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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Summit Germany | LSE:SMTG | London | Ordinary Share | GG00BJ4FZW09 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.185 | 1.18 | 1.19 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSMTG
RNS Number : 8463B
Summit Germany Limited
15 January 2018
This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation.
Summit Germany Limited (the "Company")
Proposed Bond Issue and Q3 Results
15 January 2018
Summit Germany Limited, the German commercial real estate company, is pleased to announce that, subject to market conditions, it intends to issue EUR250 million of unsecured fixed rate notes ("Senior Notes") with a term of 7 years and governed by New York law. The Senior Notes are expected to be listed on the Euro MTF Market of the Luxembourg Stock Exchange. The net proceeds from the proposed offering will be used to refinance existing indebtedness of certain subsidiaries of the Company and for general corporate purposes. A further announcement will be made upon pricing of the offering.
The Company also announces its unaudited financial results as of and for the nine months ended 30 September 2017 (the "Period").
-- As at 30 September 2017, the aggregate net market value of the Company's property portfolio was EUR980.6 million, the EPRA NAV was EUR566.5 million and the net loan-to-value ratio amounted to 39.5%.
-- During the Period, the Company generated net rental income of EUR44.5 million, had annualised contractual net rental income of EUR65.5 million, EBITDA (as adjusted for fair value adjustments) of EUR47.0 million and funds from operations (FFO) of EUR35.5 million.
-- The portfolio comprised a total lettable area of approximately 919,000 sqm, had an EPRA vacancy rate of 8.9% and weighted average lease term of 4.2 years at the end of the Period.
-- By net market value as at 30 September 2017, the Company's office, logistics and retail properties accounted for 77%, 16% and 7%, respectively.
-- As of 30 September 2017, the Company's cost of debt was 2.7%, the Company's average debt maturity amounted to 5.3 years, the amount of the Company's unencumbered assets was EUR78.1 million and the Company's interest coverage ratio amounted to 4.4x.
-- The Company's unaudited consolidated financial statements and accompanying notes for the Period are set out in full below.
-- A copy of the company presentation is available on its website at www.summitgermany.com/investors.
For further information, please contact:
Summit Germany Limited Tel: +44 (0) 1481 700 300 Zohar Levy - Managing Director Itay Barlev (Braun) - Finance Director Non-Executive Chairman Tel: +44 (0) 20 7451 7050 Harry Hyman Carey Group, Company Secretary Tel: +44 (0) 1481 700 300 Sara Bourne Liberum Capital Limited, Nominated Tel: +44 (0) 20 3100 2222 Adviser and Joint Broker Chris Clarke / Jill Li Cenkos Securities, Joint Broker Tel: +44 (0) 20 7397 8900 Ivonne Cantu Russell Kerr / Selwyn Jones (Broking)
condensed CONSOLIDATED STATEMENTs OF FINANCIAL POSITION
Hot Features
Premium
30 September 31 December
------------------ -----------
2017 2016 2016
--------- ------- -----------
(Unaudited) (Audited)
------------------ -----------
Note Euro (in thousands)
---- -------------------------------
ASSETS
NON-CURRENT ASSETS:
Investment properties 5 980,605 755,943 795,579
Other long-term assets 6 27,659 13,141 12,093
Deferred tax asset 515 868 655
--------- ------- -----------
Total non-current assets 1,008,779 769,952 808,327
--------- ------- -----------
CURRENT ASSETS:
Cash and cash equivalents 25,173 40,344 54,158
Trade receivables, net 1,080 1,158 1,297
Prepaid expenses and other current
assets 15,643 19,591 16,133
Receivables from related parties 8 168 160 169
Investment property held for
sale 5 - 15,338 2,242
--------- ------- -----------
Total current assets 42,064 76,591 73,999
--------- ------- -----------
Total assets 1,050,843 846,543 882,326
========= ======= ===========
The accompanying notes are an integral part of the condensed consolidated financial statements.
