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ATLANTIC LEAF PROPERTIES LIMITED - Summarised results of the audited financial statements for the year ended 28 Feb 2020 and declaration of dividend

Release Date: 28/04/2020 17:33
Code(s): ALP     PDF:  
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Summarised results of the audited financial statements for the year ended 28 Feb 2020 and declaration of dividend

Atlantic Leaf Properties Limited
Incorporated in Jersey
Registration number: 128426
JSE share code: "ALP"
SEM share code: "ALPL.N0000"
ISIN: "MU0422N00009"
www.atlanticleaf.com
("Atlantic Leaf" or "the Company")


SHORT-FORM ANNOUNCEMENT: SUMMARISED RESULTS OF THE AUDITED FINANCIAL STATEMENTS 
FOR THE YEAR ENDED 28 FEBRUARY 2020 AND DECLARATION OF 4.5 GBP PENCE DIVIDEND


FINANCIAL HIGHLIGHTS
                                                                            
                                                           28 Feb 2019     28 Feb 2020     % Change   
Revenue (GBP)                                               26,860,004      29,242,149         8.9%   
Earnings per share (pence)                                        4.86           10.90      124.3%*   
Headline earnings per share (pence)                               9.18            8.98       (2.2)%   
Adjusted headline earnings per share (pence)                      9.31           10.54        13.2%   
NAV per share (GBP)                                               1.03            1.04         1.0%   

*  Earnings per share impacted by property revaluations

DIRECTORS' COMMENTARY
The board of directors of Atlantic Leaf ("the Board") is pleased to present the Company's results for the financial year ended
28 February 2020. 

In presenting these results the Board would like to emphasise that the safety and wellbeing of our staff, tenants and service providers
remains of paramount importance during this pandemic. Atlantic Leaf's management team and our external auditors, Mazars are
also to be commended for the timely completion of the year-end audit under difficult conditions.

Earnings
The Company is pleased to report a 13% increase in adjusted headline earnings per share to 10.54 GBP pence per share (2019:
9.31 GBP pence per share). We continued to benefit from a strong tenant base, with only one asset, the office previously occupied
by Thomas Cook, vacant at year end. Cash rental revenue increased by 8% to GBP26.2m (2019: GBP24.1m) and we also benefitted
from the timely disposal of a DHL warehouse asset in February 2020 which realised a profit on sale of GBP 4.3 million. The sale not
only resulted in a strong internal rate of return of 16% over the time we held the asset but has significantly strengthened our cash
position at an opportune time.

In terms of the Property Services Agreement, the Company has provided a loan to Atlantic Property Investments Limited, to fund
the acquisition of shares in the Company. As a result of the drop in the JSE listed trading price of Atlantic Leaf at year end, we have
made a provision for the possible impairment of this loan.

Atlantic Leaf entered the UK REIT regime from 1 March 2019 and thus no longer pays non-resident landlord tax and the small tax
charge relates to prior period adjustments.

Balance sheet
As previously announced on SENS and on the website of the Stock Exchange of Mauritius Ltd, the Company sold its interest in
the DFS joint venture and reinvested the sale proceeds into five industrial distribution assets, each of which has performed in line
with expectations.

The valuations of the Company's property assets were carried out by independent valuers. The value of the office assets decreased
primarily due to the vacant portion of the office previously let to Thomas Cook, but this was offset by an uplift in the value of our
industrial assets.

As at year-end there was no evidence of any adverse impact of Covid-19 on these valuations. Since the year end, the impact of
Covid-19 cannot be reliably determined but a higher degree of risk and uncertainty exists in the current market environment.

The adoption of IFRS 16 has resulted in the recognition of a lease liability and a corresponding right of use asset in respect of certain
leasehold properties that we hold.

The Company has a strong cash position of GBP 26 million at year end which includes the net proceeds from the sale of the DHL
warehouse asset. The Company also has GBP 1.6 million of undrawn available facilities. At year-end, our loan to value ratio ("LTV") was
40%, down from 48% last year. We are fully compliant with all our loan covenants and have no debt maturing in the next financial year.

