ATLANTIC LEAF PROPERTIES LIMITED - Abridged unaudited financial statements for the three and nine months ended 30 November 2018

Release Date: 11/01/2019 17:06
Code(s): ALP
 
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Abridged unaudited financial statements for the three and nine months ended 30 November 2018

Atlantic Leaf Properties Limited
(Incorporated in the Republic of Mauritius)
(Registration number: 119492 C1/GBL)
SEM share code: "ALPL.N0000"
JSE share code: "ALP"
ISIN: "MU0422N00009"
www.atlanticleaf.mu
("Atlantic Leaf" or "the Company")

ABRIDGED UNAUDITED FINANCIAL STATEMENTS FOR THE THREE AND NINE
MONTHS ENDED 30 NOVEMBER 2018

DIRECTORS' COMMENTARY

Earnings

Earnings for the quarter ended 30 November 2018 at 2.22 GBP pence per share were in line with our guidance and marginally up on the
prior year (2.17 GBP pence per share). Whilst the industrial sector of the UK property market continues to be relatively unaffected by the
uncertainty surrounding Brexit, we have adopted a cautious approach to pursuing new investment opportunities resulting in some "cash
drag" on the earnings in the quarter. The Company has received new tenant proposals on both the Haydock (currently vacant) and Brecon
(currently rented at a reduced rate to Homebase, due to a Company Voluntary Arrangement) assets, which are expected to create a
positive uplift in income and valuations in the 2020 financial year should these new leases be successfully concluded.

As part of our plan to extend our debt maturity profile and reduce refinancing risk, the Company has successfully refinanced the HSBC debt 
which has resulted in an IFRS 9 fair value loss adjustment of GBP 667,745. The adjustment is approximately the value of the unamortised finance 
costs on the old debt. The adjusted headline earnings will exclude this fair value adjustment and the costs will continue to be amortised over 
the term of the new loans.

Balance sheet

The refinancing of a large portion of the Company's debt was successfully completed in the quarter under review. The resultant weighted
average cost of funding has increased slightly from 3.30% to 3.53% but the maturity profile is now approximately four years with roughly
75% hedged. 

The UK property market is exhibiting different segmental characteristics with the industrial sector remaining active and strong, whilst the 
retail and office sectors are experiencing pressure from a tenant stability and valuation perspective. Although our portfolio is biased towards 
the industrial sector (70% of our assets), we have been adversely affected by the retail warehousing and office sectors in which we have an exposure 
of 10% and 20% by value respectively. 

As part of the refinancing of the debt, we have updated the valuations of some of our investment properties. This resulted in a net write-down of 
GBP 370,000, which together with other fair value adjustments on the listed portfolio, the debt refinance and the joint venture portfolio have resulted 
in a decrease in the Company's net asset value by one GBP pence per share to 1.04 GBP per share. A comprehensive valuation of the Company's investment 
properties will be conducted at the year-end.

Outlook

We anticipate that the results for the year ending 28 February 2019 will be slightly ahead of the prior year. The reletting of Haydock and
Brecon will benefit the results in the 2020 financial year.

The redomicile of the Company to Jersey and conversion to a UK REIT are planned to coincide with the commencement of the financial year
on 1 March 2019. Both the redomicile and conversion to a REIT are subject to final regulatory approvals and an announcement will be made 
to shareholders once the date has been confirmed.

STATEMENT OF FINANCIAL POSITION
                                                                                          Group          Group          Group
                                                                                      Unaudited      Unaudited        Audited
                                                                                          as at          as at          as at
                                                                                    30-Nov-2018    30-Nov-2017    28-Feb-2018
                                                                                            GBP            GBP            GBP
ASSETS
Non-current assets                                                                  360 137 270    335 567 662    352 475 304
   Investment properties                                                            333 020 921    303 494 000    319 404 723
   Listed investments                                                                 3 542 156      7 097 325      7 154 208
   Investment in joint venture                                                       23 410 532     24 826 214     25 766 250
   Other receivables                                                                    163 661        150 123        150 123

