NewRiver Retail Limited
("NewRiver" or the
"Company")
Unaudited results for the six months ended 30
September 2015
Record financial results and portfolio growth
through
successful deployment of equity placing
proceeds
Financial Highlights
Record profits and strong NAV per share growth
§ EPRA
adjusted profit increased by 190% to £19.7 million (Sept 2014: 120%
to £6.8 million)
§ Profit
before tax increased by 243% to £42.2 million (Sept 2014: 137% to
£12.3 million)
§ EPRA
adjusted earnings per share increased by
95% to 13.2p (Sept 2014: 6.8p)
§ Basic
Earnings per share of 28.3p, a 128% increase on the prior period of
12.4 p
§ Dividend
per share of 9p(1) (Sept 2014: 8.5p), fully
covered
§ Third
quarter dividend increased to 4.75 pence per share (11.7% growth on
prior year)
§ EPRA NAV
per share increased by 14% to 287p (Sept 2014: 252p)
§ LTV
decreased to 37% (March 2015: 39%) with further approved debt
facilities in place
Operational Highlights (2)
Highly active asset management continues to drive
value
§ Successfully raised £150 million of fresh equity from a range
of new and existing shareholders
§ Swiftly
deployed into £230 million of acquisitions, net initial yield of
9.6%
§ Assets
under management increased to £1 billion
§ Balance
sheet assets increased to £882 million
§ Improved
high retail occupancy rate of 96% (Sept 2014: 95%)
§ 22
planning consents for Convenience Store programme, construction
started for first C-Store
§ Planning
application lodged for major mixed-use town centre regeneration in
Burgess Hill
§ Good
progress on move to Main Market, obtaining a Premium Listing and
EPRA Index qualification
(1) Includes
two quarterly Dividends of 4.5 pence per share
(2) Unless
otherwise stated, all figures are proportionately
consolidated Financial Statistics
Performance Highlights
Performance
|
Sep 2015
|
Sep 2014
|
Movement/
Growth
|
Total Shareholder Return (12 months)
|
25%
|
32%
|
7%
|
EPRA adjusted profit
|
£19.7m
|
£6.8m
|
+190%
|
Profit before tax
|
£42.2m
|
£12.3m
|
+243%
|
EPRA Adjusted Profit (Pence Per Share)
(3)
|
13.2
|
6.8
|
+95%
|
EPRA Basic (Pence Per Share)
|
12.6
|
5.6
|
+125%
|
Earnings Per Share
|
28.3
|
12.4
|
+128%
|
Dividends per share
|
9.0
|
8.5
|
+6%
|
Dividend cover
|
147%
|
80% (4)
|
-
|
Property valuation movement and disposals
|
£22.9m
|
£6.8m
|
+£16.1m
|
Interest Cover
|
4.0x
|
3.5x
|
+0.5x
|
(3) EPRA Adjusted Profit = Recurring
Profit plus Profit on disposals
(4) Divided cover for the financial
year to 31 March 2015 was 116%
Balance Sheet (proportionally
consolidated)
Six months ended
|
30 Sep 2015
|
31 Mar 2015
|
Movement/ Growth
|
Net Asset Value
|
£521.0m
|
£339.7m
|
+£181.3m
|
EPRA NAV per share
|
287 pence
|
265 pence
|
+22 pence
|
Secured debt facilities (net of fees)
|
£359.4m
|
£272.5m
|
+£86.9m
|
Cash
|
£28.1m
|
£21.1m
|
+£7.0m
|
Net debt
|
£331.3m
|
£251.4m
|
+£79.9m
|
Cost of debt
|
3.8%
|
3.8%
|
-
|
Average debt maturity
|
3.9 years
|
4.6 years
|
-0.7 years
|
Loan to value
|
37%
|
39%
|
-2%
|
Balance sheet gearing
|
55%
|
49%
|
+6%
|
% of debt at fixed/capped rates
|
75%
|
83%
|
-8%
|
David Lockhart, Chief Executive of
NewRiver Retail Limited, commented:
"I am delighted to report another
strong set of financial results following one of the most active
periods for NewRiver since its incorporation in 2009. We have
achieved record profit growth and strong sustainable income
returns, delivering increases in all our key financial metrics.
These are excellent results and demonstrate that our business model
is delivering. Following the over-subscribed £150 million equity
fundraise, we efficiently deployed the proceeds into £230 million
of strategic acquisitions at an average yield of 9.6%
simultaneously growing our assets under management to the landmark
£1 billion mark. Our move to the Main Market is targeted for July
2016 and will mark another important milestone in our impressive
journey."
-Ends-
For further information
NewRiver Retail
Limited
David Lockhart, Chief
Executive
Mark Davies, Finance
Director
|
Tel: 020 3328 5800
|
Bell Pottinger
David Rydell / James Newman / David
Bass
|
Tel: 020 3772 2500
|
Liberum
Richard Crawley / Jamie
Richards
|
Tel: 020 3100 2000
|
Peel Hunt LLP
Capel Irwin / Hugh
Preston
|
Tel: 020 7418 8900
|
Chairman's Statement
The first half of the financial year
has been marked as one of the most active periods for NewRiver
Retail since its incorporation just six years ago. Combining major
acquisitions, a significant equity fund raising, new debt
facilities and significant asset management initiatives the period
ended with record pre-tax profits of £42.2 million (Sept 2014:
£12.3 million) and a 14 per cent. annual increase in EPRA NAV to
287p.
EPRA adjusted profit increased by
190 per cent. to £19.7 million (Sept 2014: £6.8 million), whilst
total gross assets under management broke through the watershed £1
billion level, an increase of 17 per cent. since 31 March 2015.
EPRA NAV per share increased to 287 pence per share, impressive
when considering this was in a period when the Company completed
its largest equity fund raising to date.
In line with its commitment to
shareholder returns, the Board has approved two Quarterly Dividend
payments of 4.5 pence per share resulting in an interim dividend of
9.0 pence (Sept 2014: 8.5 pence), our highest dividend pay-out to
date. We are delighted to announce a further increase in the third
quarter dividend to 4.75 pence per share (an 11.7 per cent.
increase on the prior year).
In June, following previous
successful capital raises, NewRiver again gained shareholder
support for a major fund raising, securing £150 million of fresh
equity from a range of new and existing shareholders. Management
quickly and effectively deployed the majority of the equity
proceeds having identified attractive opportunities to acquire
quality assets and completing £230 million of new acquisitions at
an average yield of 9.6 per cent. during the period.
The largest acquisition was the
£69.1 million purchase of the Ramsay portfolio, a geographically
diverse portfolio of 13 retail warehouse assets comprising nine
investments properties and four development opportunities. Let to
prime covenant retailers, the assets were acquired at a yield of
eight per cent. and offer significant asset management and risk
controlled development opportunities. Three planning
applications have already been approved with a further five to be
submitted in the next quarter.
A further £52 million was utilised
by acquiring the 50 per cent. stake not already owned by NewRiver
in the Trent JPUT - notably the 202-strong Marston's public house
portfolio at an implied net initial yield of 10.1 per cent. and the
Camel III Shopping Centre Portfolio at a yield of 7.2 per
cent.
Management view the public house
market as a highly desirable sub sector of the retail property
market. It generates secure long term income streams and offers
significant asset-management and development opportunities. To
date, nearly 50 planning applications have been submitted, 22
receiving approval principally for developments on surplus land
adjacent to the trading public house. The Company has also
identified further value-creating opportunities in its pub
portfolio to develop up to 200 residential units on surplus
land.
In September 2015, the Company
expanded its pub portfolio through the £53.5 million acquisition of
a further 158 public houses across England and Wales from Punch
Taverns. The purchase price reflects a net initial yield of 13.5
per cent which management expect to generate an attractive cash on
cash equity return in excess of 20 per cent.
In addition to an active acquisition
programme, NewRiver made significant advances in its risk
controlled development activities. Notably a detailed
planning application was submitted to the local authority for a
major £65 million mixed use town centre redevelopment in Burgess
Hill, West Sussex, totalling 465,000 sq ft. In Cowley, Oxfordshire,
public consultation is underway for a £64 million redevelopment of
Templars Square which is expected to deliver 225,000 sq ft of mixed
use assets. In total the Company's growing development pipeline
equates to more than 1 million sq ft.
