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Summarised audited consolidated results for the year ended 31 August 2017
New Frontier Properties Ltd
(Incorporated in the Republic of Mauritius on
5 June 2014)
(Registration number 123368C1/GBL)
SEM share code: NFP.N000
JSE share code: NFP
ISIN: MU0453N00004
("New Frontier" or "the Company" or "Group")
SUMMARISED AUDITED CONSOLIDATED RESULTS
FOR THE YEAR ENDED 31 AUGUST 2017
The Company has been established in Mauritius as a public company limited by shares holding a
Category 1 Global Business Licence. The Company has primary listings on the Stock Exchange of
Mauritius Ltd ("SEM") and the Alternative Exchange ("AltX") of the Johannesburg Stock Exchange
("JSE"). The primary objective of the Company is to acquire good quality, income-generating retail
and logistics/warehouse property assets in the United Kingdom ("UK") and mainland Europe.
The Company's property investments are held by a number of wholly-owned subsidiaries.
REPORTING CURRENCY
The Company's results are reported in Pounds Sterling ("GBP").
FINANCIAL RESULTS
The Group's International Financial Reporting Standards ("IFRS") total comprehensive income for
the year was a profit of GBP2.526 million (2016: a loss of GBP6.371 million), which incorporated the
fall in valuation of the Cleveland Centre, Middlesbrough (see the table in business review below)
and the improvement in the mark-to-market ("MTM") value of the financial derivatives taken out to
fix our interest cost. The Group produced a recurring profit of GBP11.007 million for the year (2016:
GBP11.679 million). A reconciliation table of the recurring profit to IFRS total comprehensive income
for the year is provided in the financial section at the end of this report. The average annual "all in"
cost of debt of the Company, including the effect of fixed rate financial swap derivatives, currently
stands at 3.25% per annum (2016: 3.28% per annum). Over 85% (2016: 87%) of the Company's debt
is fixed by use of financial swap derivatives.
BUSINESS REVIEW
Property acquisitions
We are pleased to report that the Group's new strategic objective of acquiring European
logistics/warehouse properties commenced with a post-year-end exchange of contracts on the
purchase of unit 1, Stadium Business Park, Ballycoolin, Dublin, Ireland ("Stadium Business Park
Unit") on Tuesday, 3 October 2017. This transaction is due to complete shortly for a consideration
of 8.65 million euros ("EUR"). The Stadium Business Park Unit is let to Viking Direct (Ireland)
Limited on a 20-year full repairing and insuring lease from 24 August 2007 (with a tenant break
option in November 2020) at a rent of EUR743 518 per annum. The purchase price reflects a net
initial yield of 8.23%.
Property values
A summary of the shopping centres that are owned by the Company is shown below. These
shopping centres were valued at 31 August 2017 by an independent valuer, Colliers International
Valuation UK LLP, at GBP266 million.
Valuation 2017 Valuation 2016
Property Location GLA sq ft Acquisition date (GBP) (GBP)
Coopers Square Burton upon
Trent 402 429 14 April 2015 95 000 000 94 350 000
The Cleveland Middlesbrough
Centre 411 960 14 April 2015 72 500 000 80 000 000
Houndshill Blackpool 23 September
Shopping Centre 302 377 2015 98 500 000 98 500 000
Total 1 116 766 266 000 000 272 850 000
This small reduction in the value of the Company's portfolio
by 2.51% reflects the fall in income and value of the Cleveland
Centre, Middlesbrough (as there were a number of businesses in
receivership at this property during the past 12 months).
Income by covenant type
The vast majority of tenants in New Frontier's shopping centres
are a strong covenant with 84.46% of gross rental income
coming from national retail operators.