condensed CONSOLIDATED STATEMENTs OF FINANCIAL POSITION
30 September 31 December
-------------------- -----------
2017 2016 2016
---------- -------- -----------
(Unaudited) (Audited)
-------------------- -----------
Note Euro (in thousands)
----- ---------------------------------
EQUITY AND LIABILITIES
EQUITY:
Share capital 12 (*) - (*) - (*) -
Other reserve 369,567 380,048 377,378
Retained gain 156,677 23,595 60,514
---------- -------- -----------
Equity attributable to the owners
of the Company 526,244 403,643 437,892
Non-controlling interests 34,053 15,685 21,787
---------- -------- -----------
Total equity 560,297 419,328 459,679
---------- -------- -----------
NON-CURRENT LIABILITIES:
Interest-bearing loans and borrowings 7 379,081 356,161 349,526
Shareholders' loan 8 19,751 - -
Other long-term financial liabilities 6 3,790 1,886 1,972
Derivative financial liabilities 9 4,101 8,987 6,248
Deferred tax liability 34,994 14,668 21,127
---------- -------- -----------
Total non-current liabilities 441,717 381,702 378,873
---------- -------- -----------
CURRENT LIABILITIES:
Interest-bearing loans and borrowings 7 13,438 10,451 11,804
Derivative financial liabilities 9 1,647 1,697 1,675
Payables to related parties 8 6,086 5,247 5,507
Current tax liabilities 58 74 65
Trade and other payables 27,600 28,044 24,723
---------- -------- -----------
Total current liabilities 48,829 45,513 43,774
---------- -------- -----------
Total liabilities 490,546 427,215 422,647
---------- -------- -----------
Total equity and liabilities 1,050,843 846,543 882,326
========== ======== ===========
NAV/Share (cent) 12(d) 113.07 86.73 94.09
========== ======== ===========
EPRA NAV/Share (cent) 12(d) 121.72 91.99 100.19
========== ======== ===========
(*) No par value.
The accompanying notes are an integral part of the consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTs OF COMPREHENSIVE INCOME
Nine months Year ended
ended 30 September 31 December
---------------------- ------------
2017 2016 2016
---------- ---------- ------------
(Unaudited) (Audited)
---------------------- ------------
Note Euro (in thousands)
---- ------------------------------------
Rental income 44,484 43,433 57,168
Rental operating expenses (3,280) (3,372) (4,485)
---------- ---------- ------------
Gross profit 41,204 40,061 52,683
General and administrative expenses (5,614) (5,417) (7,436)
Fair value adjustments of investment
properties 5 93,774 (11,511) 28,203
Other income (expenses) - (208) 486
---------- ---------- ------------
Operating profit 129,364 22,925 73,936
---------- ---------- ------------
Financial income 10 2,018 1,007 1,779
Financial expenses 10 (10,036) (9,009) (11,815)
---------- ---------- ------------
Total financial expenses (8,018) (8,002) (10,036)
---------- ---------- ------------
Profit before taxes on income 121,346 14,923 63,900
Taxation (14,074) (2,043) (8,353)
---------- ---------- ------------
Profit for the period/year 107,272 12,880 55,547
---------- ---------- ------------
Other comprehensive income and
expenses:
Items that may be reclassified
subsequently to profit or loss:
Net gain arising on revaluation
of available-for-sale
financial assets - - 123
Net gain (loss) on hedging instruments
entered into for
cash flow hedges 1,772 (4,784) (2,472)
---------- ---------- ------------
Other comprehensive (loss) income
for the period/year, net of
tax 1,772 (4,784) (2,349)
---------- ---------- ------------
Total comprehensive income for
the period/year 109,044 8,096 53,198
========== ========== ============
Profit for the period/year attributable
to:
Owners of the Company 96,163 12,118 49,037
Non-controlling interests 11,109 762 6,510
---------- ---------- ------------
107,272 12,880 55,547
========== ========== ============
Total comprehensive income attributable
to:
Owners of the Company 97,660 7,979 46,973
Non-controlling interests 11,384 117 6,225
---------- ---------- ------------
109,044 8,096 53,198
========== ========== ============
Earnings per share:
Basic (Euro per share) 11 0.207 0.026 0.105
========== ========== ============
Diluted (Euro per share) 0.207 0.026 0.105
========== ========== ============
The accompanying notes are an integral part of the consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Equity attributable to owners of the Company
---------------------------------------------------
Total equity
attributable
to owners
of the
Issued Other Reserve Retained parent Non-Controlling Total
capital (Note 12) Earnings Company interests equity
---------- ------------- --------- ------------- --------------- ---------
Euro in thousands
-------------------------------------------------------------------------------
Balance at 1 January 2017 (audited) (*) - 377,378 60,514 437,892 21,787 459,679
Profit for the period - - 96,163 96,163 11,109 107,272
Other comprehensive profit for the
period, net of income
tax - 1,497 - 1,497 275 1,772
---------- ------------- --------- ------------- --------------- ---------
Total comprehensive profit - 1,497 96,163 97,660 11,384 109,044
---------- ------------- --------- ------------- --------------- ---------
Dividend distribution (Note 12c) - (9,308) - (9,308) - (9,308)
Additional non-controlling interest
on acquisition of
subsidiary - - - - 882 882
---------- ------------- --------- ------------- --------------- ---------
Balance at 30 September 2017
(unaudited) (*) - 369,567 156,677 526,244 34,053 560,297
========== ============= ========= ============= =============== =========
(*) No par value.