Portfolio management has progressed
well with total rent roll under management increasing by 19 per
cent. in the last quarter alone to £85.3 million per annum. The
retail occupancy rate improved to 96.3 per cent. and the team
completed 109 new lettings and lease renewals during the period at
7.8 per cent. above ERV, delivering £2 million per annum of
income.
The Company has announced its
intention to move from AIM to the Premium segment of the Main
market of the London Stock Exchange. The process is progressing
well with an expected target date of July 2016. The Board is
delighted with NewRiver's significant progress in the period which
again demonstrates that it is achieving its objective of becoming
one of the leading value-creating retail property investment
businesses in the UK. The Board looks forward to the future with
confidence.
Paul Roy
Chairman
18 November 2015
Proportionally consolidated Statement of
Comprehensive Income
The Group financial statements are prepared under
IFRS which includes profits from joint ventures on one line. The
Board considers the performance of the Group on a proportionately
consolidated basis and the report below therefore reflects this
basis.
|
|
Unaudited
Six months ended 30 September
2015
|
|
Unaudited
Six months ended 30 September
2014
|
|
INCOME STATEMENT
|
|
Group
|
Joint Ventures
|
Proportionally
consolidated
|
Group
|
Joint Ventures
|
Proportionally
consolidated
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Gross rental income and
fees
|
|
26,640
|
9,134
|
35,774
|
9,199
|
7,731
|
16,930
|
Property outgoings
|
|
(2,827)
|
(798)
|
(3,625)
|
(1,750)
|
(662)
|
(2,412)
|
Net property income
|
|
23,813
|
8,336
|
32,149
|
7,449
|
7,069
|
14,518
|
Operating expenses
|
|
(4,919)
|
(411)
|
(5,330)
|
(3,781)
|
(387)
|
(4,168)
|
Net financing costs
|
|
(4,959)
|
(2,472)
|
(7,431)
|
(2,908)
|
(1,889)
|
(4,797)
|
Profit/ (loss) on disposal of
investment properties
|
|
(73)
|
-
|
(73)
|
1,153
|
-
|
1,153
|
Joint ventures net income
|
|
5,453
|
(5,453)
|
-
|
4,793
|
(4,793)
|
-
|
Revaluation surplus
|
|
22,869
|
-
|
22,869
|
5,631
|
-
|
5,631
|
IFRS Profit for the
period
|
|
42,184
|
-
|
42,184
|
12,337
|
-
|
12,337
|
|
|
|
|
|
|
|
|
EPRA adjustments
|
|
(22,469)
|
-
|
(22,469)
|
(5,556)
|
-
|
(5,556)
|
EPRA adjusted profit
|
|
19,715
|
-
|
19,715
|
6,781
|
-
|
6,781
|
EPRA adjusted EPS
|
|
13.2
|
|
13.2
|
6.8
|
|
6.8
|
Dividend per share
|
|
9.0
|
|
9.0
|
8.5
|
|
8.5
|
Dividend Cover
|
|
147%
|
|
147%
|
80% (1)
|
|
80% (1)
|
|
|
|
|
|
|
|
|
|
|
(1) Divided cover for the financial
year to 31 March 2015 was 116%
Proportionally consolidated Balance Sheet
Management assesses the business on a proportionally
consolidated basis. The IFRS net assets for the Group include
investment in joint ventures on one line and this is split out on a
line by line basis in the table below.
|
|
Unaudited
As at 30 September 2015
|
|
Unaudited
As at 31 March 2015
|
|
BALANCE SHEET
|
|
Group
|
Joint Ventures
|
Proportionally
consolidated
|
Group
|
Joint Ventures
|
Proportionally
consolidated
|
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Properties at valuation
|
|
753,453
|
129,063
|
882,516
|
404,098
|
222,205
|
626,303
|
|
Investment in joint
ventures
|
|
66,110
|
(66,110)
|
-
|
113,027
|
(113,027)
|
-
|
|
Other non-current assets
|
|
567
|
-
|
567
|
513
|
-
|
513
|
|
Cash
|
|
23,498
|
4,563
|
28,061
|
15,412
|
5,696
|
21,108
|
|
Other current assets
|
|
6,654
|
1,154
|
7,810
|
6,166
|
2,698
|
8,864
|
|
Total assets
|
|
850,282
|
68,672
|
918,954
|
539,216
|
117,572
|
656,788
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities
|
|
(18,535)
|
(3,125)
|
(21,660)
|
(16,197)
|
(4,596)
|
(20,793)
|
|
Debt
|
|
(291,178)
|
(65,010)
|
(356,188)
|
(157,921)
|
(112,012)
|
(269,933)
|
|
Convertible loan stock
|
|
(16,978)
|
-
|
(16,978)
|
(23,420)
|
-
|
(23,420)
|
|
Other non-current
liabilities
|
|
(2,555)
|
(535)
|
(3,090)
|
(1,983)
|
(964)
|
(2,947)
|
|
Total liabilities
|
|
(329,246)
|
(68,670)
|
(397,916)
|
(199,521)
|
(117,572)
|
(317,093)
|
|
|
|
|
|
|
|
|
|
|
IFRS net assets
|
|
521,036
|
-
|
521,036
|
339,695
|
-
|
339,695
|
|
|
|
|
|
|
|
|
|
|
EPRA adjustments
|
|
23,742
|
|
23,742
|
29,973
|
|
29,973
|
|
EPRA net assets
|
|
544,778
|
|
544,778
|
369,668
|
|
369,668
|
|
|
|
|
|
|
|
|
|
|
EPRA NAV per share
|
|
|
|
287p
|
|
|
265p
|
|
Consolidated Condensed Income Statement
For the period from 1 April 2014 to 30 September
2015
|
|
Unaudited Period 1 Apr 2015 to 30
Sep 2015
|
Unaudited Period 1 Apr 2014 to 30
Sep 2014
|
|
Notes
|
Operating and Financing
£'000
|
Fair value adjustments
£'000
|
Total
£'000
|
Operating and Financing
£'000
|
Fair value adjustments
£'000
|
Total
£'000
|
Gross income
|
3
|
26,640
|
-
|
26,640
|
9,199
|
-
|
9,199
|
Property operating expenses
|
4
|
(2,827)
|
-
|
(2,827)
|
(1,750)
|
-
|
(1,750)
|
Net property income
|
|
23,813
|
-
|
23,813
|
7,449
|
-
|
7,449
|
Administrative expenses
|
5
|
(4,919)
|
-
|
(4,919)
|
(3,781)
|
-
|
(3,781)
|
Share of income from
joint ventures
|
11
|
5,453
|
2,296
|
7,749
|
4,793
|
5,631
|
10,424
|
Net valuation movement
|
9
|
-
|
20,573
|
20,573
|
-
|
-
|
-
|
(Loss)/Profit on disposal
of investment properties
|
|
(73)
|
-
|
(73)
|
-
|
1,153
|
1,153
|
Operating profit
|
|
24,274
|
22,869
|
47,143
|
8,461
|
6,784
|
15,245
|
Net finance expense
|
|
|
|
|
|
|
|
Finance income
|
|
25
|
-
|
25
|
166
|
-
|
166
|
Finance costs
|
|
(4,984)
|
-
|
(4,984)
|
(3,074)
|
-
|
(3,074)
|
Profit for the year
before taxation
|
|
19,315
|
22,869
|
42,184
|
5,553
|
6,784
|
12,337
|
Current taxation charge
|
|
-
|
-
|
-
|
-
|
-
|
-
|
Profit for the
year after taxation
|
|
19,315
|
22,869
|
42,184
|
5,553
|
6,784
|
12,337
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
EPRA Adjusted (pence)
|
6
|
|
|
13.2
|
|
|
6.8
|
EPRA basic (pence)
|
6
|
|
|
12.6
|
|
|
5.6
|
Basic EPS (pence)
|
6
|
|
|
28.3
|
|
|
12.4
|
EPS diluted (pence)
|
6
|
|
|
28.1
|
|
|
11.6
|
All activities derive from continuing operations of
the Group.