Income type %
Mall 1.82
Parking 7.11
National multiple 84.46
Independent retailer 4.67
Regional multiple 1.94
Grand total 100.00
Major tenants by income
Percentage Total income Number of
Occupier of income (GBP) units
New Look 7.44 1 396 000 4
Car park income 7.11 1 335 000 3
Next Group Plc 4.85 909 856 3
Boots UK Limited 4.14 777 822 4
Debenhams 3.42 641 392 1
Marks & Spencer 2.92 549 000 1
WH Smith Retail 2.70 506 150 2
H&M Hennes &
Mauritz UK Limited 2.26 425 000 2
Primark Stores
Limited 2.11 395 475 2
Barclays Bank Plc 1.82 341 490 3
Lease expiry by gross rental
Mall 1.82
Parking 7.11
< 1 yr 21.94
2018 8.44
2019 9.66
2020 7.25
2021 12.86
2022 6.35
>2023 24.57
Lease expiry by gross rental
Weighted average unexpired lease term ("WAULT")
The centres benefit from a WAULT to expiry of 9.41 years and to a term certain of 8.90 years.
Burton Middlesbrough Blackpool
WAULT to expiry, years 15.1 6.61 5.58
WAULT certain, years 15.28 6.55 4.72
Letting activity and lease renewals
As at 31 August 2017, the centres had a combined occupancy of 94.51% (31 August 2016: 93.52%)
by Estimated Rental Value ("ERV") and 91.93% (31 August 2016: 92.2%) by Gross Lettable Area
("GLA"). This represents an improvement in the vacancy rate to 5.49% by ERV (31 August 2016:
6.48%).
In the past 12 months, New Frontier has concluded 54 leasing events, 28 of which are core long-term
leases with an average lease length of 9 years and average rent-free of 8 months. The retail sector
has seen increased pressure from the growth in online sales with long-term core new lettings and
lease renewals being broadly flat at (0.5%) by ERV.
There are a further 6 units currently under offer on long-term lettings and 14 core lease renewals
ongoing which will result in a further improvement to the overall occupancy of the centres.
New Frontier has made progress letting vacant units in a challenging retail environment which is
facing headwinds from the uncertainty around Brexit, rising inflation squeezing household incomes
as it stays above wage growth and the consequential decrease in consumer spending.
The Cleveland Centre, Middlesbrough was particularly impacted by these economic conditions
with a number of its tenants going into receivership and resulting in a consequential fall in
the value of that property. That said, the performance of the Group's Burton and Blackpool
properties has counteracted the reduced value and more challenging conditions faced at the
Middlesbrough property.
The Company is undertaking a number of asset management projects within all schemes.
At Blackpool, heads of terms have been agreed for a new IMAX cinema development with ancillary
retail. At Burton, Next have opened a new 25 052 sq ft store in the old BHS unit and terms have
been agreed with H&M for the remaining unit. At Middlesbrough, a number of new lettings are
being progressed which will strengthen and improve the quality of the centre's tenants further.
Net asset value ("NAV")
The European Public Real Estate Association ("EPRA") NAV is a proportionally consolidated
measure representing the IFRS net assets excluding the MTM on effective cash flow hedges and
related debt adjustments, the MTM on convertible bonds as well as deferred taxation on property
and derivative valuations.
EPRA NAV, based on the shares in issue throughout the period of 152 774 750, is 67 pence per
share for the year ended 31 August 2017 compared to 75 pence per share at 31 August 2016.
A reconciliation table of the EPRA NAV to the Statement of Financial Position is provided in the
financial section at the end of this report.
PROSPECTS
During the past year, the Company's business strategy has continued to evolve to take into account
changes in the prevailing political and economic climate. In particular, the impact of the European
investment property market's reaction to Brexit and ensuing Article 50 negotiations as to the
terms under which the UK will leave the European Union has been felt.
New Frontier's strategy continues to retain its retail focus in the UK but has been refined to extend
to acquisitions of property (both retail and non-retail) within mainland Europe, with a preference
given to logistics/warehouse assets in the UK, Germany, Austria, Slovakia, Czech Republic, Poland,
Ireland and Benelux.
