue to dominate the UK investment market with a similar trend now evident in Germany.

Rental values in the UK have continued on an upward trend although this has been driven to a large extent by the office and distribution sectors, principally in London and the South East. Growth in retail rents has been more muted although there has been some encouraging data in the second half of 2015. Demand from retailers in Germany continued to strengthen during the year, with interest improving from both local and international brands. Demand continues to outweigh supply in prime locations which is having a positive knock-on effect on secondary locations.

With performance in the next phase of the property cycle likely to be more heavily weighted to income returns and rental growth, our approach toward recycling capital into assets with strong fundamentals and occupier demand is as important as ever.

Reshaping our portfolio

The Group's geographic exposure has been streamlined following the sale of our remaining investment in Cromwell and the Swiss portfolio. The Group's core portfolio is now wholly focused on the UK and Germany, Europe's two strongest economies and its largest real estate investment markets. Capital recycling and new investment have also significantly repositioned the portfolio to locations with stronger economic fundamentals and improved occupier demand.

Our recent acquisition and disposal activities have improved the overall quality of the portfolio and enhanced expectations of rental and income growth. The AUK portfolio provides the potential to add net rental income of £2.2 million per annum over the medium-term through the letting of vacant space. The Group's pro-forma portfolio, incorporating 100% ownership of the AUK portfolio, increases the average lot size and the quality of our assets, providing enhanced liquidity.

We expect income returns to form an increasing proportion of total property returns over the medium-term. Our strategy of delivering long-term sustainable income returns and proactively positioned the portfolio to improve income and rental growth prospects is, we believe, well suited to the next phase of the property cycle.

Acquisitions

Retail portfolio joint venture, Germany

The most significant transaction completed during the year was the acquisition of a portfolio of 56 German retail assets in joint venture with Redefine Properties. The portfolio, valued at €156.8 million, was acquired together with existing debt facilities of €100.0 million, which were refinanced post acquisition. The Company's share of the total consideration was €46.1 million (including our share of break costs of €6.8 million) which provided an initial yield on equity of 11.0%. The portfolio provides annualised gross rental income of €12.6 million with a WAULT of 9.8 years and is let to leading German retailers Edeka, Netto, Rossmann and Real (together accounting for over 90% of gross rental income). The value of the portfolio has increased by 3.0% to €161.5 million since the acquisition with a number of further asset management opportunities still to be delivered. 

DoubleTree by Hilton Hotel, Edinburgh

This 138 bedroom hotel was acquired in September 2014 for £25.3 million (£26.9 million including transaction costs). The hotel was rebranded and extensively refurbished prior to acquisition and provides high quality, flexible accommodation to business travellers and tourists. The hotel is managed by RedefineBDL.

Premium portfolio, Germany

The remaining 44.9% interest in the Premium portfolio was acquired for an equity consideration of €3.6 million (£2.8 million) reflecting a portfolio valuation of €33.4 million and a net initial yield of 6.9%. The portfolio is currently valued at €36.0 million, a 7.8% increase since acquiring the additional stake. 

Notes:

1. The Company acquired the remaining 44.9% interest from its joint venture partner for €3.6 million.

2. The acquisition was made in joint venture with Redefine Properties.

Delta portfolio

Three assets were also acquired from the Delta portfolio security pool for approximately £15.6 million. The net proceeds were used to repay the Delta loan facility. The consideration reflected a net initial yield of 13.0%.

Disposals

Our strategy of recycling capital into assets which more closely align with occupier requirements aims to reposition the portfolio for long-term growth. Sales during the year focused on smaller assets and those assets we believe have limited growth potential.

The sale of our Swiss portfolio for CHF36.0 million (€24.3 million) reflected a net initial yield of 3.9%. The Group no longer has any exposure to the Swiss market.

Delamere Place, Crewe was sold in May for £5.5 million. The property had been held primarily as a long-term development option, however a development scheme was not considered viable at present, and so the decision was taken to dispose of the asset.

York and Bremervörde were also sold during the year for £1.9 million and €3.1 million respectively, these were smaller assets in non-core locations.

