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ATLANTIC LEAF PROPERTIES LIMITED - Summarised results for the year ended 28 February 2019, declaration of dividend and changes to the board

Release Date: 23/04/2019 14:22
Code(s): ALP     PDF:  
 
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Summarised results for the year ended 28 February 2019, declaration of dividend and changes to the board

Atlantic Leaf Properties Limited 
Registered by continuation in Jersey 
Registration number: 128426 
SEM share code: "ALPL.N0000" 
JSE share code: "ALP" 
ISIN: "MU0422N00009" 
www.atlanticleaf.mu 
("Atlantic Leaf" or "the Company") 
 
  
SUMMARISED RESULTS OF THE AUDITED FINANCIAL STATEMENTS FOR THE 
YEAR ENDED 28 FEBRUARY 2019, DECLARATION OF 4.65 GBP PENCE 
DIVIDEND AND CHANGES TO THE BOARD 

Highlights  

    -   Conversion to UK REIT, redomiciled to Jersey 
    -   Successful debt refinance 
    -   Net property income: GBP 24.5 million, up 5.4% 
    -   Dividends: 9.3 GBP pence per share, up 2.2% 
    -   Assets under management: GBP 356 million, up 1.1% 

The board of directors of Atlantic Leaf ("the Board") is pleased to present the Company's results for the financial  
year ended 28 February 2019. 

These results reflect a satisfactory outcome in what has been a challenging year in which it was difficult to raise 
new capital to grow the asset base of the company. Atlantic Leaf is also pleased to announce a total distribution to 
its shareholders of 9.3 GBP pence per share for the 2019 financial year (2018: 9.1 GBP pence per share).  

Key events  

On 1 March 2019, Atlantic Leaf changed its jurisdiction of incorporation from Mauritius to Jersey and converted to 
a UK Real Estate Investment Trust ("REIT"). As part of this process the Company's place of effective management 
and control was migrated to the UK. This brings Atlantic Leaf more into line with its peers and as a consequence 
distributions will be made on a pre-tax basis from the 2020 financial year. 

During the year GBP 142 million of debt was successfully refinanced and the Company's debt maturity profile was 
increased to approximately four years. As a result, the new effective interest rate has increased from 3.3% to 
3.55%. Our debt remains approximately 75% hedged and the Company's loan to value ("LTV") is 48%. Our strategy 
is to gradually reduce this over the next few years. Atlantic Leaf has an interest cover ratio of over four times which 
is well in excess of its banking covenants. 

Earnings 

There were no significant rent reviews during the financial year with the net property income increasing to 
GBP 24.5 million (2018: GBP 23.2 million). The distributable earnings increased by 18.5% to GBP 17.6 million (2018: 
GBP 14.8 million) mainly due to higher income earned from our joint venture portfolio compared to the prior year. The 
2019 distribution of 9.3 GBP pence per share is slightly lower than our original forecast, mainly as a result of a 
longer than anticipated vacancy of the Haydock property (which has been re-let from March 2019). 

The new lease on Haydock and a potential new lease on Brecon (currently let at reduced rental to Homebase) 
should have a positive impact on income and valuations in the 2020 financial year. Our vacancy level is now back to 
zero (28 February 2019: 3%). 

Balance sheet 

The industrial and logistics segments of the UK property market have benefitted from strong demand, whereas the 
retail and office sectors have remained under pressure. We continue to see independent valuers lowering 
valuations of properties exposed to the retail and office sectors. The Company revalued its property portfolio 
(including the JV properties) down by net GBP 6.9 million during the year. This negatively impacted the Company's 
net asset value by 3.65 GBP pence per share at the year end. However, overall our assets under management 
increased to GBP 356 million (2018: GBP 352 million) with the acquisition of the Knowsley property in March 2018. 