Consolidated Condensed Statement of Comprehensive
Income
For the period from 1 April 2014 to 30 September
2015
|
Notes
|
Unaudited Period 1 Apr 2015 to 30
Sep 2015
£'000
|
Unaudited Period 1 Apr 2014 to 30
Sep 2014
£'000
|
Profit for the year after taxation
|
|
42,184
|
12,337
|
Other comprehensive income
|
|
|
|
Items that will be reclassified subsequently to
profit or loss
|
|
|
|
Fair value gain on interest rate derivatives
designated in cash flow hedges
|
12
|
6
|
129
|
Total comprehensive income for the year
|
|
42,190
|
12,466
|
Consolidated Condensed Balance Sheet
As at 30 September 2015
|
Notes
|
30 September 2015
£'000
|
31 March
2015
£'000
|
Non-current assets
|
|
|
|
Investment properties
|
9
|
753,453
|
404,098
|
Investments in joint ventures
|
11
|
66,110
|
113,027
|
Property, plant and equipment
|
|
567
|
513
|
Total non-current assets
|
|
820,130
|
517,638
|
Current assets
|
|
|
|
Trade and other receivables
|
|
5,542
|
5,853
|
Derivative financial instruments
|
12
|
1,112
|
313
|
Cash and cash equivalents
|
|
23,498
|
15,412
|
Total current assets
|
|
30,152
|
21,578
|
Total assets
|
|
850,282
|
539,216
|
Equity and liabilities
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
|
18,535
|
16,197
|
Current taxation liabilities
|
|
-
|
-
|
Total current liabilities
|
|
18,535
|
16,197
|
Non-current liabilities
|
|
|
|
Derivative financial instruments
|
12
|
2,555
|
1,983
|
Borrowings
|
12
|
291,178
|
157,921
|
Debt instruments
|
12
|
16,978
|
23,420
|
Total non-current liabilities
|
|
310,711
|
183,324
|
Net assets
|
|
521,036
|
339,695
|
|
|
|
|
Equity
|
|
|
|
Share capital
|
13
|
-
|
-
|
Retained earnings
|
|
79,235
|
58,254
|
Other reserves
|
|
412,333
|
273,582
|
Hedging reserve
|
|
(684)
|
(690)
|
Share Option reserve
|
|
1,463
|
1,063
|
Revaluation reserve
|
|
28,689
|
7,486
|
Total equity
|
|
521,036
|
339,695
|
|
|
|
|
Net Asset Value (NAV) per share
|
|
|
|
EPRA NAV (pence)
|
7
|
287
|
265
|
Basic (pence)
|
7
|
290
|
267
|
Basic diluted (pence)
|
7
|
286
|
264
|
The financial statements were approved by the Board
of Directors on 18 November 2015 and were signed on its behalf
by:
David Lockhart
Mark Davies
Chief Executive
Finance
Director
Consolidated Condensed Cash Flow Statement
As at 30 September 2015
|
Note
|
30 September 2015
£'000
|
30 September 2014
£'000
|
Cash flows from operating activities
|
|
|
|
Profit before tax on ordinary activities for the year
attributable to Shareholders
|
|
42,184
|
12,337
|
Adjustments for:
|
|
|
|
Loss/(profit) on disposal of investment property
|
|
73
|
(1,153)
|
Net movement from fair value adjustments on
Investment Properties
|
9
|
(20,573)
|
-
|
Net movement from fair value adjustments in joint
ventures
|
11
|
(2,296)
|
(5,561)
|
Profits in joint ventures
|
|
(5,453)
|
(4,793)
|
Net finance costs
|
|
4,959
|
2,908
|
Rent free lease incentive adjustment
|
|
(112)
|
(216)
|
Provision for bad debts
|
|
(3)
|
22
|
Amortisation of legal and letting fees and facility
fees
|
|
(342)
|
338
|
Depreciation on property plant and equipment
|
|
62
|
33
|
Share Options
|
|
400
|
268
|
Operating profit before changes in working
capital
|
|
18,899
|
4,183
|
Changes in working capital:
|
|
|
|
(Increase)/decrease in receivables and other
financial assets
|
|
(487)
|
(3,328)
|
Increase/(decrease) in payables and other financial
liabilities
|
|
3,105
|
(3,458)
|
Cash generated from / (used in) operations before
interest
|
|
21,424
|
(2,603)
|
Net finance costs
|
|
(4,984)
|
(175)
|
Corporation tax paid
|
|
-
|
(219)
|
Net cash generated from / (used in) operating
activities
|
|
16,533
|
(2,997)
|
Cash flows from investing activities
|
|
|
|
Investment in joint ventures
|
11
|
-
|
(72,470)
|
Purchase of investment properties
|
|
(76,454)
|
(33,578)
|
Acquisition costs
|
|
(7,435)
|
-
|
Properties acquired on business combinations
|
10
|
(194,033)
|
-
|
Disposal of investment properties
|
|
6,150
|
24,450
|
Development and other capital expenditure
|
|
(4,729)
|
(1,693)
|
Purchase of plant and equipment
|
|
(117)
|
(66)
|
Dividends received
|
8
|
2,250
|
2,380
|
Net cash used in investing activities
|
|
(274,368)
|
(80,977)
|
Cash flows from financing activities
|
|
|
-
|
Proceeds from issuance of new shares
|
|
143,208
|
420
|
Repayment of bank loans and other costs
|
|
-
|
(11,960)
|
New borrowings
|
|
133,612
|
16,770
|
Dividends paid
|
8
|
(10,899)
|
-
|
Net cash generated from financing activities
|
|
265,921
|
5,230
|
Cash and cash equivalents at 1 October/1 April
|
|
15,412
|
89,555
|
Net increase / (decrease) in cash and cash
equivalents
|
|
8,086
|
(78,744)
|
Cash and cash equivalents at 30 September/31
March
|
|
23,498
|
10,811
|
Consolidated Condensed Statement of Changes in
Equity
As at 30 September 2015
|
Notes
|
Retained
earnings
£'000
|
Share
capital and
Share
premium
£'000
|
Other
reserves
£'000
|
Hedging
reserves
£'000
|
Share
Option
reserves
£'000
|
Revaluation
reserves
£'000
|
Total
£'000
|
As at 30 September 2014
|
|
37,778
|
-
|
213,401
|
110
|
528
|
771
|
252,588
|
Net proceeds of issue from new shares
|
13
|
|
72,900
|
|
|
|
|
72,900
|
Transfer of share premium
|
|
|
(72,900)
|
72,900
|
|
|
|
-
|
Total comprehensive income for the period
|
|
27,191
|
|
|
(800)
|
|
|
26,391
|
Realisation of fair value movements
|
|
146
|
|
|
|
|
(146)
|
-
|
Share-based payments
|
|
|
|
|
|
535
|
|
535
|
Dividend payments
|
8
|
|
|
(12,719)
|
|
|
|
(12,719)
|
Revaluation movement
|
|
(6,861)
|
|
|
|
|
6,861
|
|
As at 31 March 2015
|
|
58,254
|
-
|
273,582
|
(690)
|
1,063
|
7,486
|
339,695
|
Net proceeds of issue from new shares
|
|
|
149,650
|
|
|
|
|
149,650
|
Transfer of share premium
|
|
|
(149,650)
|
149,650
|
|
|
|
-
|
Total comprehensive income for the period
|
|
42,184
|
|
|
6
|
|
|
42,190
|
Realisation of fair value movements
|
|
(630)
|
|
|
|
|
630
|
-
|
Share-based payments
|
|
|
|
|
|
400
|
|
400
|
Dividend payments
|
8
|
|
|
(10,899)
|
|
|
|
(10,899)
|
Revaluation movement
|
|
(20,573)
|
|
|
|
|
20,573
|
-
|
As at 30 September 2015
|
|
79,235
|
-
|
412,333
|
(684)
|
1,463
|
28,689
|
521,036
|
Notes to the financial statements
1 Accounting policies General information
NewRiver Retail Limited (the 'Company') and its
subsidiaries (together the 'Group') is a property investment group
specialising in commercial real estate in the UK. NewRiver Retail
Limited was incorporated on 4 June 2009 in Guernsey under the
provisions of The Companies (Guernsey) Law, 2008. On 22 November
2010, the Company converted to a UK REIT( Real Estate Investment
Trust) and is managed and controlled in the UK. The Company's
registered office is Old Bank Chambers, La Grande Rue, St Martin's,
Guernsey GY4 6RT and the business address is 37 Maddox Street,
London W1S 2PP. The Company is publicly traded on the AIM market
under the symbol NRR.
The Company has taken advantage of the exemption
conferred by the Companies (Guernsey) Law, 2008, Section 244, not
to prepare company only financial statements.
These consolidated financial statements have been
approved for issue by the Board of Directors on 18 November
2015.
