Wrap Text
Abridged audited consolidated results for the year ended 31 August 2016
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 "the Group")
ABRIDGED AUDITED CONSOLIDATED RESULTS
FOR THE YEAR ENDED 31 AUGUST 2016
HIGHLIGHTS
Dividend
UP GBP 7.6p
per share
(GBP 3.05p per share August 2015*)
Recurring profit
UP GBP 11.68m
(GBP 2.75m August 2015*)
Total assets
UP GBP 282m
(GBP 188m August 2015)
Rental Income
UP GBP 20.66m
(GBP 5.33m August 2015*)
*Part year
AUDITED STATEMENTS OF FINANCIAL POSITION AT 31 AUGUST 2016
THE GROUP
31 August 31 August
2016 2015
GBP 000 GBP 000
ASSETS
Non-current assets
Property, plant and equipment 19 -
Investment property 272 588 180 225
Derivative financial instrument - 175
272 607 180 400
Current assets
Trade and other receivables 5 846 2 655
Cash and cash equivalents 3 639 4 985
9 485 7 640
Total assets 282 092 188 040
EQUITY
Capital and reserves (attributable to owners of the parent)
Share capital 124 412 80 511
Hedging reserve (5 614) -
(Accumulated losses)/Retained earnings (10 051) 834
Owner's interest 108 747 81 345
LIABILITIES
Non-current liabilities
Borrowings 162 935 102 974
Derivative financial instrument 5 614 -
Deferred tax - 26
168 549 103 000
Current liabilities
Trade and other payables 4 719 3 310
Income tax payable 77 385
4 796 3 695
Total liabilities 173 345 106 695
Total equity and liabilities 282 092 188 040
AUDITED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR YEAR ENDED 31 AUGUST 2016
THE GROUP
Period from
For the year ended 1 January 2015
31 August 2016 to 31 August 2015
GBP 000 GBP 000
Rental income 20 663 5 333
Expenses
Property operating expenses (2 822) (811)
Administrative expenses (1 678) (1 088)
Acquisition related costs (2 563) (1 719)
Other income 43 41
Fair value (loss) / gain on investment property (8 745) 1 225
Loss on disposal of subsidiary company - (67)
4 898 2 914
Net finance costs (5 707) (1 306)
(Loss)/profit before tax (809) 1 608
Taxation 52 (723)
(Loss)/profit from continuing operations (757) 885
Profit from discontinued operations - 54
(Loss)/profit for the year/period (757) 939
Other comprehensive income for the year/period
Items that may be reclassified to profit or loss
Fair value loss on financial derivatives (5 614) -
Exchange loss arising on retranslation of subsidiary company - (11)
Items that will not be reclassified to profit or loss
Release of exchange difference on disposal of subsidiary company - 11
Other comprehensive income for the year/period (5 614) -
Total comprehensive income for the year/period (6 371) 939
Basic (loss)/earnings per share (GBP) (0.005) 0.013
Headline earnings/(loss) per share (GBP) 0.053 (0.004)
RECONCILIATION OF (LOSS)/PROFIT TO HEADLINE EARNINGS
THE GROUP
Period from
For the year ended 1 January 2015
31 August 2016 to 31 August 2015
GBP 000 GBP 000
Basic (loss)/earnings from continuing operations
attributable to equity holders of the Company (757) 885
Fair value loss/(gain) on investment property 8 745 (1 225)
Loss on disposal of subsidiary company - 67
Headline earnings/(loss) from continuing operations
attributable to equity holders of the Company 7 988 (273)
Basic earnings from discontinued operations - 54
Headline earnings from discontinued operations - 54
Weighted average number of shares 150 527 365 68 481 218
Basic (loss)/earnings per share (GBP) (0.005) 0.013
Headline earnings/(loss) per share (GBP) 0.053 (0.004)
note: There are no dilutionary instruments in issue
AUDITED STATEMENTS OF CHANGES IN EQUITY FOR YEAR ENDED 31 AUGUST 2016
Retained
earnings/ Non-
Share Hedging (Accumulated controlling
capital Reserve losses) Total interests Total
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
THE GROUP
Balance at 1 September 2015 80 511 - 834 81 345 - 81 345
Issue of shares 44 693 - - 44 693 - 44 693
Issue costs (792) - - (792) - (792)
Loss for the year - - (757) (757) - (757)
Other comprehensive income for the year - (5 614) - (5 614) - (5 614)
Dividend payment - _ (10 128) (10 128) - (10 128)
Balance at 31 August 2016 124 412 (5 614) (10 051) 108 747 - 108 747
Balance at 1 January 2015 616 - (105) 511 31 542
