NEWRIVER REIT PLC

Interim / Quarterly Report • Nov 28, 2013

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RNS Number : 1289U

NewRiver Retail Limited

28 November 2013

NewRiver Retail Limited

("NewRiver" or "the Company")

Unaudited results for the six months ended 30 September 2013

Strong financial performance and significant portfolio expansion through £175m acquisitions

A highly successful period for NewRiver delivering strong profit growth of 60% with further growth to come particularly from a profitable joint venture partnership.

Six months ended	30 Sep 2013 £'000	30 Sep 2012 £'000	Increase
Net rental income (Group share)	8,529	7,669	+11%
EPRA recurring profit before tax	3,026	1,884	+60%
Profit before tax	5,218	479	-
EPRA earnings per share	6.5	6.4	-
Interim dividend per share	6.0	6.0	-

Financial highlights

§ EPRA recurring profit increased by 60% to £3.0 million (2012: £1.9 million).

§ Profit before tax £5.2 million (2012: £0.5 million)

§ EPRA earnings per share maintained at 6.5 pence (2012: 6.4 pence) despite a 115% increase of Ordinary

Shares in issue

§ Dividend per share of 6 pence (2012: 6 pence), successfully covered by EPRA earnings in the period

§ EPRA NAV per share at 222p (March 2013: 240p) after taking into account dilution from 115% increase of

Ordinary Shares in issue

§ LTV reduced to 30% (2012: 51%) at the period end with further approved debt facilities in place to support

current acquisitions

Operational highlights

§ Oversubscribed £67 million equity fundraise completed in July

§ Assets under management increased by 12.5% to £450 million (March 2013: £400 million)

§ High retail occupancy rate improved to 95% (March 2013: 94%)

§ 50 new lettings and lease renewals, delivering income of £1.6 million at 1.3% above ERV

§ Largest single asset acquisition to date of Hillstreet Shopping Centre, Middlesbrough, for £50.0 million in August

§ Risk-controlled developments completed during the period in Wallsend, Paisley and Warrington

§ Good like for like performance in the period with rental income sustained at current levels and valuations starting

to move upwards with +0.5% growth

Post-balance sheet highlights

§ As announced separately today, exchange of contracts to acquire a portfolio of 202 public house assets from

Marston's Plc for £90.0 million at a net initial yield of circa 13%

§ Exchange of contracts to acquire two shopping centres from Axa for £34.3 million equating to a net initial yield

of circa 8%

§ Significant progress in deploying fundraising proceeds at an average yield of 11%

§ BRAVO* joint venture has grown rapidly to £270 million in less than 12 months and delivered a 20% return on

equity to NewRiver in its first year

*BRAVO is a fund advised and managed by Pacific Investment Management Company LLC

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

"The first six months of the financial year have been an exceptional period for NewRiver in which it significantly increased EPRA recurring profit and doubled the Company's market capitalisation. The successful completion of the oversubscribed equity fundraising combined with the support of NewRiver's joint venture partner BRAVO, has positioned the Company for continued growth and to enhance our reputation as one of the UK's leading retail real estate investors."

"Our acquisition of 202 pubs from Marston's announced today is a further example of the highly innovative and opportunistic approach of management to source above market long-term returns supported by double-digit income streams. In conjunction with other acquisitions announced today, the Company's total spend since the equity fundraising has now reached approximately £175 million. We are excited by the opportunities that the retail sector presents and are in a strong position to capitalise on future growth."

-Ends-

For further information

NewRiver Retail Limited  David Lockhart, Chief Executive Mark Davies, Finance Director	Tel: 020 3328 5800
Pelham Bell Pottinger David Rydell/Guy Scarborough/Charlotte Offredi	Tel: 020 7861 3232
Cenkos Securities Max Hartley/Ian Soanes	Tel: 020 7397 8900
Liberum Capital Shane Le Prevost/Tim Graham	Tel: 020 3100 2000

Chairman's Statement

I am pleased to report NewRiver's interim results for the six months to 30 September 2013.

The Company delivered a strong financial performance during the period. EPRA recurring profit increased by 60% to £3.0 million (2012: £1.9 million), whilst assets under management grew 12.5% to £450 million since the end of the last financial year. The Board has maintained the interim dividend per share at 6 pence (2012: 6 pence).

I am also pleased to welcome many new shareholders following the successful completion of NewRiver's £67 million equity issue in July 2013. The offering was oversubscribed, which was both an endorsement of the Company's strategy and track record and a reflection of improved investor sentiment towards the UK retail sector and UK regional retail property. The additional equity gave NewRiver more firepower in its targeted markets, whilst doubling the Company's market capitalisation and more than doubling its number of shareholders, both institutional and private. After considering the enlarged number of shares in issue, the dividend is covered by EPRA earnings per share of 6.5 pence (2012: 6.4 pence).