Going concern
The Directors of NewRiver Retail Limited have
reviewed the current and projected financial position of the Group
making reasonable assumptions about future trading and performance.
The key areas reviewed were:
· Value of investment
property
· Timing of property
transactions
· Capital expenditure and
tenant incentive commitments
· Forecast rental income
· Loan covenants
· Capital and debt
funding
· Capital expenditure
The Group has cash and short-term deposits, as well
as profitable rental income streams and as a consequence the
Directors believe the Group is well placed to manage its business
risks. Whilst the Group has borrowing facilities in place it is
currently well within prescribed financial covenants. Together with
its cash resources the Group will arrange bank facilities to fund
any future risk-controlled developments.
The Group has £17 million of Convertible Unsecured
Loan Stock ("CULS") in issue which mature on 31 December 2015 when
they will be either converted or repaid. The Company expects the
holders of the CULS to convert their interest to equity prior to
the maturity date.
After making enquiries and examining major areas
which could give rise to significant financial exposure, the Board
has a reasonable expectation that the Company and the Group have
adequate resources to continue its operations for the foreseeable
future. Accordingly, the Group continues to adopt the going concern
basis in preparation of these financial statements.
Summary of significant accounting policies
The principal accounting policies applied in the
preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all years
presented, unless otherwise stated.
Statement of compliance
The financial statements are prepared in accordance
with IFRSs as adopted by the European Union. The condensed set of
financial statements included in this half yearly financial report
has been prepared in accordance with International Accounting
Standard 34 'Interim Financial Reporting', as adopted by the
European Union.
Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the Company and its subsidiaries. The
consolidated financial statements account for interest in joint
ventures using the equity method of accounting per IFRS11.
The same accounting policies, presentation and
methods of computation are followed in the condensed set of
financial statements as applied in the Group's latest audited
financial statements, a copy of which can be found on our website
www.nrr.co.uk.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated
and are based on historical experience as adjusted for current
market conditions and other factors.
In the process of applying the Group's accounting
policies, management is of the opinion that any instances of
application of judgements did not have a significant effect on the
amounts recognised in the financial statements.
The preparation of financial statements requires
management to make estimates affecting the reported amounts of
assets and liabilities, of revenues and expenses, and of gains and
losses. The key assumptions concerning the future, and other
key sources of estimation uncertainty at the end of the reporting
period, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year, are discussed below.
i. Investment properties
As described above, the Group's investment properties
are stated at fair value, as accounted for by management based on
an independent external appraisal. The estimated fair value may
differ from the price at which the Group's assets could
be sold at a particular time, since actual selling prices are
negotiated between willing buyers and sellers. Also, certain
estimates require an assessment of factors not within management's
control, such as overall market conditions. As a result,
actual results of operations and realisation of net assets could
differ from the estimates set forth in these financial statements,
and the difference could be significant.
The valuation of the Group's development property
portfolio is inherently subjective due to, amongst other factors,
the individual nature of each property, forecast trading EBITDA,
the status of planning consent, obtaining vacant possession,
development cost projections and the expected future rental income,
incorporating tenant credit risk. As a result, the valuations the
Group places on its development property portfolio are subject to a
degree of uncertainty and are made on the basis of current relevant
information available at the date of valuation.
ii. Valuation of share-based payments
Management has relied on the services of external
experts to determine the fair value of share-based payments.
This requires significant estimates of a number of inputs
which are used to model that fair value.
iii. Impairment in investments and joint ventures
Determining whether investments are impaired requires
an estimation of the fair values less cost to sell and value in use
of those investments. The process requires the Group to
estimate the future cash flows expected from the cash-generating
units and an appropriate discount rate in order to calculate
the present value of the future cash flows. Management has
evaluated the recoverability of those investments based on such
estimates.
iv. Property disposals
The Company has elected for REIT status. To continue
to benefit from this regime, the Group is required to comply with
certain conditions as defined in the REIT legislation. In
particular, Management are required to determine whether each
property acquisition should be included within the REIT rental
property income business and whether on disposal of that property,
any gain arising is capital or trading in nature, and therefore
whether it has triggered a tax charge to be payable to HMRC. If
HMRC were to challenge the tax treatment on the disposal of a
property, particularly for properties for which redevelopment works
have occurred and disposal is within a three year period since
acquisition, and consider this to be trading in nature, this
may give rise to a tax charge. The Group has
determined that all property acquisitions during the year,
including those within joint ventures should be included within the
REIT ring-fence and therefore has not recognised any deferred tax
on the revaluation movements since acquisition, and that all
property disposals during the year generated a taxable loss. The
Group has unrecognised tax losses carried forwards of £1.0 million
at 30 September 2015 as detailed in Note 8.
v. Accounting for acquisitions
Management must assess whether the acquisition of
property through the purchase of a corporate vehicle should be
accounted for as an asset purchase or a business combination. Where
the acquired corporate vehicle contains processes and inputs in
addition to property, the transaction is accounted for as a
business combination. Where there are no such items, the
transaction is treated as an asset purchase.
Business combinations are accounted for using the
acquisition method any excess of the purchase consideration over
the fair value of the net assets acquired is recognised as goodwill
and reviewed annually for impairment. Any discount received or
acquisition related costs are recognised in the income
statement.
Management acquired a trading pub
portfolio in the period. The intention of the Group was to lease
the properties to LT Management Plc for a period of 5 years. Under
this arrangement the Group will only receive a fixed rental over
the lease period and a minimal turnover rent should the performance
of the pubs exceed a certain agreed level. As this adjustable
element is expected to be minimal and hence income is expected to
be mainly fixed over the period of the lease, the properties have
been classified as investments properties under IAS40 and not as
fixed assets under IAS16. The lease with LT Management was agreed
post 30 September 2015.
2 Segmental reporting
During the year the Group operated in one business
segment, being property investment in the UK and as such no further
information is provided.
3 Gross income
|
2015
£'000
|
2014
£'000
|
Rental and related income
|
21,723
|
8,307
|
Asset management fees
|
530
|
874
|
Realised gain received from Joint Venture partnership
during the year
|
4,220
|
-
|
Surrender premiums and commissions
|
167
|
18
|
Gross income
|
26,640
|
9,199
|
4 Property operating expenses
|
2015
£'000
|
2014
£'000
|
Amortisation of tenant incentives and letting
costs
|
326
|
235
|
Ground rent payments
|
508
|
363
|
Rates on vacant units
|
510
|
330
|
Other property operating expenses
|
927
|
283
|
Property operating expenses
|
2,271
|
1,211
|
|
|
|
Service charge income
|
5,290
|
1,836
|
Service charge expense
|
(4,734)
|
(1,297)
|
Net service charge expense
|
556
|
539
|
Total property operating expenses
|
2,827
|
1,750
|
5 Administrative expenses
|
2015
£'000
|
2014
£'000
|
Group staff costs
|
3,005
|
2,673
|
Depreciation
|
62
|
33
|
Share Option and LTIP expense
|
400
|
75
|
Administration and other operating expenditure
|
1,452
|
1,000
|
Administrative expenses
|
4,919
|
3,781
|
Asset management fees
|
(530)
|
(874)
|
Net administrative expenses
|
4,389
|
2,907
|
Net administrative expenses as a % of gross rental
income (including share of joint ventures)
|
16%
|
19%
|
|
2015
£'000
|
2014
£'000
|
Auditor's remuneration
|
|
|
Fees payable to the Company's auditor for the
audit
|
75
|
25
|
Total audit fees
|
|
|
Fees payable to the Company's auditor for reporting
accountant services and half year review
|
53
|
-
|
Total non-audit fees
|
-
|
-
|
Total
|
128
|
25
|
|
2015
Number
|
2014
Number
|
Average staff numbers including Directors
|
44
|
36
|
6 Earnings per share
The European Public Real Estate Association (EPRA)
issued Best Practices Policy Recommendations in 2014 and additional
guidance in January 2015, which gives recommendations for
performance measures. The EPRA earnings measure excludes investment
property revaluations and gains on disposals, intangible asset
movements and their related taxation. We have also disclosed
an EPRA adjusted profit measure which includes realised gains on
disposals and adds back Share Option expense as it is
unrealised.
The National Association of Real Estate Investment
Trusts (NAREIT) Funds From Operations (FFO) measure is similar to
EPRA earnings and is a performance measure used by many property
analysts. The main difference to EPRA earnings with respect to the
Group is that it adds back the amortisation of leasing costs and
tenant incentives and is based on US GAAP.
