Interim Results

RNS Number : 8077D

NewRiver Retail Limited

09 December 2009

 



NewRiver Retail Limited ("NewRiver" or "the Company")

Interim results for the period ended 30 September 2009

NewRiver Retail Limited (AIM: NRR), the specialist value-creating retail property investment and asset management company, is pleased to announce its interim results for the period ended 30 September 2009.

Key Highlights

 

·         Company’s shares successfully admitted to trading on London’s AIM market and Channel Islands Stock Exchange (CISX) on 1 September 2009

 

·         Total of £25 million of initial capital raised at 250 pence per share

 

·         Range of institutional, management and other investors supported Initial Public Offering

 

·         Platform for future growth established

 

·         Significant management appointments made

 

·         Maiden acquisition completed post period end with a number of further transactions being actively pursued

 

·         Market conditions showing signs of improvement

 

·         Cash in bank at period end of £24.2 million

 

·         Net Asset Value of £24.1 million, representing 241 pence per share

 

David Lockhart, Non-executive Director of NewRiver Retail Limited and Chief Executive of NewRiver Capital Limited, commented:

"The initial fundraising has created a platform for growth. We believe the timing is right for a pure retail property focused value creating business to take advantage of historically favourable market conditions. NewRiver is well positioned as a growth business with no legacy assets, stretched borrowings or distressed bank covenants to distract it. The Company has entered the market and made its first acquisition. Considerable progress is being made regarding a number of other opportunities. The Company is committed to utilising shareholders' funds but will only spend it wisely and where it sees real opportunities to enhance shareholder value in the medium to long term. We look forward to the future with confidence."

- ends -

For further information

NewRiver Retail Ltd                                                                                    Tel: [phone]

Serena Tremlett

New River Capital Ltd                                                                                 Tel: [phone]

David Lockhart                        

Bell Pottinger Corporate & Financial                                                          Tel: [phone]

David Rydell/Rosanne Perry                     

BofA Merrill Lynch                                                                                      Tel: [phone]

(Broker & Nominated Adviser)        

Marcus Jackson

Georgina Stewart

About NewRiver 

NewRiver Retail Limited is a specialist real estate investor and asset manager with particular focus on the UK retail sector. The Company is advised on property matters by its wholly-owned subsidiary, NewRiver Capital Limited, whose experienced management team, led by David Lockhart have more than 50 years combined experience in UK commercial property markets. The Company's activities include active and entrepreneurial asset management and risk controlled development, utilising both its own balance sheet and co-investment joint venture structures. It is NewRiver's intention to become one of the leading value-creating property investment businesses focused on the UK retail market. The Company was founded in 2009 and its shares were admitted to the London AIM market and Channel Islands Stock Exchange (CISX) in September of the same year. 

For more information on NewRiver, please visit 

www.newriverretail.com and www.newrivercapital.co.uk

  Chairman's statement

The period includes only 30 days during which the Company's shares were traded on London's AIM market and Channel Islands Stock Exchange (CISX).

On 1 September 2009, shares in NewRiver were admitted to trading following a successful fundraising that raised £25 million of initial capital to launch the Company's investment strategy. It was pleasing to see institutional, management and other investors support the Initial Public Offering.

NewRiver Retail has been established as a specialist real estate investment and asset management business for the purposes of taking advantage of opportunities that the next cycle in the UK commercial property market will present. The Company is advised on property matters by NewRiver Capital Limited ("NRC"), a wholly-owned subsidiary. NRC comprises a highly experienced management team with a strong long-term track record of creating shareholder value established across a variety of property ventures and a range of economic conditions.

NewRiver intends to capitalise on the significant and rapid fall in capital values in the retail sector by identifying opportunities that the Directors expect to deliver attractive returns for Shareholders through active and entrepreneurial asset management leading to increased capital and rental income growth. A key objective of NewRiver Retail is to become one of the leading value-creating property investment businesses focused on the UK retail market.

Significant advances have been made in appointing key personnel to NRC. On 5 October Nick Sewell, a chartered surveyor with more than 14 years of retail commercial property experience, took up his role as a Board Director and on 19 October Mark Davies, a qualified chartered accountant with more than 10 years real estate experience, joined as Finance Director. Importantly, the Company has already announced, post period end, its first acquisition - a £5.25 million high yielding multi-let retail property in Wrexham town centre ideally placed to benefit from the Company's active asset management skills. Additionally, a number of further transactions are being actively pursued with two at an advanced stage of negotiation.

Investment sentiment in the retail property market place is showing signs of improvement and we believe that as liquidity begins to return to the market, attractive opportunities will be available for NewRiver to exploit its core skill sets. The stock selection and asset management skills of the NewRiver team are ideally suited to this environment. The Board believes that a strongly capitalised vehicle can take significant advantage of such market conditions and is well placed to pursue its business plan.

The Board is delighted with the progress of NewRiver and looks forward to the future with confidence.

