NEW FRONTIER PROPERTIES LIMITED - Summarised reviewed consolidated results for the three months and six months ended 28 February 2019

Release Date: 15/04/2019 14:40
Code(s): NFP
 
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Summarised reviewed consolidated results for the three months and six months ended 28 February 2019

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 REVIEWED CONSOLIDATED RESULTS FOR THE THREE MONTHS AND SIX MONTHS ENDED 28 FEBRUARY 2019

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") profit for the 6 month period ended 28 February 2019 was a
loss of GBP 11.00 million (2018: profit of GBP 2.79 million).

BUSINESS REVIEW

Letting activity and lease renewals

As at 28 February 2019, the centres at Blackpool, Middlesbrough and Burton upon Trent had, as expected, a marginal fall in
combined occupancy, following the closure of a number seasonal temporary stores to 92.60% (30 November 2018: 93.46%) by
Estimated Rental Value ("ERV") and 90.63% (30 November 2018: 91.56%) by Gross Lettable Area ("GLA").

The Company is focused on letting and lease renewal activity and completed 9 lease renewals of which 6 were core tenants and one
new letting during the period. Unfortunately, there were two administrations; Patisserie Valerie and Fivepoundworld during the
period.

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 with the Group at this time. However, both lenders have trapped the free rental cashflow, although
they have agreed 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 of directors of New Frontier ("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.

STRATEGY

The Group is actively managing its assets, focussing on improving its net operating income and reducing its debt exposure though
the sale of assets where it can do so for the benefit of all its stakeholders. This is exemplified by the steps already taken by the Group
to dispose of its property in Dublin.

Furthermore, the Group is seeking long-term solutions to reduce the cost base with the support of its major shareholder and
positioning its assets to take advantage of any improvement in the UK retail sector. This includes investigating a possible delisting
of the Company from the JSE and SEM.

PROSPECTS

The Company continues to actively manage its assets in a challenging retail environment. It is seeking ways of reducing the level
of its debt and working with all stakeholders to protect the value of its assets and the business.

The UK economy continues to weaken as politicians try to find a solution to Brexit and until a long-term solution is found the retail
sector is likely to continue to suffer.

CHANGES TO BOARD AND COROPRATE GOVERNANCE

At the Company's annual general meeting held on 26 February 2019 Mr Richard Thomas and Mr William Heaney were not re-elected to the 
Board of the Company effective from the conclusion of that meeting.

The Board wishes to thank both Mr Thomas and Mr Heaney for their invaluable contributions to the Company.

Mr Tinesh Ramprusad has been appointed to the Audit and Risk Committee and Mr Robert Becker has been appointed to the Corporate Governance 
and Remuneration Committee as Chairman.

DIVIDEND

The Board is not recommending the payment of a dividend.

BASIS OF PREPARATION AND ACCOUNTING POLICIES

These summarised reviewed consolidated results for the six month period ended 28 February 2019 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. The accounting policies are consistent with those applied in the 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 directors have concluded that there remains a fundamental uncertainty in the UK shopping centre investment market owing to
a lack of willing buyers and sellers. In order to preserve the Group's resources for the benefit of its shareholders and lenders, an
external valuation of the Group's UK shopping centres has not been undertaken. The Board has used the MSCI UK in town shopping
centre index for the period from July 2018 to December 2018 as a proxy for changes in capital values since the last external valuation,
which took place as at 31 August 2018. During the six months to December 2018 the index declined by 6.43% and this figure has
been applied to those external valuations to determine valuations as at 28 February 2019.

In relation to the assessment of going concern, the position has not changed since the Group last reported for the 3 months ended 
30 November 2018. 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.

The Board has instigated the process of selling its property in Dublin and this asset has been transferred to current assets in the
financial statements. As this disposal represents the discontinuance of the European warehouse segment it has been disclosed separately 
in the statement of comprehensive income and cash flow statement in accordance with IFRS 5.

These financial information have been reviewed by the Company’s external auditors, BDO & Co. This review report does not necessarily report 
on all of the information contained in these financial results.

AUDITORS' REPORT

The Company's external auditor, BDO & Co, has reviewed the financial information contained in this announcement in accordance with the 
International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Auditor of the Entity".

Based on that review BDO & Co has confirmed that nothing has come to their attention that causes them to believe that the condensed 
consolidated financial statements for the six months ended 28 February 2019 have not been prepared, in all material respects, in accordance 
with International Financial Reporting Standards.

The Group is in default of the LTV covenant on both of its loan facilities which are therefore repayable on demand. As a result, BDO & Co 
has drawn attention to the existence of material uncertainty on the Group's ability to continue as a going concern and therefore that the 
Group may be unable to realise their assets and discharge their liabilities in the normal course of business.