Leasing

Across the portfolio 157 lease events were completed during the year. 95 rent reviews were agreed, providing a total rent of £16.2 million, 5.8% above the previous passing rent. 62 new lettings or renewals were completed providing a total rent of £3.2 million, 3.1% above ERV.

The Group's lease expiry profile provides a relatively even spread of lease maturities with less than 30% of gross rental income subject to tenant break options or expiries in the next five years.

Top tenants

Our tenants provide a diverse source of rental income backed by strong covenants. Our top ten tenants account for 34.6% of gross rental income.

Notes:

1. Figures at 31 August 2015 and reflect share of joint ventures

2. Bremervörde income as at 28/2/15 was €0.4 million. Assuming 7% costs and a sale price of €3.1 million, this equates to a 10.9% NIY.

Development

Weston Favell, Northampton

The first two phases of the rebranding and redevelopment project have commenced and are progressing well. The investment of £4.6 million to rebrand the centre and reconfigure the ground floor retail space is expected to support future phases and generate demand from retailers. Amazon click and collect boxes are being provided as part of the redevelopment and should contribute to a drive in footfall.

Primark, Ingolstadt

A conditional agreement for lease was signed with Primark in January 2015 for a new 5,200 sqm (56,000 sqft) store. Once completed, the scheme will provide approximately 7,700 sqm of net retail space including an existing H&M store. The development will include a further 1,100 sqm of office space and 15 residential units, totalling approximately 1,300 sqm.

Development works commenced in September 2015 and the scheme is expected to be delivered in late 2016.

Capital projects summary as at 31 August 2015

AUK portfolio

The combined AUK portfolio (including Banbury Cross Retail Park) was exchanged post year end for a combined purchase price of £489.7 million. The portfolio comprises largely institutional quality assets which have strong property fundamentals and scope for adding capital value through active asset management. The acquisition increases the Group's exposure to Greater London and the South East and includes four good quality distribution assets in established locations.

Assuming the full value of the AUK portfolio, 45.0% of the Group's portfolio will be in Greater London, the "Big 6" UK regional cities (Birmingham, Bristol, Edinburgh, Glasgow, Manchester and Leeds), and the "Big 5" German cities (Berlin, Düsseldorf, Hamburg, Frankfurt and Munich).

Note: Figures at 31 August 2015 adjusted for 100% of the AUK portfolio

Although the AUK portfolio has a relatively high overall occupancy of 96.6% (by area) there are numerous identified asset management opportunities to reduce voids and associated carrying costs, which will drive both higher income returns and capital values.

Pro-forma portfolio

The table below provides a summary of the Group's portfolio at 31 August 2015 together with 100% of the total AUK portfolio, including Banbury Cross Retail Park.

Note:

1. Excludes the Hague.

UK Retail

Portfolio overview

Note:

1. Occupancy reflects 19,000 sqft of vacant office space at 31 August 2015 which is expected to be demolished.

Leasing and asset management

Occupancy improved markedly during the year to 97.1% (2014: 95.4%) following 119,000 sqft of lettings. 25 lease events were completed, generating a gross rent of £1.3 million. 2 rent reviews were agreed providing a total rent of £0.1 million, 7.9% above the previous passing rent. 23 new lettings or renewals were completed providing a total rent of £1.2 million, 1.7% below ERV.

Successful letting activity at Grand Arcade, Wigan increased occupancy to 99.8% with the final unit currently under offer to an international retailer. New Look introduced one of their first menswear stores in the UK at a passing rent of £120,000 p.a. reflecting a 27% premium to ERV. There were also new lettings to Clarks and Holland & Barrett at a combined passing rent of £150,000.

Pep & Co, a new entrant to the discount clothing market in the UK, signed new leases at Birchwood and Coventry totalling 8,900 sqft on a turnover basis. Sport Direct signed a new lease over 6,000 sqft at Birchwood on a turnover rental basis taking the last remaining retail space at the centre.

The majority of our shopping centres are now near full occupancy and, with steady improvements in the economy and improving retail trends, the outlook for rents and rental growth for quality assets continues to improve.

Footfall for the year was down by 0.8% which compares favourably with national indices which were 1.3% down over the same period. The trend appears to have stabilised with footfall increasing by 1.1% across the portfolio in the three months to August 2015.