Paul Roy

Chairman, NewRiver Retail Limited

8 December 2009 

  Consolidated Condensed Income Statement (unaudited)

For the period ended 30 September 2009

	Note	Unaudited
		Period ended
		30 Sep 09
		£'000
Continuing Operations
Revenue	2	18
Administrative expenses		(150)
Operating Loss		(132)
Finance income	4	3
Loss Before taxation		(129)
Tax on ordinary activities		-
Loss for the period		(129)
Loss per share (basic)	5	-£0.0129

All amounts relate to continuing operations.

All income is attributable to the equity holders of the parent company.

The accompanying notes form part of these condensed financial statements.

There were no other gains or losses in the Period and therefore the Company has not prepared a Statement of Other Comprehensive Income.

Consolidated Condensed Balance Sheet (unaudited)

As at 30 September 2009

	Note	Unaudited
		As at
		30 Sep 09
		£'000
Non-current assets
Goodwill	6	55
		55
Current assets
Trade and other receivables	7	21
Cash and cash equivalents	8	24,226
		24,247
Total assets		24,302
Current liabilities
Trade and other payables	9	(213)
Net assets		24,089
Equity
Share premium	10	24,212
Share option reserve	10	6
Treasury shares	10	-
Retained earnings		(129)
Total equity		24,089
Net asset value per share	11	£2.41

The accompanying notes form part of these financial statements.

Consolidated Condensed Statement of Changes in Equity (unaudited)

For the period ended 30 September 2009

	Note	Retained	Treasury	Share	Total
		earnings	Shares	Premium
		£'000	£'000	£'000	£'000
At 4 June 2009		-	-	-	-
Loss for the period		(129)	-	-	(129)
Issue of ordinary  share capital	10	-	-	25,000	25,000
Issue costs	10	-	-	(788)	(788)
Share-based payment	10	6	-	-	6
At 30 September 2009		(123)	-	24,212	24,089

The accompanying notes form part of these financial statements.

Consolidated Condensed Statement of Cash Flows (unaudited)

For the period ended 30 September 2009

	Note	Unaudited
		As at
		30 Sep 09
		£'000
Cash flow from operating activities
Operating loss		(132)
Share based payment	10	6
Cash flow from operations before changes in working capital		(126)
Changes in trade and other receivables		1
Changes in trade and other payables		123
Cash flows from operations		(2)
Interest received	4	3
Cash flows from operating activities		1
Investing activities:
Cash acquired on acquisition of subsidiary	6	13
Financing activities:
Net proceeds from share issue		24,212
Net increase in cash and cash equivalents		24,226
Cash and cash equivalents at beginning of period		-
Cash and cash equivalents at end of period		24,226

The accompanying notes form part of these financial statements.

  Notes to the accounts

For the period ended 30 September 2009

1 General Information

NewRiver Retail was incorporated on 4 June 2009 in Guernsey as a closed-ended investment company. The registered office is Isabelle Chambers, Route Isabelle, St. Peter Port, Guernsey, Channel Islands.

2 Basis of preparation and accounting policies

The financial information contained in this report has been prepared in accordance with IAS 34 "Interim Financial Reporting". The condensed financial statements for the period are unaudited and do not constitute statutory accounts for the purposes of The Companies (Guernsey) Law, 2008. The accounting policies adopted are in accordance with those the Group expects to be applicable at 31 March 2010.

The Financial Statements have been prepared on a going concern basis. After making enquiries, and on the strength of its balance sheet, the Directors are of the opinion that the Company and its subsidiary have adequate resources to continue their operational activities for the foreseeable future. The Board is therefore of the opinion that the going concern basis should be adopted in the preparation of the financial statements. The Company currently holds significant cash balances and is not dependent on any external financing.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). 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. The results of subsidiaries acquired during the year are included in the consolidated income statement from the effective date of acquisition. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, revenue and expenses are eliminated on consolidation. 

Use of estimates

The preparation of the Group's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingencies at the date of the Group's financial statements, and revenue and expenses during the reporting period. Actual results could differ from estimated. Significant estimates in the Group's financial statements include the assumptions relating to the valuation of options. By their nature these estimates and assumptions are subject to measurement uncertainty.

Revenue recognition

Fees and interest income are included on an accruals basis.

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.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Share options

Share options have been granted as set out in note 10. The Company accounts for the fair value of these options at grant date over the vesting period in the income statement, with a corresponding increase to equity. The fair value has been calculated based on the Black Scholes Model using the following inputs:

- Share price	£2.50
- Exercise price	£2.50
- Expected volatility*	15%
- Expected life	5 years
- Risk free rate	2.60%
- Expected dividends	2%

*based on similar quoted companies.

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.

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 acquiree, plus any costs directly attributable to the business combination. 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.

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.

3 Segmental information

During the period the Group operated in one business segment, being retail property investment and development.