A copy of the auditor's ISRE 2410 review report is available for inspection at the Company's registered office.

The directors take full responsibility for the preparation and fair presentation of these interim financial results.

SEGMENTAL INFORMATION

The Group derives its revenue from the single business activity of property investment and is active in the UK shopping centres but
has decided to discontinue its European warehouse investment business.

INVESTOR PRESENTATION

Further to these reviewed interim results for the three and six months ended 28 February 2019, shareholders are advised that New
Frontier Properties will host an investor update conference call on Tuesday, 16 April 2019 at 11:00 (South African time).

Dial-in details are as follows:

Johannesburg (Telkom)                          010 201 6800
Johannesburg (Neotel)                          011 535 3600
USA and Canada                                 1 508 924 4326
UK                                             0333 300 1418
Australia (Toll Free)                          1 800 350 100

Participants should ask to be joined to the New Frontier Properties call.

A presentation of the results, which will be discussed during the conference call, will be available for download on the Company's
website from 9:00 onwards (South Africa time) on Tuesday, 16 April 2019 at:

http://newfrontierprop.com/wp-content/uploads/2019/02/New-Frontier-Properties-Ltd-Q2-2019-FINAL.pdf


By order of the Board

Osiris Corporate Solutions (Mauritius) Limited
Company secretary

15 April 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 of 
New Frontier Properties Ltd 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


NEW FRONTIER PROPERTIES LTD
STATEMENTS OF FINANCIAL POSITION AT 28 FEBRUARY 2018



                                                                  THE GROUP
                                                  Unaudited           Unaudited           Audited
                                            28 February 2019   28 February 2018     31 August 2018
                                                     GBP 000            GBP 000            GBP 000
ASSETS
Non-current assets
Property, plant and equipment                             14                17                 15
Investment property                                  172,977           274,538            193,288
Derivative financial instrument                          688             1,529              1,103
                                                     173,679           276,084            194,406
Current assets
Non-current Assets held for sale                       7,873                 -                  -
Trade and other receivables                            4,958             5,199              5,179
Cash and cash equivalents                              4,299             5,108              3,471
                                                      17,130            10,307              8,650

Total assets                                         190,809           286,391            203,056


EQUITY

Share capital                                         47,136            47,136             47,136
Hedging reserve                                         (734)           (1,083)              (915)
Retained earnings/(Accumulated losses)               (34,105)           60,991            (23,102)
Total equity                                          12,297           107,044             23,119

LIABILITIES
Non-current liabilities
Borrowings                                            10,751           163,358            143,581

Current liabilities
Trade and other payables                               4,033             5,084              5,000
Borrowings                                           163,728            10,905             31,356
                                                     167,761            15,989             36,356

Total liabilities                                    178,512           179,347            179,937

Total equity and liabilities                         190,809           286,391            203,056



NEW FRONTIER PROPERTIES LTD
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR QUARTER AND HALF YEAR ENDED 28 FEBRUARY 2019
                                                                 

                                                                                   THE GROUP
                                                        Unaudited          Unaudited          Unaudited          Unaudited
                                                        For the 6          For the 6          For the 3          For the 3
                                                     months ended       months ended        months ended       months ended
                                                 28 February 2019   28 February 2018    28 February 2019   28 February 2019       
                                                          GBP 000            GBP 000             GBP 000            GBP 000


 Rental income                                              7,623              8,778              4,042               4,301

 Expenses
 Property operating expenses                               (2,044)            (1,980)              (930)             (1,451)
 Administrative expenses                                       (1)              (632)              (253)               (343)
 Other income                                                   2                  -                  2                   -
 Movement in foreign exchange                                   -                  -                  6                   -
 Fair value loss on investment property                   (12,518)                 -            (12,520)                  -
                                                           (6,938)             6,166             (9,653)              2,507
 Net finance costs                                         (3,855)            (3,412)            (1,988)             (1,692)
 Profit before tax                                        (10,793)             2,754            (11,641)                815
 Taxation                                                    (358)                 -               (196)                  -
 Profit for the period – continuing operations            (11,151)             2,754            (11,837)                815
 Net income/ (loss) from discontinued operations              148                 31                (40)                121
 Profit for the period – all operations                   (11,003)             2,785            (11,877)                936
 Other comprehensive income for the period   
 Fair value (loss)/ gain on derivative financial
 instruments                                                 (415)             1,830               (282)                440
 Other comprehensive income for the period                   (415)             1,830               (282)                440


 Total comprehensive income for the period                (11,418)             4,615            (12,159)              1,376


 Earnings per share

 Basic earnings per share (GBP)                            (0.068)             0.018             (0.074)              0.006

 Headline earnings per share (GBP)                          0.010              0.018              0.001               0.006


The Company does not have any dilutionary instruments in issue.


