Interim Results for the Half Year End

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

INTERIM RESULTS FOR THE six months ENDED 28 february 2017

committed to being the UK's leading income-focused REIT

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 six months ended 28 February 2017.

Financial Highlights

(1) Refer to Glossary for explanation

(2) LTV as reported at 28 February 2016 was pro-forma adjusted for AUK completion on 1 March 2016 and excludes The Hague

· Underlying earnings per share of 1.35 pence, in line with guidance

· Weighted average cost of debt reduced to 3.3% (31 August 2016: 3.4%)

· Interest cover improved to 3.1 times (31 August 2016: 2.7 times)

· Cash and available facilities of £100.3 million (31 August 2016: £57.3 million)

Operating Highlights

· Disposals totalling £95.0 million at an average premium of 12.4% to August 2016 market value

· 40 new leases completed in the period for a gross annual rent of £2.2 million, 2.3% ahead of ERV

· Occupancy increased to 98.0% (31 August 2016: 97.7%)

· Weighted average unexpired lease term of 7.5 years (31 August 2016: 7.8 years)

· Acquisition of controlling interest in the German supermarket portfolio, previously held in joint venture, for €49.4 million (£42.2 million) including costs, post period end

Greg Clarke, Chairman, commented:

"Against an uncertain backdrop, Redefine International has delivered a solid performance underpinned by a strategy which is expected to deliver a much stronger Company, portfolio and capital structure for the benefit of shareholders over the long-term. Following a number of transactions, the portfolio is now well on the way to being successfully repositioned for future income growth, meaning we can look to the future with renewed confidence."

Mike Watters, Chief Executive, commented:

"The disposals achieved during the period, in addition to the selective re-investment of proceeds, illustrate our commitment to improving the overall quality of the portfolio. Simultaneously, we have strengthened our capital structure, underpinning sustainable shareholder value and enhanced long-term growth prospects. Our first-class asset management team continues to identify new opportunities to create value and sustain high occupancy levels, supporting our ability to deliver superior income-led total returns in this historic low interest rate environment.

"With optimism in the long-term outlook of the markets we operate in, we remain committed to driving Redefine International forward to cement the Company's position as the UK's leading income-focused diversified REIT."

Results presentation, webcast and conference call

A meeting for analysts and investors will take place at 9.00 a.m. (UK time) at 'etc.venues', Monument, 8 Eastcheap, London, EC3M 1AE. The presentation and a live webcast will be available at 9.00 a.m. (UK time), 10.00 a.m. (SA time) which can be accessed via the homepage of the Company's website: www.redefineinternational.com.

Conference call dial-in numbers

United Kingdom Local: 020 3059 8125

South Africa Local: 0318 197 008 or 0800 999 282

All other locations: +44 20 3059 8125

Conference code: Redefine

For further information, please contact:

Disclaimer

This release includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Redefine International P.L.C. to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Any information contained in this release on the price at which shares or other securities in Redefine International P.L.C. have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide to future performance.

STRATEGIC REPORT

Chief Executive's Report

In February 2017, the Company held its first Capital Markets Day where it set out its strategic priorities. With the Company experiencing a period of significant growth, we recognised the need to strengthen our portfolio and balance sheet in order to continue to deliver sustainable shareholder value and enhance growth prospects for the future.

I am pleased to report that we have already delivered solid progress against these objectives including a reduction in leverage to 49.9 per cent, the successful disposal of £95.0 million of assets at a 12.4 per cent premium to the August 2016 market value and the re-investment post period end of €49.4 million (including transaction costs) to acquire control of the German supermarket portfolio, previously held in a joint venture.

Results and dividends

Re-based underlying earnings increased by 13.0 per cent to £24.3 million (29 February 2016: £21.5 million) due to the full period impact of the AUK acquisition, the second tranche of which completed in March 2016. EPRA NAV per share increased by 1.0 per cent to 40.4 pence (31 August 2016: 40.0 pence) which was largely the result of both realised and unrealised gains on the property portfolio.

The Board has declared an interim dividend of 1.3 pence per share (29 February 2016: 1.625 pence per share), on earnings of 1.35 pence per share, which is in line with our re-based earnings metric and highlights progress towards our distribution pay-out target previously communicated.

Strategic priorities

Scalable business

There are a number of long-term benefits associated with greater scale, including enhanced access to capital markets, greater liquidity, lower cost of capital, overhead efficiencies and operational flexibility. However, these benefits will remain secondary to securing the right investment opportunities and the actions we are currently taking, including strengthening the balance sheet, places the Company in a stronger position to capitalise on future opportunities that may arise whilst weathering any potential Brexit volatility.

Income-focused portfolio

The portfolio continues to be enhanced through capital recycling and re-investment into income-led asset management opportunities within the existing portfolio. The disposals completed in the period reflected an average net initial yield of 6.1 per cent and an average reversionary yield of 5.8 per cent, illustrating our strategy of recycling out of assets with weak rental or income growth potential and concentrating the portfolio on assets with stronger growth prospects.

Efficient capital structure

The Group's loan-to-value ratio reduced to 49.9 per cent (31 August 2016: 53.4 per cent) largely as a result of a £58.3 million reduction in our proportionate share of debt to £792.3 million (31 August 2016: £850.6 million) and an increase in cash balances to £63.7 million (31 August 2016: £34.3 million). A further £29.0 million of disposals have been completed or are under offer post period end.

The Group's weighted average cost of debt reduced to 3.3 per cent (31 August 2016: 3.4 per cent) following a period of pro-active refinancing which has continued post period end, providing visibility of further reductions in the cost of debt and creating greater interest cost certainty as debt facilities are extended.

The long-term debt secured against four of our UK shopping centres has been successfully restructured post period end to reduce leverage and interest costs. The aggregate facility of £167.8 million has been reduced to £146.1 million and extended to April 2042. This restructuring included the termination of the historic profit share arrangement on Grand Arcade, Wigan. The aggregate prepayment and restructuring costs of £27.6 million will provide a marginal return of c.10 per cent, which will be accretive to earnings and efficient in terms of reduction in leverage.

