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NEW FRONTIER PROPERTIES LIMITED - Summarised unaudited results for the three and nine months ended 31 May 2019 and changes to the board of directors

Release Date: 12/07/2019 13:30
Code(s): NFP     PDF:  
 
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Summarised unaudited results for the three and nine months ended 31 May 2019 and changes to the board of directors

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")

SUMMARISED UNAUDITED CONSOLIDATED RESULTS FOR THE THREE AND NINE MONTHS
ENDED 31 MAY 2019 AND CHANGES TO THE BOARD OF DIRECTORS


The Company was 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.

REPORTING CURRENCY

The Company's results are reported in pounds sterling ("GBP").

FINANCIAL RESULTS

The Group's International Financial Reporting Standards ("IFRS") loss for the nine-month period ended 31 May 2019 was
GBP 60.05 million (31 May 2018: profit of GBP 4.26 million).

The loss is primarily attributable to a fair value loss on the Group’s property investments of GBP 63.0 million. As a result the Group
has net liabilities of GBP 36.8 million.

The board of directors of New Frontier ("Board") has noted the net liabilities shown on the balance sheet and it believes that so
long as the Group's lenders continue to release funds to the Group to meet its commitments the business continues to be a going
concern and these financial statements have been prepared on that basis. The lenders are continuing to provide support to the Group,
however, the Board recognises that should this support cease then it is likely that the Company would enter administration thereafter.

BUSINESS REVIEW

Due to the continuing uncertain business and political environment in the UK, the Company will continue to focus on managing its
existing assets with the support of its lenders.

It is well documented that the UK shopping centre sector has suffered from further tenant administrations and company voluntary
arrangements ("CVAs") resulting in reduced levels of rental income being received by the Company. The shopping centre
investment market is extremely shallow and combined with there being limited debt funding available for the sector at this time,
investment yields have continued to move out resulting in a negative impact on valuations.

The Company is actively engaging with its lenders, local authorities and tenants to produce the best outcome for its stakeholders in
this challenging period.

The significant CVAs impacting the Company include the Arcadia Group, Debenhams, Monsoon and Select.

Letting activity and lease renewals

As at 31 May 2019, the centres at Blackpool, Middlesbrough and Burton upon Trent have seen improvement in combined occupancy
to 94.1% (28 February 2019: 92.6%) by estimated rental value and 93.3% (28 February 2019: 90.6%) by gross lettable area.

The asset manager and the letting teams continue to work hard to minimise the void levels and reduce costs with a focus on
improving net operating income.

BANKING

As previously announced the reduction in valuation of the Group’s properties at 31 August 2018 resulted in the Group's loan to
value ("LTV") covenants being exceeded.
Both lenders continue to engage actively with the Group at this time. However, they have trapped the free rental cashflow, whilst
agreeing to release funds for the Group’s operating expenses and capital expenditure to support letting activity at the shopping
centres. Meanwhile, surplus funds will be used to repay the outstanding loans.

Whilst the Group has the support of its funders, its loan terms are effectively repayable on demand.

The Board considers that so long as the Group has the support of its lenders it can service its obligations in the normal course of
business and will continue as a going concern.

PROSPECTS AND DELISTING

In light of the financial position of the Company, the Board believes that it is unlikely that shareholders will realise any value from
their shares, consequently, the Board sees little benefit in continuing to be listed and will actively pursue a delisting from the SEM
and JSE.

PROPERTY DISPOSAL

On 24 May 2019 the Company completed the sale of Unit 1, Stadium Business Park, Ballycoolin, Dublin for a consideration of
€10 500 000, representing a net initial yield of 6.52%, following its acquisition in October 2017 for €8 600 000.

It was originally acquired in October 2017, as part of New Frontier’s strategy of diversifying its property portfolio to include logistics
and warehousing properties occupied by the growing online retail sector.

However, following a decrease in the property values of New Frontier’s retail portfolio, the Board resolved to dispose of the property
and use the proceeds to pay down existing debt.

DIVIDEND

The Board is not recommending the payment of a dividend.

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

These summarised unaudited consolidated results for the nine months ended 31 May 2018 have been prepared in accordance with
IFRS, including IAS34 – Interim Financial Reporting, the SEM Listing Rules, the Securities Act of Mauritius 2005 and the JSE
Listings Requirements. The accounting policies adopted are consistent with those used to prepare the audited annual financial
statements for the year ended 31 August 2018.

The key judgements used in preparing these financial statements has been the valuation of the Group’s investment property and the
assessment of the Group’s ability to continue to trade as a going concern.