The accompanying notes are an integral part of the consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Equity attributable to owners of the Company
---------------------------------------------------
Total equity
attributable
to owners
of the
Issued Other Reserve Retained parent Non-Controlling Total
capital (Note 12)-- Earnings Company interests equity
---------- ------------- --------- ------------- --------------- ---------
Euro in thousands
-------------------------------------------------------------------------------
Balance at 1 January 2016 (audited) (*) - 398,007 11,477 409,484 15,218 424,702
Profit for the period - - 12,118 12,118 762 12,880
Other comprehensive loss for the
period, net of income
tax - (4,139) - (4,139) (645) (4,784)
---------- ------------- --------- ------------- --------------- ---------
Total comprehensive profit (loss) - (4,139) 12,118 7,979 117 8,096
---------- ------------- --------- ------------- --------------- ---------
Dividend distribution - (13,820) - (13,820) - (13,820)
Additional non-controlling interest
on acquisition of
subsidiary - - - - 350 350
---------- ------------- --------- ------------- --------------- ---------
Balance at 30 September 2016
(unaudited) (*) - 380,048 23,595 403,643 15,685 419,328
========== ============= ========= ============= =============== =========
(*) No par value.
The accompanying notes are an integral part of the consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Equity attributable to owners
of the Company
-------------------------------------------------- --------------- ----------
Total equity
attributable
to owners
of the
Issued Other Reserve Retained parent Non-Controlling Total
capital (Note 12) Earnings Company interests equity
--------- ------------- --------- ------------- --------------- ----------
Euro in thousands
------------------------------------------------------------------- ----------
Balance at 1 January 2016 (audited) (*) - 398,007 11,477 409,484 15,218 424,702
Profit for the year - - 49,037 49,037 6,510 55,547
Other comprehensive loss for the
year,
net of income tax - (2,064) - (2,064) (285) (2,349)
--------- ------------- --------- ------------- --------------- ----------
Total comprehensive profit (loss) - (2,064) 49,037 46,973 6,225 53,198
--------- ------------- --------- ------------- --------------- ----------
Dividend distribution - (18,565) - (18,565) - (18,565)
Additional non-controlling interest
on acquisition of subsidiary - - - - 344 344
--------- ------------- --------- ------------- --------------- ----------
Balance at 31 December 2016
(audited) (*) - 377,378 60,514 437,892 21,787 459,679
========= ============= ========= ============= =============== ==========
(*) No par value.
