Half Yearly Report

RNS Number : 6359S

NewRiver Retail Limited

04 December 2012

 



NewRiver Retail Limited

("NewRiver" or "the Company")

Half Year Report

NewRiver Retail Limited (AIM and CISX: NRR), the UK REIT specialising in value-creating retail property investment and active asset management, is pleased to announce its interim results for the period ended 30 September 2012.

Growth in recurring profits

 

Key highlights

The Company has delivered further growth in its EPRA recurring profits during this period and its business model of targeting convenience led, strong income producing assets has enabled it to fully cover and maintain its high interim dividend payment of 6 pence per share.

	HY2013	HY2012
Gross revenue £m	8.7	6.3
EPRA recurring profit £m*	2.0	1.4
EPRA earnings per share pence**	6.4	7.2
FFO earnings per share pence**	6.0	6.8
Interim dividend per share pence	6.0	6.0
EPRA NAV pence***	252	258

*Recurring profit is before capital gains or losses

**After accounting for an 11 million increase in the average number of shares in issue in HY13

***FY12 v HY13 the Company paid a dividend of 9 pence per share which reduced the NAV

 

Financial highlights

·  EPRA recurring profits increased by 40% to £2.0 million (2011: £1.4 million)

·  Interim dividend fully covered by recurring earnings of 6 pence per share (2011: 6 pence)

·  EPRA EPS of 6.4 pence (2011: 7.2 pence) following the increase in the average number of shares in issue following the successful equity capital raise in the prior year

·  EPRA NAV per share maintained at 252 pence (FY12: 258 pence) after payment of last year's final dividend of 9 pence which reduced NAV

·  Marginal reduction in property valuations of 0.5% compared to overall market decline of more than 2% (Source: IPD)

 

Operational highlights

·  Period marked by focus on value enhancing active asset management and risk controlled development across the portfolio

·  Occupancy across the retail estate held at 96%

·  71 leasing events completed

·  Planning consents achieved and in progress across a number of key initiatives, including:

o  acquiring the former vacant Somerfield store in Wallsend at a discounted price and securing a planning consent to convert to three big box retail units which in due course will be pre-let to national value and discount retailers

o  continuing investment in consumer experience enhancement - Wi-Fi roll-out, Amazon lockers, Costa Coffee, experiential marketing with key partner brands, late opening

David Lockhart, Chief Executive of NewRiver Retail Limited, commented:

"NewRiver has made a strong start to the first half of the financial year increasing EPRA recurring profit and achieving significant progress with its active asset management initiatives across the portfolio. The Company's value-enhancing abilities are demonstrated by the high occupancy levels and the sustained dividend reflects our commitment to generating shareholder returns.

"The current market continues to present highly attractive opportunities for well capitalised, specialist and proven investors like NewRiver. We continue to develop a strong platform for growth in order to enhance our position as one of the UK's leading retail real estate investors."

-Ends-

For further information

NewRiver Retail Limited  David Lockhart, Chief Executive Mark Davies, Finance Director	Tel: [phone]
Pelham Bell Pottinger David Rydell/Guy Scarborough	Tel: [phone]
Cenkos Securities Ian Soanes/Max Hartley	Tel: [phone]
Investec Bank plc Garry Levin/David Anderson	Tel: [phone]

Chairman's statement

30 September 2012

I am pleased to report our interim results for the six months to 30 September 2012.

The company has made further progress and delivered a solid financial performance for the first half of the current financial year.  

The increase in recurring profit of 40% to £2.0m (2011: £1.4m) supports NewRiver's core proposition of creating value through active asset management and risk-controlled development. Despite the challenging macro-economic environment, the Company's retail portfolio enjoyed a high occupancy rate of 96%, reflecting the quality of our assets and our strategic focus on value and food-led retailers. 

NewRiver's strategy of investing in good quality, high-yielding assets also enables it to uphold its strong commitment to enhancing shareholder returns through a high dividend payout, with dividend payments covered by recurring profits in the period. The Board has agreed to pay an interim dividend of 6p per share (2011: 6p), which is in line with last year.

A revaluation deficit in the period of £1.4m (2011: £1.4m surplus) resulted in profit after tax falling to £0.6m (2011: £2.8m). Despite the headline decline, the Company outperformed the wider index of shopping centre valuations, which fell by over 2% during the period (Source IPD),compared to 0.5% for NewRiver's portfolio.

There were no major portfolio acquisitions or disposals over the period. However the Company has worked hard to advance a wide range of asset management and enhancement initiatives, completing 71 leasing events and making further progress on achieving planning consents.

Notable projects include:

·  Acquiring the former vacant Somerfield store in Wallsend at a discounted price and securing planning consent to convert to three large box retail units, which in due course are expected to be pre-let to national value and discount retailers,

·  Constructing a new Costa Coffee shop at our convenience-led shopping centre in Fareham which is driving footfall, improving dwell time and customer experience,

·  Agreements with The Cloud (BskyB) to provide free Wi-Fi and Amazon to provide collection lockers within our shopping centres, which are also expected to increase footfall and dwell time,

·  Enhancing commercialisation income via national agreements with Coca-Cola, Photo-Me and Forum Centre Space,

·  Obtaining planning consent for student accommodation at vacant office space above our shopping centre in Paisley with good demand expected for future occupancy.

Since the close of the period, the Company announced its acquisition of a retail unit in Golden Square Shopping Centre in Warrington on 8 November 2012. The purchase price was £3.5m at an initial yield of 7.7%. As part of this innovative structured transaction, the company also acquired the vacant unit next door for nil consideration to create a new 55,000 sq. ft. store. We have secured a letting of the entire unit to Primark on a 25 year lease at £475,000 per annum. The cash on cash equity return of 15% makes this highly accretive to earnings and is a further example of the Company's ability to enhance value through its property transactions.