Financial discipline

As previously announced, our earnings metric has been revised to an EPRA based measure which better aligns our earnings and dividend policy to operating cashflow. The dividend announced today of 1.3 pence reflects a pay-out against underlying earnings of 96 per cent. Our medium-term guidance on the pay-out ratio remains 90 - 95 per cent of underlying earnings, with dividends in the shorter term likely to be at the higher end of that range.

The combination of lower leverage and a reduced cost of debt has improved interest cover at a Group level to 3.1 times (31 August 2016: 2.7 times).

Outlook

The UK economy has proved more resilient since the June 2016 EU referendum than was widely anticipated, with growth forecasts recently revised upwards to 2.0 per cent for 2017. Unemployment has remained low and recent growth appears to be widespread across most regions. Notwithstanding this, the UK faces a number of uncertainties including an imminent General Election and the subsequent Brexit negotiations, as well as rising inflation.

The UK triggered Article 50 on 29 March 2017 which started the formal process of leaving the European Union. Despite the possibility of a protracted period of negotiation and market volatility, the UK continues to be a truly global real estate market supported by many factors including its skills base. London now employs more people in the information and communications sector than it does in the traditional finance and insurance sectors, evidenced by the continued strength in the occupier market in recent months.

The outlook for the German economy appears stable with modest growth and one of the lowest unemployment rates in Europe at 4.3 per cent. Prime yields in Germany's core markets are now at, or below, their last peak, but continuing scarcity of investment product and strong investment demand, particularly for prime assets, suggests ongoing support for valuations.

Our diversified portfolio, which includes a 21 per cent weighting to Germany (25 per cent following the German supermarket portfolio acquisition) and no direct exposure to the financial services markets in London, gives us relative confidence in our outlook. 

Inflation and interest rates will continue to be closely monitored. General expectations are for official UK interest rates to rise in the next 24 months but for future increases to be gradual. Interest rates in Europe are also anticipated to remain low for an extended period, although the European Central Bank monetary stimulus is likely to be reduced. Our pro-active approach to refinancing and extending debt maturities early in the current low interest rate environment places us in a strong position over the medium term in respect of interest cost certainty and mitigates refinancing risk.

Whilst there is ongoing political and economic uncertainty, we are focused on our strategic priorities and the fundamentals of our business. We will continue to enhance our portfolio by allocating capital to assets and opportunities that can provide sustainable and growing rental income and we will deliver that income to shareholders efficiently from a robust balance sheet.

Based on the results for the first half and current trading conditions, the Company's earnings guidance remains unchanged for the 2017 financial year, between 2.7 to 2.8 pence per share.

Mike Watters

Chief Executive

26 April 2017

STRATEGIC REPORT

Operating review

Portfolio Overview

The income characteristics of the portfolio continue to be enhanced through disciplined capital allocation and active asset management. We are focused on all aspects of income growth including income-led development, asset management opportunities and ancillary income generation through our commercialisation process. With long-term real estate returns proven to be driven largely by income returns, the portfolio is being progressively positioned to provide consistent and sustainable income with potential for capital growth:

· 32.3 per cent of the portfolio is subject to inflation-linked or fixed rental increases providing guaranteed income growth in a rising inflationary environment.

· Our weighted average lease length of 7.5 years is complemented by only 21 per cent of leases by rental income being subject to tenant breaks or expiries in the next five years.

· Our portfolio, diversified by sector and geography, provides a broad range of high quality tenants with little concentration risk.

· Our internally managed commercialisation function is actively enhancing the quality of advertising and promotional activity within our retail assets. Commercialisation income of £1.1 million has already been secured in 2017, a 20 per cent increase on the same period last year.

Leasing activity

Portfolio occupancy by ERV increased to 98.0 per cent (31 August 2016: 97.7 per cent) driven largely by successful lettings in the UK Commercial portfolio totalling 42,500 sqft (3,900 sqm).

Key leasing activity completed during the period:

· City Point, Leeds - all of the remaining vacant space at City Point, Leeds, comprising 10,900 sqft (1,000 sqm) on the second floor, was filled following the signing of a 10 year lease to Blacks Solicitors in January 2017, which was completed at £25.0 psf, in line with ERV. The 61,500 sqft (5,700 sqm) office building is now fully occupied and has a strong tenant mix including Ashcourt Rowan p.l.c., GVA, Savills, JLL, Starbucks and HSBC.

· Schloss Strassen Centre, Berlin - REWE has agreed to a 10 year reversionary lease creating a 15 year unbroken term which will see it increase its floor area by approximately 1,900 sqft (200 sqm) subject to obtaining vacant possession of a neighbouring unit. The agreed annualised rent of €0.4 million p.a. is in line with the current passing rent of the combined units.

Rateable values

In January 2016 the UK Valuation Office Agency published an updated rating list for England and Wales which has been adopted from 1 April 2017. The change in rateable values for commercial real estate will have a direct impact on business rates and therefore the total cost of occupation to tenants and the cost of vacant space to landlords. In general, rates are expected to increase materially in London while many regional centres are anticipated to see a reduction in rateable values. Across our UK portfolio (excluding the UK Hotel portfolio) our expectation is for rates to reduce by approximately 6.9 per cent. Our hotels, which are largely London focused, are anticipated to see a 51 per cent increase in rates. The impact of the change in rates is to be phased in over a three year period, however, the change is now reflected in hotel property values.

Acquisitions

On 7 April 2017, the Company announced the acquisition of a controlling interest in the Leopard portfolio from its joint venture partner, Redefine Properties.

The Leopard portfolio comprises 66 properties and totals 1,505,500 sqft (140,000 sqm) of lettable area. It includes a mixture of stand-alone supermarkets, foodstore anchored retail parks and cash & carry stores. The properties are well located within their respective micro markets, with 86.4 per cent of the total annual rental income located in Western Germany and Berlin and the remainder in Eastern Germany.