Since the fundraise, the Company has successfully deployed most of the equity capital raised through three astute acquisitions via our joint venture with BRAVO II, a fund advised and managed by Pacific Investment Management Company LLC, which was established last year. Total value of these acquisitions was circa £175 million, with an average purchase yield of 11%. All of the properties hold additional value-creating opportunities that will benefit from NewRiver's dynamic asset management approach.

In addition to acquisition-related activities, NewRiver's property management team executed 50 leasing and asset management events during the period at 1.3% above ERV, as well as completing three risk-controlled development projects in Paisley, Wallsend and Warrington.

The portfolio acquisition from Marston's Plc announced separately today is a particularly exciting opportunity for the Company. The purchase yield of 13%, supported by Marston's FTSE250 company rental guarantee for four years, will deliver strong income returns, while the Company's asset management skills will create additional value through attaining change of use from leisure to retail in the majority of the portfolio. The strategy is supported by food retailers buying into the convenience store space where new premises are at a premium.

Accounting for the acquisitions announced today, NewRiver's assets under management are now £580 million, representing a 29% uplift since 30 Sept 2013. 

The Board is delighted with the Company's significant progress which further demonstrates that NewRiver is achieving its objective of becoming one of the leading value-creating retail property investment businesses in the UK.

Paul Roy

Chairman

27 November 2013

Consolidated Condensed Income Statement

For the period from 1 April 2013 to 30 September 2013

				Unaudited Period 1 April 2013 to 30 Sep 2013			Unaudited Period 1 April 2012 to 30 Sep 2012	Audited Year ended 31 March 2013
	Notes	Income £'000	Capital £'000	Total £'000	Income £'000	Capital £'000	Total £'000	Total £'000
Gross property income	3	8,742	-	8,742	8,687	-	8,687	17,978
Property operating expenses	4	(1,797)	-	(1,797)	(1,659)	-	(1,659)	(3,591)
Net property income		6,945	-	6,945	7,028	-	7,028	14,387
Administrative expenses	5	(2,191)	-	(2,191)	(2,327)	-	(2,327)	(4,797)
Income from joint ventures	10	1,056	1,268	2,324	323	(69)	254	(624)
Net valuation movement	9	-	924	924	-	(1,336)	(1,336)	(2,157)
Profit on disposal of investment properties		-	-	-	-	-	-	811
Operating profit		5,810	2,192	8,002	5,024	(1,405)	3,619	7,620
Net finance expense
Finance income		29	-	29	8	-	8	10
Finance costs		(2,813)	-	(2,813)	(3,148)	-	(3,148)	(6,220)
Profit for the period/year before taxation		3,026	2,192	5,218	1,884	(1,405)	479	1,410
Current taxation		-	-	-	92	-	92	88
Profit for the period/year after taxation		3,026	2,192	5,218	1,976	(1,405)	571	1,498
Earnings per share
EPRA adjusted (pence)	6			6.5			6.4	16.3
EPRA basic (pence)	6			6.3			6.4	13.6
FFO basic (pence)	6			6.2			6.0	13.0
Basic (pence)	6			10.9			1.8	4.7
Basic diluted (pence)	6			9.2			1.8	2.4

All activities derive from continuing operations of the Group. The Notes on pages 8 to 22 form an integral part of these financial statements.

Consolidated Condensed Statement of Comprehensive Income

For the period from 1 April 2013 to 30 September 2013

	Notes	Unaudited Period 1 April 2013 to 30 Sep 2013 £'000	Unaudited Period 1 April 2012 to 30 Sep 2012 £'000	Audited Year ended 31 March 2013 £'000
Profit for the period/year after taxation		5,218	571	1,498
Items that will not be reclassified subsequently to profit or loss
Fair value gain/(loss) on interest rate swaps	12	873	(813)	(572)
Items that may be reclassified subsequently to profit or loss
Fair value gain/(loss) on interest rate swaps		-	-	-
Total comprehensive income for the period/year		6,091	(242)	926

All activities derive from continuing operations of the Group. The Notes on pages 8 to 22 form an integral part of these financial statements.

Consolidated Condensed Balance Sheet

As at 30 September 2013

	Notes	Unaudited as at 30 Sep 2013 £'000	Unaudited as at 30 Sep 2012 £'000	Audited  as at 31 March 2013  £'000
Non-current assets
Investment properties	9	212,038	198,105	206,278
Investments in joint ventures	10	28,344	11,234	14,688
Property, plant and equipment		402	419	404
Total non-current assets		240,784	209,758	221,370
Current assets
Trade and other receivables		2,776	4,308	1,981
Cash and cash equivalents		50,803	5,105	7,545
Total current assets		53,579	9,413	9,526
Total assets		294,363	219,171	230,896
Equity and liabilities
Current liabilities
Trade and other payables		9,230	6,927	10,994
Current taxation liabilities		438	409	424
Total current liabilities		9,668	7,336	11,418
Non-current liabilities
Non-current taxation liabilities		-	438	220
Derivative financial instruments	12	1,288	2,343	2,080
Borrowings	12	111,693	107,975	112,697
Debt instruments	12	24,750	24,639	24,693
Total non-current liabilities		137,731	135,395	139,690
Net assets		146,964	76,440	79,788
Capital and reserves
Retained earnings	13	5,148	1,449	854
Share capital and share premium	13	-	-	-
Other reserves	13	139,629	74,085	78,637
Hedging reserve	13	(1,400)	(2,514)	(2,273)
Share option reserve	14	353	187	260
Revaluation reserve	13	3,234	3,233	2,310
Total equity		146,964	76,440	79,788
Net asset value (NAV) per share
EPRA NAV (pence)	7	222	252	240
Basic (pence)	7	220	246	235
Basic diluted (pence)	7	220	245	235

The Notes on pages 8 to 22 form an integral part of these financial statements.