Current market conditions are favourable for NewRiver with its core value and food led proposition still in high demand from end user occupiers and consumers alike. Current market values favour the Company's strategic growth objectives and the Board is actively considering a number of opportunities that it believes would provide significant benefits to shareholders in the medium term.

NewRiver Retail has made significant progress in its key objective of becoming one of the leading value-creating property investment businesses in the UK retail property sector. The Board is pleased with the progress made since our last report and remains confident the Company will continue to build on its success to date.

 

Paul Roy

Chairman

NewRiver Retail Limited

3 December 2012

Independent Review Report to the members of 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 2012 which comprises the Consolidated Condensed Income Statement, the Consolidated Condensed Statement of Comprehensive Income, the Consolidated Condensed Balance Sheet, the Consolidated Condensed Cash Flow Statement, the Consolidated Condensed Statement of Changes in Equity and related Notes 1 to 17. 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 2012 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

Guernsey, Channel Islands

3 December 2012

Consolidated Condensed Income Statement

For the period from 1 April 2012 to 30 September 2012

				Unaudited Period 1 April 2012 to 30 Sep 2012			Unaudited Period 1 April 2011 to 30 Sep 2011	Audited Year ended 31 March 2012
	Notes	Income £'000	Capital £'000	Total £'000	Income £'000	Capital £'000	Total £'000	Total £'000
Gross property income	3	8,687	-	8,687	6,337	-	6,337	15,011
Property operating expenses		(1,659)	-	(1,659)	(1,317)	-	(1,317)	(2,222)
Net property income		7,028	-	7,028	5,020	-	5,020	12,789
Administrative expenses	4	(2,327)	-	(2,327)	(1,821)	-	(1,821)	(4,009)
Share of income from joint ventures	9	323	(69)	254	467	-	467	385
Net valuation movement	8	-	(1,336)	(1,336)	-	1,393	1,393	(274)
Profit on disposal of investment properties		-	-	-	-	45	45	413
Operating profit		5,024	(1,405)	3,619	3,666	1,438	5,104	9,304
Net finance expense
Finance income		8	-	8	2	-	2	5
Finance costs		(3,148)	-	(3,148)	(2,262)	-	(2,262)	(5,339)
Profit for the period/year before taxation		1,884	(1,405)	479	1,406	1,438	2,844	3,970
Current taxation		92	-	92	-	-	-	(120)
Profit for the period/year after taxation		1,976	(1,405)	571	1,406	1,438	2,844	3,850

All activities derive from continuing operations of the Group. The Notes form an integral part of these financial statements.

Consolidated Condensed Statement of Comprehensive Income

For the period from 1 April 2012 to 30 September 2012

	Notes	Unaudited Period 1 April 2012 to 30 Sep 2012 £'000	Unaudited Period 1 April 2011 to 30 Sep 2011 £'000	Audited Year ended 31 March 2012 £'000
Profit for the period/year after taxation		571	2,844	3,850
Other comprehensive income
Fair value loss on interest rate swaps	12	(813)	(1,323)	(1,451)
Total comprehensive (loss)/income for the period/year		(242)	1,521	2,399
Earnings per share
FFO basic (pence)	5	6.0	6.8	17.4
EPRA basic (pence)	5	6.4	7.2	17.3
Basic (pence)	5	1.8	14.5	15.3
Diluted (pence)	5	1.8	14.3	15.2

All activities derive from continuing operations of the Group. The Notes form an integral part of these financial statements.

Consolidated Condensed Balance Sheet

As at 30 September 2012

	Notes	Unaudited as at  30 Sep 2012 £'000	Unaudited as at  30 Sep 2011 £'000	Audited as at 31 March 2012 £'000
Non-current assets
Investment properties	8	198,105	189,885	197,736
Investments in joint ventures	9	11,234	11,893	11,275
Property, plant & equipment		419	13	404
Total non-current assets		209,758	201,791	209,415
Current assets
Trade and other receivables		4,308	2,893	3,045
Cash and cash equivalents	11	5,105	6,565	8,562
Total current assets		9,413	9,458	11,607
Total assets		219,171	211,249	221,022
Equity and liabilities
Current liabilities
Trade and other payables		6,927	6,428	6,908
Current taxation liabilities		409	653	495
Total current liabilities		7,336	7,081	7,403
Non-current liabilities
Non-current taxation liabilities		438	1,160	744
Derivative financial instruments	12	2,343	1,573	1,376
Borrowings	12	107,975	97,046	107,842
Debt instruments	12	24,639	24,524	24,581
Total non-current liabilities		135,395	124,303	134,543
Net assets		76,440	79,865	79,076
Equity
Retained earnings	14	1,449	1,129	1,936
Share capital and share premium	14	-	40,345	-
Other reserves	14	74,085	33,801	74,085
Hedging reserve	14	(2,514)	(1,573)	(1,701)
Share option reserve	15	187	78	187
Revaluation reserve	14	3,233	6,085	4,569
Total equity		76,440	79,865	79,076
Net Asset Value (NAV) per share
EPRA NAV (pence)	6	252	260	258
Basic (pence)	6	246	257	254
Diluted (pence)	6	245	255	253

The Notes form an integral part of these financial statements.