Key portfolio attributes include:

· Gross rental income of €13.9 million.

· Edeka, Netto, Real and Rossmann account for over 85.6 per cent of gross rental income, providing strong tenant covenants.

· WAULT of 8.4 years.

· Portfolio occupancy of 99.2 per cent by estimated market rental value.

· 99.2 per cent of gross rental income is indexed, typically between 60 - 70 per cent of German CPI, subject to cumulative indexation reaching a hurdle of 10 per cent since the last rent review date.

The portfolio provides exposure to high quality, secure, indexed-linked cashflows with opportunities to extend existing stores and re-gear leases.

The acquisition provides an efficient re-investment of capital from recent disposals into a portfolio in which the Company already held a 50 per cent share. The acquisition also further simplifies the Company's portfolio and structure, with the Leopard portfolio assets now under our control, providing greater flexibility over future asset management and investment decisions.

Disposals

It has been an active period with £95.0 million of assets sold in seven separate transactions, with a further £29.0 million completed or under offer post period end. Our disposal strategy has focused on assets where business plans have been successfully executed and values maximised, as well as assets with negative rental and/or capital growth expectations. Disposals completed during the period reflected a 12.4 per cent premium to August 2016 market value. Net rental income associated with these disposals totals £6.1 million.

Exchange House, Watford

As announced with our prior year end results, the sale of Exchange House was completed in October 2016 for £13.3 million, a 12.7 per cent premium to August 2016 market value. The sale price reflects a net initial yield of 6.9 per cent and a reversionary yield of 5.8 per cent. The 63,000 sqft (5,900 sqm) office building is occupied by the Department of Work and Pensions until March 2023 with a break option in March 2018. The annual passing rent was £1.0 million.

VBG

On 18 January 2017, the Company completed on the sale of four German office assets for a gross consideration of €106.0 million. The assets, which were disposed of via a share sale and included related debt facilities, were held in a joint venture with the Menora Mivtachim Group. The Company's 49 per cent share reflects an 8.6 per cent premium to the August 2016 market value in Euro terms. The Company's net proceeds of €24.9 million, which includes a performance fee of €2.4 million, delivered an IRR of 27 per cent over the investment period.

The properties, situated in Berlin, Dresden, Cologne and Stuttgart, total 485,900 sqft (45,100 sqm), and are let to a German government-backed social insurance body, VBG, on a combined WAULT of just under seven years. The portfolio generated a total annual gross rental income of €8.1 million, of which €4.0 million was attributable to Redefine International.

Deansgate, Manchester

On 31 January 2017, the Company completed on the disposal of 201 Deansgate in Manchester for £29.2 million. The property provides 83,700 sqft (7,800 sqm) of office space and delivered an annual net rental income of £1.1 million, with a WAULT of 4.1 years. The office was originally acquired as part of the AUK Portfolio in March 2016 and the sales price represents a net initial yield of 3.6 per cent and a 14.3 per cent premium to the last reported market value. The geared IRR over the investment period was 22 per cent.

Development and capital expenditure

Development activity is focused on refurbishing existing assets and adding incremental space and income to meet additional occupier demand.

City Arcaden, Ingolstadt

The redevelopment of this prime retail asset is anticipated to be completed in June 2017 and will transform the existing retail pitch. The completed scheme will total approximately 129,000 sqft (12,000 sqm) including two retail units let to Primark and H&M of approximately 100,000 sqft (9,500 sqm). The scheme is anticipated to generate €2.1 million in rental income resulting in a yield on cost of 5.4 per cent. 

Holiday Inn Express, Southwark

The twelve room extension and upgrade to the front and rear façade is on target with development works anticipated to be completed in the third quarter of 2017. The hotel's operating business continues to deliver consistent underlying revenue growth with revenue up 1.3 per cent year-to-date despite the disruptions from the extension and refurbishment works.

Albion Street, Derby

Terms have been agreed for a new 15 year lease with an international discount fashion retailer at a rent of £0.2 million p.a. The introduction of a well-known international brand will strengthen the retail pitch considerably and support the letting of the remaining vacant shop units.

Retail Parks

Four additional pods are at advanced stages of planning approval and the new Pure Gym unit at Banbury Cross Retail Park is under construction. In total, the new units will provide an additional £0.3 million of rental income reflecting a yield on cost of 12.2 per cent.

Foodstore extensions, Germany

Three extensions to foodstore units are being progressed which include extending the existing leases to new 15 year terms. The extensions for tenants such as REWE, Edeka and Netto will provide long-term indexed-linked income returns from strong covenants. They total over 12,900 sqft (1,200 sqm) and are expected to provide a yield on cost of 7.7 per cent.

UK Retail

UK consumer confidence has recovered quickly post the initial shock of the EU referendum result. However, inflationary pressure following Sterling weakness and its impact on import prices is yet to be fully reflected in economic terms. The outlook therefore remains cautious with value oriented retailers likely to be more resilient. 

Occupancy across the UK Retail portfolio declined marginally to 97.5 per cent (31 August 2016: 98.7 per cent). The portfolio value was broadly unchanged at £537.0 million (31 August 2016: £537.1 million). UK Shopping Centres declined 0.7 per cent largely as a result of a 0.5 per cent reduction in gross rental income reflecting a 150 bps increase in vacancy. Conversely, UK Retail Parks and Other Retail increased by 1.1 per cent to £202.0 million (31 August 2016: £199.9 million).

Shopping Centres

Occupancy across the UK shopping centre portfolio declined to 96.6 per cent (31 August 2016: 98.1 per cent). Rental income across the shopping centre portfolio declined marginally with annualised gross rental income down 0.5 per cent. ERVs have remained broadly unchanged. The 41,300 sqft (3,800 sqm) former BHS unit at Grand Arcade, Wigan is now under offer to a national operator.