The financial statements were approved by the Board of Directors on 27 November 2013 and were signed on its behalf by:

David Lockhart            Mark Davies

Chief Executive              Finance Director

Consolidated Condensed Cash Flow Statement

As at 30 September 2013

	Notes	Unaudited Period 1 April 2013 to 30 Sep 2013 £'000	Unaudited Period* 1 April 2012 to 30 Sep 2012 £'000	Audited  Year Ended 31 March 2013 £'000
Rental income received from tenants		7,876	7,963	16,529
Property-related expenditure		(1,582)	(1,485)	(3,189)
Fees and other income received		830	448	1,489
Operating expenses paid to suppliers and employees		(2,671)	(2,500)	(3,025)
Cash generated from operations		4,453	4,426	11,804
Interest paid		(2,612)	(2,958)	(6,087)
Interest received		29	8	10
Corporation tax paid		(205)	(299)	(508)
Net cash inflow from operating activities		1,665	1,177	5,219
Investing activities:
Investment in joint ventures	10	(12,150)	-	(4,830)
Purchase of investment properties		-	(710)	(4,497)
Development and other capital expenditure		(7,584)	(1,940)	(3,208)
Net proceeds from disposal of investment property		-	-	811
Purchase of plant and equipment		(25)	(39)	(53)
Distributions from joint ventures	10	871	450	925
Net cash from investing activities		(18,888)	(2,239)	(10,852)
Financing activities:
Issue of new shares	13	64,395	-	4,552
Repayment of bank loans		(948)	-	-
Increase in bank loans		-	-	4,607
Dividends paid	8	(2,965)	(2,394)	(4,543)
Net cash from financing activities		60,482	(2,394)	4,616
Cash and cash equivalents at the beginning of the period/year		7,545	8,562	8,562
Movement during the period/year		43,258	(3,457)	(1,017)
Cash and cash equivalents at the end of the period/year		50,803	5,105	7,545
Cash and cash equivalents comprise:
Cash at bank and in hand		50,803	5,105	7,545
Cash and cash equivalents at the end of the period/year		50,803	5,105	7,545

*These comparatives were adjusted to reflect the reclassification of expenditure from operating expenses to development and other capital expenditure to ensure the format was consistent with the current period.

The Notes on pages 8 to 22 form an integral part of these financial statements.

Consolidated Condensed Statement of Changes in Equity

As at 30 September 2013

	Notes	Retained earnings £'000	Share capital and share premium £'000	Other reserves £'000	Hedging reserves £'000	Retained earnings £'000	Share capital and share premium £'000	Other reserves £'000
As at 31 March 2012		1,936	-	74,085	(1,701)	187	4,569	79,076
Total comprehensive income for the period	13	571	-	-	(813)	-	-	(242)
Dividends paid		(2,394)	-	-	-	-	-	(2,394)
Revaluation movement	13	1,336	-	-	-	-	(1,336)	-
As at 30 September 2012		1,449	-	74,085	(2,514)	187	3,233	76,440
Net proceeds of issue from new shares	13	-	4,552	-	-	-	-	4,552
Transfer of share premium	13	-	(4,552)	4,552	-	-	-	-
Total comprehensive income for the year	13	927	-	-	241	-	-	1,168
Realisation of fair value movements	13	102	-	-	-	-	(102)	-
Share-based payments	14	-	-	-	-	73	-	73
Dividend payments		(2,445)	-	-	-	-	-	(2,445)
Revaluation movement	13	821	-	-	-	-	(821)	-
As at 31 March 2013		854	-	78,637	(2,273)	260	2,310	79,788
Net proceeds of issue from new shares	13	-	64,395	-	-	-	-	64,395
Transfer of share premium	13	-	(64,395)	64,395	-	-	-	-
Total comprehensive income for the period	13	5,218	-	-	873	-	-	6,091
Share-based payments	14	-	-	-	-	93	-	93
Dividend payments	13	-	-	(3,403)	-	-	-	(3,403)
Revaluation movement	13	(924)	-	-	-	-	924	-
As at 30 September 2013		5,148	-	139,629	(1,400)	353	3,234	146,964

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. NewRiver Retail Limited 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 Martin's, Guernsey GY4 6RT and the business address is 37 Maddox Street, London W1S 2PP. The Company is publicly traded on the AIM under the symbol NRR. On 1 October 2013 NewRiver Retail Limited delisted from CISX. 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

·  Capital expenditure and tenant incentive commitments

·  Forecast rental income

·  Loan covenants

·  Capital and debt funding

The Group has substantial 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. The Group has credit committee approval to extend a number of existing facilities as detailed in Note 12. Together with its cash resources the Group will arrange bank facilities to fund any future risk-controlled developments.