The level of activity in the UK shopping centre investment market is extremely low and valuations have fallen significantly in the
last six months reflecting the effect of the CVAs, uncertainty caused by delays to Brexit and a lack of buyers prepared to invest in
this class of assets. In preparing these financial statements the directors have engaged with the Group’s valuers who have prepared
desktop valuations of the Group’s investment properties. These valuations have been used in the preparation of these financial
statements.

In relation to the assessment of going concern, the position has not changed since the Group last reported for the 3 months ended
28 February 2019. The Group continues to be in breach of the LTV covenants on its loans and its lenders are trapping all of the
income. The lenders are supportive of the Group and are releasing funds to meet its operational and corporate expenses. The Board
believes that so long as the Group’s lenders continue to release funds to the Group to meet its commitments the business continues
to be a going concern and these financial statements have been prepared on that basis.

These financial statements have not been reviewed or reported on by the Company’s external auditors.

SEGMENTAL INFORMATION

The Group derives its revenue from a single business activity of property investment and is active in the UK shopping centre sector,
which is its only segment following the sale of its warehouse in Dublin.

CHANGES TO THE BOARD OF DIRECTORS

Shareholders are advised that Sisa Ngebulana and Rob Becker have resigned from the New Frontier Board with effect from 11 July
2019. The Board thanks Sisa and Rob for their valuable contributions to the Board

By order of the Board
Osiris Corporate Solutions (Mauritius) Limited
Company secretary


12 July 2019


NOTES
Copies of this report are available to the public at the registered office of the Company, Chemin Vingt Pieds, 5th 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 Chemin Vingt Pieds, 5th Floor, La Croisette, Grand Baie, Mauritius.

This communiqué is issued pursuant to Listing Rules 12.20 and 12.21 and Section 88 of the Securities Act of Mauritius 2005. The
Board accepts full responsibility for the accuracy of the information in this communiqué.

For further information please contact:

JSE designated advisor
Java Capital +27 11 722 3050

Company secretary
Osiris Corporate Solutions (Mauritius) Limited +230 650 4030
NEW FRONTIER PROPERTIES LTD

STATEMENTS OF FINANCIAL POSITION
AT 31 MAY 2019

                                                                           THE GROUP
                                                              Unaudited      Unaudited      Audited
                                                                31 May         31 May     31 August
                                                                   2019          2018         2018
                                                               GBP 000        GBP 000      GBP 000
ASSETS
Non-current assets
Property, plant and equipment                                        14             17          15
Investment property                                             122,569        274,723     193,288
Derivative financial instrument                                     342            908       1,103
                                                                122,925        275,648     194,406

Current assets
Trade and other receivables                                       5,932          4,451        5,179
Cash and cash equivalents                                        11,711          2,650        3,471
                                                                 17,643          7,101        8,650

Total assets                                                    140,568        282,749     203,056


EQUITY
Capital and reserves (attributable to owners of the parent)
Share capital                                                     47,136         47,136      47,136
Hedging reserve                                                    (783)        (1,407)       (915)
(Accumulated losses)/Retained earnings                          (83,155)         57,642    (23,102)
Total equity                                                    (36,802)       103,371       23,119

LIABILITIES
Non-current liabilities
Borrowings                                                      161,562        165,256     143,581
Arrangement fees                                                  (873)              -           -
                                                                160,689        165,256     143,581
Current liabilities
Trade and other payables                                          5,588          5,311        5,000
Borrowings                                                       11,093          8,811       31,356
                                                                 16,681         14,122       36,356

Total liabilities                                               177,370        179,378     179,937

Total equity and liabilities                                    140,568        282,749     203,056
NEW FRONTIER PROPERTIES LTD

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR QUARTER AND NINE MONTHS ENDED 31 MAY 2019


                                                                      THE GROUP
                                                     Unaudited    Unaudited    Unaudited     Unaudited
                                                                     For the    For the 9    For the 9
                                                        For the      quarter       months        months
                                                  quarter ended     ended 31     ended 31      ended 31
                                                   31 May 2019      May 2018     May 2019      May 2018

                                                      GBP 000      GBP 000        GBP 000     GBP 000
Rental income                                             3,658       4,573        11,280       13,568

Expenses
Property operating expenses                               (875)       (861)        (2,919)      (2,849)
Administrative expenses                                    (91)       (309)           (92)      (1,055)
Other income                                                  -            -            2             -
Movement in foreign exchange                                 1          (65)            2        (129)
Fair value loss on investment property                 (50,443)            -      (62,960)            -
                                                       (47,750)       3,338       (54,687)       9,535
Net finance costs                                       (2,112)      (1,847)       (5,967)      (5,259)
(Loss)/Profit before tax                               (49,862)       1,491       (60,654)       4,276
Taxation                                                  (152)         (12)        (510)         (12)
(Loss)/Profit for the period - continuing
operations                                             (50,014)       1,479       (61,164)       4,264
Net income/ (loss) from discontinued operations            964             -        1,111             -
(Loss)/Profit for the period - all operations          (49,050)       1,479       (60,053)       4,264
Other comprehensive income for the period
Items that may be reclassified subsequently to
profit or loss
Fair value (loss)/gain on derivative financial
instruments                                               (346)       (621)         (761)        1,209
Other comprehensive income for the period                 (346)       (621)         (761)        1,209