Asset management activity has been targeted at income-led opportunities including the refurbishment of the food court and the reconfiguration of retail space at West Orchards, Coventry to drive new lettings, including 4,000 sqft (400 sqm) let to Footasylum. In aggregate, asset management initiatives at West Orchards are targeting additional net rental income of £0.5 million which would reflect an approximate yield on cost of 18.0 per cent.

Retail Parks

Our retail park portfolio remains fully occupied which, when combined with generally low vacancy rates across the sector, gives us cautious optimism in relation to occupier demand and rental value growth.

Asset management activity is focused on adding marginal income through the introduction of convenience food and beverage offerings, extensions for leisure use and commercialisation opportunities across the portfolio. Pre-let agreements have been secured for £0.3 million of rental income including a new 10 year lease with Pure Gym at Banbury Cross Retail Park. The 7,500 sqft (700 sqm) extension will deliver £0.2 million of rental income and a yield on cost of 15.0 per cent.

UK Commercial

The regional office market has remained robust with the availability of Grade A space well below historic averages.

Occupancy across the UK Commercial portfolio increased to 96.7 per cent (31 August 2016: 94.6 per cent) following over 42,500 sqft (3,900 sqm) of new lettings and renewals in the office portfolio and the sale of 201 Deansgate, Manchester which included 16,600 sqft (1,500 sqm) of vacant office space.

The portfolio value increased by 2.7 per cent on a like-for-like basis to £386.1 million. The overall increase was driven predominantly by strong uplifts in the distribution and industrial assets and in the office at Charing Cross Road, London, reflecting a strong investment market and clear evidence of underlying rental growth.

Office Portfolio 

An active period of leasing combined with the sale of 201 Deansgate, Manchester has increased occupancy across the portfolio to 96.3 per cent (31 August 2016: 93.1 per cent). Three leases totalling 15,100 sqft (1,400 sqm) were completed in the period providing rental income of £0.3 million, marginally ahead of ERV.

Our office at Charing Cross Road continues to benefit from the large-scale investment in the immediate area in connection with the Crossrail Tottenham Court Road Station which is due to start operating in 2018. Crossrail will link the West End to Canary Wharf in twelve minutes, Stratford in thirteen and Heathrow in less than 30, bringing an additional 1.5 million people to within a 45 minute commute of the popular retail and entertainment district. We have received strong occupational and investment demand providing a range of asset management options for the property. A pre-planning application has been submitted and the detailed planning process is on-going.

The major letting during the period was to Blacks Solicitors at City Point, Leeds. The firm of solicitors took the remaining 10,900 sqft (1,000 sqm) on a 10 year lease at a headline rent of £25.0 psf which was in line with ERV.

Distribution and Industrial Portfolio

The distribution and industrial sectors remain beneficiaries of the ongoing change in all aspects of retail. Demand from online retailers resulted in a record 34 million sqft of warehouse space being transacted in the UK during 2016. This demand, coupled with relatively low levels of supply and a relatively modest development pipeline, should be supportive of rents.

Given the strength of the occupational market, the investment market has been equally strong with £2.6 billion of acquisitions in 2016. Prime yields stand at around 5.0 per cent although investment demand is placing further downward pressure on yields.

These trends are evident in our own portfolio, particularly at Camino Park, Crawley where £1.6 million of rental income is subject to rent review in late 2017. Average passing rents on acquisition in March 2016 were £7.5 psf. Recent lettings have been completed at £10.3 psf and more recent evidence indicates rents of £13.0 psf which would reflect an increase of approximately 73 per cent on passing rent since acquisition.

The refurbishment of 53,400 sqft (5,000 sqm) of vacant space at Colchester has been completed and is now being actively marketed.

UK Hotels

Following a relatively weak start to the financial year, underlying trading during recent months has recovered strongly with revenue figures for the six month period to 28 February 2017 ahead of management's budgets and the prior period performance by 1.3 and 3.9 per cent respectively. This recent strong trading performance has been partly offset by the anticipated impact of higher rates, particularly across the London portfolio.

The outlook for London hotels is mixed with uncertainty around the impact of the vote to leave the EU, security concerns and tighter corporate travel budgets offset by the positive impact of the significant fall in Sterling which is expected to support tourism and investment demand. Occupancy and RevPar are forecast by PwC to grow by 0.9 per cent and 3.3 per cent respectively. We have experienced a similar trend, with current trading performance showing modest growth over the same period last year. Supply of hotel space is expected to grow by approximately five per cent in London over 2017 with the majority still focused on budget hotels.

The portfolio value remained broadly unchanged at £229.3 million (31 August 2016: £229.2 million).

(1) Subject to annual review with reference to forecast EBITDA of the RedefineBDL managed portfolio.

RedefineBDL

The Company's 30.4 per cent stake in RedefineBDL, the largest independent hotel management company in the UK, produced underlying earnings of £0.3 million during the period, a decrease of £0.9 million over the same period last year which included a £1.1 million contract termination fee.

International Hotel Properties Limited

The Company's 17.2 per cent investment in International Hotel Properties Limited ("IHL") had a market value of £9.8 million at 28 February 2017 resulting in a fair value gain of £1.0 million for the first half of the year. No dividend has yet been declared in respect of the current financial period.

Europe

Strong fundamentals in Germany combined with low interest rates and uncertainty in other European investment markets has led to sustained capital flows into commercial real estate and significant competition for good quality investment opportunities. These dynamics have led to yields reaching historic lows in many markets, particularly for core assets. Given the strength of the investment market, returns will be increasingly reliant on income and rental growth with further yield compression likely to be limited.

The European portfolio occupancy increased to 99.0 per cent (31 August 2016: 98.5 per cent) following 64,200 sqft (6,000 sqm) of new lettings and renewals.

The portfolio value increased by 0.2 per cent on a like-for-like basis in local currency terms to €337.1 million. The shopping centre portfolio, including development property, increased in value by 2.0 per cent to €192.4 million reflecting strong investment demand, particularly for core assets in Berlin and Hamburg.

