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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Taliesin Pty | LSE:TPF | London | Ordinary Share | JE00B3B3WB31 | 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% | 4,450.00 | 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
TIDMTPF TIDMTPFZ
RNS Number : 8412N
Taliesin Property Fund Limited
14 August 2017
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
TALIESIN PROPERTY FUND LIMITED
Unaudited half yearly report for the 6 months to 30 June 2017
Key financial and operational highlights
-- Adjusted Net Asset Value (NAV)* per share increased by 17.6% to end the first half of 2017 at EUR44.14 (31 December 2016 EUR37.53). On an EPRA basis**, the NAV per share was EUR43.59 as at 30 June 2017 (31 December 2016 EUR36.87)
-- Property portfolio now valued at EUR359.7 million, an increase of 14.1% after adjusting for property sales in the first half of 2017
-- Per square metre (psqm) valuation of EUR3,070 (31 December 2016 EUR2,700) -- Loan-to-value declined to 37.8% (31 December 2016 42.2%) * The Adjusted NAV takes the IFRS NAV and excludes gross deferred tax liabilities
** The EPRA NAV takes the IFRS NAV and excludes the cumulative mark-to-market movements in Taliesin's interest rate swap contracts and excludes net deferred tax liabilities
For further information, please contact:
Taliesin Property Fund Limited
Mark Smith, Director 01534 700 000
Stockdale Securities Limited
Robert Finlay/David Coaten 020 7601 6100
I am pleased to be able to report on another strong half year for the Group. Taliesin's Adjusted NAV per share increased by 17.6% in the first six months of 2017 to EUR44.14 (31 December 2016 EUR37.53). The value of the Group's portfolio as at 30 June 2017, following a valuation carried out by Jones Lang LaSalle (JLL), stood at EUR359.7 million, an increase of 14.1% in the period after adjusting for property sales.
The value per square metre of the portfolio now stands at EUR3,070, an increase of 13.7% from 31 December 2016 (EUR2,700 psqm). The Group continued to invest in the property portfolio during the six month period under review, with a further EUR2.1 million spent on maintenance and improvements. A similar amount has been committed for the second half of the year.
The privatisation potential of the Taliesin portfolio is beginning to be better reflected in the overall portfolio valuation. Further apartment sales were made in the first half at prices significantly above the current valuation level and I expect further momentum in the second half of 2017. Rents continue to increase in line with the trend of recent years as the availability of residential space continues to lag behind demand.
The virtuous circle in Berlin residential real estate continues apace. A low interest rate environment combined with higher property valuations is allowing the Group to re-finance maturing senior debt facilities at lower interest rates and higher principal amounts. Lower borrowing rates have played a large part in the yield compression seen in the portfolio valuation but equally important, I would argue, has been the ongoing price growth in individual apartment sales, the elevated level of market rents versus in situ rents and the still cheap absolute price of Berlin residential property.
In the last couple of years, Taliesin has been able to deliver on its long held aim of distributing capital to shareholders. This distribution has been possible due to the attractive re-financing market and, to a lesser extent, proceeds from the privatisation process in place. The Group has a further large senior loan maturing at the end of 2017 and is in discussions with various lenders regarding re-financing. A successful outcome should facilitate a further capital distribution within the next six months.
Investment Advisers' Report
The first six months of 2017 showed an acceleration of the price trends experienced in Berlin in 2016. The value of the Group's property portfolio (based on a valuation by JLL) increased to EUR359.7 million. This valuation equates to EUR3,070 psqm, an increase of 13.7% from EUR2,700 psqm at the end of 2016. Apartment sales during the period amounted to EUR3.2 million with recent apartment sales prices approaching EUR4,500 psqm. In the first half of 2017, the Group's Adjusted NAV per share increased by 17.6% to EUR44.14.
