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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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