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.

Fair value measurements recognised in the balance sheet

The financial instruments that are measured subsequent to initial recognition at fair value are interest rate swaps. These financial instruments would be classified as Level 2 fair value measurements, as defined by IFRS 7, being those derived from inputs other than quoted prices ( i.e. derived from prices). There were no transfers between levels in the current or prior period.

The fair values of financial assets and financial liabilities are determined as follows:

Interest rate swap contracts are measured using the MID point of the yield curve prevailing on the reporting date. The valuations have been made on a clean basis in that they do not include accrued interest from the previous settlement date to the reporting date. The fair value represents the net present value of the difference between the contracted rate and the valuation rate when applied to the projected balances for the period from the reporting date to the contracted expiry dates.

Statement of compliance

These financial statements have been prepared on a going-concern basis and 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, joint venture interests and derivatives which are fair valued.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company, its subsidiaries and the Special Purpose Vehicles ('SPVs') controlled by the Company. 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 condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.

The Company has adopted the amendments to IAS 1 "Presentation of Items of Other Comprehensive Income" and IFRS 13 "Fair Value Measurement". Otherwise, the same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest audited financial statements, a copy of which can be found on our website www.nrr.co.uk.

The amendments to IAS 1 require items of other comprehensive income to be grouped by those items that will be reclassified subsequently to profit and loss and those that will never be reclassified together with their associated income tax. These amendments have been applied retrospectively and hence the presentation of items of comprehensive income has been regrouped to reflect the change. The effect of these changes is evident from the Consolidated Condensed Statement of Comprehensive Income. IFRS 13 has impacted the measurement criteria of fair value for certain assets and liabilities and also introduced new disclosures as set out in Note 12. No retrospective changes were necessary as a result of the adoption of the Standard.

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 2013 £'000	30 Sep 2012 £'000	31 March 2013 £'000
Rental and related income	7,975	8,240	16,308
Asset management fees	559	231	653
Surrender premiums and commissions	208	216	1,017
Gross property income	8,742	8,687	17,978

4 Property operating expenses

	30 Sep 2013 £'000	30 Sep 2012 £'000	31 March 2013 £'000
Amortisation of tenant incentives and letting fees	215	175	402
Ground rent payments	356	366	733
Service charge and void rates	852	788	1,756
Other property operating expenses	374	330	700
Property operating expenses	1,797	1,659	3,591

5 Administrative expenses

	30 Sep 2013 £'000	30 Sep 2012 £'000	31 March 2013 £'000
Group staff costs	1,339	1,473	2,943
Depreciation	28	24	53
Share option expense	93	-	73
Administration and other operating expenditure	731	830	1,728
Administrative expenses	2,191	2,327	4,797
Asset management fees	(559)	(231)	(653)
Net administrative expenses	1,632	2,096	4,144

6 Earnings per share

The European Public Real Estate Association (EPRA) issued Best Practices Policy Recommendations in August 2011, which provides 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 accounts disclose an Adjusted EPRA earnings measure which adds back share option expense as it is unrealised, and profit on investment property disposals.

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 2013 £'000	30 Sep 2012 £'000	31 March 2013 £'000
Earnings
Earnings for the purposes of basic and diluted EPS being profit after taxation	5,218	571	1,498
Adjustments to arrive at EPRA profit
Unrealised surplus on revaluation of investment properties	(924)	1,336	2,157
Unrealised surplus on revaluation of joint venture investment properties	(1,268)	69	1,483
Profit on disposal of investment properties	-	-	(811)
EPRA profit	3,026	1,976	4,327
Profit on disposal of investment properties	-	-	811
Share option expense	93	-	73
EPRA adjusted profit	3,119	1,976	5,211
Adjustments to EPRA profit to arrive at NAREIT FFO
EPRA profit	3,026	1,976	4,327
Amortisation of tenant incentives and letting costs	215	175	402
Amortisation of rent free periods	(279)	(277)	(573)
NAREIT FFO	2,962	1,874	4,156

Number of shares	30 Sep 2013 No. 000s	30 Sep 2012 No. 000s	31 March 2013 No. 000s
Weighted average number of Ordinary Shares for the purposes of basic EPS and basic EPRA EPS	47,783	31,080	31,904
Effect of dilutive potential Ordinary Shares:
Options	-	-	-
Warrants	139	-	-
CULS	-	-	-
Weighted average number of Ordinary Shares for the purposes of basic diluted EPS and basic diluted EPRA EPS	47,922	31,080	31,904