The Berlin residential property market continues to benefit from a number of positive factors which have been discussed in detail in previous updates. Of particular note in the recent valuation carried out by JLL is the greater recognition of the privatisation uplift potential in the Taliesin portfolio. This is a subject that we have spoken about extensively in recent years (the difference between single apartment sale prices and whole building valuations) and it is encouraging that this price differential is beginning to be recognised in higher whole building valuations. The single apartment market continues to power ahead driven primarily by local buyers but with a growing international participation. Our own experience with apartment sales, which is covered in more depth later in this report, has shown a similarly strong price trajectory.
What has become increasingly evident recently is that, in the wake of Brexit and changes to the tax regime, especially in relation to foreign purchasers, the UK has ceded its status as a 'safe haven' for property investors to Germany. With America retreating somewhat from its international commitments, Germany, along with China, is filling the political vacuum and taking the mantle of global leadership. Germany's dominant position in Europe appears truly unassailable, as the EU continues to muddle through with the help of the German tax payer, the Greek problem now satisfactorily contained and the Italian banking system slowly recapitalising. Berlin is now the preeminent city of Europe, yet property prices are less than half those prevailing in Moscow, Stockholm, Paris or Vienna: prices are far closer to those prevailing in Kiev than to London.
Angela Merkel is the clear political beneficiary of Germany's current strength. No political party, including her own, has been able to find a challenger to her in the upcoming Federal elections. Her CDU party is well ahead in opinion polls with Martin Schulz' SPD trailing far behind. Four other parties are polling between 6 and 8% each and look set to be the junior partners in an eventual coalition government. The current most likely outcome is a coalition of the CDU and FDP (economically liberal party), a combination which achieved election success recently in Schleswig-Holstein (together with the Green party) and Nordrhein Westfalen. Unlikely is another grand coalition, especially from the perspective of the leftist SPD party - their popularity has plummeted whilst they have participated in the current coalition government. Interesting to note is that the CDU/FDP coalition appears ready to push back against certain rent regulations, in particular the Mietpreisbremse and favours instead encouraging home ownership through subsidies. Berlin continues to be governed by a left/communist/green coalition. The operating environment remains challenging and we provide more commentary in the risks section of this report.
Berlin is the capital of a country which is growing the strongest amongst the G7. According to recent data from Destatis, unemployment in Germany declined to 3.9% in May and the number of employed persons hit a post reunification high of 44.1 million. Real wage growth looks set to grow strongly as peak employment approaches. Recent ifo Business Survey data describes sentiment among German businesses as 'euphoric'. The Business Climate Index rose to 116.0 points in July, hitting a record high for a third successive month. Companies' satisfaction with their current business situation also reached a post reunification high. The ifo construction index rose to a record high and contractors expressed optimism about the outlook for the sector.
Increasing property prices combined with a robust economy have led to further record property transaction volumes in both Germany and Berlin. As a snapshot of overall activity, large residential portfolio transaction volumes increased by 22% in Germany in the first six months of 2017 to EUR5.9 billion according to CBRE. Over 80% of the buying came from German investors. Berlin accounted for close to 30% of total portfolio transactions in the six months, with volumes up by a third from a year earlier to EUR1.7 billion. Nationwide, there was a significant increase in transaction volume related to development and new build. This sector showed a year-on-year increase of around 40% and reflects the current lack of housing and strong urbanisation trend. This catapulted average selling prices higher to EUR1,980 across Germany, an increase of 29% from a year ago according to CBRE.
In the face of record demand, residential property supply continues to be an issue. Although construction activity is picking up in Germany, in the first five months of 2017, only 121,234 residential building permits were issued, compared with 295,000 in France (Federal Statistics Bureau, Ministre de L'ecologie du Developpement). In Berlin, the supply issue appears even more acute. According to a recent report from BFW Landesverband BB, the current political situation in Berlin is dissuading developers from pursuing new residential projects. They report an 8.5% reduction in building permit applications in the first quarter of 2017 compared to a year earlier. In the same period, the number of permits granted for multi-family dwellings in Brandenburg (the 'Land' that surrounds Berlin) increased by 132%. Any further contraction in the supply of new residential stock will inevitably pressure prices further. Some of the constraint on supply could be eased by a number of recent court rulings in Berlin which appear to pave the way for significantly
higher residential development density in central districts. This could be especially beneficial for Taliesin given how many centrally located properties are in the portfolio and should accelerate the planning process for roof developments in particular.