In line with this new investment strategy, the Company has explored a number of opportunities
in mainland Europe and is close to executing transactions in Austria and Germany in the
logistics/warehouse space. These proposed acquisitions, together with the imminent purchase of
the Stadium Business Park Unit in Ireland, will provide the Group with exposure to the European
logistics/warehouse market enabling the Company to benefit from the increase in e-retailing
activity across Europe as well as broadening its hard currency exposure.
CHANGES TO BOARD OF DIRECTORS ("THE BOARD")
Mr John Needham resigned as a non-executive director of the Company with effect from
30 September 2017. Mr Kameel Keshav resigned as a non-executive director of the Company with
effect from 29 June 2017. Mrs Marelise De Lange was appointed to the Board as a non-executive
director of the Company on 5 July 2017.
The Board would like to thank Mr Needham and Mr Keshav for their valuable contributions to the
Company and are pleased to welcome Mrs De Lange to the Board.
DISTRIBUTABLE EARNINGS
The Board is pleased to announce that a dividend of GBP 3.6 pence per share (GBP 5.5 million) has
been declared for the year under review and this, combined with the interim dividend, totals GBP
7.2 pence per share (GBP 11 million). An announcement, containing details of this dividend, will be
made on the Stock Exchange News Service ("SENS") of the JSE as well as the website of the SEM
in due course.
AMENDMENTS TO CONSTITUTION
On 28 July 2017, the Board issued a notice informing its shareholders that the Company had
amended certain provisions of its Constitution. The amended Constitution, which was approved
by shareholders by special resolution on 26 July 2017, the JSE and the SEM, is available on the
Company's website.
ASSET MANAGEMENT AGREEMENT ("AGREEMENT")
The Board issued a notice dated 27 June 2017 informing the Company's shareholders that
it proposed to make certain amendments to the Agreement to incentivise the asset manager,
Waypoint New Frontier Limited, to acquire further assets. These amendments were approved by
shareholders on 10 July 2017.
CAPITAL REDUCTION
On 9 June 2017, the Board issued a notice informing the Company's shareholders and the public in
general that it had put forward a proposal for the reduction of the Company's stated capital which
was subsequently approved by its shareholders by special resolution at a special meeting of the
Company on 11 July 2017.
BASIS OF PREPARATION
The Company's external auditors, BDO & Co, have issued their unmodified audit opinion on the
Group's financial statements for the year ended 31 August 2017 and a copy of the audit opinion,
together with the underlying audited annual financial statements, is available for inspection at the
Company's registered office. This summarised report is extracted from audited information, but is
not itself audited. The directors take full responsibility for the preparation of the summarised report
and for ensuring that the financial information has been correctly extracted from the underlying
audited financial statements.
These summarised audited consolidated results for the year ended 31 August 2017 have been
prepared in accordance with IFRS, including IAS 34 - Interim Financial Reporting, the SEM Listing
Rules, the Securities Act of Mauritius 2005 and the JSE Listings Requirements to the extent
required. The accounting policies are in terms of IFRS and are consistent with those of the previous
annual financial statements.
SEGMENTAL INFORMATION
The Group derives its revenue from a single business activity, the property sector, which it considers
as its only segment.
By order of the Board
Osiris Corporate Solutions (Mauritius) Limited
Company secretary
31 October 2017
NOTES
Copies of this report are available to the public at the registered office of the Company,
B45 Twenty-Foot Road, 3rd Floor, La Croisette, Grand Baie, Mauritius.
Copies of the statement of direct or indirect interest of the Senior Officers of the Company pursuant
to rule 8(2)(m) of the Securities (Disclosure of Obligations of Reporting Issuers) Rules 2007 are
available to the public upon request to the Company Secretary at the Registered Office of the
Company at B45 Twenty-Foot Road, 3rd Floor, La Croisette, Grand Baie, Mauritius.
This communique is issued pursuant to Listing Rules 12.20 and 12.21 and Section 88 of the Securities
Act of Mauritius 2005. The Board of New Frontier Properties Ltd accepts full responsibility for the
accuracy of the information in this communique.