Current assets                                                                        9 897 383     11 282 668     10 378 826
    Trade and other receivables                                                       3 553 524      4 987 813      3 760 371
    Cash and cash equivalents                                                         6 343 859      6 294 855      6 618 455

Total assets                                                                        370 034 653    346 850 330    362 854 130

Equity and liabilities
Equity                                                                              196 472 500    197 671 106    204 205 734
   Share capital                                                                    198 498 451    198 484 877    198 467 699
   Retained earnings                                                                (1 160 303)        (9 512)      6 233 714
   Cash flow hedge reserve                                                            (865 648)      (804 259)      (495 679)

Liabilities

Non-current liabilities                                                             150 624 647    117 708 953    131 829 657
   Interest-bearing borrowings                                                      150 624 647    117 708 953    131 829 657

Current liabilities                                                                  22 937 506     31 470 271     26 818 739
    Trade and other payables                                                          4 485 648      3 802 836      4 173 237
    Current portion of interest-bearing borrowings                                   16 008 247     14 216 307     21 213 518
    Short-term borrowings                                                                     -      2 406 063              -
    Tax payable                                                                       1 511 107      1 618 663              -
    Dividend payable                                                                                 8 503 948        589 520
    Derivative financial instrument                                                     932 504        922 454        842 464

Total equity and liabilities                                                        370 034 653    346 850 330    362 854 130

Number of shares in issue                                                           188 976 628    188 976 628    188 976 628
Net asset value per share (GBP)                                                            1.04           1.05           1.08
Net asset value per share excluding cash flow hedge reserve                                1.04           1.05           1.08

STATEMENT OF COMPREHENSIVE INCOME
                                                         Group            Group           Group          Group          Group
                                                     Unaudited        Unaudited       Unaudited      Unaudited        Audited
                                                  Three months      Nine months    Three months    Nine months           Year
                                                         ended            ended           ended          ended          ended
                                                   30-Nov-2018      30-Nov-2018     30-Nov-2017    30-Nov-2017    28-Feb-2018
                                                           GBP              GBP             GBP            GBP            GBP
       
Rental income                                        6 106 334       17 954 303       5 736 051     17 136 124     21 201 662
Tenant recoveries                                      326 170          896 851               -              -              -
Straight-line lease income                             263 206        1 291 824         285 892        932 646      2 892 734
Revenue                                              6 695 710       20 142 978       6 021 943     18 068 770     24 094 396
Property operating                                   (622 481)      (1 733 659)       (214 319)      (646 412)      (856 597)
expenses       
Net property                                         6 073 229       18 409 319       5 807 624     17 422 358     23 237 799
income       
Other operating                                      (528 780)      (2 216 336)       (657 825)    (1 863 725)    (2 615 124)
expenditure       
Operating income                                     5 544 449       16 192 983       5 149 799     15 558 633     20 622 675
Other income                                               504           39 920               -         14 172          5 243
Investment income                                       94 932          390 060          77 332        124 439        158 350
Profit on disposal of                                        -          378 068               -              -        134 985
investment property       
and listed       
investments       
Profit on foreign                                       50 899           54 253           8 695         49 220         67 316
exchange       
Settlement of swap                                      80 562           80 562               -              -              -
Fair value                                         (1 825 685)      (3 714 815)       (376 963)    (1 015 224)        585 784
adjustments        
Finance costs                                      (1 382 368)      (4 092 591)     (1 171 760)    (3 649 200)    (4 860 164)
Equity accounted                                       188 049        2 056 894         865 531        865 531      1 805 566
profit       
Profit before                                        2 751 342       11 385 334       4 552 634     11 947 571     18 519 755
taxation       
Taxation                                             (471 405)      (1 299 013)       (257 057)    (1 222 729)    (1 551 687)
Profit for the period                                2 279 937       10 086 321       4 295 577     10 724 842     16 968 068