The calculation of basic and diluted earnings per
share is based on the following data:
|
2015
£'000
|
2014
£'000
|
Earnings
|
|
|
Earnings for the purposes of basic and diluted EPS
being profit after taxation
|
42,184
|
12,337
|
Adjustments to arrive at EPRA profit
|
|
|
Unrealised (gains) on revaluation of investment
properties
|
(20,573)
|
-
|
Unrealised (surplus) on revaluation of joint venture
investment properties
|
(2,296)
|
(5,631)
|
Profit/(loss) on disposal of investment
properties
|
73
|
(1,153)
|
Gain on bargain purchase
|
(674)
|
-
|
EPRA profit
|
18,714
|
5,553
|
Profit/(loss) on disposal of investment
properties
|
(73)
|
1,153
|
Share Option expense
|
400
|
75
|
Gain on bargain purchase
|
674
|
-
|
EPRA adjusted profit
|
19,715
|
6,781
|
Adjustments to EPRA profit to arrive at NAREIT
FFO
|
|
|
EPRA profit
|
18,714
|
5,553
|
Amortisation of tenant incentives and letting
costs
|
115
|
235
|
Amortisation of rent-free periods
|
(112)
|
(216)
|
Amortisation of capitalised leasing costs
|
211
|
-
|
NAREIT FFO
|
18,928
|
5,572
|
Number of shares
|
2015
No. 000s
|
2014
No. 000s
|
Weighted average number of Ordinary Shares for the
purposes of basic EPS and basic EPRA EPS
|
148,899
|
99,545
|
Effect of dilutive potential Ordinary Shares:
|
|
|
Options
|
1,143
|
707
|
Warrants
|
254
|
244
|
CULS
|
-
|
-
|
MSREI joint venture conversion (1)
|
-
|
2,803
|
Weighted average number of Ordinary Shares for the
purposes of basic diluted EPS
and basic diluted EPRA EPS
|
150,296
|
103,299
|
EPRA Adjusted EPS (pence)
|
13.2
|
6.8
|
EPRA EPS basic (pence)
|
12.6
|
5.6
|
EPRA diluted EPS (pence)
|
12.5
|
5.5
|
FFO EPS basic (pence)
|
12.7
|
5.6
|
EPS basic (pence)
|
28.3
|
12.4
|
Diluted EPS basic (pence)
|
28.1
|
11.6
|
(1) The
MSREI conversion expired in May 2015 7 Net asset value
per share
|
|
|
30 September 2015
|
|
|
|
31 March 2015
|
|
Total equity £'000s
|
Shares
No'000s
|
Pence per share
|
|
Total equity £'000s
|
Shares
No'000s
|
Pence per share
|
Basic
|
521,036
|
179,864
|
290
|
|
339,695
|
127,078
|
267
|
Warrants in issue
|
764
|
490
|
156
|
|
933
|
569
|
164
|
Unexercised employee awards
|
5,294
|
2,778
|
191
|
|
4,850
|
2,617
|
185
|
Convertible loan stock (A CULS)
|
17,000
|
6,996
|
243
|
|
17,000
|
6,855
|
248
|
Convertible loan stock (B CULS)
|
-
|
-
|
-
|
|
6,500
|
2,642
|
246
|
Diluted
|
544,094
|
190,128
|
286
|
|
368,978
|
139,761
|
264
|
Fair value derivatives
|
684
|
-
|
-
|
|
690
|
-
|
-
|
EPRA
|
544,778
|
190,128
|
287
|
|
369,668
|
139,761
|
265
|
* The number of shares in issue is adjusted under the
EPRA calculation to assume conversion of the warrants, options,
shares from the long-term incentive plan and the Convertible
Unsecured Loan Stock converted to equity providing they have a
dilutive effect.
8 Dividends
The following dividends are associated with the
current and prior periods:
Payment date
|
Dividend
|
PID
|
Non-PID
|
Pence per
share
|
30 September 2015
£'000
|
|
Current period dividends
|
|
|
|
|
|
|
18 May 2015
|
Fourth quarterly dividend
|
4.25
|
-
|
4.25
|
5,401
|
|
31 July 2015
|
First quarterly dividend
|
4.50
|
-
|
4.50
|
5,839
|
|
13 November 2015 (1)
|
Second quarterly dividend
|
4.50
|
-
|
4.50
|
8,094
|
|
|
|
13.25
|
-
|
13.25
|
19,334
|
|
(1) Post balance
sheet event
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year dividends
|
|
|
|
|
31 March 2015
£'000
|
|
31 October 2014
|
First interim dividend
|
1.00
|
3.25
|
4.25
|
4,235
|
|
30 January 2015
|
Second interim dividend
|
1.00
|
3.25
|
4.25
|
4,242
|
|
30 January 2015
|
Third quarterly dividend
|
4.25
|
-
|
4.25
|
4,242
|
|
|
|
|
|
|
|
|
|
|
6.25
|
6.50
|
12.75
|
12,719
|
|
|
|
|
|
|
30 September 2015
£'000
|
31 March
2015
£'000
|
Dividends in consolidated statement of changes in
equity
|
|
|
|
|
10,899
|
12,719
|
Dividends settled in cash during the year
|
|
|
|
|
10,899
|
12,719
|
Timing difference related to payment of withholding
tax on dividends
|
|
|
|
|
-
|
(503)
|
Dividends in cash flow statement
|
|
|
|
|
10,899
|
12,216
|
The Company announced that it was moving to a
quarterly dividend policy last year and this policy has now been
implemented.
During the period ended 30 September 2015 the Company
declared total dividends of 8.50 pence per share of which 4.25
pence was paid after the period end. The total dividend is fully
covered by profits in the year.
Of the total dividend in respect to the period ended
30 September 2015, 13.25 pence was paid as a PID.
A third quarterly dividend of 4.75 pence per share in
respect of the year ended 31 March 2016 will be paid on 10 February
2016 to shareholders on the register at close of business on 29
December 2015. The ex-dividend date will be 24 December 2015. The
quarterly dividend will be payable as a REIT Property Income
Distribution (PID).
9 Investment properties
|
Notes
|
30 September 2015
£'000
|
31 March 2015
£'000
|
Fair value brought forward
|
|
404,098
|
214,124
|
Acquisitions and improvements in the year
|
|
82,515
|
89,815
|
Properties acquired on business combinations
|
10
|
252,400
|
121,500
|
Disposals in the year
|
|
(6,133)
|
(28,202)
|
|
|
732,880
|
397,237
|
Valuation movement gains in profit and loss
|
|
20,573
|
6,861
|
Fair value carried forward
|
|
753,453
|
404,098
|
It is the Group's policy to carry investment
properties at fair value in accordance with IAS 40 'Investment
Property'. The fair value of the Group's investment property
at 31 March 2015 has been determined on the basis of open market
valuations carried out by Colliers International and Strutt
and Parker LLP who are the external independent valuers to the
Group.
The fair value at 2015 represents the highest and
best use.
The properties are categorised as Level 3 in the IFRS
13 fair value hierarchy. There were no transfers of property
between Levels 1, 2 and 3.
The Group's policy is to recognise transfers into and
out of fair value hierarchy levels as of the date of the event or
change in circumstances that caused the transfer.
Valuation processes
The Group's investment properties have been valued at
fair value on 31 March 2015 by independent valuers, Colliers
International Valuation UK LLP and Strutt and Parker LLP, on the
basis of fair value in accordance with the Current Practice
Statements contained in The Royal Institution of Chartered
Surveyors Valuation - Professional Standards, (the 'Red Book').