	30 Sep 2013 £'000	30 Sep 212 £'000	31 March 2013 £'000
Adjusted EPRA EPS (pence)	6.5	6.4	16.3
EPRA EPS basic (pence)	6.3	6.4	13.6
EPRA diluted EPS (pence)	6.3	6.4	13.6
FFO EPS basic (pence)	6.2	6.0	13.0
EPS basic (pence)	10.9	1.8	4.7
Diluted EPS (pence)	9.2	1.8	2.4

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 a NAV for NAV basis into shares of NewRiver Retail Limited, up to 10% of the share capital of NewRiver Retail Limited up until its fifth anniversary of 17 May 2015. This conversion currently has a dilutive effect on the Group's EPS calculation and is reflected in the Diluted EPS calculation above (dilutive effect in the prior period but not previously reflected) and an accretive effect on the Group's EPRA dilutive EPS calculation and therefore has not been reflected in the above calculation.

7 Net asset value per share

	30 Sep 2013 £'000	30 Sep 2012 £'000	31 March 2013 £'000
Net asset value	146,964	76,440	79,788
Net asset value EPRA	149,937	84,451	83,733
Net asset value (diluted)	148,538	81,937	81,460
Number of Ordinary Shares	66,724	31,080	34,030
Number of Ordinary Shares EPRA*	67,565	33,480	34,841
EPRA Net asset value per share (pence)	222	252	240
Basic Net asset value per share (pence)	220	246	235
Diluted Net asset value per share (pence)	220	245	235

*The number of shares in issue is adjusted under the EPRA calculation to assume conversion of the warrants, options, shares from the long-term incentive plan and the Convertible Unsecured Loan Stock converted to equity where they have a dilutive effect.

8 Dividends

	PID	Pence per share	30 Sep 2013 £'000	30 Sep 2012 £'000	31 March 2013 £'000
Current period dividends
Ordinary dividends approved	6.0	6.0	4,003	-	-
Prior year dividends paid
25 Jul 2013                 2013 Final dividend	10.0	10.0	-	-	3,403
30 Jan 2013                2013 Interim dividend	6.0	6.0	-	2,042	2,042
		16.0	-	2,042	5,445
Dividends in Consolidated Statement of Changes in Equity			3,403	2,797	4,839
Dividends settled in cash			3,403	2,797	4,839
Timing difference related to payment of withholding tax on dividends			(438)	(403)	(296)
Dividends in cash flow statement			2,965	2,394	4,543

The 2013 final dividend of 10 pence was paid in July 2013 to shareholders. £3.0 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 £4.0 million was approved by the Board on 27 November 2013. It will be paid on 31 January 2014 to Ordinary Shareholders listed on the Company's register on 10 January 2014. The ex-dividend date will be 8 January 2014. It has not been included as a liability or deducted from retained profits in these accounts. It will be recognised as an appropriation of retained earnings in the Annual Report for the year ended 31 March 2014.

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.

9 Investment properties

	30 Sep 2013 £'000	30 Sep 2012 £'000	31 March 2013 £'000
Opening balance	206,278	197,736	197,736
Acquisitions and improvements in the period/year	4,836	1,705	10,699
Disposals in the period/year	-	-	-
	211,114	199,441	208,435
Fair value gain/(deficit) on property revaluations	924	(1,336)	(2,157)
Closing balance	212,038	198,105	206,278

The Group's investment properties have been valued at 30 September 2013 by independent valuers on the basis of open market value in accordance with the Appraisal and Valuation Standards of the Royal Institute of Chartered Surveyors Eighth 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 2013 has been determined on the basis of open market valuations carried out by Colliers International who are the independent 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.

10 Investments in joint ventures

	30 Sep 2013 £'000	30 Sep 2012 £'000	31 March 2013 £'000
Opening balance	14,688	11,275	11,275
Additional joint venture interests acquired during the period/year	12,150	-	4,830
Income from joint ventures	1,056	323	859
Net valuation movement	1,268	(69)	(1,483)
Distributions, dividends and return of capital	(871)	(450)	(925)
Hedging movements	53	155	132
Net book value	28,344	11,234	14,688

Name	Country of incorporation	% Holding 30 Sep 2013	% Holding 30 Sep 2012
NewRiver Retail Investments LP	Guernsey	50%	50%
NewRiver Retail Investments (GP) Ltd*	Guernsey	50%	50%
NewRiver Retail Property Unit Trust	Jersey	10%	-
NewRiver Retail Property Unit Trust 2	Jersey	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 Barley JV.

There are currently three joint ventures which are equity accounted for as set out below.     

NewRiver Retail Property Unit Trust and NewRiver Retail Property Unit Trust No.2

NewRiver Retail Property Unit Trust (the 'CAMEL II JV') is an established jointly controlled Jersey Property Unit Trust set up by NewRiver Retail Limited and PIMCO Bravo Fund LP ('BRAVO') to invest in UK retail property.

NewRiver Retail Property Unit Trust No.2 (the 'Middlesbrough JV') is an established jointly controlled Jersey Property Unit Trust set up by NewRiver Retail Limited and PIMCO Bravo II Fund LP ('BRAVO II') to invest in UK retail property.