The accompanying notes are an integral part of the consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months Year ended
ended 30 September 31 December
---------------------- -------------
2017 2016 2016
---------- ---------- -------------
(Unaudited) (Audited)
---------------------- -------------
Euro (in thousands)
-------------------------------------
Cash flows from operating activities:
Profit for the period/year 107,272 12,880 55,547
---------- ---------- -------------
Adjustments for:
Deferred taxes 13,734 1,873 8,155
Financial expenses, net 8,018 8,002 10,036
Fair value adjustment of investment
properties (93,774) 11,511 (28,203)
Depreciation of property, plant
and equipment 19 36 44
Amortization and impairment of
intangible assets (278) 21 54
---------- ---------- -------------
(72,281) 21,443 (9,914)
---------- ---------- -------------
Changes in operating assets and
liabilities:
Decrease in trade receivables 291 380 348
Decrease in trade and other payables (819) (2,742) (3,225)
Increase in payables to related
parties and shareholders 449 919 858
Decrease in prepaid expenses and
other current assets 1,380 608 727
Increase (decrease) in other non-current
liabilities (28) (179) 20
---------- ---------- -------------
1,273 (1,014) (1,272)
---------- ---------- -------------
Net cash flows from operating activities 36,264 33,309 44,361
Cash flows from investing activities:
Payments of property, plant and
equipment (684) (30) (31)
Net cash outflow on acquisition
of asset companies (25,961) (38,499) (38,506)
Change in deposits 1,188 (3,819) (1,591)
Increase in loan to third party (11,888) (5,939) (5,009)
Payments for acquisitions of investment
properties (8,273) (6,954) (10,917)
Proceeds from sale of investment
property 17,560 3,297 18,597
Interest income received 1,051 - 1,528
---------- ---------- -------------
Net cash flows used in investing
activities (27,007) (51,944) (35,929)
---------- ---------- -------------
Cash flows from financing activities:
Proceeds from borrowings from banks - 75,350 90,652
Proceeds from borrowings from related
parties 19,751 - -
Repayment of borrowings (40,397) (32,505) (54,101)
Interest expense paid (8,214) (8,376) (10,590)
Dividend distribution (9,382) (9,073) (13,818)
---------- ---------- -------------
Net cash flows from (used in)
financing activities (38,242) 25,396 12,143
---------- ---------- -------------
Increase (decrease) in cash and
cash equivalents (28,985) 6,761 20,575
Cash and cash equivalents at the
beginning of period/year 54,158 33,583 33,583
---------- ---------- -------------
Cash and cash equivalents at the
end of period/year 25,173 40,344 54,158
========== ========== =============
The accompanying notes are an integral part of the consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: GENERAL
Summit Germany Limited (the "Company") and its subsidiaries (together: the "Group") is a German property specialist company. The Company was incorporated and registered in Guernsey on 19 April 2006. The parent company of the Group is Summit Real Estate Holdings Ltd (hereinafter: "SHL"), a company registered in Israel.
The Group owns, enhances and operates commercial real estate assets in Germany including office buildings, logistic centers and others, which are leased to numerous commercial and industrial tenants. The Group invests primarily in such properties that provide substantial income flows and potential for value increase through asset management. The Group does not acquire properties for speculative purposes.
NOTE 2: ACCOUNTING POLICIES
Basis of preparation:
The annual financial statements of Summit Germany Limited are prepared in accordance with IFRSs as adopted by the European Union. The same accounting policies and methods of computation have been applied to the Unaudited Condensed Interim Financial Statements as in the annual financial statements as of 31 December 2016. The presentation of the unaudited condensed interim financial statements is consistent with the annual financial statements as of 31 December 2016.
The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union.
Going concern
The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of Group's accounting policies which are described in Note 2 to the annual financial statements as of 31 December 2016, management is required to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities that are not readily apparent from other sources. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Key sources of estimation uncertainty:
The key assumptions concerning the future and other key sources of estimation uncertainty at the consolidated statement of financial position date, 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 in the Group Consolidated Financial Statements as of 31 December 2016.
Fair Value of investment properties:
The Group carries its investment properties at fair value, with changes in fair values being recognised in profit or loss. The Group engages independent valuation specialists to determine fair value of investment properties at least on an annual basis. The valuation technique used to determine fair value of investment properties is based on a discounted cash flow model as well as comparable market data.
The determined fair value of the investment properties is sensitive to the estimated yield, estimated rental values as well as the long term vacancy rate. See note 5 for further information.
Taxation:
Uncertainties might exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the Group's international business relationships and the nature of contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded.
Deferred taxes
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits (See also note 17 to the annual financial statements as of 31 December 2016).
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Cont.)
Acquisition of assets:
In regard to the transactions detailed in note 5, the Group management and the Directors have reviewed the characteristics of the transaction and the properties over which control was acquired by the Group, in accordance with the requirements of IFRS 3. Although control over corporate entities was gained as a result of the transaction, these entities were special purpose vehicles for holding properties rather than separate business entities - this judgment was made mainly due to the absence of business processes inherent in these entities. Consequently, the Directors consider that the transaction meets the criteria of acquisition of assets and liabilities rather than business combination, and accounted for the transaction as such.