Dividends declared 

The Board is pleased to announce a dividend of 4.65 GBP pence per share for the six months ended                                        
28 February 2019, which together with the dividend of 4.65 GBP pence per share for the six months ended 
31 August 2018 brings the total dividend for the year to 9.3 GBP pence per share, an increase of 2.2% over the 2018 
year.  

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

Subsequent events 

Subsequent to year-end, we entered into an agreement to sell our interest in the JV portfolio of DFS retail outlets to 
our existing JV partner. This sale will generate cash of approximately GBP 22 million which, in line with our 
strategy, will be deployed into diversified industrial and logistics assets.  

The Board decided that this was an opportune time to dispose of the DFS portfolio for reasons including: 

    -    pending debt refinance of the JV assets; and 
    -    increased capital commitment required to be invested in the portfolio. 

The investment generated an IRR of over 9% since this was purchased in September 2017.  

A separate Category 2 announcement has been released on 23 April 2019 containing further details of the transaction.  

Outlook 

The trading conditions under which we operate are expected to remain challenging with the continued Brexit 
uncertainty. 

Converting to a UK REIT has repositioned the Company in a more tax efficient manner which should assist in its 
strategy to raise new capital from South African and UK investors. The asset management strategy will focus on our 
lease management activity to ensure that income from assets is maximised. A further asset management strategy 
will be to change the asset mix to reduce our retail warehouse exposure (as evidenced by the sale of the DFS 
portfolio) and increase our exposure to  industrial and logistics buildings, both single and multi-tenanted. 

As a result of the debt refinance, finance costs will, going forward, increase by approximately GBP 360,000 per 
annum. Following the REIT conversion, the 2019 financial year will be the last year in which Atlantic Leaf pays tax 
on rental business profits at the corporate level.  

The Company is targeting distributions of at least 10 GBP pence per share for the 2020 financial year. This forecast 
takes into account higher finance costs from the debt refinance, deployment of proceeds from expected asset 
sales, asset management activity during the year, including the letting of our Haydock asset, and no company-level 
tax charge as a result of being a REIT.  

This forecast statement and the forecasts underlying such statement are the responsibility of the Board and have 
not been reviewed or reported on by the Company's auditors. 
 
Changes to the Board  
 
Due to Atlantic Leaf's migration to Jersey and REIT conversion it has consolidated its presence and operations in the 
UK. As a result, Kesaven Moothoosamy and Warren Morton have indicated that they will resign as directors of 
Atlantic Leaf on 31 May 2019. Both Kesaven, as non-executive director, and Warren, as financial director, have 
been with the Company since it commenced operations. The Board would like to thank them for their years of 
service and contributions to Atlantic Leaf where they have been part of its growth in becoming a successful listed 
commercial property company. We wish them all the best for their future endeavours.   

Mark Pryce, who has been part of the management team since 2015, will be appointed as financial director with 
effect from 1 June 2019. Mark Pryce is a Chartered Accountant and a CFA charterholder with extensive 
experience in financial services. The Board is confident that he is sufficiently qualified and experienced to be 
appointed into this role.    

Results presentation  

Management will be presenting the annual financial results at 10:00 CAT on Wednesday 24 April 2019 via live 
webcast which can be viewed on http://themediaframe.eu/links/atlanticleaf190424.html   

Alternatively, the presentation may be accessed via the conference call numbers below: 

South Africa: 011 535 3600 

International: +27 11 535 3600 

By order of the Board 

Ocorian Secretaries (Jersey) Limited  

Company Secretary 

23 April 2019 

STATEMENT OF FINANCIAL POSITION                                                                                                         
                                                                                                     Group                    Group    
                                                                                                   Audited                  Audited    
                                                                                                     as at                    as at    
                                                                                                 28-Feb-19                28-Feb-18    
                                                                                                       GBP                      GBP    
ASSETS                                                                                                                                  
Non-current assets                                                                             332,691,273              352,475,304     
Investment properties                                                                          328,910,000              319,404,723     
Listed investments                                                                               3,617,612                7,154,208     
Investment in joint venture                                                                             -                25,766,250     
Other receivables                                                                                  163,661                  150,123     