The financial statements were approved by the Board of Directors on 3 December 2012 and were signed on its behalf by:

 

David Lockhart             Mark Davies

Chief Executive              Finance Director

Consolidated Condensed Cash Flow Statement

As at 30 September 2012

	Notes	Unaudited Period 1 April 2012 to 30 Sep 2012 £'000	Unaudited Period 1 April 2011 to 30 Sep 2011 £'000	Audited Year 1 April 2011 to 31 March 2012 £'000
Net cash inflow from operating activities	13	231	1,613	4,130
Investing Activities:
Purchase and improvement of investment properties	8	(1,705)	(87,692)	(99,855)
Net proceeds from disposal of investment property		-	5,000	8,058
Purchase of plant & equipment		(39)	(6)	(415)
Cash inflow from joint ventures	9	450	500	845
Net cash from investing activities		(1,294)	(82,198)	(91,367)
Financing Activities:
Issue of new shares	14	-	40,345	40,284
Repayment of bank loans		-	(3,588)	-
Increase in bank loans		-	40,382	47,370
Dividends paid	7	(2,394)	(640)	(2,506)
Net cash from financing activities		(2,394)	76,499	85,148
Cash and cash equivalents at the beginning of the period/year		8,562	10,651	10,651
Movement during the period/year		(3,457)	(4,086)	(2,089)
Cash and cash equivalents at the end of the period/year		5,105	6,565	8,562
Cash and cash equivalents comprise:
Cash at bank and in hand	11	5,105	6,565	8,562
Cash and cash equivalents at the end of the period/year		5,105	6,565	8,562

The Notes form an integral part of these financial statements.

Consolidated Condensed Statement of Changes in Equity

As at 30 September 2012

	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 31 March 2011		318	-	33,801	(250)	62	4,843	38,774
Net proceeds of issue from new shares	14	-	40,284	-	-	-	-	40,284
Total comprehensive income for the period	14	2,844	-	-	(1,323)	-	-	1,521
Share-based payments		-	-	-	-	16	-	16
Dividends paid	7	(640)	-	-	-	-	-	(640)
Revaluation movement	8	(1,393)	-	-	-	-	1,242	(151)
As at 30 September 2011		1,129	40,284	33,801	(1,573)	78	6,085	79,804
Transfer of share premium	14	-	(40,284)	40,284	-	-	-	-
Total comprehensive income for the period	14	1,006	-	-	(128)	-	-	878
Share-based payments		-	-	-	-	109	-	109
Dividends paid	7	(1,866)	-	-	-	-	-	(1,866)
Revaluation movement	8	1,667	-	-	-	-	(1,516)	151
As at 31 March 2012		1,936	-	74,085	(1,701)	187	4,569	79,076
Total comprehensive income for the period	14	571	-	-	(813)	-	-	(242)
Dividends paid	7	(2,394)	-	-	-	-	-	(2,394)
Revaluation movement	8	1,336	-	-	-	-	(1,336)	-
As at 30 September 2012		1,449	-	74,085	(2,514)	187	3,233	76,440

The Notes form an integral part of these financial statements.

Notes to the accounts

 

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 United Kingdom. The Company was incorporated on 4 June 2009 in Guernsey as a registered closed-ended investment company. The Company was incorporated in Guernsey under the provisions of The Companies (Guernsey) Law, 2008. On 22 November 2010, the Company converted to a REIT and repatriated effective management and control to the United Kingdom. The Company's registered office is Old Bank Chambers, La Grande Rue, St Martins, Guernsey GY4 6RT and the business address is 37 Maddox Street, London W1S 2PP. The Company is publicly tracked on the London Stock Exchange, AIM and Channel Islands Stock Exchange ("CISX") 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.

 

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

·  Timing of dividend payments

·  Capital expenditure and tenant incentive commitments

·  Forecast rental income

·  Loan covenants

The Group has sufficient 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.

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.

 

Statement of compliance

These financial statements have been prepared on a going concern basis and in accordance with IAS 34 "Interim Financial Reporting". The same accounting policies, estimates, presentation and methods of computation are followed in the interim report as applied in the Group's latest annual audited financial statements prepared in accordance with International Financial Reporting Standards, as adopted by the European Union ("IFRS").

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties and derivatives which are fair valued.

 

Basis of consolidation

The consolidated condensed financial statements incorporate the financial statements of the Company, its subsidiaries and the SPV's controlled by the Company, made up to 30 September 2012. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. Intra group transactions are eliminated in full.

Certain new standards and interpretations and amendments or revisions to existing standards, which may be relevant to the Group, have been published that are mandatory for later accounting periods and which have not been adopted early. These are:

IFRS 9 Financial Instruments

IFRS 10 Consolidated Financial Statement

IFRS 11 and IFRS 12 Joint Arrangements and related disclosures

IFRS 13 Fair Value Measurement

IAS 19 (revised) Employee Benefits

The Directors are considering whether these will have a material impact on the Group's financial statement. Whilst they believe these will not have any material impact on the carrying value of assets and liabilities, these standards may lead to additional disclosures in the future.

 

Critical judgements in applying the Group's accounting policies

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.

 

Key sources of estimation uncertainty

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 below, the Group's investment properties are stated at estimated market value, as accounted for by management based on an independent external appraisal. The estimated market 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.

 

(ii) Valuation of options

Management have relied on the services of external experts to determine the fair value of options at their grant date, in order to expense that value over their estimated vesting period. This requires significant estimates of a number of inputs which are used to model that fair value.

 

(iii) Valuation of convertible unsecured loan stock

Management was required to make estimates with the assistance of external experts to conclude on the valuation of the convertible unsecured loan stock 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% pa for 5 years. Management have concluded that the value of the convertible option was negligible and the value resided in the debt portion of the instrument at the date of issue.

 

(iv) Impairment in investment in associates 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.

 

Investment property and property in the course of construction

Property held to earn rentals and for capital appreciation is classified as investment property. Investment property comprises both freehold and leasehold land and buildings.

Investment property is recognised as an asset when:

·  It is probable that the future economic benefits that are associated with the investment property will flow to the Group;

·  There are no material conditions precedent which could prevent completion; and

·  The cost of the investment property can be measured reliably.

Investment property is measured initially at its cost, including related transaction costs. After initial recognition, investment property is carried at fair value. The Group has appointed Colliers International as property valuers to prepare valuations on a semi-annual basis. Valuations are undertaken in accordance with the appropriate sections of the current Practice Statements contained in the Royal Institution of Chartered Surveyors Appraisal and Valuation Standards, 6th Edition (the "Red Book"). This is an internationally accepted basis of valuation. Gains or losses arising from changes in the fair value of investment property are included in the income statement in the period in which they arise and transferred to the revaluation reserve.