NOTE 4: ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS A) Amendments to standards affecting the current period and / or previous reporting periods: * Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses
The amendments clarify the following:
1. Decreases below cost in the carrying amount of a fixed-rate debt instrument measured at fair value for which the tax base remains at cost give-rise to a deductible temporary difference, irrespective of whether the debt instrument's holder expects to recover the carrying amount of the debt instrument by sale or by use, or whether it is probable that the issuer will pay all the contractual cash flows;
2. When an entity assesses whether taxable profits will be available against which it can utilise a deductible temporary difference, and the tax law restricts the utilisation of losses to deduction against income of a specific type (e.g. capital losses can only be set off against capital gains), an entity assesses a deductible temporary difference in combination with other deductible temporary differences of that type, but separately from other types of deductible temporary differences;
3. The estimate of probable future taxable profit may include the recovery of some of an entity's assets for more than their carrying amount if there is sufficient evidence that it is probable that the entity will achieve this; and
4. In evaluating whether sufficient future taxable profits are available, an entity should compare the deductible temporary differences with future taxable profits excluding tax deductions resulting from the reversal of those deductible temporary differences.
The amendments apply retrospectively for annual periods beginning on or after 1 January 2017 with earlier application permitted.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4: ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS (Cont.) B) New and revised IFRSs in issue but not yet effective * IFRS 15 Revenue from Contracts with Customers
In May 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11
Construction Contracts and the related interpretations when it becomes effective.
The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition.
-- Step 1: Identify the contracts(s) with a customer. -- Step 2: Identify the performance obligations in the contract. -- Step 3: Determine the transaction price. -- Step 4: Allocate the transaction price to the performance obligations in the contract. -- Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.
Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when 'control' of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15.
The directors of the Company do not anticipate that the application of IFRS 15 will have a significant effect on the Group. The standard is effective for annual reporting periods beginning on or after 1 January 2018.
* IFRS 16 Leases
In January 2016, the IASB published IFRS 16 Leases. The new Standard supersedes IAS 17 Leases and its associated interpretative guidance.
IFRS 16 applies a control model to the identification of leases, distinguishing between leases and service contracts on the basis of whether there is an identified asset controlled by the customer.
IFRS 16 introduces significant changes to lessee accounting it removes the distinction between operating and finance leases under IAS 17 and requires a lessee to recognise a right-of-use asset and a lease liability at lease commencement for all leases, except for short-term leases and leases of low value assets.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4: ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS (Cont.) B) New and revised IFRSs in issue but not yet effective (Cont.) * IFRS 16 Leases (Cont.)
IFRS 16 is effective for reporting periods beginning on or after 1 January 2019 with early application permitted for entities that apply IFRS 15 at or before the date of initial application of IFRS 16.
The Group does not expect that this standard will have a significant effect on its financial statements.
-- IFRS 9 Financial Instruments
IFRS 9 issued in November 2009 introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised of IFRS 9 was issued in July 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a 'fair value through other comprehensive income' (FVTOCI) measurement category for certain simple debt instruments.
Key requirements of IFRS 9:
-- All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at FVTOCI. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.
-- With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability's credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4: ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS (Cont.) B) New and revised IFRSs in issue but not yet effective (Cont.) * IFRS 9 Financial Instruments (Cont.)
Key requirements of IFRS 9 (Cont.):
-- In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred loss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.
-- The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in IAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an 'economic relationship'. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity's risk management activities have also been introduced.
The directors of the Company do not expect that this standard will have a significant effect on the Group. The standard is effective for annual reporting periods beginning on or after 1 January 2018.
NOTE 5: INVESTMENT PROPERTIES
Euro
in thousands
----------------
Balance at 1 January 2016 731,748
Additions during the year 52,885
Disposals during the year (15,015)
Reclassification to property held for
sale (b 1) (2,242)
Fair value adjustments during the year 28,203
----------------
Balance at 31 December 2016 795,579
================
Additions during the period (c) 106,570
Disposals during the period (b 2) (15,318)
Fair value adjustments during the period
(a) 93,774
----------------
Balance at 30 September 2017 980,605
================
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5: INVESTMENT PROPERTIES (cont) a. Fair value adjustments
The investment properties are stated at fair value. The fair value represents the amount at which the assets could be exchanged between a willing buyer and willing seller in an arm's length transaction at the date of valuation, after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. Valuations are prepared by external valuators at least once a year and more frequently when significant changes to properties' value are identified.
The valuations are performed using the income capitalisation method, which is a valuation model based on the present value of expected Net Operating Income per property. Real estate valuations are based on the net annual cash flows after capitalisation by discounted rates that reflect the specific risks inherent in property activity.