Current assets                                                                                  38,999,422               10,378,826     
Trade and other receivables                                                                      3,401,513                3,760,371     
Asset held for Sale                                                                             23,000,356                        -      
Cash and cash equivalents                                                                       12,597,553                6,618,455     

Total Assets                                                                                   371,690,695              362,854,130     

Equity and Liabilities                                                                                                                  
Equity                                                                                         195,279,858              204,205,734     
Share capital                                                                                  198,467,699              198,467,699     
(Accumulated losses) / Retained earnings                                                       (2,063,544)                6,233,714    
Cash flow hedge reserve                                                                        (1,124,297)                (495,679)    

Liabilities                                                                                                                             
Non-Current Liabilities                                                                        163,850,876              131,829,657     
Interest-bearing borrowings                                                                    163,850,876              131,829,657     

Current liabilities                                                                             12,559,961               26,818,739     
Trade and other payables                                                                         4,441,201                4,173,237     
Current portion of interest-bearing borrowings                                                   6,296,381               21,213,518     
Tax payable                                                                                        613,862                  842,464      
Derivative financial instruments                                                                 1,208,517                  589,520    

Total Equity and Liabilities                                                                   371,690,695              362,854,130     

Number of shares in issue                                                                      188,976,628              188,976,628     
Net asset value per share (GBP)                                                                       1.03                     1.08     
Net asset value per share excluding cash flow hedge reserve                                           1.04                     1.08     


STATEMENT OF COMPREHENSIVE INCOME                                                                        
                                                                                                     Group                    Group    
                                                                                                   Audited                  Audited    
                                                                                                      Year                     Year    
                                                                                                     ended                    ended    
                                                                                                 28-Feb-19                28-Feb-18    
                                                                                                       GBP                      GBP
                                                                                                           
Rental revenue                                                                                  24,111,358               21,201,662    
Tenant recoveries                                                                                1,228,146                        -    
Straight-line lease income                                                                       1,520,500                2,892,734    
Revenue                                                                                         26,860,004               24,094,396    

Property operating expenses                                                                    (2,373,275)                (856,597)    
Net property income                                                                             24,486,729               23,237,799    

Other operating expenditure                                                                    (2,818,787)              (2,615,124)    
Operating income                                                                                21,667,942               20,622,675    

Other income                                                                                       140,560                    5,243    
Investment income                                                                                  435,945                  158,350    
Profit on disposal of investment property                                                          249,724                        -    
Profit on disposal of listed investments                                                           128,344                  134,985    
Profit on foreign exchange                                                                         100,252                   67,316    
Fair value adjustments                                                                         (9,117,807)                  585,784    
Finance costs                                                                                  (5,592,367)              (4,860,164)    
Equity accounted profit                                                                          2,663,929                1,805,566    
Profit before taxation                                                                          10,676,522               18,519,755    

Taxation                                                                                       (1,493,442)              (1,551,687)    
Profit for the year                                                                              9,183,080               16,968,068    

Other comprehensive income                                                                                                             
Items that will be reclassified subsequently to profit or loss                                                                         
Other comprehensive income                                                                       (613,032)                1,385,270    
Items reclassified through profit or loss                                                         (15,586)                        -    
Total other comprehensive income                                                                 (628,618)                1,385,270    
Total comprehensive income for the year                                                          8,554,462               18,353,338    


STATEMENT OF CHANGES IN EQUITY                                                                                                
                                                             Stated                                                                    
                                                            Capital    Retained Earnings    Cash flow hedge reserve           Total    
                                                                GBP                  GBP                        GBP             GBP
                                                                    
Balance at 1 March 2017                                 152,772,761            3,904,456                (1,880,949)     154,796,268    