The CAMEL II JV is owned 10% by NewRiver Retail Limited and 90% by BRAVO. The Middlesbrough JV is owned 50% by NewRiver Retail Limited and 50% by BRAVO II. NewRiver Retail (UK) Limited is the appointed asset manager on behalf of the CAMEL II and Middlesbrough JVs 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.

Management have taken the decision to account for the equity interest in the CAMEL II and Middlesbrough JVs as an associate as the Group has significant influence over decisions made by each joint venture but is not able to exert complete control over these joint ventures.

The CAMEL II and Middlesbrough JVs have an acquisition mandate to invest in UK retail property with an appropriate leverage with future respective equity commitments being decided on a transaction by transaction basis.

In line with the existing NewRiver investment strategy, the CAMEL II and Middlesbrough JVs will target UK retail property assets with the objective of delivering added value and above average returns through NewRiver's proven skills in active and entrepreneurial asset management and risk-controlled development.

Both JVs have a 31 December year end and the Group has applied equity accounting for its interest in each JV. The aggregate amounts recognised in the consolidated balance sheet and income statement eliminate inter-company transactions and are as follows:

	30 Sep 2013 NewRiver Retail Property Unit Trust and Trust No.2 Total £'000	30 Sep 2013 Group's Share £'000	30 Sep 2012 NewRiver Retail Property Unit Trust Total £'000	30 Sep 2012 Group's Share £'000	31 March 2013 NewRiver Retail Property Unit Trust Total £'000	31 March 2013 Group's  Share £'000
Balance sheet
Non-current assets	147,451	37,145	-	-	90,401	9,040
Current assets	5,485	1,147	-	-	4,668	467
Current liabilities	(5,228)	(1,167)	-	-	(4,663)	(466)
Non-current liabilities	(68,638)	(17,633)	-	-	(42,546)	(4,255)
Net assets	79,070	19,492	-	-	47,860	4,786
Income statement
Net income	6,264	1,066	-	-	2,325	232
Administration expenses	(1,215)	(162)	-	-	(128)	(13)
Finance costs	(1,176)	(173)	-	-	(590)	(59)
Recurring income	3,873	731	-	-	1,607	160
Fair value gain on property revaluations	4,734	2,029	-	-	-	-
Income from joint ventures	8,607	2,760	-	-	1,607	160

The Group's share of any contingent liabilities to the CAMEL II and Middlesbrough JVs is £nil.

NewRiver Retail Investments LP

NewRiver Retail Investments LP (the 'Barley JV') is an established jointly controlled limited partnership set up by NewRiver Retail Limited and Morgan Stanley Real Estate Investing ('MSREI') to invest in UK Retail property.

The Barley JV is owned equally by NewRiver Retail Limited and MSREI. NewRiver Retail (UK) Limited is the appointed asset manager on behalf of the Barley JV and receives asset management fees as well as performance-related return promote payments. 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 Barley 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 up until its fifth anniversary of 17 May 2015. This conversion would currently have a dilutive effect on the Group's EPS calculation and an accretive effect on the Group's EPRA EPS calculation (accretive in the prior period).

In line with the existing NewRiver investment strategy, the Barley JV will target UK retail property assets with the objective of delivering added value and above average returns through NewRiver's proven skills in active and entrepreneurial asset management and risk-controlled development and refurbishment.

The Barley JV has a 31 December year end and the Group has applied equity accounting for its interest in the Barley JV. The aggregate amounts recognised in the consolidated balance sheet and income statement eliminate inter-company transactions and are as follows:

	30 Sep 2013 NewRiver Retail Investments (GP) Ltd Total £'000	30 Sep 2013 Group's Share 50% £'000	30 Sep 2012 NewRiver Retail Investments (GP) Ltd  Total £'000	30 Sep 2012 Group's Share 50% £'000	31 March 2013 NewRiver Retail Investments (GP) Ltd Total £'000	31 March 2013 Group's  Share 50% £'000
Balance sheet
Non-current assets	40,325	20,163	45,465	22,732	41,700	20,850
Current assets	1,362	681	1,906	953	1,880	940
Current liabilities	(1,374)	(687)	(1,931)	(966)	(1,118)	(559)
Non-current liabilities	(22,611)	(11,306)	(22,971)	(11,485)	(22,658)	(11,329)
Net assets	17,702	8,851	22,469	11,234	19,804	9,902
Income statement
Net income	1,558	779	1,681	840	2,592	1,296
Administration expenses	(499)	(250)	(571)	(286)	(312)	(156)
Finance costs	(408)	(204)	(463)	(231)	(882)	(441)
Recurring income	651	325	647	323	1,398	699
Fair value (deficit) on property revaluations	(1,521)	(761)	(137)	(69)	(2,967)	(1,483)
(Deficit)/Income from joint ventures	(870)	(436)	510	254	(1,569)	(784)

The Group's share of any contingent liabilities to the Barley JV is £nil (Sep 2012: nil)