For further information please contact:
JSE sponsor
Java Capital +27 11 722 3050
Company secretary
Osiris Corporate Solutions (Mauritius) Limited +230 650 4030
STATEMENTS OF FINANCIAL POSITION
AT 31 AUGUST 2017
THE GROUP
Audited
31 August 31 August
2017 2016
GBP 000 GBP 000
ASSETS
Non-current assets
Property plant and equipment 17 19
Investment property 264 800 272 588
264 817 272 607
Current assets
Trade and other receivables 6 091 5 846
Cash and cash equivalents 5 510 3 639
11 601 9 485
Total assets 276 418 282 092
EQUITY
Capital and reserves (attributable to owners of the parent)
Share capital 39 412 124 412
Hedging reserve (3 330) (5 614)
Retained earnings/(Accumulated losses) 63 678 (10 051)
Total equity 99 760 108 747
LIABILITIES
Non-current liabilities
Borrowings 159 112 162 935
Derivative financial instrument 300 5 614
159 412 168 549
Current liabilities
Borrowings 11 738 -
Trade and other payables 5 508 4 719
Income tax payable - 77
17 246 4 796
Total liabilities 176 658 173 345
Total equity and liabilities 276 418 282 092
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
YEAR ENDED 31 AUGUST 2017
THE GROUP
Audited
For the year For the year
ended ended
31 August 31 August
2017 2016
GBP 000 GBP 000
Rental income 19 279 20 663
Expenses
Property operating expenses (1 895) (2 822)
Administrative expenses (1 432) (1 678)
Acquisition related costs - (2 563)
Other income 99 43
Fair value loss on investment property (10 046) (8 745)
6 005 4 898
Net finance costs (5 847) (5 707)
Profit/(loss) before tax 158 (809)
Taxation 84 52
Profit/(loss) for the year 242 (757)
Other comprehensive income for the year
Items that may be reclassified subsequently to profit or loss
Fair value gain/(loss) on derivative financial instruments 2 284 (5 614)
Other comprehensive income for the year 2 284 (5 614)
Total comprehensive income for the year 2 526 (6 371)
Earnings/(loss) per share
Basic earnings/(loss)per share (GBP) 0.002 (0.005)
Headline earnings per share (GBP) 0.067 0.053
STATEMENTS OF CHANGES IN EQUITY
YEAR ENDED 31 AUGUST 2017
Audited
(Accumulated
losses)/
Share Hedging Retained
capital reserve earnings Total
GBP 000 GBP 000 GBP 000 GBP 000
THE GROUP
Balance at 1 September 2016 124 412 (5 614) (10 051) 108 747
Profit for the year - - 242 242
Other comprehensive income for the year - 2 284 - 2 284
Total comprehensive income for the year 2 284 242 2 526
Capital reduction (85 000) - 85 000 -
Dividends - - (11 611) (11 611)
Waiver of dividends - - 98 98
Total transactions with owners of the parent (85 000) - 73 487 (11 513)
Balance at 31 August 2017 39 412 (3 330) 63 678 99 760
Balance at 1 September 2015 80 511 - 834 81 345
Loss for the year - - (757) (757)
Other comprehensive income for the year - (5 614) - (5 614)
Total comprehensive income for the year - (5 614) (757) (6 371)
Issue of shares 44 693 - - 44 693
Issue costs (792) - - (792)
Dividends - - (10 128) (10 128)
Total transactions with owners of the parent 43 901 - (10 128) 33 773
Balance at 31 August 2016 124 412 (5 614) (10 051) 108 747
STATEMENTS OF CASH FLOWS
YEAR ENDED 31 AUGUST 2017
THE GROUP
Audited
For the year For the year
ended ended
31 August 31 August
2017 2016
GBP 000 GBP 000
Cash flows from operating activities
Cash generated from operations 16 375 11 617
Tax refunded/(paid) 217 (1 119)
Interest paid (5 411) (5 723)
Net cash from operating activities 11 181 4 775
Cash flows from investing activities
Acquisitions of subsidiaries, net of cash and cash equivalents
acquired - (11 553)
Addition to investment property - (358)
Capital improvements to investment property (2 258)
Purchase of property, plant and equipment - (20)
Interest received 5 1