Operational Highlights
Taliesin's latest privatisation project, Kavalierstrasse, progressed strongly during the period under review. Seven additional apartments were sold in the first half and a further one notarised for sale beyond the reporting date. Average sales prices exceeded EUR4,200 psqm for the seven sold units, amounting to a total sales value of EUR3.2 million and close to EUR4,500 psqm for the most recently notarised unit. Achieved sales prices continue to represent a significant premium over the accounting valuation of the remaining units in the property, which currently stands at EUR3,710 psqm. Interestingly, Kavalierstrasse is the only property in the portfolio which has been reclassified as an 'asset held for sale' and therefore valued at an implied privatisation price. The project provides a good insight into the potential for further valuation uplift across the Group's portfolio. There remain eleven unsold units in the building and we expect the strong price momentum to continue in the second half of the year.
The Group has taken advantage of the benign financing environment in recent years and managed to reduce the interest cost on its senior loans by a significant margin. As we highlighted in the full year 2016 report, Taliesin has a maturing EUR25.3 million debt facility to re-finance later this year and has been in discussions with a number of local banks regarding terms for a new facility. The market for new loans remains extremely borrower friendly. The existing senior secured loan started out as a EUR30 million facility and has been amortised down over the last five years to the current amount. The rate of amortisation of the existing loan had been increased due to the sale of a property. The current interest rate stands at 2.69%. Indicative terms for a replacement loan point to a principal amount of approximately EUR60 million with an interest rate of around 1.5% per annum for a five year term.
The Group has historically relied almost entirely on the local Pfandbrief market for its borrowing. Strong relationships have been built with a number of local banks which has been beneficial in facilitating the rollover of maturing senior loans. It is interesting to note, however, how many property investors are now issuing bonds directly to re-finance existing loans or to raise new capital and just how competitive the terms have become. Recent large unsecured bonds have been issued with interest rates below 1.5% and durations of seven years plus. Investor demand for any bond which offers (relative to Bunds) an attractive yield appears insatiable. The availability of this lower cost financing will have a predictable impact on the demand for property in Berlin.
Additional funds released from maturing loan facilities together with the proceeds of profitable apartment sales should allow the Group to make a further B share capital distribution within the next six months. The aforementioned large re financing is scheduled to take place at year end and it is currently the intention of the Group to complete this re financing ahead of making a further distribution. This should allow Taliesin to consider making a larger distribution, depending on both the successful replacement of the existing loan and other demands on capital.
Risks and Uncertainties
Taliesin's property portfolio is located almost entirely in Berlin and therefore at risk from developments in the political and economic environment that may have an impact on the city. As in previous years, the Group remains vigilant to these twin threats to the wellbeing of the business.
We have discussed the upcoming Federal elections and the potential for a more constructive environment in the future for landlords on a national level. Locally, however, the operating environment remains challenging. As we mentioned earlier in this report, housing starts in Berlin appear to be moving in the wrong direction which is further exacerbating the scarcity of supply in the residential market and further heightening political tensions. Routine refurbishment approvals and planning consents are taking a considerable time to complete resulting in a much slower turnaround for vacant apartments. We also face the prospect of further restrictions and regulations on the rental market.
On the economic front, the ongoing improvement in the outlook for the German and European economies will inevitably lead to higher interest rates at some point. There has been a small back up in Bund yields recently and we would expect a further move higher as and when quantitative easing is withdrawn. Although there is no evidence of any kind of leverage binge in Germany and real yields on property remain attractive currently versus government bond yields, there exists the risk of a reversal at some point.
Directors' statement of responsibilities
The Directors are responsible for preparing the half-yearly financial statements in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:
- the condensed set of financial statements contained within the half-yearly financial report have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union;
- the half-yearly financial report provides a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed half-yearly financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year ending 31 December 2016; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could materially affect the financial position or performance of the entity.