Asset management activity has focused on the Schloss-Strassen Centre in Berlin with plans to modernise the existing food court and improve the food offering, as well as increase the allocation of space to food and convenience offerings.

Bakery Junge, have taken 1,900 sqft (200 sqm) of previously vacant space at an annual rent of €0.1 million. The national operator provides a popular concept and will broaden the food offer to cater for commuter footfall associated with the centre's strong transport links.

REWE has agreed to a conditional lease extension which would create a 15 year unbroken term and increase its floor area by approximately 1,900 sqft (200 sqm). The agreed annualised rent of €0.4 million p.a. is in line with the current passing rent of the combined units.

The pharmacy chain, dm, has also agreed to extend their floor area by 1,100 sqft (100 sqm) into the neighbouring vacant unit on a new 10 year lease for a total rent of €0.3 million.

STRATEGIC REPORT

Financial review

Overview

The Group had an active first half of 2017, particularly with respect to capital recycling and leverage reduction. In total, £95.0 million of assets were disposed at an aggregate premium of £10.5 million (12.4 per cent) on 31 August 2016 valuations. Most notable were the disposals of the VBG portfolio in Germany and an office building in Deansgate, Manchester which achieved IRRs over the investment period of 27 per cent and 22 per cent respectively.

The proceeds generated reduced the Group's loan-to-value ratio and supported re-investment into assets with improved property fundamentals, post period end. Three small facilities were also refinanced, typically at lower gearing levels and with lower associated margins.

The Company hosted a Capital Markets Day in early February to provide an update on business activities and give further guidance and explanation of the strategic rationale surrounding the change to the Group's key earnings measure and dividend policy.

The combined effect of aligning earnings to an EPRA based measure, whilst lowering the Group's pay-out ratio, has provided headroom to operational cashflow, a degree of financial flexibility for investment, progression of asset management initiatives and leverage reduction.

The Group's key earnings metric, underlying earnings, is based on EPRA earnings. This is then adjusted to remove the impact of foreign exchange gains and losses and non-cash IFRS debt accretion charges which are recurring in nature and significant in size. Underlying earnings as reported for the first half of 2016 were £25.4 million (1.7 pence per share). Re-basing the comparative period, which removes the impact of discontinued company adjustments, would have resulted in earnings of £21.5 million (1.4 pence per share). The reduction in earnings per share to 1.35 pence for the first half of 2017 is attributable to both the income lost following disposals and certain non-recurring administrative costs, discussed in more detail below.

The Board has today declared a distribution of 1.3 pence per share for the first half of 2017 representing a 96 per cent pay-out ratio on re-based underlying earnings, slightly above our medium-term target range of 90 - 95 per cent. Group LTV has reduced to 49.9 per cent from 53.4 per cent at 31 August 2016, bringing us within the upper end of our medium-term LTV target range of 45 - 50 per cent.

EPRA NAV per share increased by one per cent to 40.4 pence, driven primarily by both realised and unrealised gains on the Group's property portfolio.

Presentation of financial information

Internally the Board focuses on and reviews information and reports presented on a proportionately consolidated basis, which includes the Group's share of interests in joint ventures. To align with how the Group is managed, this financial review has therefore been presented on the same basis.

In comparison to the first half of 2016, EPRA earnings have increased by £0.7 million or 3.0 per cent. This is due to the additional net rental income from the integrated AUK portfolio, offset by a termination fee of £1.2 million in respect of the cancellation of the portfolio's historic asset management contract which remained in place at acquisition.

Gross rental income increased by £5.9 million, the result of an additional £6.7 million in gross rent following completion of the second tranche of the AUK acquisition on 1 March 2016, offset by income lost following disposals during the first half of the year.

As illustrated below, like-for-like income across the UK portfolio was flat. UK Commercial increased 1.8 per cent following a number of rent reviews. UK Hotels recorded a marginal decrease as a result of lease incentive payments extended for general improvements to the portfolio.

In Sterling terms, European like-for-like income increased 14.6 per cent, the result of Sterling's weakness in the first half of 2017 compared to the same period last year. The underlying currency performance recorded a decrease in like-for-like income following a fall in turnover rents which can vary depending on tenants' trading performance.

Included within acquisitions is income from the AUK acquisition which completed on 1 March 2016, resulting in the overall increase in rental income. Although not yet like-for-like, the portfolio's performance over the six months to 28 February 2017, compared to the six months to 31 August 2016, saw an improvement of £0.3 million or 2.2 per cent in gross rental income.

Property operating expenses have increased in line with the enlarged portfolio.

Other income of £2.8 million includes a £2.0 million performance fee generated following the sale of the VBG portfolio in January 2017. The Group, which provided asset management services to the joint venture, was due a performance fee based on the IRR achieved on exit. This represents the Group's proportionate share of the fee payable by Menora Mivtachim, the joint venture partner. The proceeds from the sale of the VBG portfolio have been re-invested post period end through the acquisition of the controlling interest in the German supermarket portfolio, also previously held in joint venture.

Administrative expenses of £8.8 million reflect a significant increase on the prior period. As previously guided, the first half of 2017 includes a non-recurring charge of £1.2 million relating to the termination of the AUK asset management contract previously held with Kames Capital. The recurring cost base has increased in line with the enlarged portfolio as, amongst other services, asset management activities are now performed in-house.

A £5.0 million gain was recognised following the disposal of the VBG portfolio, which includes cumulative foreign currency gains now realised in the income statement that arose during the investment period.

Net finance costs decreased by £0.4 million despite the larger portfolio, reflecting the Group's continuing efforts to drive down the overall cost of debt.

Other finance costs include £1.3 million charged in respect of the profit share arrangement with Aviva, the senior debt lender with security on the Grand Arcade shopping centre, Wigan. Terms were agreed post period end to refinance the facility and in doing so, terminate the existing profit share arrangement. In total, a profit share provision of £5.5 million was fully provided at 28 February 2017 and this was settled on refinancing in April 2017.