Issue of shares 84 163 - - 84 163 - 84 163
Issue costs (4 268) - - (4 268) - (4 268)
Profit for the period - - 939 939 - 939
Other comprehensive income for the period - - - - - -
Disposal of subsidiary company - - - - (31) (31)
Balance at 31 August 2015 80 511 - 834 81 345 - 81 345
AUDITED STATEMENTS OF CASH FLOWS FOR YEAR ENDED 31 AUGUST 2016
THE GROUP
Period from
31 August 1 January 2015
2016 to 31 August 2015
GBP 000 GBP 000
Cash flows from operating activities
Cash generated from operations 11 617 1 984
Tax paid (1 119) -
Interest paid (5 723) (1 394)
Net cash generated from operating activities 4 775 590
Cash flows from investing activities
Acquisitions of subsidiaries, net of cash and cash equivalents acquired (11 553) (43 940)
Addition to investment property (358) -
Disposal of subsidiary net of cash and cash equivalents disposed - (7)
Purchase of property, plant and equipment (20) -
Interest received 1 6
Expenses incurred in respect of disposal of subsidiary company - (89)
Net cash used in investing activities (11 930) (44 030)
Cash flows from financing activities
Payments on long-term borrowings (27 827) (134 353)
Proceeds from borrowings 500 102 886
Proceeds from issue of share capital 44 693 84 163
Payments for share issuance costs (792) (4 268)
Payments of borrowing costs (637) -
Dividend payment (10 128) -
Net cash generated from financing activities 5 809 48 428
Net (decrease)/increase in cash and cash equivalents for the year/period (1 346) 4 988
Exchange difference - (5)
Cash and cash equivalents at the beginning of the year/period 4 985 2
At 31 August 3 639 4 985
FINANCIAL RESULTS
We are pleased to report that the Group produced a recurring profit of GBP 11.68 million for the year. The Group's IFRS
total comprehensive income for the period was a loss of GBP 6.37 million, which incorporated the writing off of the
acquisition fees associated with the acquisition of The Houndshill Shopping Centre ("Houndshill") in Blackpool, the fall
in valuation of its three retail investment properties (see the table in the business review below) and the Mark To
Market (MTM) value of the financial derivatives taken out to fix our interest cost. The average annual "all in" cost of
debt of the Company, including the effect of fixed rate financial swap derivatives, currently stands at 3.28% per annum.
Over 87% of the Company's debt is fixed by use of financial swap derivatives.
The Company has been established in Mauritius as a public company limited by shares holding a Category 1 Global Business
Licence. The Company has a dual primary listing 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 property assets situated in the United Kingdom ("UK"). The Company's property
investments are held by a number of wholly owned subsidiaries.
The Company's results are reported in Pounds Sterling ("GBP").
BUSINESS REVIEW
Property acquisitions
Consistent with the Group's strategy to build a portfolio of dominant retail assets in towns in the UK, the Company
raised, via a private placement, a further GBP 43.90 million (net of issue costs) on 17 September 2015. These funds,
together with a five-year term loan for GBP 59.70 million, provided by Deutsche Pfandbriefbank AG, were used to purchase
Houndshill for a consideration of GBP 100.75 million. This modern, fully covered shopping centre in the town's prime
pitch offering over 300 000 sq ft which includes 65 retail units and 750 car parking spaces. Houndshill is anchored by
Debenhams, with other major retailers including New Look, River Island, Next and H&M.
The Company transferred its tax domicile to the UK on 20 October 2015 and elected to join the UK REIT regime with effect
from 21 October 2015. The UK REIT regime offers certain tax advantages to the Company and guarantees 90% distribution of
the aggregate net property rental income, calculated on a UK Corporation Tax basis, to shareholders.
A summary of the shopping centres that are owned by the Company is shown below. These shopping centres have been valued
at 31 August 2016 by an independent valuer, Colliers International Valuation UK LLP, at GBP 272.85 million.