During the reporting period, an independent external valuation was obtained by the Company. According to the valuation report, the value of properties increased by EUR93.8 million.
b. Disposals
(1) As of 31 December 2016, a property valued at approximately EUR2.2 million was classified as held for sale. During the reporting period, the property was sold for a consideration similar to its carrying amount. Further details on investment property held for sale as of 30 September 2016 and as of 31 December 2016 - see note 5 D of the annual financial statements as of 31 December 2016.
(2) 18 properties valued at approximately EUR15.1 million were sold during the period for a consideration similar to their carrying amount. EUR9.1 million of the purchase price was paid in cash and was mostly used to partially repay one of the Company's debt facilities. The remaining balance is outstanding as a five-year loan bearing an average annual interest rate of 3% and secured by a first rank mortgage over the sold properties and the shares of the companies in which they are held.
c. Additions
Additions during the period include acquisitions described below and capital expenditures related to the Group's portfolio.
In June 2017, the Group completed an acquisition of a portfolio of commercial properties located in four different sites in the city of Wolfsburg, Germany, for a total purchase price of approximately EUR100 million.
The acquired portfolio has a lettable area of 80,000 sqm and is fully let, mainly to Volkswagen Group (approximately 60% of the lettable space through 15 different leases), as well as to other leading Companies in the automotive industry. The properties generate annual net rent of approximately EUR7.9 million.
The acquisition was carried out as a share deal transaction and the purchase price, net of liabilities of approximately EUR70 million, was financed by the Company's existing cash of approximately EUR30 million.
For further information on Acquisitions during the nine months ended on 30 September 2016 - see note 5C of the annual financial statements as of 31 December 2016.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6: OTHER LONG TERM ASSETS AND LIABILITIES
Long-term loans receivable
30 September 31 December
-------------- -----------
2017 2016 2016
------ ------ -----------
Euro in thousands
---------------------------
Other long-term financial assets:
Available-for-sale investment
- unquoted equity shares 2,373 2,250 2,373
Long-term loans receivable
(a) 24,150 10,289 9,135
Other financial assets 1,056 505 496
------ ------ -----------
Total long term financial assets 27,579 13,044 12,004
====== ====== ===========
Other long-term non-financial
assets 80 97 89
====== ====== ===========
Other long-term financial liabilities:
Other Financial liabilities 3,790 1,886 1,972
====== ====== ===========
(a) Long-term loans receivable
The Group provides funding for several residential development projects in Berlin. For further details, see note 6 of the Group Consolidated Financial Statements as of 31 December 2016.
During the reporting period, the Group engaged in two projects for the development of 95 residential units in Berlin and committed to provide funds of approximately EUR7 million as loan, in terms similar to the previous projects. Additional increase in the balance in comparison to the balance as of 31 December 2016 is due to loan of EUR6 million given to the purchaser of properties as detailed in 5 b 2.
The loan and the accrued interest are repayable from the revenues of the project, expected in the second half of 2020.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7: INTEREST-BEARING LOANS AND BORROWING
a) The Company is engaged in financing agreements with several credit providers. To the date of this report the borrowing entities comply with all the covenants set in their financing agreements.
b) In June 2017, the Group acquired a portfolio of properties - as detailed in note 5 a above. The properties are financed by loans with a remaining term of approximately 7 years and bear an average interest rate of 5% p.a. and average amortisation of 3.12% p.a. The loans are subject to a DSCR financial covenant of 225%.
c) In July 2017, the Group acquired from one of its lenders a debt secured over several Group properties (the "Acquired Debt") for a consideration of EUR19.5 million. The remaining term of the Acquired Debt is approximately 5 years and the annual debt service costs (i.e. principal and interest) are EUR2.9 million.
In order to fund the transaction, the Company has entered into a loan agreement with its majority shareholder, Summit Real Estate Holding Ltd. ("SREH"). SREH granted an unsecured shareholders loan of EUR19.5 million to the Company bearing an annual interest rate of 8%, with no amortisation. The Company can repay the shareholders loan within 3 to 16 months of drawdown.