Gains on disposals of investment property of £5.9 million were recorded following the sale of six properties, most notably 201 Deansgate, Manchester and Exchange House, Watford.

EPRA NAV per share increased one per cent, or 0.4 pence, to 40.4 pence. This was the result of realised and unrealised gains on the property portfolio and the net impact of earnings for the period, less dividends paid.

Property portfolio

Overall the portfolio increased in value on a like-for-like basis by 0.6 per cent.

UK IPD All Property Index reported a 1.4 per cent increase in capital values since August 2016 with the retail sector recording a more modest 0.3 per cent increase. Capital values have remained relatively flat in the Group's UK Retail portfolio, the result of a good performance in retail parks offsetting the weaker valuation performance of the UK shopping centres.

Asset management initiatives across the UK Commercial portfolio have resulted in some strong valuation gains at an asset level, particularly from the AUK portfolio. 

UK Hotel valuations remained broadly unchanged, down 1.0 per cent when adjusted for capital expenditure. Increased business rates, particularly with respect to the London based hotels offset an otherwise positive trading performance year-to-date.

In Europe, modest gains on the Group's shopping centre assets in Berlin and Hamburg drove valuations up 0.2 per cent in local currency terms, 0.8 per cent in Sterling terms on a like-for-like basis.

(1) Valuation includes the effect of capital expenditure, amortisation of head leases, tenant lease incentives and foreign currency translation where applicable.

Debt and gearing

During the first half of 2017, £50.7 million was refinanced, repaid or prepaid. This included the repayment of the £5.4 million AIB facility secured on Newington House and the refinancing of the asset under the AUK facility. The transfer of UK assets into this facility on refinancing has allowed the Group to benefit from a ratcheted margin structure, and with it reduce the overall cost of debt.

The €11.6 million facility on Ingolstadt was repaid in full and a £5.2 million prepayment was made against the facility secured over West Orchards, Coventry in November 2016.

These interventions continue to improve the Group's cost of debt and importantly have reduced LTV to 49.9 per cent from 53.4 per cent at 31 August 2016.

Re-investment of sale proceeds from mature assets will continue to focus on opportunities to lower the Group's LTV.

Key debt and gearing metrics are presented in the table below.

(1) Net rental income divided by net finance costs

The Group's weighted average debt maturity has been maintained at just under 7 years, with over 85 per cent maturing in 2020 or later. Interest cover has improved from 2.7 to 3.1 times.

The proportion of debt with interest rate protection, which includes the use of interest rate caps and swaps, has increased from 95.4 per cent to 97.0 per cent at the half year. This is in line with the Group policy that at least 75 per cent of debt carries interest rate certainty. The net fair value liability of these hedging instruments on a proportionate basis at 28 February 2017 was £11.1 million.

Operating cash flows increased by £10.6 million to £30.5 million during the six months ended 28 February 2017 relative to the comparative interim period, primarily as a result of the increased net rental income from the AUK acquisition and a reduction in net working capital.

Investing cash inflows were generated from disposal proceeds, the most significant being the disposal of the Group's joint venture interest in the VBG portfolio in Germany and an office building in Deansgate, Manchester. Cash outflows of £7.8 million were applied primarily towards developments at Ingolstadt in Germany and a twelve bedroom extension to our Southwark Hotel on London's Southbank.

Financing activities comprised the net repayment and prepayment of debt and dividends paid, including withholding tax arising in respect of the second interim dividend for the year ended 31 August 2016. Scrip take-up of 27.3 per cent resulted in a cash saving of £6.6 million.

Cash balances, including the proportionate share of cash in joint ventures, were £63.7 million at 28 February 2017, with an additional £36.6 million available from committed undrawn facilities.

Principal risks and uncertainties

The Directors have concluded that there have been no significant changes to the principal risks and uncertainties faced by the Group, nor is there anticipated to be any significant changes during the remaining six months to 31 August 2017. Full disclosure of risks and uncertainties faced by the Company are set out within the 2016 Annual Report.

Dividends

The Directors have declared an interim dividend for the period of 1.3 pence per share representing a 96 per cent pay-out ratio on underlying earnings. This reflects an annualised yield of 6.4 per cent when based on 28 February 2017 EPRA NAV and 7.0 per cent when compared to the Group's share price at the same date.

The Directors intend to offer shareholders the option of receiving a cash dividend or a scrip dividend by way of an issue of new Redefine International shares. An announcement containing details of the tax components of the dividend, the timetable and the scrip dividend will be released separately on Friday 28 April 2017. The dividend payment date has been set for Monday 26 June 2017 to all shareholders on the register at Friday 9 June 2017.

Donald Grant

Chief Financial Officer

26 April 2017

Statement of Directors' responsibilities

The Directors are responsible for preparing the condensed consolidated interim financial statements, in accordance with applicable laws and regulations.

We confirm to the best of our knowledge:

· the condensed consolidated interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting';

· the condensed consolidated interim financial statements include a true and fair view of the information required by Sections DTR 4.2.7R and DTR 4.2.8R of the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

The operating and financial review refers to important events which have taken place during the period.

Related party transactions are set out in Note 29 to the condensed consolidated interim financial statements.

By order of the Board

Mike Watters Donald Grant

Chief Executive Officer Chief Financial Officer

26 April 2017

Independent review report to Redefine International P.L.C.

Introduction

We have been engaged by Redefine International P.L.C. ("the Company") to review the condensed set of consolidated financial statements in the half-yearly financial report for the six months ended 28 February 2017 which comprise the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and the related explanatory notes. The financial reporting framework that has been applied in their preparation is International Financial Reporting Standards as issued by the IASB ("IFRSs"). Our review was conducted in accordance with the International Standard on Review Engagements ("ISRE") 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the half-yearly report for the six months ended 28 February 2017 is not prepared, in all material respects, in accordance with IAS 34 'Interim Financial Reporting' and the Disclosure and Transparency Rules of the UK's Financial Conduct Authority.