11 Investment in subsidiary undertakings

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

Name	Country of incorporation	Activity	Proportion of ownership interest 2013
NewRiver Retail (Boscombe No.1) Limited	United Kingdom	Real estate investments	100%
NewRiver Retail (Carmarthen) Limited	United Kingdom	Real estate investments	100%
NewRiver Retail CUL No.1 Limited	United Kingdom	Finance Company	100%
NewRiver Retail (Holdings) Limited	Guernsey	Real estate investments	100%
NewRiver Retail (Holdings No.2) Limited	Guernsey	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 (Paisley) Limited	United Kingdom	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 (Skegness) Limited	United Kingdom	Real estate investments	100%
NewRiver Retail (UK) Limited	United Kingdom	Company operation and asset management	100%
NewRiver Retail (Wisbech) Limited	United Kingdom	Real estate investments	100%
NewRiver Retail (Witham) Limited	United Kingdom	Real estate investments	100%
NewRiver Retail (Wrexham No.1) Limited	Guernsey	Real estate investments	100%

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

12 Borrowings

	30 Sep 2013 £'000	30 Sep 2012 £'000	31 March 2013 £'000
Secured bank loans	111,693	107,975	112,697
Convertible Unsecured Loan Stock	24,750	24,639	24,693
	136,443	132,614	137,390
Maturity of borrowings:
Less than one year	-	-	-
Between one and two years*	35,043	-	-
Between two and five years	101,400	132,614	137,390
	136,443	132,614	137,390

*Loans due for expiry in one to two years have Credit Committee approval to extend for between five to seven years.

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.

Total Group secured bank loans

Hedging and Group borrowing costs(including share of joint ventures)

3.6%* (2012: 3.9%)

Fixed 38%         £53.1m

Capped 30%      £42.2m

Floating 32%     £46m

*Effective interest rate during the period to 30 September 2013:  3.6% (30 Sep 2012: 3.9%)

Total Group borrowing facilities

Including share of joint ventures

2.43 years**

(2012: 3.16 years)

Balance sheet   £112.2m

Joint ventures    £29.1m

Convertibles       £25m

**Weighted average debt maturity. At the date of this report there were credit approved terms to extend £78 million of existing facilities which would result in weighted average debt maturity of 4 years including extension options (excluding convertibles).

Facility and arrangement fees

			30 September 2013
	Maturity date	Credit approved extension(1)	Facility drawn £'000	Fees £'000	Amortised £'000	Balance  £'000
Santander*	2015	2021	35,126	(326)	244	35,044
Clydesdale**	2016	-	40,644	(541)	221	40,324
HSBC***	2015	2018	36,475	(346)	196	36,325
			112,245	(1,213)	661	111,693
Convertibles			25,000	(574)	324	24,750
			137,245	(1,787)	985	136,443

	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

	31 March 2013
	Facility drawn £'000	Fees £'000	Amortised £'000	Balance £'000
Santander	36,083	(327)	208	35,964
Clydesdale	40,815	(539)	167	40,443
HSBC	36,475	(346)	162	36,290
	113,373	(1,212)	537	112,697
Convertibles	25,000	(574)	267	24,693
	138,373	(1,786)	804	137,390

(1) The Group has credit committee approval from the bank to extend the facilities up to the date outlined above.

*This balance incorporates facilities across two portfolios, 48% fixed by way of an interest rate swap at an all in cost of 3.4%.

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

***This facility has a current all in cost of 3.2% and is subject to an interest rate cap agreement that is 57% capped.

Fair value on interest rate swaps

	30 Sep 2013 £'000	30 Sep 2012 £'000	31 March 2013 £'000
Derivative financial instruments brought forward	(2,080)	(1,376)	(1,376)
Fair value gain/(loss) movement in in profit and loss	873	(813)	(572)
Less fair value relating to joint ventures	(81)	(154)	(132)
Derivative financial instrument carried forward	(1,288)	(2,343)	(2,080)

The Group recognised a mark to market fair value gain of £0.873 million (2012 loss £0.813 million) on its interest rate swaps as at 30 September 2013. The carrying value of interest rate swaps in the balance sheet at 30 September 2013 was £1.288 million (2012 2.343 million).

All borrowings are due after more than one year.

Convertible Unsecured Loan Stock ('CULS')

On 22 November 2010 the Group issued £25 million of CULS, £17 million of A CULS and £8 million of B CULS. On issue, the stockholder was able to convert all or any of the stock into Ordinary Shares at the rate of one Ordinary Share for every £2.80. The conversion rate has subsequently been adjusted on the A CULS to £2.61 and on the B CULS to £2.59 as at 30 September 2013 as a result of equity raised and dividends paid in accordance with the terms of the agreement. Under the terms of the convertible, interest will accrue at 5.85% on the outstanding loan stock until 31 December 2015 when it will 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% p.a. for five 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 Share capital and reserves