NOTE 8: BALANCES AND TRANSACTIONS WITH RELATED PARTIES
Amounts owed by Amounts owed to
related parties related parties
----------------------------- -----------------------------
30 September 31 December 30 September 31 December
--------------- ------------ --------------- ------------
2017 2016 2016 2017 2016 2016
------- ------ ------------ ------- ------ ------------
Euro in thousands
------------------------------------------------------------
Loan to related 19,751 - -
parties - - -
Related parties 168 160 169 6,086 5,247 5,507
------- ------ ------------ ------- ------ ------------
168 160 169 25,837 5,247 5,507
======= ====== ============ ======= ====== ============
At the date of this report Summit Real Estate Holdings Ltd ("SHL") holds approximately 50.01% of the Ordinary shares in the Company. SHL is under the control of Mr. Zohar Levy, the Managing Director of the Group. Summit Management CO S.A. ("SMC"), a company controlled by Zohar Levy, was appointed as an Asset Manager on 19 May 2006. The terms of this appointment were revised in March 2017. For the terms and conditions of the management agreement, please refer to Note 13b to the annual financial statements for the year 2016.
The increase in the amounts owed to related parties during the period results from the provision for management fees to SMC (including a provision for a performance-based compensation) in the total amount of EUR563 thousand).
During the reporting period, the Company has entered into a loan agreement with its majority shareholder, Summit Real Estate Holding Ltd. ("SREH") in order to fund a debt acquisition, as further described under note 7 c.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9: FAIR VALUE
Fair value of financial instruments carried at amortised cost:
The directors consider that the carrying amounts of financial assets and financial liabilities recognised at amortised cost in the financial statements approximate their fair values.
Fair value measurements recognised in the statement of financial position:
The fair value measurements are grouped into Levels 1, 2 and 3 based on the degree to which the fair value is observable.
-- Level 1 fair value measurements marketable securities are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2 fair value measurements (swaps transactions) are derived from inputs other than quoted prices that are observable for those instruments directly (i.e. as prices).
-- Level 3 fair value measurements (available-for-sale investment - unquoted equity share) are derived from valuation techniques that include inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). Refer to Note 5 for valuation approach adopted on investment property.
30 September 2017
---------------------------------
Level Level Level
1 2 3 Total
----- -------- ------- -------
Euro in thousands
---------------------------------
Non-financial assets
Investment properties
(see note 5) - - 980,605 980,605
Available-for-sale financial
assets
Unquoted equity shares - - 2,373 2,373
----- -------- ------- -------
Total - - 982,978 982,978
===== ======== ======= =======
Financial liabilities
Derivative instruments
- swaps (a) - (5,748) - (5,748)
===== ======== ======= =======
(a) The change in derivative instruments from 31 December 2016 to 30 September 2017 was due to revaluations.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9: FAIR VALUE (Cont.)
Fair value measurements recognised in the statement of financial position (Cont.):
31 December 2016
----------------------------------
Level Level Level
1 2 3 Total
----- -------- -------- -------
Euro in thousands
----------------------------------
Non-financial assets
Investment properties - - 797,821 797,821
Available-for-sale financial
assets
Unquoted equity shares - - 2,373 2,373
----- -------- -------- -------
Total - - 800,194 800,194
===== ======== ======== =======
Financial liabilities
Derivative instruments
- swaps - (7,923) - (7,923)
===== ======== ======== =======
30 September 2016
-----------------------------------
Level Level Level
1 2 3 Total
----- --------- ------- --------
Euro in thousands
-----------------------------------
Non-financial assets
Investment properties - - 771,281 771,281
Available-for-sale financial
assets
Unquoted equity shares - - 2,250 2,250
----- --------- ------- --------
Total - - 773,531 773,531
===== ========= ======= ========
Financial liabilities
Derivative instruments
- swaps - (10,684) - (10,684)
===== ========= ======= ========
NOTE 10: FINANCIAL EXPENSES (INCOME)
Nine months Year ended
ended 30 September 31 December
--------------------- ------------
2017 2016 2016
----------- -------- ------------
Euro in thousands
-----------------------------------
Financial expenses:
Interest on borrowings (a) 8,034 7,704 10,393
Amortization of cost of raising
loans 895 626 842
Expenses on currency exchange 9 - -
Other 1,098 679 580
----------- -------- ------------
Total financial expenses 10,036 9,009 11,815
=========== ======== ============
Financial income:
Total financial income 2,018 1,007 1,779
=========== ======== ============
(a) The reporting period amount includes EUR0.25m interest on shareholder loan, as detailed in note 8.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11: EARNINGS PER-SHARE
The calculation of the basic and diluted earnings per share is based on the following data:
Nine months Year ended
ended 30 September 31 December
--------------------- ------------
2017 2016 2016
---------- --------- ------------
Euro in thousands
-----------------------------------
Earnings
Earnings for the purposes of
basic earnings per share being
net profit attributable to
owners of the Company 96,163 12,118 49,037
========== ========= ============
Nine months Year ended
ended 30 September 31 December
--------------------- ------------
2017 2016 2016
---------- --------- ------------
in thousands
-----------------------------------
Number of shares
Weighted average number of
ordinary shares for the purposes
of the basic earnings per share 465,400 465,400 465,400
========== ========= ============
Nine months Year ended
ended 30 September 31 December
--------------------- ------------
2017 2016 2016
---------- --------- ------------
(Unaudited) (Audited)
--------------------- ------------
Earnings per share:
Basic (Euro per share) 0.207 0.026 0.105
========== ========= ============
Diluted (Euro per share) 0.207 0.026 0.105
========== ========= ============
There is no difference between basic and diluted earnings per share over the periods.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12: SHARE CAPITAL
a. The authorized share capital of the Group is represented by an unlimited number of Ordinary shares with no par value.