When the Group begins to redevelop an existing investment property for continued future use as an investment property, the property remains an investment property and is accounted for as such. When the Group begins to redevelop an existing investment property with a view to sell, the property is transferred to trading properties and held as a current asset. The property is re-measured to fair value as at the date of the transfer with any gain or loss being taken to the income statement. The re-measured amount becomes the deemed cost at which the property is then carried in trading properties.

In completing these valuations the valuer considers the following:

(i)  current prices in an active market for properties of a different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect those differences;

(ii) recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices; and

(iii) discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of any existing lease and other contracts and (where possible) from external evidence such as current market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.

The cost of properties in the course of development includes attributable interest and other associated outgoings. Interest is calculated on the development expenditure by reference to specific borrowings where relevant and otherwise on the average rate applicable to the term loans. A property ceases to be treated as a development property on practical completion.

 

Value added tax

Revenues, expenses and assets are recognised net of the amount of value added tax except:

(i)  Where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

(ii) Receivables and payables that are stated with the amount of value added tax included. The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

Revenue recognition

(i)  Rental income

Rental income is recognised on an accruals basis. A rent adjustment based on open market estimated rental value is recognised from the rent review date in relation to unsettled rent reviews. Where a rent-free period is included in a lease, the rental income foregone is allocated evenly over the period from the date of lease commencement to the expiry date of the lease.

Rental income from fixed and minimum guaranteed rent reviews is recognised on a straight-line basis over the entire lease term. Where such rental income is recognised ahead of the related cash flow, an adjustment is made to ensure the carrying value of the related property including the accrued rent does not exceed the external valuation. Initial direct costs incurred in negotiating and arranging a new lease are amortised on a straight-line basis over the period from the date of lease commencement to the expiry date of the lease.

Where a lease incentive payment, including surrender premiums is paid, does not enhance the value of a property, it is amortised on a straight-line basis over the period from the date of lease commencement to the expiry date of the lease. Upon receipt of a surrender premium for the early determination of a lease, the profit, net of dilapidations and non-recoverable outgoings relating to the lease concerned, is immediately reflected in income.

(ii) Interest income

Interest income and expenses are recognised in the income statement under the effective interest method as they accrue. Interest income is recognised on a gross basis, including withholding tax, if any.

(iii) Asset management fees

Management fees are recognised in the income statement on an accruals basis.

(iv) Promote payments

Under the terms of the Limited Partnership Agreement of NewRiver Retail Investments LP, the Group is contractually entitled to receive a promote payment should the returns from the joint venture to the joint venture partner exceed a certain internal rate of return. This payment is only receivable by the Group on disposal of underlying properties held by the joint venture. Any entitlements under these arrangements are only accrued for in the financial statements once the Group believes that crystallisation of the fee is virtually certain.

 

Business combinations

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the income statement. Goodwill is reviewed for impairments annually. The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of completion, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquired. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition.

Whilst a corporate acquisition would normally be accounted for under IFRS 3, there are situations where these transfers may not qualify as business combinations. This is considered on a case by case basis by management in light of the substance of the acquisition.

 

Acquisitions

The consideration payable in respect of each acquisition may be dependent upon certain future events. In calculating the cost of each acquisition the Group has assessed the most probable outcome as at the balance sheet date. These amounts are reconsidered annually at each year end and changes to consideration are taken to the income statement.

 

Joint ventures

The Group's investment properties are typically held in property specific special purpose vehicles ("SPVs"), which may be legally structured as a joint venture.

In assessing whether a particular SPV is accounted for as a subsidiary or joint venture, the Group considers all of the contractual terms of the arrangement, including the extent to which the responsibilities and parameters of the venture are determined in advance of the joint venture agreement being agreed between the two parties. The Group will then consider whether it has the power to govern the financial and operating policies of the SPV, so as to obtain benefits from its activities, and the existence of any legal disputes or challenges to this control in order to conclude on the classification of the SPV as a joint venture or subsidiary undertaking. The Group considers this position with the evidence available at the time.

The consolidated financial statements account for interests in joint ventures using the equity method of accounting. Any premium paid for an interest in a jointly controlled entity above fair value of identifiable assets, liabilities and contingent liabilities is accounted for in accordance with the goodwill accounting policy.

 

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

 

Convertible unsecured loan stock

Convertible unsecured loan stock consists of both a liability and equity element. On issue of convertible loan stock, management assess the fair value of the liability by reference to the cash flow to redemption associated with the instrument, discounted at a market rate of interest. The difference between the issue proceeds and the fair value of the liability is allocated to the equity element of the instrument.

 

Trade and other payables

Trade and other payables are initially recognised at fair value, and subsequently where necessary re-measured at amortised cost using the effective interest method.

 

Trade and other receivables

Trade and other receivables are initially recognised at fair value. A provision for impairment of trade receivables is established when there is objective evidence the Group will not be able to collect all amounts due according to the original terms of the receivables.

 

Property, plant and equipment

Fixtures and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method, on the following bases:

Fixtures and equipment 10% - 25%

The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.

 

Share-based payments

Share options have been granted to key management. The cost of equity-settled transactions is measured with reference to the fair value at the date at which they were granted. The Group accounts for the fair value of these options at grant date over the vesting period in the income statement, with a corresponding increase to the share-based payment reserve. The fair value was calculated based on the Black-Scholes Model using the following inputs:

Share price                    £2.35 - £2.50

Exercise price               £2.35 - £2.71

Expected volatility          25%* - 10%*

Risk free rate                 1.39% - 2.60%

Expected dividends*       6% - 3%

*Based on quoted property sector average (not NewRiver Retail Limited's expected dividend).