NEW FRONTIER PROPERTIES LTD
STATEMENTS OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 28 FEBRUARY 2019

                                                        Share           Hedging        Retained                                                
                                                        capital         reserve        Earnings/(Accumulated Losses)   Total
                                                        GBP 000         GBP 000        GBP 000                         GBP 000


THE GROUP

Balance at 1 September 2018                             47,136          (915)          (23,102)                        23,119

Profit for the period                                   -                -             (11,003)                        (11,003)
Other comprehensive income for the period               -               (415)           -                              (415)
Total comprehensive income for the period               -               (415)          (11,003)                        (11,418)

Amortisation of historic cash flow hedge reserve        -                596            -                              596
Balance at 28 February 2019                             47,136          (734)          (34,105)                        12,297


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

Profit for the period                                   -                -               2,785                          2,785
Other comprehensive income for the period               -                1,830           -                              1,830
Total comprehensive income for the period               1,830            2,785           4,615


Issue of shares                                         7,724            -               -                              7,724
Dividends                                               -                -              (5,500)                        (5,500)
Waiver of dividends                                     -                -               28                                28
Amortisation of historic cash flow hedge reserve        -               417              -                                417
Balance at 28 February 2018                             47,136          (1,083)          60,991                       107,044


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

Loss 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
Balance at 31 August 2018 (Audited)                     47,136          (915)           (23,102)                       23,119


NEW FRONTIER PROPERTIES LTD 
STATEMENTS OF CASH FLOWS FOR HALF YEAR ENDED 28 FEBRUARY 2019

                                                                                   THE GROUP
                                                                 Unaudited              Unaudited          Audited
                                                            For the period         For the period     For the year
                                                                     ended                  ended            ended
                                                               28 February            28 February        31 August
                                                                      2019                   2018             2018
                                                                   GBP 000                GBP 000          GBP 000
 Cash flows from operating activities
 Cash generated from operations
     Continuing operations                                           4,165                 6,203           11,870
     Discontinued operations                                           233                   (66)             (33)
 Tax (paid)/ refunded                                                   (7)                  146              146
 Interest paid                                                      (2,013)               (2,138)          (4,755)
 Net cash generated from operating activities                        2,378                 4,145            7,228


 Cash flows from investing activities
 Capital improvements to investment property                          (178)               (1,312)          (1,132)
 Purchase of investment property                                         -                (8,455)          (8,150)
 Net cash (used in)/ generated from investing activities              (178)               (9,767)           9,282


 Cash flows from financing activities
 Proceeds from loans                                                     -                11,996           12,800
 Repayment of borrowings                                            (1,381)                 (588)          (1,783)
 Payment of borrowing costs                                              -                  (701)            (695)
 Dividend payment                                                        -                (5,472)         (10,299)
 Net cash (used in)/from financing activities                      (1,381)                 5,235               23

 Net increase/(decrease in cash and cash equivalents for
 the period/year                                                       819                  (387)          (2,031)
 Exchange difference                                                     9                   (15)              (8)
 Cash and cash equivalents at the beginning of the
                                                                     3,471                 5,510            5,510
 period/year


 At end of period/ year                                              4,299                 5,108            3,471




NEW FRONTIER PROPERTIES LTD

RECONCILIATION OF PROFIT FOR HALF YEAR ENDED 28 FEBRUARY 2019
TO HEADLINE EARNINGS


                                                                             THE GROUP
                                                    For the             For the            For the            For the          
                                             6 months ended      6 months ended     3 months ended     3 months ended                                            
                                            28 February 2019   28 February 2018   28 February 2019   28 February 2018
                                         
 Basic and headline earnings per share               GBP 000            GBP 000           GBP 000            GBP 000

 Basic earnings attributable to equity   
 holders of the Company                             (11,003)              2,785           (12,265)               936

 Fair value movement on investment
 properties                                          12,616                   -            12,445                  -
 Headline earnings attributable to
 equity holders of the Company                        1,613               2,785               180                936

 Weighted average number of shares              160,935,407         156,201,234       160,935,407        159,665,971


 Earnings per share
                                         
 Basic earnings per share (GBP)                     (0.068)               0.018           (0.076)              0.006

                                        
 Headline earnings per share (GBP)                   0.010                0.018            0.001               0.006

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