Issued and
outstanding
-------------
Number of
shares
-------------
At 1 January 2016 465,399,862
Change in the period -
-------------
At 30 September 2016 465,399,862
At 31 December 2016 465,399,862
Change in the period -
-------------
At 30 September 2017 465,399,862
=============
b. Other reserve:
Other reserves comprise mostly of distributable reserve. The directors have elected to transfer the premium arising from the issue of ordinary shares by the Company to a distributable reserve, which balance as of 30 September 2017 is EUR370.1 million (as of 31 December 2016: EUR379.4 million). The change during the period was due to dividends distributed in the nine months period ended 30 September 2017.
In accordance with the Companies (Guernsey) law, 2008, any distribution is subject to a solvency test to determine whether the Company is able to distribute funds to shareholders.
c. Distribution of Dividends
For dividends distributed in 2016 - see note 11 of the annual financial statements as of 31 December 2016.
In December 2016, the Company declared a dividend of 1.02 cent per share. The total amount of EUR4,747 thousand was paid to the shareholders in February 2017.
In June 2017, the Company declared a dividend of 1.00 cent per share. The total amount of EUR4,654 thousand was paid to the shareholders in August 2017.
In September 2017, the Company declared a dividend of 1.00 cent per share. The total amount of EUR4,654 thousand was paid to the shareholders after the end of the reporting period (in November 2017).
d. NAV and EPRA NAV:
As of 30 September As of 30 September As of 31 December
2017 2016 2016
-------------------------- ---------------------------- ------------------------
EUR, thousands EUR, per EUR, thousands EUR, EUR, EUR,
share per share thousands per share
--------------- --------- --------------- ----------- ----------- -----------
NAV (*) 526,244 1.13 403,642 0.87 437,892 0.94
Financial
derivative
instruments 5,748 10,684 7,923
Deferred
Tax, net 34,479 13,800 20,472
--------------- --------------- -----------
EPRA NAV
(**) 566,471 0.12 428,126 0.92 466,287 1.00
(*) Net Asset Value
(**) EPRA NAV is calculated based on the NAV excluding the effect of deferred taxes and the fair value of hedging instruments.
NOTE 13: SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
In August 2017, Group's Finance Director and a director of a subsidiary of the Group purchased a total of 125,000 ordinary shares of the Company. The consideration for these share purchases was satisfied by the Company pursuant to the settlement of a bonus and a share award respectively.
NOTE 14: SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
a. After the end of the reporting period, the Group acquired approximately 865,000 sqm of land near Berlin for future development at total acquisition costs of approximately EUR3.3 million.
b. In December 2017 the Group acquired 384,658 shares of Deutsche Real Estate AG ("DRE AG"), reflecting approximately 1.87% of DRE AG share capital. Following the acquisition, the Group holds 80.84% of DRE AG.
c. After the end of the reporting period, a subsidiary of the Group has signed an agreement to sell one of its properties for a consideration of EUR51.4 million. As of the date of approval of these financial statements, the transaction has not yet been completed.
This information is provided by RNS
The company news service from the London Stock Exchange
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