Information about fair value measurements for the investment
property using significant unobservable inputs (Level 3)
|
|
Property ERV per sq ft
(£)
|
Property Rent per sq ft
(£)
|
Property Equivalent Yield
(%)
|
Net Initial Yield (%)
|
Segment
|
Fair value (£'000)
|
Min
|
Max
|
Average
|
Min
|
Max
|
Average
|
Average
|
Average
|
|
|
|
|
|
|
|
|
|
|
Shopping centres
|
526,762
|
8.12
|
36.67
|
13.28
|
4.91
|
28.31
|
12.41
|
7.4
|
6.40
|
High street
|
49,390
|
2.26
|
21.66
|
8.85
|
1.94
|
22.47
|
8.71
|
6.6
|
6.55
|
Retail Warehouse
|
118,548
|
7.05
|
20.00
|
11.13
|
6.04
|
21.36
|
10.42
|
7.4
|
7.26
|
Development site
|
11,760
|
0.00
|
10.00
|
10.00
|
0.00
|
0.00
|
0.00
|
0.0
|
0.00
|
|
706,460
|
7.40
|
32.38
|
12.56
|
4.81
|
26.26
|
11.61
|
7.19
|
6.45
|
|
|
Property Rent per sq ft
(£)
|
Net Initial Yield (%)
|
Segment
|
Fair value
(£'000)
|
Min
|
Max
|
Average
|
Min
|
Max
|
Average
|
|
|
|
|
|
|
|
|
Pub portfolio
|
126,620
|
2.30
|
87.56
|
20.47
|
6.2
|
32.1
|
11.9
|
Convenience store development portfolio
|
49,436
|
13.50
|
17.50
|
16.81
|
6.0
|
6.5
|
6.0
|
|
176,056
|
|
|
|
|
|
|
Group Total
|
|
|
|
|
|
|
|
By Ownership
|
|
|
|
|
|
|
|
Wholly owned
|
753,453
|
|
|
|
|
|
|
Joint ventures
|
129,063
|
|
|
|
|
|
|
Group Total
|
882,516
|
|
|
|
|
|
|
Revenues are derived from a large number of tenants
with no single tenant or group under common control contributing
more than 5% of the Group's revenue.
There are interrelationships between all these
unobservable inputs as they are determined by market conditions.
The effect of an increase in more than one unobservable input would
be to magnify the impact on the valuation. The impact on the
valuation will be mitigated by the interrelationship of two
unobservable inputs moving in opposite directions, e.g. an increase
in rent may be offset by an increase in yield, resulting in no net
impact on the valuation. Expected vacancy rates may impact the
yield with higher vacancy rates resulting in higher yields.
Valuation techniques underlying the Group's estimation of fair
value including joint ventures
The investments are several retail assets in the UK
with a total carrying amount of £883 million. The valuation was
determined using an income capitalisation method, which involves
applying a yield to rental income streams. Inputs include yield,
current rent and ERV.
Development properties are valued using a residual
method, which involves valuing the completed investment property
using an investment method and deducting estimated costs to
complete, then applying an appropriate discount rate. The
relationship of unobservable inputs to fair value are the higher
the rental values and the lower the yield, the higher the fair
value. In respect of the pub portfolio the Valuer makes judgements
on whether to use residual value or a higher value to include
development potential where appropriate. Where no conversion
opportunity has been identified at present, the Valuer has not
specifically considered an alternative use valuation.
These inputs include:
· Rental value - total rental
value pa
· Equivalent yield - the
discount rate of the perpetual cash flow to produce a net present
value of zero assuming a purchase at the valuation
There were no changes in valuation techniques during
the period.
The portfolio has been valued by external valuers
biannually, on a fair value basis in accordance with the RICS Red
Book. Valuation reports are based on both information provided by
the Group, e.g. current rents and lease terms which is derived from
the Company's financial and property management systems and is
subject to the Group's overall control environment, and assumptions
applied by the valuers, e.g. ERVs and yields. These assumptions are
based on market observation and the valuer's professional
judgement.
The fee payable to the valuers is on a fixed
basis.
10 Acquisition of a subsidiary (Business combination)
On 18 June 2015, the Group acquired 50% of the units
of NewRiver Retail Property Unit Trust 3 and 4, Unit Trusts
registered in Jersey which is engaged in property investment,
resulting in ownership of 100% and control of the underlying entity
from its Joint Venture Partner Bravo II. Management determined that
the acquisition of control should be accounted for as a business
combination in accordance with IFRS 3 'Business Combinations'. The
fair value of the Group's 50% equity interest in the NewRiver
Retail Property Unit Trusts held before the business combination
amounted to £54m. The acquired subsidiaries have contributed net
revenues of £4.5m and profit of £2.9m to the Group for the period
from the date of acquisition to 30 September 2015. If the
acquisition had occurred on 1 April 2015, with all other variables
held constant, Group net revenue for 2015 would have increased by
£3m and underlying profit for 2015 would have increased by
£2.6m.
Details of the assets and bargain purchase arising
are as follows:
|
Trent
Attributed fair value
£'000
|
Camel III
Attributed fair value
£'000
|
Investment property
|
121,000
|
77,900
|
Current assets
|
1,183
|
656
|
Other net current liabilities
|
(3,334)
|
(2,562)
|
Cash and cash equivalents
|
3,562
|
3,341
|
Debenture and loans
|
(62,453)
|
(32,358)
|
Fair value of acquired interest in net assets of
subsidiary
|
59,958
|
46,977
|
Bargain purchase (negative goodwill)
|
(478)
|
(490)
|
Total purchase consideration
|
59,480
|
46,487
|
Less: fair value previously held interest
|
(30,480)
|
(23,537)
|
Cash consideration
|
29,000
|
22,950
|
Total acquisition of NewRiver Retail Property Unit
Trust 3 and 4
|
29,000
|
22,950
|
The purchase consideration disclosed above comprises
cash and cash equivalents paid to the acquiree's 50% owner of
£51.95m. The bargain purchase is a result of the fair value
exceeding the purchase price and includes a capital payment by
Bravo II of £4.2m as part of the transaction which accrued to
NewRiver Retail Limited as a result of strong performance of the
Property Unit Trust. The gain on bargain purchase is recognised in
the income statement. The fair value of cash and cash equivalents
was considered equal to the carrying value representing the
entity's bank deposits; fair value of borrowings and trade and
other payables was calculated based on discounted cash flow models.
The acquired bank loans and overdrafts have no recourse to other
companies or assets in the Group.
On 13 July 2015 the Group acquired 158 pubs purchased
under a Business Sale Agreement from Punch Tavern. The purchase
consideration of this business combination was £53.5m equivalent to
the fair value investment property acquired of £53.5m. No fair
value was attributed to any other assets or liabilities.
The Group has not disclosed the revenue and
profit or loss for this acquisition since acquisition date or the
impact on revenue and profit or loss as though the acquisition date
had been as of the beginning of the annual reporting period on the
basis it was impractical to do so as this information was not
readily available at the period end.
11 Investments in joint ventures
|
Note
|
Sep 2015
£'000
|
Mar 2015
£'000
|
Opening balance
|
|
113,027
|
74,851
|
Additional joint venture interests acquired during
the period/year(1)
|
|
-
|
72,470
|
Effective disposal of 50% investments
|
10
|
(54,017)
|
(7,942)
|
Income from joint ventures
|
|
5,453
|
11,411
|
Net valuation movement
|
|
2,296
|
11,843
|
Distributions and dividends(1)
|
|
(310)
|
(6,450)
|
Loan repayment
|
|
-
|
(45,567)
|
Capital call
|
|
-
|
2,275
|
Hedging movements
|
|
(339)
|
136
|
Closing balance
|
|
66,110
|
113,027
|
|
|
|
|
Name
|
Country of incorporation
|
% Holding
2015
|
% Holding
2015
|
NewRiver Retail Investments LP and NewRiver Retail
Investments (GP) Ltd*
|
Guernsey
|
50
|
50
|
NewRiver Retail Property Unit Trust
|
Jersey
|
100
|
100
|
NewRiver Retail Property Unit Trust No.2
|
Jersey
|
50
|
50
|
NewRiver Retail Property Unit Trust No.3
|
Jersey
|
100
|
50
|
NewRiver Retail Property Unit Trust No.4
|
Jersey
|
100
|
50
|
NewRiver Retail Property Unit Trust No.5, No.6,
No.7
|
Jersey
|
50
|
50
|
(1) The net cash outflow during the year was £0.3m
(Mar 2015 inflow £66.02 million).
* NewRiver Retail Investments (GP) Limited and its
Limited partner (NewRiver Retail Investments LP) has a number of
100% owned subsidiaries which are NewRiver Retail (Finco No 1)
Limited and NewRiver Retail (GP1) Limited, acting in its capacity
as General Partner for NewRiver Retail (Holding No 1) LP and
NewRiver Retail (Portfolio No 1) LP. These entities have been set
up to facilitate the investment in retail properties in the UK by
the Barley JV.
There are currently four joint ventures which are
equity accounted for as set out below:
NewRiver Retail Property Unit Trust, NewRiver Retail Property Unit
Trusts No 2, 5,6 and 7.