 

Treasury shares

Own equity instruments which are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in the income statement on the purchased, sale, issue or cancellation of the Group's own equity instruments. Any difference between the carrying amount and the consideration is recognised in the reserves.

The Group has issued a number of shares to an Employee Benefit Trust (EBT). As this EBT is controlled by the Group, it is consolidated in these financial statements and unallocated shares held by the EBT are shown as treasury shares.

 

Dividends

Dividends to the Company's Shareholders are recognised when they become legally payable. In the case of interim dividends, this is when paid. In the case of final dividends, this is when approved by the Board.

 

Hedge accounting

Hedges of interest rate risk on firm commitments are accounted for as cash flow hedges.

At the inception of the hedge relationship, the entity documents the relationship between the hedging instruments and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the "other gains and losses" line item.

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line of the income statement as the recognised hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income at that time is accumulated in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.

 

Leasing (as lessors)

Leases where the Group does not transfer substantially all the risks and benefits incidental to the ownership of the assets are classified as operating leases. All of the Group's properties are leased under operating leases and included in investment property in the balance sheet.

 

2 Segmental reporting

During the period the Group operated in one business segment, being property investment in the United Kingdom and as such no further information is provided.

 

3 Gross property income

	30 Sep 2012 £'000	30 Sep 2011 £'000	31 March 2012 £'000
Rental and related income	8,240	6,088	14,290
Asset management fees	231	217	470
Surrender premiums and commissions	216	32	251
Gross property income	8,687	6,337	15,011

4 Administrative expenses

	30 Sep 2012 £'000	30 Sep 2011 £'000	31 March 2012 £'000
Group staff costs	1,473	1,213	2,537
Office costs	253	121	279
Depreciation	24	-	11
Other administration costs	577	487	1,182
Administrative expenses	2,327	1,821	4,009
Asset management fees	(231)	(217)	(470)
Net administrative expenses	2,096	1,604	3,539

 

5 Earnings per share

The European Public Real Estate Association (EPRA) issued Best Practices Policy Recommendations in October 2010, which gives guidelines for performance measures. The EPRA earnings measure excludes investment property revaluations and gains on disposals, intangible asset movements and their related taxation and the REIT conversion charge.

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:

	30 Sep 2012 £'000	30 Sep 2011 £'000	31 March 2012 £'000
Earnings
Earnings for the purposes of basic and diluted EPS being profit after taxation	571	2,844	3,850
Adjustments to arrive at EPRA profit
Exceptional items:
Unrealised deficit/(surplus) on revaluation of investment properties	1,336	(1,393)	274
Unrealised deficit/(surplus) on revaluation of joint venture investment properties	69	-	560
Profit on disposal of investment properties
	-	(45)	(413)
Other exceptional items	-	-	83
EPRA profit	1,976	1,406	4,354
Additional adjustments to arrive at NAREIT FFO
Amortisation of tenant incentives	37	32	70
Amortisation of rent free periods	(277)	(174)	(171)
Amortisation of capitalised leasing costs	138	67	134
NAREIT FFO	1,874	1,331	4,387

Number of shares	30 Sep 2012 No. 000's	30 Sep 2011 No. 000's	31 March 2012 No. 000's
Weighted average number of Ordinary Shares for the purposes of basic EPS, basic EPRA EPS and FFO EPS	31,080	19,652	25,242
Effect of dilutive potential Ordinary Shares:
Options	-	125	-
Warrants	-	62	28
CULS	-	-	-
Weighted average number of Ordinary Shares for the purposes of basic diluted EPS and basic diluted EPRA EPS	31,080	19,839	25,270

	30 Sep 2012 £'000	30 Sep 2011 £'000	31 March 2012 £'000
EPRA EPS basic (pence)	6.4	7.2	17.3
EPRA diluted EPS (pence)	6.4	7.1	17.2
FFO EPS basic (pence)	6.0	6.8	17.4
EPS basic (pence)	1.8	14.5	15.3
Diluted EPS (pence)	1.8	14.3	15.2

Under the terms of the Limited Partnership agreement relating to NewRiver Retail Investments LP dated 28 February 2010, MSREI has been granted the right to convert its interest in the JV or part thereof on an NAV for NAV basis into shares of NewRiver Retail Limited, up to 10% of the share capital of NewRiver Retail Limited during the joint venture period. This conversion would have an accretive effect on the Group's EPS calculation for the current period (accretive effect for the prior period).

 

6 Net asset value per share

	30 Sep 2012 £'000	30 Sep 2011 £'000	31 March 2012 £'000
Net asset value (£'000)	76,440	79,865	79,076
Number of Ordinary Shares EPRA*	33,480	43,743	34,333
Number of Ordinary Shares	31,080	31,080	31,080
Number of diluted shares	33,480	43,743	34,333
EPRA Net asset value per share (pence)	252	260	258
Basic Net asset value per share (pence)	246	257	254
Diluted Net asset value per share (pence)	245	255	253

*The number of shares in issue is adjusted under the EPRA calculation to assume conversion of all the warrants, options and the Convertible Unsecured Loan Stock converted to equity. However, in the current period the conversion of the Convertible Unsecured Loan Stock would have an accretive effect on the EPRA calculation and is therefore excluded from the calculation of normal diluted number of shares.

 

7 Dividends

The following dividends were paid during the current and prior periods:

		Pence per share	£'000
Ordinary dividends paid
2011 Final dividend	20-Jul-11	4.5p	641
2012 Interim dividend	23-Dec-11	6.0p	1,865
2012 Final dividend	13-Jul-12	9.0p	2,797
Ordinary dividends proposed
2013 Interim dividend	30-Jan-13	6.0p	1,865

The 2012 final dividend was paid in July 2012 to Shareholders. £2.4 million was paid in the period. The remaining £0.4 million relates to withholding tax and was paid after the balance sheet date.