Profit for the year                                               -           16,968,068                          -      16,968,068    
Dividends                                                         -         (14,638,810)                          -    (14,638,810)    
Issue of shares (net of transaction costs)               45,694,938                    -                          -      45,694,938    
Other comprehensive income                                        -                    -                  1,385,270       1,385,270    

Balance at 28 February 2018                             198,467,699            6,233,714                  (495,679)     204,205,734    

Profit for the year                                               -            9,167,494                          -       9,167,494    
Dividends                                                         -         (17,480,338)                          -    (17,480,338)    
Amounts reclassified through profit or loss                       -               15,586                   (15,586)               -    
Other comprehensive income                                        -                    -                  (613,032)       (613,032)    

Balance at 28 February 2019                             198,467,699          (2,063,544)                (1,124,297)     195,279,858    


STATEMENT OF CASH FLOWS                                                                                                        
                                                                                             Group Audited            Group Audited    
                                                                                                Year ended               Year ended    
                                                                                                 28-Feb-19                28-Feb-18    
                                                                                                       GBP                      GBP    

Cash generated from operations                                                                  20,742,469               15,770,848     
Interest received                                                                                  146,508                   76,121    
Interest paid                                                                                  (4,901,062)              (4,291,899)    
Tax paid                                                                                       (1,722,044)              (1,596,311)    

Net cash generated from operating activities                                                    14,265,871                9,958,759     

Cash flows from investing activities                                                                                                   
Acquisition of investment properties                                                          (15,969,982)             (12,313,853)    
Investment of joint venture                                                                              -             (24,794,876)    
Sale of investment property                                                                      1,182,724                        -    
Purchase of listed investments                                                                           -              (7,787,184)    
Sale of listed investments                                                                       3,345,084                  925,802    
Dividends received                                                                               4,700,743                  941,544     

Net cash utilised in investing activities                                                      (6,741,431)             (43,028,567)    

Cash flow from financing activities                                                                                                    
Proceeds from issue of shares                                                                            -               45,694,938    
Proceeds from borrowings                                                                        21,808,033                2,790,691    
Repayment of borrowings                                                                        (5,973,289)              (6,921,950)    
Dividends paid                                                                                (17,480,338)             (14,638,810)    

Net cash (utilised in)/generated from financing activities                                     (1,645,594)               26,924,869    

Increase / (decrease) in cash and cash equivalents                                               5,878,846              (6,144,939)    
Cash and cash equivalents at beginning of the year                                               6,618,455               12,696,078    
Effects of exchange difference on cash and cash equivalents                                        100,252                   67,316     

Cash and cash equivalents at end of the year                                                    12,597,553                6,618,455     


SEGMENTAL REPORTING - YEAR ENDED 28 FEBRUARY 2019                                                                
                                                                                               Retail                                  
                                                             Industrial         Office      Warehouse    Unallocated          Total    
                                                                    GBP            GBP            GBP            GBP            GBP  
                                                                      
Operating income                                             17,214,302      5,335,011        150,761    (1,032,132)     21,667,942 
   
Equity accounted profit (net of taxation)                       722,527              -      1,941,402              -      2,663,929    
Other Income and Foreign exchange                                     -              -              -        676,757        676,757    
Profit on disposal of investments                               249,724              -              -        128,344        378,068    
Fair value adjustments - investment property                (3,168,569)    (2,373,636)    (1,510,000)              -    (7,052,205)    
Fair value adjustments - debt refinancing (net of swaps)      (439,912)      (286,986)        (1,635)              -      (728,533)    
Fair value adjustments - asset held for sale                  (183,068)              -      (834,145)              -    (1,017,213)    
Fair value adjustments - listed investments                           -              -              -      (319,856)      (319,856)    
Interest expense                                            (4,176,152)    (1,307,386)       (93,866)       (14,963)    (5,592,367)    
Income tax                                                    (927,340)      (334,652)      (169,863)       (61,587)    (1,493,442)    

Adjusted headline earnings                                   11,821,149      3,651,281      2,293,658      (174,337)     17,591,751    