Other
comprehensive
income
Items that will be
reclassified
subsequently to
profit or loss
Fair value                                           (541 632)        (369 969)         754 381      1 076 690      1 385 270
movement on      
interest rate swaps      
Total                                                1 738 305        9 716 352       5 049 958     11 801 532     18 353 338
comprehensive  
income for the
period

STATEMENT OF CHANGES IN EQUITY
                                                                   Stated       Retained          Cash flow
                                                                  capital       earnings      hedge reserve             Total
                                                                      GBP            GBP                GBP               GBP
Balance at 1 March 2017                                       152 772 761      3 904 456        (1 880 949)       154 796 268
Profit for the year                                                     -     16 968 068                  -        16 968 068
Dividends                                                               -   (14 638 810)                  -      (14 638 810)
Issue of shares (net of transaction costs)                     45 694 938              -                  -        45 694 938
Other comprehensive income                                              -              -          1 385 270         1 385 270
Balance at 28 February 2018                                   198 467 699      6 233 714          (495 679)       204 205 734
Profit for the period                                                   -     10 086 321                  -        10 086 321
Dividends                                                               -   (17 480 338)                  -      (17 480 338)
Issue of shares (net of transaction costs)                         30 752              -                  -            30 752
Other comprehensive income                                              -              -          (369 969)         (369 969)
Balance at 30 November 2018                                   198 498 451    (1 160 303)          (865 648)       196 472 500

STATEMENT OF CASH FLOWS
                                                                                   Group              Group             Group
                                                                               Unaudited          Unaudited           Audited
                                                                             Nine months        Nine months              Year
                                                                                   ended              ended             ended
                                                                             30-Nov-2018        30-Nov-2017       28-Feb-2018
                                                                                     GBP                GBP               GBP
Cash generated from operations                                                15 537 705         20 556 311        15 770 848
Interest received                                                                 26 728             30 680            76 121
Finance costs                                                                (3 455 871)        (3 256 500)       (4 291 899)
Tax paid                                                                       (630 270)          (491 154)       (1 596 311)
Net cash generated from operating activities                                  11 478 292         16 839 337         9 958 759

Cash flows from investing activities
Acquisition of investment properties                                        (15 908 675)          (426 000)      (12 313 853)
Investment in joint venture                                                            -       (25 660 407)      (24 794 876)
Sale of investment property                                                    1 182 724                  -                 -
Acquisition of listed investments                                                      -        (6 468 648)       (7 787 184)
Sale of listed investments                                                     3 345 085                  -          925 802
Dividends received                                                             4 669 268            894 906           941 544
Net cash utilised in investing activities                                    (6 711 598)       (31 660 149)      (43 028 567)

Cash flow from financing activities
Proceeds from issue of shares                                                          -         45 712 116        45 694 938
Proceeds from borrowings                                                      17 368 411          2 406 063         2 790 691
Repayment of borrowings                                                      (4 872 691)       (25 109 000)       (6 921 950)
Dividends paid                                                              (17 480 338)       (14 638 810)      (14 638 810)
Net cash (utilised in)/generated from financing activities                   (4 984 618)          8 370 369        26 924 869

Decrease in cash and cash equivalents                                          (217 924)        (6 450 443)       (6 144 939)
Cash and cash equivalents at beginning of the year                             6 618 455         12 696 078        12 696 078
Effects of exchange difference on cash and cash equivalents                     (56 672)             49 220            67 316
Cash and cash equivalents at end of period                                     6 343 859          6 294 855         6 618 455

SEGMENTAL REPORTING - NINE MONTHS ENDED 30 NOVEMBER 2018
                                                                                        Retail
                                                       Industrial        Office      Warehouse    Unallocated           Total
                                                              GBP           GBP            GBP            GBP             GBP
Operating income                                       12 547 077     4 295 508        118 571      (768 173)      16 192 983
        