Valuation

The UK Retail portfolio increased in value by £14.4 million or 4.4% on a like-for-like basis. The increase in value was supported by an inward yield shift of 23 basis points and like-for-like net rental income increased by £0.5 million or 2.1%. Estimated market rental values increased by 0.5%.

Note: Delamere Place, Crewe was sold during the year. tar

Consumer and brand engagement

It has been a progressive year for the UK Retail portfolio in terms of consumer engagement and brand positioning, both of which are key elements in driving retail asset performance from a sales, footfall and dwell time perspective. There has been a focus on embedding the shopping centre brands into their respective communities, with an emphasis on shopper engagement and maximising retailer sales.

Online activity has seen impressive growth for the year. All shopping centre websites were renewed or refreshed which contributed to year-on-year growth of web traffic and in-site engagement. In addition, the consumer database has grown by 22% and shopping centre application downloads increased by 43% year-on-year. Social media platforms have become a key element of consumer marketing activity, the success of which is demonstrated by the huge growth across the key media - Facebook and Twitter. The continued growth in these channels creates further opportunities to engage shoppers in two-way communication, whilst enabling the marketing teams to become more informed about shoppers' desires and to tailor marketing plans accordingly.

CentreStage Leasing

Commercialisation activities across our retail portfolio were reviewed during the year which led to a decision being made to bring all such operations in-house in order to improve quality and delivery, while at the same time maximising income potential. A new overarching brand, CentreStage Leasing, and a web based sales platform were launched by Redefine International to support the sale and promotion of these opportunities, led by a dedicated internal team.

UK Hotels

Notes:

1. The Group's hotel portfolio, apart from the Travelodge, Enfield, is managed by RedefineBDL in which the Company has a 25.3% interest. Enfield is let to Travelodge Hotels Ltd directly.

Market

The investment market has been exceptionally active with deal volumes anticipated to reach £10 billion in 2015, characterised by large portfolio transactions.

PWC anticipates average occupancy rates to reach 84% in 2016, its highest level for a decade. Average daily rates and RevPARs in London are expected to increase by 2.2% and 2.3% respectively. Demand is still expected to exceed supply with net room supply in London expected to grow 4.9% in 2016.

Underlying performance and trading

Underlying performance from the RedefineBDL managed portfolio was broadly in line with management expectations. Revenue increased by 6.0% which translated into a 7.9% increase in EBITDA. The rental level for the 2016 financial year has been set at £14.3 million, a 4.0% increase on last year.

The DoubleTree by Hilton, Edinburgh was acquired in September 2014 for £25.3 million (excluding transaction costs) reflecting a net initial yield of approximately 6.9%. The hotel has delivered strong underlying results since acquisition, driven by higher room rates. Revenue and EBITDA increased by 30.5% and 65.1% respectively.

Valuation

The UK Hotels portfolio increased in value by £14.3 million or 7.4% on a like-for-like basis (excluding acquisition costs). The increase in value was supported by a 4.0% growth in rental income from the London portfolio and progress on completing the 6,800 sqft extension to the Enfield Travelodge.

RedefineBDL

Our 25.3% shareholding in RedefineBDL continues to provide visibility on the performance and management of our hotels as well as strategic insight into the market and investment opportunities.

RedefineBDL delivered a profit after tax of £0.6 million for the year. The Company supported RedefineBDL in the establishment of the International Hotel Group Limited, a hotel investment company that was listed on the JSE and UX post year-end. The Company also invested £3.8 million into IHGL post year-end.

Asset management

Planning was approved and works have commenced at Enfield to fit out a 6,800 sqft extension to the Travelodge. The additional rent has been agreed at £120,000 p.a. which will increase the net initial yield from 4.5% to 5.4%. The lease for the extension will be co-terminus with the existing lease to 2047, and will include RPI escalations.

Planning was approved for a twelve bedroom extension to the Southwark Holiday Inn Express, London. Construction has commenced with completion set for the third quarter in 2016. The total cost of £2.8 million includes a full enhancement and recladding of the existing hotel façade.

