Redefine Properties Limited (RDF) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I am Sipho Pityana, the Chairperson of Redefine. I welcome you all together with the Non-Executive Directors and Executive Directors and Company Secretary to the General Meeting of the company. The general meeting will be conducted entirely by electronic communications, including voting as contemplated by the Companies Act #71 of 2008 otherwise referred to as the Companies Act and the company Memorandum of Incorporation, the MOI. Please take note that the only person -- that only persons who are in possession of a valid proxy, which has been filled in accordance with the notice of the meeting to shareholders, or shareholders who are reflected on the share register are entitled to speak and vote at this meeting. Any person not so entitled may, however, pose questions after the conclusion of the meeting. I hereby advise that I'm holding proxies in respect of 25 shareholders. This represents 77.53% of the voting ordinary shares. Furthermore, I am holding letters of representation in respect of 17 members. This represents 6.13% of the voting ordinary shares. I'm advised that the necessary quorum is present and I declare that the meeting is duly constituted. Pursuant to Clause 22.3 of the MOI, I determine that the voting in respect of this meeting shall proceed by way of poll. Such poll voting shall be conducted entirely electronically as contemplated in Section 63, Subsection 2 of the Companies Act and Clause 21 of the MOI through the electronic online facility provided by the transfer secretaries of the company being Computershare Investor Services otherwise referred to transfer secretaries. For the purpose of the poll, I nominate a representative of the transfer secretaries present at the meeting to act as the scrutineers. I propose that in order to expedite the proceedings of the meeting, you may cast your vote after the resolution is put to the meeting whereafter, I shall announce the results. A video tutorial of the voting procedure was played before the start of the meeting and the procedure can also be found in the shareholder user guide at www.smartagm.co.za. If you have a question, you may cast your vote once the question has been addressed. Are there any objections to the procedure that we have outlined? I shall now open the voting on the electronic online facility and voting can be performed at any time during the meeting and I close the voting on the resolution -- until I close the voting on the resolution, sorry. You will be able to send messages and view the webcast while the poll is open and I shall allow any questions pursuant to the motion to be discussed after I have tabled the resolution. I further propose that any questions not relating to the resolutions before us today be held over until the end of the meeting. Are there any questions in respect of the procedures that I've just outlined? Okay. We shall now proceed with the business of the meeting. I refer the meeting to the announcement released by Redefine on SENS on November 29, 2021 wherein Redefine shareholders were advised that the Redefine posed -- that Redefine proposed making a share-for-share offer, which I shall refer to as Redefine offer, to acquire all of the shares in EPP not already owned by Redefine other than those EPP shares owned by I Group as part of an integrated transaction pursuant to which subject to EPP shareholder approval, EPP shares will be delisted from the JSE and the Luxembourg Stock Exchanges. Redefine offer will be made as part of the series of inter-conditional transactions to give effect to the EPP delisting and the reorganization of EPP whereby among other transactions, Redefine will offer to acquire all EPP shares not already owned by it excluding EPP shares owned by I Group at an exchange ratio of 2.70 Redefine shares for every EPP share acquired. If all of the EPP shareholders to whom the Redefine offer is made accepts the Redefine offer, whether by way of on-market or off-market transactions, Redefine would be required to issue up to 1,130,037,043 new Redefine shares. The number of unissued Redefine shares presently under the control of the Redefine Board is not sufficient to implement the Redefine offer in full. Accordingly, in order to give effect to the Redefine offer, Redefine shareholders are being requested to place up to 1,135,037,043 unissued Redefine shares under the control of the Redefine Board in accordance with the ordinary resolution to be proposed at this meeting. A notice convening this general meeting was circulated to shareholders on December 14, 2021. I therefore propose that the notice be taken as read. Does anyone here have any objection to the procedure? So let's go to the resolution, which is an ordinary resolution placing the unissued shares under the control of the Directors. You are asked to approve the placing of an additional 1,135,037,043 unissued shares under the control of the Directors. Will you now please complete your electronic voting in respect of the ordinary resolution?

I shall now allow any questions pursuant to the resolution tabled at the ordinary resolution meeting to be discussed before closing voting. Ms. Matwa and [ Andre, ] have any questions been raised pursuant to the resolutions tabled at today's general meeting?

Yes, Chair. There have been few questions so far. The first question is from Anthony Pope and Mr. Pope says reference is only made to the EPP's LTV ratio. EPP operates in a lower interest rate environment versus South Africa, hence a higher LTV ratio is acceptable in such a low interest environment. This is demonstrated too by EPP's slightly better interest cover ratio than RDF. So that was more of a comment than a question, Chair. Then the next one from Mr. Pope as well is the tax treatment of RDF distributions taxed at the average SA rate of about 40% versus EPP dividends, which are taxed at 20% is unfavorable to EPP shareholders. Has this been taken into consideration when calculating the share swap ratio?

I see that the next comment is also from Anthony Pope as well. We may as well ahead with that one as well.

No problem, Chair. As you said, from Mr. Pope again. The recent RDF distribution has not been taken into account when calculating the share swap ratio.

Are those the only questions that we have, Andre?

At the moment, yes, Chair.

Any from on your side, Andrew?

Chair, no questions on our side have been received.

Thank you very much for that question. Anthony, and I'll ask Andrew to respond. We have of course as a Board taken a great deal of this issues into consideration. But Andrew, please can you respond to that in more detail?

Thank you, Chair. Anthony, thank you for your questions. Just in terms of the basis of arriving at what we believe would be a share swap ratio, we approached it from a value perspective. So how we approached it was we looked at the relative net asset values of both EPP and Redefine projected at the point of the actual implementation of the transaction, which clearly does take into account the recent dividend, which Redefine paid to its investors. So if one looks at the post distribution dividend impact upon the NAV of Redefine and you apply the 2.7x swap ratio, you will see that on a converted basis the EUR 1.02 net asset value, which EPP confirmed in their recent SENS announcement that was last week, you will notice that the EUR 1.02 converted at today's exchange rate times 2.7 is equivalent to the NAV, and this is how we arrived at the swap ratio, the NAV that we currently have at Redefine times 2.7. I also just want to go further, Anthony, just to also suggest you look at the EPP SENS announcement that I referred to earlier wherein the -- it's actually Deloitte who expressed a fairness opinion of the swap ratio actually confirmed therein specifically that Redefine's distribution was considered by them when assessing such fairness as well.

Thanks. And are there any other questions? Are there any further questions?

No further questions at the moment, Chair.

Okay. Thank you very much, Andrew, and thanks to shareholders for raising questions. Are there any other matters not already covered in accordance with the Companies Act requirements for the general meeting that members may wish to raise? Okay. I now close the voting and the results will be shown shortly on the screen for the benefit of all. So as we can see, we have overwhelming support for the resolution with those in favor at 78.34% and those against at 21.66% and the balance is extensions. I therefore declare that the ordinary resolution has been passed by the requisite majority. As all of the business on the agenda has been dealt with, I declare the meeting closed and thank you for your attendance. Thank you very much.