Other income                                                    -             -              -        484 234         484 234
Profit on disposal of investments                         249 724             -              -        128 344         378 068
Settlement of swaps                                         8 009        72 553              -              -          80 562
Fair value adjustments                                (1 741 405)       131 902    (1 710 000)      (395 312)     (3 714 815)
Interest expense                                      (3 052 070)     (955 566)       (73 060)       (11 895)     (4 092 591)
Equity accounted profit (net of tax)                      613 260             -      1 443 633              -       2 056 893
Tax expense                                             (698 315)     (325 315)      (219 960)       (55 423)     (1 299 013)
        
Profit/(loss) for the period                            7 926 280     3 219 082      (440 816)      (618 225)      10 086 321
        
Adjustments        
Fair value adjustments (including associate and        
net of swap realisation)                                1 616 402     (204 455)      2 175 222        395 313       3 982 482
Straight-line lease income                              (858 691)      (31 268)              -              -       (889 959)
        
Adjusted headline earnings                              8 683 991     2 983 359      1 734 406      (222 912)      13 178 844
        
Statement of financial position        
Total assets                                          256 729 003    78 097 193     22 148 475     13 059 982     370 034 653
Total borrowings                                      122 973 560    40 330 907      2 107 762      1 260 777     166 632 894
  
SEGMENTAL REPORTING - NINE MONTHS ENDED 30 NOVEMBER 2017
                                                                                        Retail
                                                       Industrial        Office      Warehouse    Unallocated           Total
                                                              GBP           GBP            GBP            GBP             GBP
Operating income                                       11 931 166     4 063 351        271 209      (707 092)      15 558 634
           
Other income                                                    -             -              -        187 831         187 831
Fair value adjustments                                  (799 441)     (128 069)              -       (87 715)     (1 015 225)
Interest expense                                      (2 691 182)     (877 199)       (75 189)        (5 630)     (3 649 200)
Equity accounted profit (net of tax)                      364 990             -        500 541              -         865 531
Tax expense                                             (883 403)      (87 528)       (60 945)      (190 853)     (1 222 729)
           
Profit/(loss) for the period                            7 922 130     2 970 555        635 616      (803 459)      10 724 842
           
Adjustments           
Fair value adjustments (including associate)              603 148        58 744       (229 107)        87 715         520 500
Straight-line lease income                              (873 903)      (58 744)              -              -       (932 647)
           
Adjusted headline earnings                              7 651 375     2 970 555        406 509      (715 744)      10 312 695
           
Statement of financial position           
Total assets                                          227 201 773    77 321 234     25 479 087     16 848 236     346 850 330
Total borrowings                                       90 262 039    39 496 296      2 166 925      2 406 063     134 331 323
 
RECONCILIATION OF BASIC EARNINGS TO DISTRIBUTABLE EARNINGS

                                                            Group         Group          Group          Group           Group
                                                        Unaudited     Unaudited      Unaudited      Unaudited         Audited
                                                     Three months   Nine months   Three months    Nine months            Year 
                                                            ended         ended          ended          ended           ended
                                                      30-Nov-2018   30-Nov-2018    30-Nov-2017    30-Nov-2017     28-Feb-2018
                                                              GBP           GBP            GBP            GBP             GBP
Basic earnings                                          2 279 937    10 086 321      4 295 577     10 724 842      16 968 068
Less:
Fair value adjustments to investment properties           641 140     2 651 758        285 892        932 646     (1 130 136)
Net profit on disposal of investment properties in              -             -              -              -       (303 703)
joint venture
Fair value adjustments to properties in joint             463 030       348 229              -              -       (291 390)
venture 
Net profit on disposal of investment properties                 -     (249 724)              -              -               -
Headline earnings                                       3 384 107    12 836 584      4 581 469     11 657 488      15 242 839
Add back: 
Straight-line lease income*                             (296 653)     (889 958)      (285 892)      (932 646)     (1 243 529)
Net profit of disposal of investment properties                 -       249 724      (494 725)      (494 725)         303 703
Fair value adjustments to listed investments              516 800       395 311         91 071         82 578         544 352
IFRS 9 fair value adjustment (net of swap                 587 183       587 183              -              -               -
realisation)
Adjusted headline earnings/distributable                4 191 437    13 178 844      3 891 923     10 312 695      14 847 365
earnings