Net cash used in investing activities (2 253) (11 930)
Cash flows from financing activities
Payments on long-term borrowings - (27 827)
Proceeds from borrowings 7 500 500
Proceeds from issue of share capital - 44 693
Payments for share issuance costs - (792)
Premium paid to reset interest rate swap (3 030) -
Payment on borrowing costs (14) (637)
Dividend payment (11 513) (10 128)
Net cash (used in)/from financing activities (7 057) 5 809
Net increase/(decrease) in cash and cash equivalents for the year 1 871 (1 346)
Cash and cash equivalents at the beginning of the year 3 639 4 985
At 31 August 2017/31 August 2016 5 510 3 639
RECONCILIATION OF PROFIT
FOR YEAR ENDED 31 AUGUST 2017 TO HEADLINE EARNINGS
THE GROUP
Audited
31 August 31 August
2017 2016
GBP 000 GBP 000
Basic and headline earnings per share
Basic earnings/(loss) attributable to equity holders of the Company 242 (757)
Fair value movement on investment properties 10 046 8 745
Headline earnings attributable to equity holders of the Company 10 288 7 988
Number of shares/weighted average number of shares 152 774 750 150 527 365
Earnings/(loss) per share
Basic and diluted earnings/(loss) per share (GBP) 0.002 (0.005)
Headline and diluted earnings per share (GBP) 0.067 0.053
Note: The Company had shareholders convertible loans amounting to GBP 4,038 million. The loans
will be converted into shares of the Company as and when the Company undertakes an equity
raise. The loan is unsecured and repayable when the Company undertakes the vendor placement,
failing which six months from the advance date.
As at 31 August 2017, the Company did not have specific input relating to pricing and the timing of
the conversion as these were contingent based on the forthcoming capital raise and placement by
the Company. The Group therefore could not present the dilutive effect on the earnings per share.
RECONCILIATION OF IFRS TOTAL COMPREHENSIVE INCOME TO RECURRING PROFIT
Basis of preparation
In order to provide information of relevance to investors and a meaningful basis of comparison,
unaudited management accounts have been prepared and are presented below. The directors
consider that the management accounts are more meaningful in interpreting the performance of
the Company. The management accounts diverge from IFRS as they make adjustments to total
comprehensive income to determine recurring profit and EPRA NAV.
The preparation of the management accounts is the sole responsibility of the directors and has
been prepared in accordance with the basis stated for illustrative purposes only. Due to their
nature, the management accounts may not fairly represent the results of the Company.
Year ended Year ended
31 August 31 August
2017 2016
GBP 000 GBP 000
Total comprehensive income/(loss) for the period 2 526 (6 371)
Fair value (loss)/gain on financial derivatives (2 284) 5 614
Basic earnings/(loss) 242 (757)
Fair value movement on investment property 10 046 8 745
Amortised and other loan costs 451 419
Taxation (84) (52)
Acquisition related fees - 2 563
Administrative expenses 352 761
Recurring profit 11 007 11 679
EPRA has issued recommended bases for the calculation of NAV per share (see the table below).
Commentary on NAV per share is provided in the business review.
As at As at
31 August 31 August
2017 2016
Total equity (GBP 000) 99 760 108 747
Adjusted for:
MTM of financial derivatives (GBP 000) 3 330 5 614
EPRA NAV (GBP 000) 103 090 114 361
Number of shares 152 774 750 152 774 750
NAV per share (GBP) 0.67 0.75
EPRA NAV excludes MTM on financial derivatives.
Date: 31/10/2017 01:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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