	Retained earnings £'000	Share premium £'000	Other reserves £'000	Hedging reserve £'000	Share option reserve £'000	Revaluation reserve £'000	Total £'000
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
Net proceeds of issue from new shares	-	4,552	-	-	-	-	4,552
Transfer to distributable reserve	-	(4,552)	4,552	-	-	-	-
Total comprehensive income for the year	927	-	-	241	-	-	1,168
Share-based payments	-	-	-	-	73	-	73
Realisation of fair value movements	102	-	-	-	-	(102)	-
Dividend paid	(2,445)	-	-	-	-	-	(2,445)
Revaluation movement	821	-	-	-	-	(821)	-
As at 31 March 2013	854	-	78,637	(2,273)	260	2,310	79,788
Net proceeds of issue from new shares	-	64,395	-	-	-	-	64,395
Transfer to distributable reserve	-	(64,395)	64,395	-	-	-	-
Total comprehensive income for the period	5,218	-	-	873	-	-	6,091
Share-based payments	-	-	-	-	93	-	93
Dividend paid	-	-	(3,403)	-	-	-	(3,403)
Revaluation movement	(924)	-	-	-	-	924	-
As at 30 September 2013	5,148	-	139,629	(1,400)	353	3,234	146,964

The authorised share capital is unlimited and there are currently 66,723,884 shares in issue (2012: 31,079,068). During the period an additional 32,682,926 shares were issued at an issue price of £2.05 and a further 11,449 shares were issued as a result of the exercise of a warrant at an exercise price of £1.87.

In addition there are 624,000 treasury shares held in the Employee Benefit Trust. As the EBT is consolidated, these shares are treated as treasury shares. No treasury shares were acquired during the period (2012: nil).

During the period the Group approved a transfer from the share premium account of £64.4 million (2012: £4.6 million) to other reserves which may be distributed in the future.

Shareholders who subscribed for Placing Shares in the IPO received warrants, in aggregate, to subscribe for 3% of the Fully Diluted Share Capital exercisable at the subscription price per Ordinary Share of £2.50 and all such warrants shall be fully vested and exercisable upon issuance. The subscription price has been adjusted to £1.87 following subsequent share issues and dividend payment. During the period 11,449 (2012: nil) warrants were exercised. Of the warrants representing the original 3% of the fully diluted share capital exercisable, warrants representing 2.94% remain in issue, which at 30 September 2013 was equivalent to 841,531 at 187 pence. EPRA NAV disclosed in Note 7 assumes conversion of all 841,531 shares. This has had less than 1 pence per share dilutive impact as at 30 September 2013.

14 Share-based payments

The Group provides share-based payments to employees in the form of share options and also in the form of performance shares. All share-based payment arrangements granted since the admission on 1 September 2009 have been recognised in the financial statements.

Share options

The Group uses the Black-Scholes Model to value share options 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.

	Exercise Price £	30 Sep 2013 Number of  options	30 Sep 2012 Number of options	31 March 2013 Number of options
Awards brought forward	2.35-2.72	2,317,410	2,471,949	2,471,949
Awards lapsed during the period/year	-	-	-	(154,539)
Exercisable options at the end of the period/year		2,317,410	2,471,949	2,317,410

There have been no new share options issued in the current period/year.

Performance shares

The Group uses the Black-Scholes Model and the Monte Carlo Pricing Model to value performance shares 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.

	Exercise Price  £	30 Sep 2013 Number of options	30 Sep 2012 Number of options	31 March 2013 Number of options
Awards brought forward		500,000	-	-
Awards made during the current period/year	nil	150,000	-	500,000
Awards carried forward		650,000	-	500,000

(b) Share-based payment charge

	30 Sep 2013 £'000	30 Sep 2012 £'000	31 March 2013 £'000
Share-based payment expense brought forward	260	187	187
Share-based payment expense in the period/year	93	-	73
Cumulative share-based payment	353	187	260

15 Post balance sheet events

On 27 November 2013 as part of a 50:50 joint venture with Bravo II, NewRiver Retail Limited exchanged contracts to acquire a portfolio of 202 assets from Marston's Plc for £90.0 million at a net initial yield of circa 13% and also exchanged contracts to acquire two shopping centres from Axa for £34.3 million equating to a net initial yield of circa 8%. Approved debt facilities are in place to fund these acquisitions.

On 27 November 2013 the Directors approved an interim dividend of 6 pence per share (2012: 6 pence).

16 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 2013 Number of Ordinary Shares	30 Sep 2012 Number of Ordinary Shares
Paul Roy	360,000	360,000
David Lockhart	1,622,000	1,622,000
Mark Davies	14,000	14,000
Allan Lockhart	173,684	149,294
Charles Miller	9,756	-
Nick Sewell	109,500	107,500
Chris Taylor	10,000	-

Total emoluments of Executive Directors during the period (excluding share-based payments) was £1.3 million (2012:  £1.2 million).

Share-based payments of £0.1 million (2012: £0.1 million) accrued during the year.

During the period 46,146 shares (2012: 544) were acquired by Directors on the open market.

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 2013 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 16. 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 2013 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

27 November 2013

This information is provided by RNS

The company news service from the London Stock Exchange

END

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