Weighted average number of shares in issue            188 976 628   188 976 628    179 308 464    154 626 426     163 223 203
Basic and diluted earnings per share (GBP pence)             1.21          5.34           2.40           6.94           10.40
Basic and diluted headline earnings per share  
(GBP pence)                                                  1.79          6.79           2.56           7.54            9.34
Adjusted headline earnings per share (GBP  
pence)                                                       2.22          6.97           2.17           6.67            9.10
 
Interim dividend                                                -     8 787 413              -      8 503 948       8 503 948
Final dividend                                                  -             -              -              -       8 692 925
Total dividend                                                  -     8 787 413              -      8 503 948      17 196 873
  
Interim dividend per share (GBP pence)                          -          4.65              -           4.50            4.50
Final dividend per share (GBP pence)                            -             -              -              -            4.60
Total dividend per share (GBP pence)                            -          4.65              -           4.50            9.10

*The exclusion of straight-line lease income relates specifically to the contractual rental escalations but does not exclude
straight-line lease income on lease incentives such as the rent-free periods.

RELATED PARTY TRANSACTIONS

Per the Property Services Agreement, fees for the quarter paid to Martial Eagle Limited amounted to GBP 454,175 (2017: GBP 419,157).

NOTES

The Company is required to publish financial results for the three and nine months ended 30 November 2018 in terms of 
Listing Rule 12.19 of the Stock Exchange of Mauritius Ltd ("SEM"). The abridged unaudited financial statements for the 
three and nine months ended 30 November 2018 ("financial statements") have been prepared in accordance with the framework 
concepts and the measurement and recognition requirements of International Financial Reporting Standards ("IFRS") as issued 
by the International Accounting Standards Board ("IASB"), interpretations issued by the IFRS Interpretation Committee ("IFRS IC"), 
the requirements of the SAICA Financial Reporting Guides and the Pronouncements as issued by the Financial Reporting Standards
Council, the Mauritian Companies Act 2001, the Mauritian Financial Reporting Act 2004, the Mauritian Securities Act 2005, 
the SEM Listing Rules and the JSE Listings Requirements and contains the information required by IAS 34: Interim Financial Reporting.

The accounting policies and methods of computation adopted in the preparation of these financial statements are in
terms of IFRS and consistent with those applied in the preparation of the audited financial statements for the year ended
28 February 2018.

These financial statements were approved by the Board of Directors of the Company (the "Board") on 11 January 2019. 
The financial statements have not been reviewed or reported on by the Company's external auditors.

Copies of these financial statements and the Statement of direct and indirect interests of each officer of the Company,
pursuant to Rule 8(2)(m) of the Securities (Disclosure Obligations of Reporting Issuers) Rules 2007 of Mauritius, are
available free of charge, upon request at the Registered Office of the Company at c/o Intercontinental Trust Limited,
Level 3, Alexander House, 35 Cybercity, Ebene 72201, Mauritius. Contact person: Mrs. Smitha Algoo-Bissonauth.

This communique is issued pursuant to SEM Listing Rules 11.3 and 12.20 and Section 88 of the Mauritian Securities Act
2005. The Board accepts full responsibility for the accuracy of the information contained in these financial statements
and this announcement. The Directors have disclosed all matters or circumstances arising subsequent to the period
ended 30 November 2018 that require any additional disclosure or adjustment to the financial statements.

Atlantic Leaf has primary listings both on the Official Market of the SEM and on the Main Board of the JSE Limited.

By order of the Board

11 January 2019

JSE sponsor
Java Capital                                +27 11 722 3050

Company secretary
Intercontinental Trust Limited              +230 403 0800

SEM authorised representative and sponsor
Perigeum Capital Limited                    +230 402 0890
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