Basis of our report, responsibilities and restriction on use

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the UK's Financial Conduct Authority. As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with IFRSs as issued by the IASB. The Directors are responsible for ensuring that the condensed set of consolidated financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 'Interim Financial Reporting'. Our responsibility is to express to the Company a conclusion on the condensed set of consolidated financial statements in the half-yearly financial report based on our review.

We conducted our review in accordance with the International Standard on Review Engagements 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. 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 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.

We read the other information contained in the half-yearly financial report to identify material inconsistencies with the information in the condensed set of consolidated financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the review. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules of the UK's Financial Conduct Authority. 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.

N. Marshall 26 April 2017

For and on behalf of

KPMG

Chartered Accountants, Statutory Audit Firm,

1 Harbourmaster Place

International Financial Services Centre

Dublin 1

Ireland

Condensed Consolidated Income Statement

for the six months ended 28 February 2017

(1) Net gain on sale of joint venture interests relates to the disposal of the property-owning subsidiaries of one of the Group's joint ventures, Wichford VBG Holding S.à.r.l. While the holding structure has been retained, the business of the joint venture has been disposed and Wichford VBG Holding S.à.r.l. holds only residual cash to settle working capital and deferred consideration receivable.

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

Condensed Consolidated Statement of Comprehensive Income

for the six months ended 28 February 2017

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

Condensed Consolidated BALANCE SHEET

as at 28 February 2017

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

The condensed consolidated interim financial statements were approved by the Board of Directors on 26 April 2017 and were signed on its behalf by:

Mike Watters Donald Grant

Chief Executive Officer Chief Financial Officer

Condensed Consolidated Statement of Changes In Equity

for the six months ended 28 February 2017

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

Condensed Consolidated Statement of Changes In Equity

for the six months ended 29 February 2016

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

Condensed Consolidated Statement of Changes In Equity

for the year ended 31 August 2016

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

Condensed Consolidated Statement of CASH FLOWs

for the six months ended 28 February 2017

 (1) Net proceeds of £18.1 million received by 28 February 2017 on disposal of joint ventures interests of Wichford VBG Holding S.à.r.l. are comprised of the Group's 49 per cent share of the proceeds received of £36.9 million after the deduction of the performance fee of £4.0 million (gross cash proceeds: £40.9 million) and includes the repayment of loans advanced by the Group to the joint venture of £12.3 million. The performance fee received has been separately presented under operating activities.

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 28 February 2017

1. General Information

Redefine International P.L.C. was incorporated in the Isle of Man on 28 June 2004 (Registered Number: 111198C) and was re-registered under the Isle of Man Companies Act 2006 on 3 December 2013 (Registered Number: 010534V).

On 4 December 2013, the Company converted to a UK-REIT and moved its tax residence from the Isle of Man to the United Kingdom ("UK").

The Company holds a primary listing on the Main Market of the London Stock Exchange ("LSE") and a secondary listing on the Main Board of the Johannesburg Stock Exchange ("JSE").

2. Significant Accounting Policies

2.1 Statement of Compliance

These condensed consolidated interim financial statements ("interim financial statements") for the six months ended 28 February 2017, have been prepared in accordance with IAS 34 'Interim Financial Reporting' ("IAS 34") as issued by the International Accounting Standards Board ("IASB").

Selected explanatory notes are included to explain events and transactions that are significant to understanding the changes in financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended 31 August 2016.

The financial information contained in these interim financial statements does not constitute a complete set of financial statements and does not include all of the information required for full annual financial statements (including all comparative figures and all required notes) prepared in accordance with International Financial Reporting Standards ("IFRS"). The interim financial statements should therefore be read in conjunction with the consolidated financial statements as at and for the year ended 31 August 2016 which are available on the Group's website, www.redefineinternational.com.

The relevant new standards, amendments and interpretations that have been adopted during the period are set out in the following table:

The adoption of these improvements and amendments has not had a material impact on the interim financial statements of the Group and otherwise the accounting policies applied by the Group are the same as those applied in the audited consolidated financial statements as at and for the year ended 31 August 2016, as set out on pages 91-95 of the 2016 Annual Report.

The relevant new standards, amendments and interpretations that have been issued by the IASB but are not yet effective, or have not been adopted early, are disclosed in the table below. The impact of these improvements and amendments on the consolidated financial statements of the Group is being assessed.

2.2 Basis of Preparation

The interim financial statements are presented in Great British Pounds, which is the functional currency of the Company and the presentational currency of the Group, rounded to the nearest hundred thousand pounds. They are prepared using the historical cost basis except for investment property, certain assets held for sale, derivative financial instruments and financial instruments designated at fair value through profit and loss, all of which are carried at fair value.

Going Concern

The Directors are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future and for this reason the interim financial statements have been prepared on a going concern basis.

Re-presentation of Prior Period Comparatives

Consistent with the presentation in the financial statements for the year ended 31 August 2016, the Group has re-presented its interests in joint venture entities for the comparative interim period, 29 February 2016. Payments of equity which are permanent and loss absorbing in nature are disclosed as 'Investments in joint ventures', while advances of loans with either contractual maturities or amounts that are callable on demand, are disclosed as 'Loans to joint ventures'. Interest payments made by joint ventures under loan agreements are presented as finance income whereas distributions received from investments reduce the carrying value of the Group's investment in joint ventures.

The impact of this change on the key financial statement line items for the period ended 29 February 2016 was as follows:

(1) The consolidated balance sheet as at 29 February 2016 is not presented in these condensed consolidated financial statements. The re-presentations required are disclosed for information purposes only.

As there has been no change in either net asset value or profit for the period, there has been no impact on net asset value per share or earnings per share. There has also been no impact on net cash flows.