Total comprehensive income for the period              (49,396)         858       (60,814)       5,473


Earnings per share
Basic earnings per share (GBP)                          (0.305)       0.009        (0.373)       0.027
                                                          0.018       0.018                      0.018
Headline earnings per share (GBP)                         0.009       0.009         0.018        0.027
NEW FRONTIER PROPERTIES LTD
STATEMENTS OF CHANGES IN EQUITY
FOR THE NINE MONTHS ENDED 31 MAY 2019
                                                    
                                                                            Retained
                                                                           Earnings/
                                                   Share     Hedging
                                                                        (Accumulated
                                                   capital    reserve        Losses)       Total
                                                     GBP        GBP
                                                      000         000       GBP 000     GBP 000
THE GROUP
Unaudited
Balance at 1 September 2018                        47,136       (915)        (23,102)     23,119

Loss for the period                                      -          -        (60,053)   (60,053)
Other comprehensive income for the period                -      (761)               -      (761)
Total comprehensive income for the period                -      (761)        (60,053)   (60,814)

Amortisation of historic cash flow hedge reserve         -       893                -       893

Balance at 31 May 2019                             47,136       (783)        (83,155)   (36,802)

Unaudited
Balance at 1 September 2017                        39,412     (3,330)         63,678      99,760

Profit for the period                                    -          -          4,264       4,264
Other comprehensive income for the period                -     1,209                -      1,209
Total comprehensive income for the period                -     1,209           4,264       5,473

Issue of shares                                     7,724           -               -      7,724
Amortisation of historic cash flow hedge reserve         -       714                -       714
Dividends                                                -          -        (10,328)   (10,328)
Waiver of dividend                                       -          -             28         28
Balance at 31 May 2018                             47,136     (1,407)         57,642     103,371

Audited
Balance at 1 September 2017                        39,412     (3,330)         63,678      99,760

Profit for the year                                      -          -        (76,481)   (76,481)
Other comprehensive income for the year                  -     1,404                -      1,404
Total comprehensive income for the year                  -     1,404         (76,481)   (75,077)

Issue of shares                                     7,724           -               -      7,724
Dividends                                                -          -        (10,327)   (10,327)
Waiver of dividends                                      -          -              28        28
Amortisation of historic cash flow hedge reserve         -     1,011                -      1,011
Total transactions with owners of the parent        7,724      1,011         (10,299)    (1,564)

Balance at 31 August 2018                          47,136       (915)        (23,102)     23,119
NEW FRONTIER PROPERTIES LTD


STATEMENTS OF CASH FLOWS
FOR NINE MONTHS ENDED 31 MAY 2019
                                                                                 THE GROUP
                                                                   Unaudited          Unaudited           Audited
                                                                For the period    For the period     For the year
                                                                        ended             ended             ended
                                                                 31 May 2019       31 May 2018     31 August 2018
                                                                     GBP 000           GBP 000            GBP 000
Cash flows from operating activities
Cash generated from operations                                          7,704             9,951            11,837
Tax (paid)/refunded                                                      (313)              146               146
Interest paid                                                          (3,640)          (3,218)            (4,755)

Net cash generated from operating activities                            3,751             6,879             7,228


Cash flows from investing activities
Capital improvements to investment property                             (214)           (1,390)            (8,150)
Sale of investment property                                             9,258           (8,643)            (1,132)
Net cash from/(used in) investing activities                            9,044          (10,033)            (9,282)


Cash flows from financing activities
Proceeds from loans                                                          -           11,311            12,800
Payment of borrowing costs                                             (2,350)            (701)             (695)
Repayment of borrowings                                                (2,205)                 -           (1,783)
Dividend payment                                                             -         (10,300)          (10,299)
Net cash (used in)/from financing activities                           (4,555)              310                23


Net increase /(decrease) in cash and cash equivalents
for the period/year                                                     8,240           (2,844)            (2,031)
Exchange difference                                                         -              (16)                (8)
Cash and cash equivalents at the beginning of the period/year           3,471             5,510             5,510


At 31 May 2019/31 May 2018/31 August 2018                              11,711             2,650             3,471

Date: 12/07/2019 01:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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