Valuation 2016 Valuation 2015
Property Location GLA sq ft Acquisition date (GBP) (GBP)
Coopers Square Burton upon Trent 396 504 14 April 2015 94 350 000 95 000 000
The Cleveland Centre Middlesbrough 392 993 14 April 2015 80 000 000 85 250 000
Houndshill Shopping Centre Blackpool 301 959 23 September 2015 98 500 000 100 750 000*
Total 1 091 456 272 850 000 281 000 000
*Based on purchase price
This small decline in values of 2.90% reflects the increase in stamp duty and the slightly more cautious approach to
valuations post results of the European Union ("EU") referendum in the UK.
Rental income
The combined annualised net operational income (NOI) is GBP 11.68 million per annum with 83% of the income coming from
national retail operators.
Letting activity and lease renewals
The centres have a combined occupancy of 93.52% by Estimated Rental Value ("ERV") and 92.2% by Gross Lettable Area
("GLA"). We anticipate the occupancy will rise to above 96% by ERV shortly as leases on units under offer complete. In
the past 12 months, New Frontier has concluded 46 leasing events, 13 of which are core long-term leases at an average
rent increase of 6.59% above ERV.
Since the EU referendum we have completed seven lettings and have 10 units under offer on either short- or long-term
lettings, equivalent to GBP 416 500 per annum rent.
A number of asset management initiatives are under way within all schemes which will allow the Company to improve the
quality of space that is offered to tenants, allowing them the opportunity to upsize and improve their profitability.
Net asset value ("NAV")
The European Public Real Estate Association ("EPRA") NAV is a proportionally consolidated measure representing the IFRS
net assets excluding the mark-to-market on effective cash flow hedges and related debt adjustments, the mark-to-market
on the convertible bonds as well as deferred taxation on property and derivative valuations.
EPRA NAV is GBP 75 pence per share down from GBP 78 pence per share at 31 August 2015.
PROSPECTS
The outcome of the EU referendum has given rise to considerable uncertainty in the UK's investment markets. Whilst we
consider the UK economy to be fundamentally resilient and likely to respond positively once the UK's future relationship
with the EU becomes clear, we believe it is appropriate to re-balance the Company's portfolio by focussing our
acquisition activity on properties in mainland Europe. In executing this extension to our strategy, we will continue to
target dominant retail assets. This will include smaller centres where these match our investment criteria. We will also
acquire non-retail assets, up to a maximum of 20% of aggregate portfolio value, where these present a persuasive
investment case. This enhancement of our investment strategy will enable us to exploit a much wider range of
opportunities, reducing our overall risk profile whilst continuing to benefit from the profits contributed by our
existing centres and broadening our Rand hedge strategy.
DISTRIBUTABLE EARNINGS
The Board is pleased to announce that a dividend of GBP 4.0 pence per share (GBP 6.11 million) has been declared and
this combined with the interim dividend totals GBP 7.6 pence per share (GBP 11.61 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 will be issued in due course.
SCRIP DIVIDEND
Following a review of the Group's dividend policy the Board have decided not to declare a scrip dividend but will
continue to consider such an option for future dividend payments.
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 2016 and a copy of the audit opinion, together with the underlying audited
annual financial statements are available for inspection at Company's registered office. This abridged report is
extracted from audited information, but is not itself audited. The directors take full responsibility for the
preparation of the abridged report and for ensuring that the financial information has been correctly extracted from the
underlying audited financial statements. These abridged audited consolidated results for the year ended 31 August 2016
have been prepared in accordance with International Financial Reporting Standards, IAS 34, the rules of the SEM and the
Listings Requirements of the JSE Limited.
By order of the Board
Osiris Corporate Solutions (Mauritius) Limited
Company secretary
17 October 2016
NOTES
Copies of this report, together with the audit 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 communiqué is issued pursuant to Listing Rules 12.14 and Section 88 of the Securities Act 2005. The Board of New
Frontier Properties Limited accepts full responsibility for the accuracy of the information in this communiqué.
For further information, please contact:
JSE sponsor
Java Capital +27 11 722 3050
Company secretary
Osiris Corporate Solutions (Mauritius) Limited +230 650 4030
Date: 17/10/2016 02:30:00 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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