Certain other presentational changes were made to the comparative balance sheet to ensure consistency with the current period. This has resulted in a reclassification of tenant lease incentives of £3.8 million and other receivables of £0.9 million as non-current assets in line with the requirements of IAS 1, Paragraph 60, as at 31 August 2016 these amounts would not have been settled or recovered within twelve months of the balance sheet date. In addition, current tax liabilities of £2.4 million as at 31 August 2016 have been presented separately on the consolidated balance sheet in accordance with IAS 1, Paragraph 54 (n). Current tax liabilities were previously included in trade and other payables.

2.3 Key Judgements and Estimates

The preparation of the interim financial statements in conformity with IFRS requires the use of judgements and estimates that affect the reported amounts of assets and liabilities at the reporting date and the reported amounts of revenues and expenses during the period. Although these estimates are based on the Directors' best knowledge of the amount, event or actions, actual results may differ materially from those estimates.

The principal areas where such judgements and estimates have been made are detailed below:

2.3.1 Investment Property Valuation

The Group uses valuations performed by independent valuers in accordance with IFRS 13 'Fair Value Measurement' ("IFRS 13") as the fair value of its investment property. The valuations are based upon assumptions including estimated rental values, future rental income, anticipated maintenance costs, future development costs and appropriate market yields. The valuers also make reference to market evidence of transaction prices for similar properties. Further details are provided in Note 12.

2.3.2 Property Acquisitions

Where properties are acquired through the acquisition of corporate interests, the Directors have regard to the substance of the assets and activities of the acquired entity in determining whether the acquisition represents the acquisition of a business. Where such acquisitions are not considered to be an acquisition of a business, the transactions are accounted for as if the Group had acquired the underlying property directly. Accordingly, no goodwill arises on initial recognition of the asset purchase. Corporate acquisitions are otherwise accounted for as business combinations.

2.3.3 Classification of Investment Property for UK Hotels

The UK Hotels are held for capital appreciation and to earn rental income. Apart from one of the properties, the hotels have been let to Redefine Hotel Management Limited ("RHML") and Redefine Earls Court Management Limited ("RECML"), on lease terms which are subject to annual review. At each review, the revised rent is set with reference to the forecast EBITDA of the hotels. RHML and RECML run the hotels' operating business and are therefore exposed to fluctuations in the underlying trading performance of each hotel under management. They are responsible for the key decision making of the business operations and the day-to-day upkeep of the properties.

The Group cumulatively holds a 30.4% shareholding in RedefineBDL Hotel Group Limited ("RedefineBDL"), which in turn controls RHML and RECML. Having considered the guidance in IFRS 10, the respective rights of each of the shareholders in RedefineBDL and the relative size of the Group's shareholding, the Directors have determined that the Group has the ability to exercise significant influence over RedefineBDL. The Group does not control RedefineBDL and hence does not control RHML or RECML. The investment in RedefineBDL is classified as an associate.

Aside from the payment of rental income to the Group, which is reset annually, and the Group's shareholding in RedefineBDL, the Group is not involved with the operation of the hotel management business. There are also limited transactions between the two entities and, as a result, the hotels are classified as investment property in line with IAS 40.

2.3.4 Classification of the Group's Investment in International Hotel Properties Limited ("IHL") at Fair Value through Profit or Loss

On 14 October 2015, the Company acquired, by way of private placement, 3.8 million shares in the newly listed International Hotel Properties Limited (formerly International Hotel Group Limited) for £3.8 million. On the date of listing this investment represented 25.4% of the entity's issued share capital and the investment was recognised as an associate of the Group under the equity method. On 20 October 2015, the Group ceased to recognise IHL as an associate when its shareholding was diluted to 13.2% and the investment was reclassified as a financial instrument at fair value through profit or loss. At 31 August 2016, the Group held a 15.5% interest in IHL. During the six months ended 28 February 2017, the Group's shareholding increased by 1.7% to 17.2%. Refer to Note 13 for further details on changes in the Group's ownership interests in IHL.

The degree of judgement relating to this classification has increased given that the Company currently has representation on IHL's board of directors. In drawing their conclusion, the Directors have considered the criteria for significant influence in paragraphs 5-9 of IAS 28, the relative size of the Group's shareholding and the fact the Group does not have the right to appoint a director. Having considered all the facts and circumstances, the Directors believe that the designation of the Company's investment as a financial asset at fair value through profit or loss continues to be appropriate.

2.3.5 Aviva Profit Share and Capital Appreciation Rights

As part of the Aviva debt restructure in 2013, Aviva, the lender with security over the Group's shopping centre asset, Grand Arcade, Wigan had a right under the facility agreement to participate in 50 per cent of the valuation uplifts of the property in excess of the value of the drawn debt ("capital appreciation right"). Once the value of the property exceeded £90 million, Aviva had the additional right to realise tranches of the excess valuation at any time, with corresponding reductions to their right to profit share participation.

While the Group has recognised a financial liability in respect of Aviva's right to participate in the profits of the shopping centre in prior periods and as at 28 February 2017, a provision has not been recognised to date in respect of Aviva's capital appreciation right. A reliable estimate of the provision could not be made and it has not been considered probable that a payment to Aviva would be required. In prior periods, the contractual obligation has been disclosed as a contingent liability. At 28 February 2017, the possibility of payment was considered remote based on the revised terms under negotiation in the debt restructure that completed post period end. Disclosure of the contingent liability was therefore not required.

Both Aviva's existing capital appreciation and profit participation rights have been formally extinguished on completion of the debt restructure after the reporting date.

3. Segmental Reporting

As required by IFRS 8 'Operating Segments' ("IFRS 8"), the information provided to the Board, which is the Chief Operating Decision Maker, has been classified into the following segments:

Management information, as presented to the Chief Operating Decision Maker, is prepared on a proportionately consolidated basis. Segmental reporting is therefore reported in line with management information, with the Group's share of joint ventures presented line-by-line. Joint venture adjustments are disclosed to reconcile segmental performance and position to the condensed consolidated financial statements.