NewRiver Retail Property Unit Trusts No 2, 3 and 4,
5,6,7 (the 'Middlesbrough, 'Camel III', 'Trent' and 'Swallowtail'
JVs) are established jointly controlled Jersey Property Unit Trusts
set up by NewRiver Retail Limited and PIMCO BRAVO II Fund LP
('BRAVO II') to invest in UK retail property.
On 18 June 2015, the Group acquired 50% of the units
of Trent and Camel III, resulting in ownership of 100% and control
of the underlying entity from its Joint Venture Partner Bravo II.
See note 13. The Middlesbrough and Swallowtail JVs are owned 50% by
NewRiver Retail Limited and 50% BRAVO II. NewRiver Retail (UK)
Limited is the appointed asset manager on behalf of these JVs and
receives asset management fees, development management fees and
performance-related return promote payments.
Management have taken the decision to account for the
equity interest in JVs as joint ventures as the Group has
significant influence over decisions made by each joint venture but
is not able to exert complete control over these joint
ventures.
The JVs have an acquisition mandate to invest in UK
retail property with an appropriate leverage with future
respective equity commitments being decided on a
transaction-by-transaction basis. In line with the existing
NewRiver investment strategy, the JVs will target UK retail
property assets with the objective of delivering added value and
above average returns through NewRiver's proven skills in active
and entrepreneurial asset management and risk-controlled
development.
All JVs have a 31 December year end and the Group has
applied equity accounting for its interest in each JV. The
aggregate amounts recognised in the consolidated balance sheet and
income statement eliminate intercompany transactions and are as
follows:
|
2015
NewRiver Retail
Property Unit Trust, 2, 5, 6,7
Total
£'000
|
30 September
2015
Group's share
£'000
|
2015
NewRiver Retail Property Unit Trust, 2, 3, 4,5,6,7
£'000
|
31 March
2015
Group's Share
£'000
|
Balance sheet
|
|
|
|
|
Non-current assets
|
231,050
|
115,525
|
417,560
|
208,780
|
Current assets
|
9,374
|
4,687
|
14,799
|
7,400
|
Current liabilities
|
(4,637)
|
(2,318)
|
(8,372)
|
(4,186)
|
Senior debt
|
(117,242)
|
(58,614)
|
(211,252)
|
(105,619)
|
Non-current liabilities
|
(1,069)
|
(542)
|
(1,865)
|
(939)
|
Net assets
|
117,476
|
58,738
|
210,870
|
105,436
|
Income statement*
|
|
|
|
|
Net income
|
11,769
|
7,988
|
34,702
|
15,705
|
Administration expenses
|
(571)
|
(359)
|
(1,800)
|
(804)
|
Finance costs
|
(3,192)
|
(2,311)
|
(8,867)
|
(4,021)
|
Recurring income
|
8,006
|
5,318
|
24,035
|
10,880
|
Fair value surplus on property revaluations
|
4,041
|
2,020
|
25,616
|
12,807
|
Income from joint ventures
|
12,047
|
7,338
|
49,651
|
23,687
|
*Includes NewRiver Retail Ltd's share of NewRiver
Retail Property Unit Trust IV and III from the period 1 April 2014
to 30 June 2015 prior to acquisition of the remaining 50%.
The Group's share of any contingent liabilities to
the JPUTs is £nil (2014: £nil).
NewRiver Retail Investments LP
NewRiver Retail Investments LP (the 'Barley JV') is
an established jointly controlled limited partnership set up by
NewRiver Retail Limited and Morgan Stanley Real Estate Investing
('MSREI') to invest in UK retail property.
The Barley JV is owned equally by NewRiver Retail
Limited and MSREI. NewRiver Retail (UK) Limited is the appointed
asset manager on behalf of the Barley JV and receives asset
management fees as well as performance-related return promote
payments.
In line with the existing NewRiver investment
strategy, the Barley JV will target UK retail property assets with
the objective of delivering added value and above average returns
through NewRiver's proven skills in active and entrepreneurial
asset management and risk-controlled development and
refurbishment.
The Barley JV has a 31 December year end and the
Group has applied equity accounting for its interest in the Barley
JV. The aggregate amounts recognised in the consolidated balance
sheet and income statement eliminate intercompany transactions and
are as follows:
|
2015
NewRiver
Retail
Investments
(GP) Ltd
Total
£'000
|
September 2015
Group's
Share
50%
£'000
|
2015
NewRiver
Retail
Investments
(GP) Ltd
Total
£'000
|
Mar 2015
Group's
Share
50%
£'000
|
Balance sheet
|
|
|
|
|
Non-current assets
|
27,075
|
13,538
|
26,850
|
13,425
|
Current assets
|
2,061
|
1,031
|
1,990
|
995
|
Current liabilities
|
(1,614)
|
(807)
|
(815)
|
(408)
|
Senior debt
|
(12,777)
|
(6,390)
|
(12,771)
|
(6,387)
|
Non-current liabilities
|
-
|
-
|
(70)
|
(34)
|
Net assets
|
14,745
|
7,372
|
15,184
|
7,591
|
Income statement
|
|
|
|
|
Net income
|
697
|
349
|
1,916
|
957
|
Administration expenses
|
(105)
|
(53)
|
(262)
|
(131)
|
Finance costs
|
(322)
|
(161)
|
(591)
|
(295)
|
Recurring income
|
270
|
135
|
1,063
|
531
|
Fair value surplus/(deficit) on property
revaluations
|
550
|
276
|
(804)
|
(402)
|
Income/ (Deficit) from joint ventures
|
820
|
411
|
259
|
129
|
The Group's share of any contingent liabilities to
the Barley JV is £nil (2015: £nil).
12 Borrowings
|
30 September 2015
£'000
|
31 March 2015
£'000
|
Secured bank loans
|
291,178
|
157,921
|
Convertible Unsecured Loan Stock
|
16,978
|
23,420
|
|
308,156
|
181,341
|
Maturity of borrowings:
|
|
|
Balance sheet borrowings
|
|
|
Less than one year - Convertible Unsecured Loan
Stock
|
16,978
|
23,420
|
Between one and two years
|
5,000
|
-
|
Between two and five years
|
252,395
|
85,556
|
Over five years
|
33,783
|
72,365
|
|
308,156
|
181,341
|
Maturity of borrowings:
|
|
|
Group's share of Joint Venture borrowings
|
|
|
Less than one year
|
-
|
-
|
Between one and two years
|
6,389
|
6,386
|
Between two and five years
|
58,621
|
105,626
|
Over five years
|
-
|
-
|
|
65,010
|
112,012
|
Maturity of borrowings:
|
|
|
Total Group share of borrowings (Proportionally
consolidated)
|
|
|
Less than one year
|
5,000
|
23,420
|
Between one and two years
|
6,389
|
6,386
|
Between two and five years
|
311,016
|
191,182
|
Over five years
|
33,784
|
72,365
|
Total
|
356,189
|
293,353
|
Debt maturity as at 30 September 2015 Secured bank loans
Bank loans are secured by way of legal charges on
properties held by the Group and a hedging policy is adopted which
is aligned with the property strategy on each of its assets.