Signed on behalf of the Board of Directors
_____________________________
Director
Nigel Le Quesne
Hot Features
Premium
Consolidated Statement of Comprehensive
Income
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
(unaudited) (unaudited) (audited)
Note EUR(000) EUR(000) EUR(000)
Continuing operations
Rental income 5,324 5,240 10,513
Service charge receipts 1,486 1,406 2,689
-------------------------------------------- ----- ------------ ------------ -----------
Revenue 6,810 6,646 13,202
Income from disposal of investment
property (including investment property
held for sale) 3,203 3,960 6,887
Carrying amount of investment property
sold (2,786) (3,921) (6,521)
-------------------------------------------- ----- ------------ ------------ -----------
Profit on disposal of investment property 417 39 366
Other operating income 238 169 262
-------------------------------------------- ----- ------------ ------------ -----------
Total operating revenues 7,465 6,854 13,830
Net change in fair value of investment
properties (including investment property
held for sale) 42,614 23,212 51,864
Total operating expenses 11 (14,362) (9,684) (20,573)
-------------------------------------------- ----- ------------ ------------ -----------
Profit from operating activities 35,717 20,382 45,121
Gain on fair value of financial assets 1,405 888 1,787
Finance income - 2 1
Finance expenses (2,090) (2,252) (4,995)
Net foreign exchange differences 9 (141) (166) (1,392)
Change in fair value of derivative
financial instruments 161 630 1,526
-------------------------------------------- ----- ------------ ------------ -----------
Net financing costs (665) (898) (3,073)
Profit before income tax 35,052 19,484 42,048
Income tax charge 12 (7,223) (4,207) (9,295)
-------------------------------------------- ----- ------------ ------------ -----------
Total profit for the year 27,829 15,277 32,753
Profit and total comprehensive income
attributable to:
Owners of the parent 26,291 14,314 30,795
Non-controlling interest 1,538 963 1,958
-------------------------------------------- ----- ------------ ------------ -----------
Total profit and total comprehensive
income for the year 27,829 15,277 32,753
Basic earnings per ordinary share (EUR) 13 5.33 3.11 6.52
Diluted earnings per ordinary share
(EUR) 13 5.33 3.11 6.31
Consolidated Statement of Financial
Position
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
(unaudited) (unaudited) (audited)
Note EUR(000) EUR(000) EUR(000)
ASSETS
Non-current assets
Investment properties 5 355,322 280,032 310,911
Other financial assets 7,288 4,940 5,885
--------------------------------------------- ----- ------------ ------------ -----------
Total non-current assets 362,610 284,972 316,796
Current assets
Cash and cash equivalents 8,933 875 6,348
Trade and other receivables and prepayments 6,482 8,326 5,775
Assets classified as held for sale 6 4,390 9,140 7,070
--------------------------------------------- ----- ------------ ------------ -----------
Total current assets 19,805 18,341 19,193
Total assets 382,415 303,313 335,989
SHAREHOLDERS`EQUITY AND LIABILITIES
Equity
Stated capital account 8 59,851 59,061 49,381
Shares to be issued - - 6,282
Capital reserve 56 56 56
Retained earnings 124,573 81,801 98,282
--------------------------------------------- ----- ------------ ------------ -----------
Equity attributable to equity holders
of parent 13 184,480 140,918 154,001
Non-controlling interests 7,880 5,346 6,342
Total equity 192,360 146,264 160,343
Consolidated Statement of Financial
Position
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
(unaudited) (unaudited) (audited)
Note EUR(000) EUR(000) EUR(000)
Non-current liabilities
Interest bearing loans and borrowings 10 85,095 87,608 100,781
Financial liabilities at fair value
through profit or loss 7 - 952 406
Deferred tax liabilities 12 37,557 25,896 30,729
--------------------------------------- ----- ------------ ------------ -----------