Operating income includes:                                                                                                             
Segment revenue                                              20,762,427      5,762,187        335,391              -     26,860,005    

Statement of financial position                                                                                                        
Additions to investment property                             15,969,982              -              -              -     15,969,982    
Total assets                                                256,984,186     73,330,000     22,012,100     19,364,409    371,690,695    
Total borrowings                                            127,363,738     39,130,099      2,464,113      1,189,307    170,147,257    

Total assets include:                                                                                                                  
Assets held for sale                                          5,288,255              -     17,712,101              -     23,000,356    

SEGMENTAL REPORTING - YEAR ENDED 28 FEBRUARY 2018                                                              
                                                                                               Retail                                  
                                                             Industrial         Office      Warehouse    Unallocated          Total    
                                                                    GBP            GBP            GBP            GBP            GBP 
                                                                       
Operating income                                             16,009,573      5,326,941        321,316    (1,035,155)     20,622,675    
Equity accounted profit (net of tax)                            509,867              -      1,295,699              -      1,805,566    
Other Income and Foreign exchange                                                                            230,909        230,909    
Profit on disposal of investments                                     -              -              -        134,985        134,985    
Fair value adjustments                                        3,259,727    (2,129,591)              -              -      1,130,136    
Fair value - listed investments                                       -              -              -      (544,352)      (544,352)    
Interest expense                                            (3,579,160)    (1,169,958)       (99,499)       (11,547)    (4,860,164)    
Tax expense                                                 (1,223,848)      (183,047)      (127,172)       (17,620)    (1,551,687)    

Adjusted headline earnings                                   10,285,610      3,895,610      1,364,571      (698,426)     14,847,365    
Operating income includes:                                                                                                             
Segment revenue                                              17,928,916      5,744,680        420,800              -     24,094,396    

Statement of financial position                               
Additions to investment property                             12,313,853              -              -              -     12,313,853 
Total assets                                                243,705,456     75,552,938     26,274,245     17,321,491    362,854,130 
Total borrowings                                            107,243,484     40,856,866      2,152,134      2,790,691    153,043,175 

RECONCILIATION OF BASIC EARNINGS TO DISTRIBUTABLE EARNINGS                                                                                        
                                                                                                     Group                    Group    
                                                                                                   Audited                  Audited    
                                                                                                Year ended               Year ended    
                                                                                                 28-Feb-19                28-Feb-18    
                                                                                                       GBP                      GBP    

Profit for the year attributable to owners of the parent                                         9,183,080               16,968,068     

Less:                                                                                                                                  
Fair value adjustments to investment properties                                                  7,052,205              (1,130,136)    
Profit on disposal of investment properties in joint venture                                             -                (303,703)    
Profit on disposal of investment property                                                        (249,724)                             
Fair value adjustments to properties in joint venture                                              348,229                (291,390)    
Fair value adjustments on asset held for sale                                                    1,017,213                             
Headline earnings                                                                               17,351,003               15,242,839     

Add back:                                                                                                                              
Straight-line lease income adjustment*                                                         (1,186,611)              (1,243,529)    
Profit on disposal of investment property                                                          249,724                        -    
Profit on disposal of investment properties in joint venture                                             -                  303,703    
Fair value adjustments to listed investments                                                       319,856                  544,352    
IFRS 9 fair value adjustment on debt modification (net of swap realisation)                        728,533                        -    
REIT transaction cost                                                                              129,246                        -    
Adjusted headline earnings                                                                      17,591,751               14,847,365     

Weighted average number of shares in issue                                                     188,976,628              163,223,203     
Basic and diluted earnings per share (GBP pence)                                                      4.86                    10.40     
Headline and diluted headline earnings per share (GBP pence)                                          9.18                     9.34     
Adjusted headline and diluted headline earnings per share (GBP pence)                                 9.31                     9.10     