The proposed interim dividend of 6 pence per share totalling £1.9 million was approved by the Board on 3 December 2012. It has not been included as a liability or deducted from retained profits in these accounts. The interim dividend is payable on 30 January 2013 to ordinary Shareholders on the register at the close of business on 4 January 2013 and will be recognised as an appropriation of retained earnings in 2013.

The dividend will be paid entirely as a PID (Property Income Distribution). PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate of income tax (currently 20%). However, certain classes of Shareholder may be able to claim exemption from deduction of withholding tax.

 

8 Investment properties

	30 Sep 2012 £'000	30 Sep 2011 £'000	31 March 2012 £'000
Opening balance	197,736	105,800	105,800
Acquisitions and improvements in the period/year	1,705	87,692	99,855
Disposals in the period/year	-	(5,000)	(7,645)
	199,441	188,492	198,010
Fair value movement on property revaluations	(1,336)	1,393	(274)
Closing balance	198,105	189,885	197,736

The Group's investment properties have been valued at 30 September 2012 by independent valuers on the basis of fair value in accordance with the Appraisal and Valuation Standards of the Royal Institute of Chartered Surveyors Sixth Edition (the "Red Book").

It is the Group's policy to carry investment property at fair value in accordance with IAS 40 "Investment Property". The fair value of the Group's investment property at 30 September 2012 has been determined by the Directors on the basis of open market valuations carried out by Colliers International who are the external valuers to the Group.

The basis for the valuations included in the report is based on current market rental yields, expected rental income and comparable market transactions.

9 Investments in joint ventures

	30 Sep 2012 £'000	30 Sep 2011 £'000	31 March 2012 £'000
Opening balance	11,275	11,926	11,926
Share of Income from joint ventures	323	467	945
Net valuation movement	(69)	-	(560)
Distributions and dividends	(450)	(500)	(695)
Return of capital	-	-	(150)
Hedging movements	155	-	(191)
Net book value	11,234	11,893	11,275

The Group has the following interests in joint ventures:

Name	Country of incorporation	% Holding 2011	% Holding 2012
NewRiver Retail Investments LP	Guernsey	50%	50%
NewRiver Retail Investments (GP) Ltd*	Guernsey	50%	50%

*NewRiver Retail Investments (GP) Ltd 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 joint venture.

NewRiver Retail Investments LP (the "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 JV is owned equally by NewRiver Retail Limited and MSREI. NewRiver Retail (UK) Limited is the appointed asset manager on behalf of the JV and receives asset management fees as well as performance-related return promote payments.

No promote payment has been recognised during the period and the Group is entitled to receive promote payments only after achieving the agreed hurdles.

Under the terms of the Limited Partnership agreement relating to NewRiver Retail Investments LP dated 28 February 2010, MSREI has been granted the right to convert its interest in the JV or part thereof on an NAV for NAV basis into shares of NewRiver Retail Limited, up to 10% of the share capital of NewRiver Retail Limited during the joint venture period which is from 5 March 2010 and expires 5 March 2015. This conversion would currently have an accretive effect on the Group's EPS calculation for the current period (accretive in the prior period).

In line with the existing NewRiver investment strategy, the 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 JV has a 31 December year end and the Group has applied equity accounting for its interest in the JV. The aggregate amounts recognised in the consolidated balance sheet and income statement eliminate inter company transactions and are as follows:

	30 Sep 2012 NewRiver Retail Investments (GP) Ltd Total £'000	30 Sep 2012 Group's Share 50% £'000	30 Sep 2011 NewRiver Retail Investments (GP) Ltd Total  £'000	30 Sep 2011 Group's Share 50% £'000	31 March 2012 NewRiver Retail Investments (GP) Ltd Total  £'000	31 March 2012 Group's Share 50% £'000
Balance sheet
Non-current assets	45,465	22,732	46,430	23,215	45,465	22,733
Current assets	1,906	953	1,654	827	2,035	1,018
Current liabilities	(1,931)	(966)	(1,371)	(686)	(2,002)	(1,001)
Non-current liabilities	(22,971)	(11,485)	(22,927)	(11,463)	(22,949)	(11,475)
Net assets	22,469	11,234	23,786	11,893	22,549	11,275
Income statement
Income	1,681	840	1,843	921	3,593	1,796
Administration expenses	(571)	(286)	(455)	(227)	(784)	(392)
Finance costs	(463)	(231)	(454)	(227)	(919)	(459)
Recurring income	647	323	934	467	1,890	945
Fair value deficit on property revaluations	(137)	(69)	-	-	(1,121)	(560)
Income from joint ventures	510	254	934	467	769	385

Recurring income in the joint venture has reduced due to property sales in the period ended 30 September 2011. The Group's share of any contingent liabilities to the JV is £nil (Sep 2011: £nil).

10 Investment in subsidiary undertakings

Below is a list of the Group's principal subsidiaries:

Name	Country of incorporation	Activity	Proportion of ownership interest 2012
NewRiver Retail (Boscombe No. 1) Limited	United Kingdom	Real estate investments	100%
NewRiver Retail (Market Deeping No. 1) Limited	Guernsey	Real estate investments	100%
NewRiver Retail (Newcastle No. 1) Limited	Guernsey	Real estate investments	100%
NewRiver Retail (Portfolio No. 1) Limited	Guernsey	Real estate investments	100%
NewRiver Retail (Portfolio No. 2) Limited	Guernsey	Real estate investments	100%
NewRiver Retail (Portfolio No. 3) Limited	United Kingdom	Real estate investments	100%
NewRiver Retail (Portfolio No. 4) Limited	United Kingdom	Real estate investments	100%
NewRiver Retail (Portfolio No. 5) Limited	United Kingdom	Real estate investments	100%
NewRiver Retail (Portfolio No. 6) Limited	United Kingdom	Real estate investments	100%
NewRiver Retail (St Austell) Limited	United Kingdom	Real estate investments	100%
NewRiver Retail (UK) Limited	United Kingdom	Company operation and asset management	100%
NewRiver Retail (Witham) Limited	United Kingdom	Real estate investments	100%
NewRiver Retail (Wrexham No. 1) Limited	Guernsey	Real estate investments	100%
NewRiver Retail CUL No. 1 Limited	United Kingdom	Finance Company	100%

The Group's investment properties are held by its subsidiary undertakings.