UK Commercial

Portfolio summary

Leasing and asset management

Occupancy improved to 99.3% (2014: 98.3%) following 6,600 sqft of lettings. 53 lease events were completed during the year generating additional gross rent of £4.7 million. 47 rent reviews were agreed providing a total rent of £4.0 million, 8.9% above the previous passing rent. 6 new lettings or renewals were completed providing a total rent of £0.7 million, 4.9% below ERV. The portfolio has 58.5% of leases subject to fixed uplifts or inflation-linked uplifts.

Planning is expected to be granted at the Crescent Centre, Bristol to reconfigure the entrance and introduce new amenity space. Works are planned to commence in early 2016 with completion expected in Q3 2016. The Crescent Centre is well located within the Bristol Office market with current rents of £12.0 per sqft at favourable levels against neighbouring prime rents of £28.5 per sqft. A material improvement in rental tone is anticipated following the reconfiguration.

Terms have been agreed with Oxford Brookes University to refurbish 35,000 sqft of vacant office space in Swindon. Rent has been agreed at £286,000 against an ERV of £216,000 in return for a capital contribution of £0.9 million.

Valuation

The UK Commercial portfolio increased in value by £9.3 million or 6.1% on a like-for-like basis. The increase in value was supported by an inward yield shift of 50 basis points and a like-for-like net rental income increase of £0.3 million or 2.7%. Estimated market rental values increased by 4.7%.

Europe

Portfolio summary

Note:

1. Excludes the Hague.

Leasing and asset management

Occupancy declined marginally to 98.2% (2014: 99.4%). 72 lease events were completed during the year generating additional gross rent of £2.5 million. 39 rent reviews were agreed providing a total rent of £1.0 million, 3.2% above the previous passing rent. 33 new lettings or renewals were completed providing a total rent of £1.5 million, 12.7% above ERV. The portfolio has 94.9% of leases subject to fixed uplifts or inflation-linked leases.

A number of leases were renewed during the year at the Bahnhof Centre in Altona, Hamburg. Leases totalling 700 sqm (3,500 sqft) have been extended providing a rent of €0.45 million p.a., 28.6% above the ERV.

Ongoing asset management initiatives at the Schloss Strasse Centre, Berlin have successfully introduced additional revenue streams from media points and improved utilisation of commercialisation space.

Valuation

The European portfolio increased in value by €2.5 million or 0.8% on a like-for-like basis in local currency terms. The increase in value was supported by inward yield shift of 20 basis points and like-for-like net rental income was broadly flat, excluding Ingolstadt where vacant possession has been obtained for development purposes. Estimated market rental values increased by 2.3%.

Financial Review

Overview

2015 has been an active year for the Group. Significant levels of capital recycling have been achieved following the disposal of non-core and mature assets, primarily in Australia and Switzerland, in favour of our two core markets, the United Kingdom and Germany. We have significantly enhanced the quality of the portfolio through the €156.8 million acquisition of a portfolio of 56 German retail properties in joint venture with Redefine Properties and since the year end the transformational acquisition of the £489.7 million AUK Portfolio. Balance sheet leverage continues to improve and with weighted average debt maturity of greater than eight years and a conservative level of capital commitments, the Group has a reasonable degree of financial flexibility. Despite an 8.6% decline in the Euro relative to Sterling, capital values have been moderately enhanced by income focused asset management and development initiatives.

Capital raising

To provide the Group with the financial flexibility to take advantage of market conditions, a placing of 131.4 million new ordinary shares at a price of 54 pence per share was completed in March 2015. The placing generated gross proceeds of £70.9 million.

Income statement

In addition to EPRA earnings, the Group presents an underlying calculation of earnings available for distribution. The Directors consider that this presentation provides useful information as it removes the gain on settlement of debt, removes unrealised profits and losses, deducts earnings not available for distribution and removes exceptional items. This measure more clearly represents the underlying performance of the business.

Underlying distributable earnings increased by 13.6% to £44.4 million, a reduction of 2.0% on a per share basis at 3.2 pence per share (2014: 3.3 pence per share), the result of the cash drag on earnings arising from the delayed deployment of proceeds following the March capital raise.

EPRA earnings decreased 21.4% to £64.4 million, or 4.7 pence per share (2014: 6.9 pence per share).