4 Finance income and costs

		Unaudited
		As at 30 Sep 09
		£'000
Finance income: Interest on short-term deposits		3

5 Loss per share

Loss per share is calculated on a weighted average of 10,000,000 (net of Treasury Shares) ordinary shares of nil par value. There are 544,000 potentially dilutive share options at the current period end. In addition 309,278 Warrants issued at the time of the Company's Admission would have a dilutive effect.

6 Aquisition of subsidiaries

On the 1 September 2009 the Group acquired 100% of the Issued Share Capital in NewRiver Capital Limited which resulted in Goodwill of £55,000.

The fair value of assets acquired and liabilities assumed were as follows:

		Unaudited
		As at 30 Sep 09
		£'000
Cash and cash equivalents		13
Accounts receivable		22
Trade payables		(90)
Net liabilities acquired		(55)
Goodwill on consolidation		55
Total consideration		0
Total consideration satisfied by:
Cash		0
		-
Net cash inflow arising on acquisition:
Cash consideration		-
Cash and cash equivalents acquired		13
		13

Included within the consolidated retained loss for the period is a profit of £23,000 relating to acquired subsidiaries. Due to the nature of the businesses acquired, financial performance is not comparable pre to post investment. Therefore, it is inappropriate to disclose the revenue and profit and loss of the combined entities for the period as though the acquisition date was the start of the financial period, for all business combinations that were effected during the period.

7 Trade and other receivables

		Unaudited
		As at 30 Sep 09
		£'000
Trade receivables		21

All amounts under receivable fall due for repayment in less than one year.

8 Cash and cash equivalents

Cash and cash equivalents are retained in group deposit and current accounts which are readily available to the group for day to day commercial purposes.

9 Trade and other payables

		Unaudited
		As at 30 Sep 09
		£'000
Trade payables		213

10 Share Capital

As at 30 September 2009 the Company has issued ordinary share capital of 10,000,000 nil par value shares. On the 1 September 2009 10,000,000 nil par value ordinary shares were issued at a price of £2.50 resulting in a share premium of £25,000,000. Equity issue fees of £788,000 have been set against the Share Premium account. 

There were also 624,000 nil par value shares issued to the Employee Benefit Trust ("EBT") for nil consideration. As the EBT is consolidated these shares are treated as Treasury Shares. The total outstanding share capital at the period end is therefore 10,624,000. The company may issue an unlimited number of shares. 

The company provides share-based payments to Directors in the form of share options which are recognised in the financial statements. The company uses the Black Scholes model and the resulting value is amortised through the Income Statement over the vesting period of the share based payments. The Company recognised a charge of £6,473 during the period. At 30 September 2009 unexercised options over 544,000 new ordinary nil par value shares in the company had been granted to Directors and key management. These options were issued on 1 September 2009 with an exercise price of £2.50 with a vesting period of 3rd, 4th and 5th anniversary.

Full disclosure on Share-based Payments, Share Options and Share Warrants is available in the Admission document on the company website under Investor Relations at newriverretail.com.

11 Net Asset Value Per Share

Net Asset Value per Share is calculated by dividing the Net Asset Value by the total number of issued ordinary shares (net of Treasury Shares).

12 Taxation

The Company has been granted exemption from income tax in Guernsey under the Income Tax (Exempt Bodies) (Bailiwick of Guernsey) Ordinance 1989, and is liable to pay an annual fee (currently £600) under the provisions of the Ordinance. As such it will not be liable to income tax in Guernsey other than on Guernsey source income (excluding deposit interest on funds deposited with a Guernsey bank). No withholding tax is applicable to distributions to Shareholders by the Company. The subsidiary companies are resident in the United Kingdom and liable to United Kingdom Corporation Tax.

13 Related party transactions

The following Directors acquired shares in the Company on admission at £2.50 per share:

		Number of Ordinary Shares
Paul Roy		300,000
Susie Farnon		20,000
David Lockhart		1,460,000
Peter Tom CBE		20,000
Serena Tremlett		4,000

Serena Tremlett is the Managing Director of Morgan Sharpe Administration Limited which receives fees for providing secretarial and administration services in respect of the Company. During the period £18,166 was paid to Morgan Sharpe Administration in respect of these services.

These services were carried out on an arm's length basis.

Total emoluments of Directors and key management during the period was £37,000.

Share based payments of £6,473 accrued during the period. Full disclosure of Directors salaries and share options is provided in the Admission document on the Company website under Investor Relations at newriverretail.com.

14 Post balance sheet events

On the 30 November 2009 the group acquired the freehold interests of 28-31 Hope Street and 3-5 Priory Street, Wrexham, a key single unit multi-let High Street property in the core of this important administrative and commercial centre of North Wales. The investment comprises a total of 33,975 sq ft divided into five individual retail units, currently let to strong covenants Peacocks, Vision Express, Bathstore, Laura Ashley and Walmsleys. Total rental income per annum is £534,250. The purchase price of £5.25 million reflects a net initial yield of 9.66%.

 

END

 

 

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