11 Cash and cash equivalents

	30 Sep 2012 £'000	30 Sep 2011 £'000	31 March 2012 £'000
Cash at bank	5,105	6,565	8,562

12 Borrowings

	30 Sep 2012 £'000	30 Sep 2011 £'000	31 March 2012 £'000
Secured bank loans	107,975	97,046	107,842
Convertible Unsecured Loan Stock	24,639	24,524	24,581
	132,614	121,570	132,423
Maturity of borrowings:
Less than one year	-	-	-
Between one and two years*	-	13,268	13,268
Between two and five years	132,614	108,302	119,155
Over five years	-	-	-
Total borrowings	132,614	121,570	132,423

*This loan was originated in 2010 with three years and an option to extend by a further two years. The Company has recently increased this facility post balance sheet date by £2.7 million to fund the acquisition of a property in Warrington and is now in a position to formally extend the loan to June 2015 although this had not been formally extended as at balance sheet date.

 

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.

Facility and arrangement fees

	30 September 2012
	Facility drawn £'000	Fees £'000	Amortised £'000	Balance £'000
Santander*	33,371	(327)	178	33,222
Clydesdale**	40,815	(541)	118	40,392
HSBC***	34,580	(346)	127	34,361
	108,766	(1,214)	423	107,975
Convertibles	25,000	(574)	213	24,639
	133,766	(1,788)	636	132,614

	30 September 2011
	Facility drawn £'000	Fees £'000	Amortised £'000	Balance £'000
Santander	30,371	(298)	87	30,160
Clydesdale	33,069	(490)	15	32,594
HSBC	34,580	(346)	58	34,292
	98,020	(1,134)	160	97,046
Convertibles	25,000	(574)	98	24,524
	123,020	(1,708)	258	121,570

	31 March 2012
	Facility drawn £'000	Fees £'000	Amortised £'000	Balance £'000
Santander	33,371	(327)	132	33,176
Clydesdale	40,815	(539)	64	40,340
HSBC	34,580	(346)	92	34,326
	108,766	(1,212)	288	107,842
Convertibles	25,000	(574)	155	24,581
	133,766	(1,786)	443	132,423

*This facility is 92% fixed by way of an interest rate swap at an all in cost of 3.9%.

**This facility is 81% fixed by way of an interest rate swap at an all in cost of 4.1%.

***This facility is subject to an interest rate cap agreement and is 60% capped at 6.5% (4% cap, 2.5% bank margin).

 

Fair value on interest rate swaps

The Group recognised a mark to market fair value loss of £0.813 million (2011: £1.323 million) on its interest rate swaps as at 30 September 2012. The carrying value of interest rate swaps in the balance sheet at 30 September 2012 was £2.343 million (2011: £1.573 million).

All borrowings are due after more than one year.

 

Convertible Unsecured Loan Stock ("CULS")

On 22 November 2011 the Group issued £25 million of CULS. The stock holder may convert all or any of the stock into Ordinary Shares at the rate of 1 Ordinary Share for every £2.76 nominal value of CULS held (adjusted from £2.80 for special dividends). Under the terms of the convertible, interest will accrue at 5.85% on the outstanding loan stock until 31 December 2015 when it will either be converted or repaid. The interest payable on the CULS is due biannually on the 30 June and 31 December.

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% pa for 5 years. Management have concluded that the value of the convertible option was negligible and the value resided in the debt portion of the instrument at the date of issue.

 

13 Cash flow note

	30 Sep 2012 £'000	30 Sep 2011 £'000	31 March 2012 £'000
Operating profit	3,620	5,104	9,304
Adjustments for:
Income from joint ventures not received	(323)	(467)	(945)
Net valuation movement	1,336	(1,393)	274
Net valuation movement of joint venture investment properties	69	-	560
Profit on sale of investment properties	-	(45)	(413)
Depreciation of property, plant and equipment and goodwill	24	-	11
Amortisation of tenant incentives	37	-	70
Amortisation of rent-free periods	(277)	(156)	(171)
Amortisation of capitalised leasing costs	136	-	134
Share-based payments expense	-	16	125
Interest paid	(2,958)	(2,122)	(5,036)
Interest received	8	29	5
Taxation paid	(299)	(124)	(483)
Operating cash flows before movements in working capital	1,373	842	3,435
Increase in receivables	(1,263)	(1,417)	(1,633)
Increase in payables	121	2,188	2,328
Cash inflows from operations	231	1,613	4,130

14 Share capital and reserves

	Retained earnings £'000	Share capital & Share premium £'000	Other reserves £'000	Hedging reserves £'000	Share option reserves £'000	Revaluation reserves £'000	Total £'000
As at 31 March 2011	318	-	33,801	(250)	62	4,843	38,774
Net proceeds of issue from new shares	-	40,284	-	-	-	-	40,284
Total comprehensive income for the period	2,844	-	-	(1,323)	-	-	1,521
Share-based payments	-	-	-	-	16	-	16
Dividends paid	(640)	-	-	-	-	-	(640)
Revaluation movement	(1,393)	-	-	-	-	1,242	(151)
As at 30 September 2011	1,129	40,284	33,801	(1,573)	78	6,085	79,804
Transfer of share premium	-	(40,284)	40,284	-	-	-	-
Total comprehensive income for the period	1,006	-	-	(128)	-	-	878
Share-based payments	-	-	-	-	109	-	109
Dividends paid	(1,866)	-	-	-	-	-	(1,866)
Revaluation movement	1,667	-	-	-	-	(1,516)	151
As at 31 March 2012	1,936	-	74,085	(1,701)	187	4,569	79,076
Total comprehensive income for the period	571	-	-	(813)	-	-	(242)
Dividends paid	(2,394)	-	-	-	-	-	(2,394)
Revaluation movement	1,336	-	-	-	-	(1,336)	-
As at 30 September 2012	1,449	-	74,085	(2,514)	187	3,233	76,440

The authorised share capital is unlimited and there are currently 31,079,068 shares in issue (30 September 2011: 31,079,068).