* Comparative year has been restated to conform to EPRA Reporting Best Practice recommendations (December 2014)

Gross rental income increased by £3.4 million. This was largely due to a full year of income from Weston Favell which was acquired in December 2013 and the restructuring of the Aviva shopping centre portfolio in the prior year, which resulted in Grand Arcade, Wigan and West Orchards, Coventry becoming 100% owned by the Company. This was offset by the disposal of 10 Delta assets in October 2014, the shopping centre at Delamere Place, Crewe in May 2015 and a number of smaller disposals.

Investment and other income, which includes £7.5 million received from the Group's investment in Cromwell, increased 2.7% to £11.5 million, mainly due to development and project management fee income. The Group disposed of its remaining interest in Cromwell in August 2015.

Administrative and other operating expenses decreased by 7.3% from £12.3 million to £11.4 million, the result of costs incurred in the prior year relating to internalisation of management and the Group's REIT conversion. We would expect these costs to increase in line with the expansion in the Group's activities.

Net finance costs have reduced due to the disposal of the Gamma and Delta portfolios, the related release of debt obligations, a weakening Euro and Australian Dollar and the benefit of refinancing the Group's newly acquired German retail portfolio in a historically low interest rate environment.

The gain on settlement of debt (£29.8 million) largely follows progress made in restructuring the Delta portfolio with the negative net equity position now released from charge.

Fair value gains on the Group's property portfolio of £33.6 million have arisen across all asset classes, with the strongest performance from UK Hotels which increased over 7% on a like-for-like basis. The Group's European portfolio fell 7.2% like-for-like, the result of an 8.6% decline in the Euro across the year.

In Australia, the Group's net investment in the Cromwell Property Group (property less debt) recorded a £12.8 million fair value loss. This was the result of both a weakening Australian dollar and a decline in the security price.

Financial position

EPRA adjusted, diluted net assets per share ("EPRA NAV") increased by 8.8% to 41.0 pence (2014: 37.7 pence). Adjusting for the result of non-recourse negative equity positions, Adjusted NAV of 41.7 pence increased by 1.2 pence or 3.0%, largely as a result of the property valuation uplift of £33.6 million (2.4 pence per share) being offset by a £19.9 million (1.4 pence per share) foreign exchange translation loss.

Notes:

1. Following progress made on Delta restructuring, the negative net equity position has been released.

2. As a result of the non-recourse nature of the debt relating to the Justice Centre in the Hague, Netherlands, a negative equity position of 0.7 pence per share has been adjusted for to arrive at an Adjusted NAV measure.

Investment Property

In local currency terms, valuations have increased across all operational segments. The UK portfolio increased 5.6% on a like-for-like basis. Despite the 8.6% decline in the Euro relative to sterling, an overall like-for-like valuation increase of 2.2% was achieved across the year.

Note:

1. Valuation movement includes the effect of foreign exchange and capital expenditure where applicable.

Australian & Swiss sale proceeds due

At the end of August 2015, the Group disposed of its equity investment in the Cromwell Property Group, an Australian listed real estate Group and also completed on the sale of the COOP portfolio in Switzerland. At the balance sheet date, the consideration for both disposals (£102.6 million) was due and subsequently received in September 2015.

Debt & Gearing

Adjusting for the cash proceeds due from the Australian and Swiss disposals, balance sheet leverage at 31 August 2015 had reduced to 40.7% (2014: 48.1%).

In May, the Group refinanced a number of facilities secured over German retail properties held in joint ventures. The existing facilities, totalling €100.0 million, were replaced with an €83.2 million facility initially drawn to €64.9 million at an anticipated all-in finance rate of 1.6%.

Following the sale of investments in Australia and Switzerland, subsequent to the year end the Group has repaid its AUD50 million and its CHF16 million facility. These facilities had attracted interest rates of 7.3% and 2.0% respectively. Break costs incurred totalled £0.6 million.

Since the year end, in anticipation of the AUK acquisition, the Group has secured a new £303.0 million facility with four syndicate banks. The facility is comprised of a term element of £155.0 million and a revolver of £148.0 million.

The Group utilises interest rate swaps and interest rate caps to manage its interest rate exposure. At 31 August 2015, the net fair value liability of the Group's derivative financial instruments was £2.5 million (2014: £2.9 million).