|
30 September 2015
|
31 March 2015
|
Weighted average debt maturity including extension
options
|
|
|
Balance sheet secured borrowings
|
4.0yrs
|
5.0 yrs
|
Joint Venture secured borrowings
|
3.6yrs
|
3.9 yrs
|
Total Group share of borrowings
|
3.9yrs
|
4.6 yrs
|
|
|
|
|
2015
|
2015
|
Effective interest rate during the period/year
|
|
|
Balance sheet secured borrowings (1)
|
4.0%
|
3.8%
|
Joint Venture secured borrowings
|
2.9%
|
3.9%
|
Total Group share of borrowings
|
3.8%
|
3.8%
|
LTV (proportionally consolidated)
|
37%
|
39%
|
Interest cover x (proportionally consolidated)
|
4.0x
|
3.9x
|
(1) Increased during the period following the
acquisition of the Bravo II share of the Marstons Portfolio which
carries a slightly higher cost of debt. Facility and
arrangement fees
|
30 September 2015
|
Current year
|
Maturity date
|
Facility drawn
£'000
|
Unamortised facility fees
£'000
|
Balance
£'000
|
Secured balance sheet borrowings
|
|
|
|
|
Santander
|
Feb 2021
|
34,029
|
245
|
33,784
|
Barclays
|
Mar 2020
|
46,802
|
477
|
46,325
|
Santander/HSBC
|
Mar 2020
|
69,180
|
797
|
68,383
|
Lloyds
|
Sep 2019
|
19,165
|
132
|
19,033
|
HSBC
|
May 2019
|
24,736
|
334
|
24,402
|
Barclays
|
Dec 2018
|
31,996
|
238
|
31,758
|
Venn Capital
|
Dec 2018
|
63,000
|
507
|
62,493
|
Barclays (1)
|
Oct 2015
|
5,000
|
-
|
5,000
|
Subtotal
|
|
293,908
|
2,730
|
291,178
|
Group's share of secured Joint Venture borrowings
|
|
|
|
|
Santander
|
Feb 2017
|
6,400
|
11
|
6,389
|
Barclays
|
Aug 2018
|
13,585
|
98
|
13,487
|
HSBC
|
Nov 2019
|
45,500
|
366
|
45,134
|
Subtotal
|
|
65,485
|
475
|
65,010
|
Convertible Unsecured Loan Stock
|
Dec 2015
|
17,000
|
22
|
16,978
|
Total Group's share of borrowings
|
|
376,393
|
3,227
|
373,166
|
(1) The Group agreed the extension of the
Barclays RCF from £5m to £20m on 4 November 2015
The Company expects the Holders of the Convertible
Unsecured Loan Stock to convert their interest to equity prior to
the maturity date.
|
|
31 March 2015
|
Prior year
|
Maturity date
|
Facility drawn
£'000
|
Unamortised facility fees
£'000
|
Balance
£'000
|
Secured balance sheet borrowings
|
|
|
|
|
Santander
|
Feb 2021
|
33,990
|
269
|
33,721
|
Barclays
|
Mar 2020
|
39,174
|
530
|
38,644
|
Santander/HSBC
|
Mar 2020
|
42,500
|
290
|
42,210
|
Lloyds
|
Sep 2019
|
19,165
|
149
|
19,016
|
HSBC
|
May 2019
|
24,736
|
406
|
24,330
|
Subtotal
|
|
159,565
|
1,644
|
157,921
|
Group's share of secured Joint Venture borrowings
|
|
|
|
|
Santander
|
Feb 2017
|
6,400
|
14
|
6,386
|
Barclays
|
Dec 2018
|
15,998
|
138
|
15,860
|
Barclays
|
Aug 2018
|
13,585
|
115
|
13,470
|
HSBC
|
Nov 2019
|
45,500
|
412
|
45,088
|
Venn Capital
|
Dec 2018
|
31,500
|
293
|
31,207
|
Subtotal
|
|
112,983
|
971
|
112,012
|
Convertible Unsecured Loan Stock
|
Dec 2015
|
23,500
|
80
|
23,420
|
Total Group's
share of borrowings
|
|
296,048
|
2,695
|
293,353
|
Proportionately consolidated hedging statistics
|
Sep 2015
%
|
Mar 2015
%
|
Fixed |
28.3 |
34.6 |
Capped |
46.2 |
48.0 |
Floating |
25.6 |
17.4 |
Fair value on interest rate swaps
The Group recognised a mark to market fair value
profit of £1.1 million (2014: £0.3 million) on its interest rate
swaps for the year ended 30 September 2015. The fair value of
interest rate swap liabilities in the balance sheet as at 30
September 2015 was £2.5 million (2015: £1.9 million). The fair
value of interest rate swap assets in the balance sheet as at 30
September 2015 was £1.1 million (2015: 0.3
million).All borrowings are due after more than one year and
the derivative financial instruments are held as non-current
liabilities.
Convertible Unsecured Loan Stock ('CULS')
On 22 November 2010 the Group issued £25 million of
CULS, £17 million of A CULS and £8 million of B CULS. On issue, the
stockholder was able to convert all or any of the stock into
Ordinary Shares at the rate of one Ordinary Share for every
£2.80.
The conversion rate has subsequently been adjusted on
the A CULS to £2.43 (March 2015: £2.48) as at 30 September 2015 as
a result of new shares being issued and dividends paid in
accordance with the terms of the agreement. Under the terms of the
convertible, interest will accrue at 5.85% on the outstanding loan
stock until 31 December 2015 when it will be either converted or
repaid. The interest payable on the CULS is due biannually on the
30 June and 31 December.
On 18 February 2014 £1.5 million B CULS were
converted at a conversion price of £2.59 representing 579,151
Ordinary shares and the remaining £6.5 million B CULs were
subsequently converted on 2 July 2015 at a conversion price of
£2.45, representing 2,653,061 Ordinary shares.
Management was required to make estimates with the
assistance of external experts to conclude on the valuation of the
CULS at the date of issue. The issuance of the compound instrument
was between two knowledgeable parties at arm's length and at a
market rate of 5.85% per annum for five years. Management concluded
that the value of the convertible option was negligible at that
time and the value resided in the debt portion of the instrument at
the date of issue.
13 Share capital and reserves
The authorised share capital is unlimited and there
are 179,863,580 shares in issue which excludes treasury shares
(March 2015: 127,077,895). The table below outlines the movement of
shares in the period:
|
|
Number of
Ordinary Shares
issued 000s
|
Price per
pence
|
Total number
of shares
000s
|
Brought forward at 1 April 2015
|
|
|
|
127,078
|
May 2015
|
Option exercise (EBT)
|
17
|
-
|
127,095
|
July 2015
|
CULS conversion
|
2,653
|
245
|
129,748
|
July 2015
|
Equity issuance
|
50,000
|
300
|
179,748
|
September 2015
|
Warrant conversion
|
90
|
156
|
179,838
|
September 2015
|
Option exercise (EBT)
|
25
|
-
|
179,863
|
Carried forward at 30 September 2015
|
|
|
|
179,863
|
During the period, the Group approved a transfer from
the share premium account of £152.8 million (2015: £73.3 million)
to other reserves which may be distributed in the future. Other
reserves being distributable reserves. The share premium arose from
the successful equity raise. The gross proceeds of £150m were
received from the issue of 50,000,000 shares at 300 pence. Costs of
£3.8 million associated with the issue have been netted off against
these proceeds.
Shareholders who subscribed for Placing Shares in the
IPO received warrants, in aggregate, to subscribe for 3% of the
Fully Diluted Share Capital exercisable at the subscription price
per Ordinary Share of £2.50 and all such warrants shall be fully
vested and exercisable upon issuance. The subscription price has
subsequently been adjusted to £1.56 following subsequent dividend
payments and share issues.
14 Related party transactions Group
Transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
Total emoluments of Executive Directors during the
period (excluding share-based payments) were £1.7 million (2014:
£1.6 million).
Share-based payments of £0.4 million (2014: £0.1
million) accrued during the year.
During the year, no shares (2014: 76,018) were
acquired on the open market by Directors.
15 Post balance sheet events
The Group completed the sale of Hull Ferensway for a
consideration of £3m on 6 November 2015.
The Group agreed the extension of the RCF with
Barclays from £5m to £20m on 4 November 2015.
A new Lloyd's debt facility was completed for £98m on
£20 October 2015 to fund the Group's new retail warehouse
facility.
INDEPENDENT REVIEW REPORT TO
NEWRIVER RETAIL LIMITED
We have been engaged by the company to review the
condensed set of financial statements in the half-yearly financial
report for the six months ended 30 September 2015 which comprises
the Consolidated Income statement, the Consolidated Balance Sheet,
the Consolidated Statement of Changes in Equity, the Consolidated
Cash flow statement and related notes 1 to 15. We have read the
other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the
company in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to
the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility
of, and has been approved by, the directors. The directors
are responsible for preparing the half-yearly financial report in
accordance with the AIM Rules of the London Stock Exchange.
As disclosed in note 1, the annual financial
statements of the group are prepared in accordance with IFRSs as
adopted by the European Union. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34
"Interim Financial Reporting," as adopted by the European
Union.
Our responsibility
Our responsibility is to express to the Company a
conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention
that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months
ended 30 September 2015 is not prepared, in all material respects,
in accordance with International Accounting Standard 34 as adopted
by the European Union and the AIM Rules of the London Stock
Exchange.
Deloitte LLP
Chartered Accountants and Statutory Auditor
Guernsey, Channel Islands, UK
18 November 2015