In addition there are 624,440 shares held in the Employee Benefit Trust (EBT). As the EBT is consolidated, these shares are treated as treasury shares.

During the period no shares were issued to the EBT (30 September 2011: nil). No shares have been allocated by the EBT to Directors or employees during the period (30 September 2011: nil).

In the period ended 30 September 2012, there were no Ordinary Shares issued. In the comparative period in August 2011, 16.9 million nil par value Ordinary Shares were issued for cash consideration at a price of £2.52 resulting in an increase of the total share premium to £42.5 million. Costs of £2.2 million directly attributable to the issue of these shares have been set against the share premium.

Shareholders who subscribed for Placing Shares in the initial Placing 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 was adjusted to £2.16 following subsequent share issues and dividend payments. During the period 2012 nil (2011: nil) warrants were exercised.

15 Share-based payments

The Group provides share-based payments to employees in the form of share options, all share-based payment arrangements granted since the admission on 1 September 2009 have been recognised in the financial statements. The Group uses the Black-Scholes Model and the resulting value is amortised through the income statement over the vesting period of the share-based payments with a corresponding credit to the share-based payments reserve.

(a) Terms

	Exercise Price £	30 Sep 2012 Number of options	30 Sep 2011 Number of options	31 March 2012 Number of options
Awards brought forward		2,471,949	886,949	886,949
Awards made during the period/year	2.35	-	1,585,000	1,585,000
Exercisable options at the end of the period/year		2,471,949	2,471,949	2,471,949

The awards granted during the period are based on a percentage of the total number of shares in issue.

(b) Share-based payment charge

	30 Sep 2012 £'000	30 Sep 2011 £'000	31 March 2012 £'000
Share-based payment expense brought forward	187	62	62
Share-based payment expense in the period/year	-	16	125
Cumulative share-based payment	187	78	187

The Share Option Valuation Report from 2011 has been corrected during the period which resulted in £nil share- based payment expense included in the current period. The share-based payment expense was rebased by £50,524 following the changes to the assumptions. The parameters used in valuing the Share Options are disclosed in the accounting policies in Note 1.

 

16 Post balance sheet events

On 12 November 2012, the Group completed the acquisition of two large retail units in the Golden Square Shopping Centre in Warrington, Cheshire, for a total consideration of £3.47 million. NewRiver will amalgamate and refurbish the two retail units to provide a single 56,000 sq. ft. unit for leading retailer and high-street favourite Primark. NewRiver has signed a lease with Primark for a term of 25 years at an annual rent of £475,000.

On 3 December 2012, the Board of Directors approved an interim dividend of 6 pence per share.

 

17 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.

The following Directors held shares in the Company during the period:

	30 Sep 2012 Number of Ordinary Shares	30 Sep 2011 Number of Ordinary Shares
Paul Roy	360,000	360,000
David Lockhart	1,622,000	1,610,000
Mark Davies	14,000	10,000
Allan Lockhart	149,294	140,000
Nick Sewell	107,500	100,000
Peter Tom CBE	-	40,000
Susie Farnon	-	25,000
Chris Taylor	-	-
Kay Chaldecott	-	-
Andrew Walker	-	-
Charles Miller	-	-

Total emoluments of Executive Directors during the period (excluding share-based payments) was £1.2 million (2011: £1.0 million).

During the period 32,206 shares (2011: 34,000) were acquired on the open market by Directors.

Company information

 

Directors

Paul Roy

(Non Executive Chairman)

 

David Lockhart

(Chief Executive)

 

Mark Davies

(Finance Director)

 

Allan Lockhart

(Property Director)

 

Nick Sewell

(Executive Director)

 

Charles Miller

(Executive Director)

 

Andrew Walker

(Non Executive Director)

 

Chris Taylor

(Non Executive Director)

 

Kay Chaldecott

(Non Executive Director)

 

Company Secretary

Caroline Tolhurst

Business address

37 Maddox Street
London W1S 2PP

 

Registered office

Old Bank Chambers
La Grande Rue
St Martin's Guernsey
Channel Islands GY4 6RT

 

Nominated advisor & joint broker

Cenkos Securities

6.7.8 Tokenhouse Yard
London EC2R 7AS

 

Joint broker

Investec

2 Gresham Street
London EC2V 7QP

 

Financial advisor

Kinmont

5 Clifford Street
London W1S 2LG

 

CISX listing sponsor

Morgan Sharpe Administration Limited

Old Bank Chambers
La Grande Rue
St Martin's Guernsey GY4 6RT

 

Auditors

Deloitte LLP

Regency Court
Glategny Esplanade
St. Peter Port Guernsey
Channel Islands GY1 3HW

 

Legal advisors

Eversheds LLP

One Wood Street
London EC2V 7WS

 

Mourant Ozannes

PO Box 186
1 Le Marchant Street
St. Peter Port Guernsey
Channel Islands GY1 4HP

 

Tax advisors

BDO LLP

55 Baker Street
London EC2V 7WS
Notes

 

NewRiver Retail Limited

37 Maddox Street
London
W1S 2PP

[phone]

www.nrr.co.uk

Follow us on Twitter:
@NewRiverRetail

 

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