The Group has a commercial hedging policy which requires at least 75% of all interest rate exposures exceeding one year to be on a fixed or capped rate basis. At 31 August 2015, for facilities with interest rate swaps or caps attached, the interest rates are fixed or capped for the duration of the facilities. The changes in the fair value of the Group's hedging instruments have been recognised in the income statement.

Note:

1. Adjusted to include cash received less debt repaid in September 2015 following the sale of the Group's interests in Australia (£57 million) and Switzerland (£12 million). Excludes non-core assets and debts.

Cash flow

Cash flow from operating activities increased to £43.6 million from £27.8 million in the prior year. This is mainly due to the lower finance costs resulting from lower debt levels and lower interest rates on facilities refinanced in the current and prior year.

Investing activities resulted in a net cash outflow of £35.2 million arising principally from the £26.9 million acquisition of the Double Tree Hilton Hotel in Edinburgh in September 2014, a net investment of £37.0 million in a German retail portfolio completed in joint venture with Redefine Properties Limited in January, offset by a number of smaller disposals in both the UK and Europe.

Financing activities were characterised by the March placement which raised £70.0 million (net of costs). Net debt repayments of £58.2 million related principally to the now historic Delta portfolio.

Cash dividends paid totalled £20.5 million.

Dividends

The Directors have declared a second interim dividend for the year of 1.65 pence per share making the total dividend paid and payable for the year 3.25 pence per share. This reflects an annualised yield of 7.9% based on EPRA NAV per share at 31 August 2015.

The Company proposes offering shareholders the option of receiving a cash dividend or a scrip dividend by way of an issue of new Redefine International P.L.C shares. An announcement containing details of the tax components of the dividend, the timetable and the scrip dividend will be released separately on Friday 30 October 2015. The dividend payment date has been set for 4 December 2015 to shareholders on the register at 20 November 2015.

In respect of the first interim dividend paid in June, the scrip take up was again strong at 59.7%, resulting in a cash saving of £24.7 million.

EPRA performance measures

Going Concern

At 31 August 2015 the Group's cash and undrawn committed facilities were £95.9 million and its capital commitments were £13.7 million. With weighted average debt maturity exceeding 8 years and LTV of 40.7% with sufficient headroom against financial covenants, there continues to be a reasonable expectation that the Group will have adequate resources to meet both on-going and future commitments for the foreseeable future. Accordingly, the Directors have prepared the 2015 Report & Accounts on a going concern basis.

Donald Grant

Chief Financial Officer

28 October 2015

Directors' Responsibilities

Statement of Directors' responsibilities

The statement of Directors' responsibilities has been prepared in relation to the Group's full Annual Report & Accounts for the year ended 31 August 2015. Certain parts of the Annual Report & Accounts are not included within this announcement.

We confirm to the best of our knowledge:

- the Group financial statements, which have been prepared in accordance with IFRSs, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

- the Strategic Report includes a fair review of the development and performance of the business and the position of the Group.

Signed on behalf of the Board on 28 October 2015.

Mike Watters

Chief Executive

Donald Grant

Chief Financial Officer

Consolidated Income Statement

for the year ended 31 August 2015

The accompanying notes form an integral part of these consolidated financial statements.

Consolidated Statement of Comprehensive Income

for the year ended 31 August 2015

The accompanying notes form an integral part of these consolidated financial statements.

Consolidated BALANCE Sheet

as at 31 August 2015

The accompanying notes form an integral part of these consolidated financial statements.

* The 2014 figures have been re-presented in the current year with £1.2 million now reported as 'Loans to joint ventures'. This amount is made up of balances reported within 'Long-term receivables' and 'Trade and other receivables' in the 2014 Annual Report. Derivative financial assets have also been removed from 'Investments at fair value' and are now presented separately.

The consolidated financial statements were approved by the Board of Directors on 28 October 2015 and were signed on its behalf by:

Michael Watters Donald Grant

Chief Executive Chief Financial Officer

Consolidated Statement of Changes In Equity

for the year ended 31 August 2015

The accompanying notes form an integral part of these consolidated financial statements.

Consolidated CASH FLOW statement

for the year ended 31 August 2015