Final dividend declared
The Board is pleased to be in a position to announce a dividend of 4.5 GBP pence per share for the six months ended 28 February
2020, which together with the dividend of 4.5 GBP pence per share for the six months ended 31 August 2019 brings the total dividend
for the year to 9.0 GBP pence per share (2019: 9.3 GBP pence per share). The Board had previously aimed for a slightly higher
distribution but given the current environment, considered it prudent to distribute a slightly lower dividend. 

Further information regarding the dividend, including salient dates and exchange rates, will be announced separately.

Cash flow and going concern assessment
Covid-19 has placed a strain on the business operations of many companies, and the ongoing ability of our tenants to pay their rent
could have an impact on the cash flows of Atlantic Leaf.

Since the year end, a significant majority of the rent covering the period from March to June 2020 was collected within two weeks of
the due date. This was a very positive outcome for the Company in this environment and demonstrates the strength and resilience
of our tenants to date.

Whilst the Company will, no doubt be impacted by Covid-19, the current cash position of the Company is strong, and we believe that
we are well positioned to deal with this period of uncertainty. The Company has performed additional stress testing on its going
concern assumptions and cash flows over the next twelve months, given the potential for additional stresses on rent collection. As a
prudent measure in response to the economic environment, the Company has temporarily suspended its acquisition programme
for additional investment properties. The short-term portion of the long-term borrowings of GBP 6.5 million relates to scheduled
debt amortisations and there is no debt maturing in the year to 28 February 2021. The Board is comfortable that there are sufficient
resources to ensure that the Company can continue as a going concern.

Outlook 
Whist the Company will benefit from fixed rent uplifts on the 28 properties leased to Booker, on the downside there will be no
income from the vacant portion of the ex-Thomas Cook Peterborough office until the refurbished space is re-let. The Company's
plan is to commence the refurbishment in May (estimated cost GBP 3.3 million) to subdivide the space into smaller lot sizes and
secure tenants for the individual units. The occupation of the vacant space is planned to commence from September 2020 and the
interest received from the initial marketing has been encouraging. We are however conscious that in the current environment it will
take longer than expected to fully let this property.

The management team will continue to work with all our tenants during this very challenging time to ensure that we maximise our
rental collections while also providing support to those tenants where it is needed. The first 2021 rent quarter's collection was positive
for the Company, and we hope that the businesses which have been required to curtail operations during the lockdown will be able
to recommence activities sooner rather than later.

The results cover a period before the full impact of Covid-19 and as such the market should note that going forward there may well
be greater uncertainty in the markets in which Atlantic Leaf operates. The Board therefore considers it prudent to not provide any
earnings guidance for the year ahead.

Results presentation
Management will be presenting the financial results at 10:00 CAT on Wednesday, 29 April 2020 via live webcast which can be viewed
at https://themediaframe.net/10032751

Should you prefer to dial in, please self-register on http://www.diamondpass.net/7088004

By order of the Board
 
Ocorian Secretaries (Jersey) Limited
Company Secretary

28 April 2020

This short-form announcement is only a summary of the information in the full announcement and does not contain full or complete
details of the financial results and is the responsibility of the directors of the Company. Any investment decision should be based on
consideration of the full announcement published on the JSE website at https://senspdf.jse.co.za/documents/2020/JSE/ISSE/ALP/Feb2020.pdf 
and on the Company's website at http://atlanticleaf.com/investor/announcements/ Mazars have issued an unqualified audit opinion and have 
considered the investment property valuations and the impact of the COVID-19 outbreak as Key Audit Matters. The audit opinion is included 
in the annual financial statements, which are available on the company's website http://atlanticleaf.com/investor/results-reports-presentations/ 
This leaflet is not itself audited. Copies of the full announcement are available for inspection and may be requested at the registered office of 
the Company and the sponsor's office at no charge, during office hours. 

Registered office:
Ocorian Fund Services (Jersey) Limited
26 New Street St Helier Jersey JE2 3RA

Sponsor's office: Java Capital
2nd Floor, 6A Sandown Valley Crescent, 
Sandton, 
2196
Johannesburg
South Africa




Date: 28-04-2020 05:33:00
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