H1 Dividend paid                                                                                 8,787,413                8,503,948     
H2 Dividend paid                                                                                 8,787,413                8,692,925     
Total dividend                                                                                  17,574,826               17,196,873     

Dividend per share (H1) (GBP pence)                                                                   4.65                     4.50     
Dividend per share (H2) (GBP pence)                                                                   4.65                     4.60     
Total dividend per share (GBP pence)                                                                  9.30                     9.10     

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

RELATED PARTY TRANSACTIONS 
Per the Property Services Agreement, fees for the full year to Martial Eagle Limited amounted to GBP 1,895,706 
(2018: GBP 1,823,940).  
  

NOTES 

The Company is required to publish financial results for the year ended  
28 February 2019 in terms of Listing Rule 12.14 of the Stock Exchange of Mauritius Ltd ("SEM") and paragraph 3.19 - 
3.20 of the JSE Listing Requirements.  The summarised audited financial statements for the year ended 28 February 
2019  ("financial statements") have been prepared in accordance with the framework concepts and the measurement 
and recognition requirements of International Financial Reporting Standards ("IFRS") as issued by the International 
Accounting Standards Board ("IASB"), interpretations issued by the IFRS Interpretation Committee ("IFRS IC"), the 
requirements of the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the 
Mauritian Companies Act 2001, the Mauritian Financial Reporting Act 2004, the Mauritian Securities Act 2005, the SEM 
Listing Rules and the JSE Listings Requirements and contains the information required by IAS 34: Interim Financial 
Reporting. 

The accounting policies and methods of computation adopted in the preparation of these financial statements are in 
terms of IFRS and consistent with those applied in the preparation of the audited financial statements for the year 
ended 28 February 2018. The adoption of IFRS 9 and IFRS 15 has not had a material impact on the group's financial 
position or results. 

These financial statements were approved by the Board on 23 April 2019. Mazars Mauritius and Mazars South Africa 
have issued their unmodified audit opinion on the Company's financial statements. These summarised audited financial 
statements have been derived from the Company's audited financial statements for the year ended 28 February 2019 
("audited financial statements") but is not itself audited. The Board takes full responsibility for the preparation of the 
summarised report and ensuring that the financial information has been correctly extracted from the audited financial 
statements. 

Copies of the audited financial statements, the unmodified audit opinion and the statement of direct and indirect 
interests of each officer of the Company, pursuant to Rule 8(2)(m) of the Securities (Disclosure Obligations of Reporting 
Issuers) Rules 2007 of Mauritius, are available free of charge, upon request at the Registered Office of the Company at 
c/o Ocorian Secretaries (Jersey) Limited, 26 New Street, St Helier, Jersey, JE2 3RA and at the offices of the Company's 
SEM authorised representative and SEM sponsor, Perigeum Capital Ltd, at Level 4, Alexander House, 35 Cybercity, 
Ebene 72201, Mauritius. 

This communique is issued pursuant to SEM Listing Rules 15.24 and 12.14 and Section 88 of the Mauritian Securities 
Act 2005. The Board accepts full responsibility for the accuracy of the information contained in these financial 
statements and this announcement. The Board have disclosed all matters or circumstances arising subsequent to the 
year ended 28 February 2019 that require any additional disclosure or adjustment to the financial statements. 

The Board wishes to inform the shareholders and the general public that the Company will henceforth be publishing 
interim (half-yearly) reports within the reporting deadline of the JSE and will no longer be publishing quarterly reports. 

Atlantic Leaf has a primary listing on the Main Board of the JSE Limited and a secondary listing on the Official Market of 
the SEM. 

By order of the Board 

23 April 2019 

JSE sponsor                                                    
Java Capital                                 +27 11 722 3050 
                                          
Company secretary 
Ocorian Secretaries (Jersey) Limited         +44 1534 507000 
                                              
SEM authorised representative and sponsor     
Perigeum Capital Ltd                           +230 402 0890 
   



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