Total non-current liabilities 122,652 114,456 131,916
Current liabilities
Interest bearing loans and borrowings 10 47,416 26,386 29,714
Financial liabilities at fair value
through profit or loss 7 243 371 -
Other liabilities and payables 16,452 11,372 10,227
Liabilities directly associated with
assets classified as held for sale 3,292 4,464 3,789
--------------------------------------- ----- ------------ ------------ -----------
Total current liabilities 67,403 42,593 43,730
Total equity and liabilities 382,415 303,313 335,989
Net asset value per ordinary share
(EUR) 13 36.17 29.11 31.82
The financial statements were approved by the Board of Directors on 11 August 2017 and signed on its behalf by:
_____________________________
Director
Nigel Le Quesne
Consolidated Statement of
Changes in
Equity
Stated Stated
capital capital Shares
account account to Capital Treasury Retained Equity before Non-controlling Total
ordinary Non-controlling
shares b-shares be issued reserve shares earnings interests interests equity
EUR(000) EUR(000) EUR(000) EUR(000) EUR(000) EUR(000) EUR(000) EUR(000) EUR(000)
Equity at 1
January 2017 49,381 - 6,282 56 - 98,282 154,001 6,342 160,343
Profit for the
year - - - - - 26,291 26,291 1,538 27,829
--------------- ------------- --------- ---------- --------- --------- --------- ---------------- ---------------- ---------
Total
comprehensive
income
for the year - - - - - 26,291 26,291 1,538 27,829
Transaction
with owners
Issue of
shares 10,470 - (6,282) - - - 4,188 - 4,188
Issue of
b-shares - - - - - - - - -
Redemption of
b-shares - - - - - - - - -
Cancellation
of b-shares - - - - - - - - -
Shares to be
issued for
services
received - - - - - - - - -
--------------- ------------- --------- ---------- --------- --------- --------- ---------------- ---------------- ---------
Total
transaction
with
owners 10,470 - (6,282) - - - 4,188 - 4,188
Equity at 30
June 2017 59,851 - - 56 - 124,573 184,480 7,880 192,360
Equity at 1
January 2016 48,041 - 6,643 56 - 67,487 122,227 4,383 126,610
Profit for the
year - - - - - 30,795 30,795 1,958 32,753
--------------- ------------- --------- ---------- --------- --------- --------- ---------------- ---------------- ---------
Total
comprehensive
income
for the year - - - - - 30,795 30,795 1,958 32,753
Transaction
with owners
Issue of
shares 11,020 - (6,643) - - - 4,377 - 4,377
Issue of
b-shares (9,680) 9,680 - - - - - - -
Redemption of
b-shares - - - - (9,680) - (9,680) - (9,680)
Cancellation
of b-shares - (9,680) - - 9,680 - - - -
Shares to be
issued for
services
received - - 6,282 - - - 6,282 - 6,282
--------------- ------------- --------- ---------- --------- --------- --------- ---------------- ---------------- ---------
Total
transaction
with
owners 1,340 - 6,282 - - - 979 - 979
Equity at 31
December 2016 49,381 - 6,282 56 - 98,282 154,001 6,342 160,343
Consolidated Statement of Cash Flows
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
(unaudited) (unaudited) (audited)
Note EUR(000) EUR(000) EUR(000)
Profit from operating activities 35,717 20,381 45,121
Net change in fair value of investments
properties (42,614) (23,212) (51,864)
Changes in working capital:
Decrease/(Increase) in receivables (413) (105) 780
Increase in payables 9,367 5,162 10,482
---------------------------------------------- ----- ------------ ------------ -----------
2,057 2,226 4,519
Tax paid (44) (533) (605)
Net cash generated from operating activities 2,013 1,693 3,914
Investing activities
Capital expenditure on properties held 5 (1,902) (2,150) (4,907)
Sale of property 2,672 3,593 6,887
Interest received - 2 1
---------------------------------------------- ----- ------------ ------------ -----------
Net cash generated by investing activities 770 1,445 1,981
Financing activities
Proceeds from borrowings 4,000 - 46,500
Loan repayments (2,877) (3,394) (33,622)
Interest paid (1,321) (1,644) (3,805)
Capital return to owners - - (9,680)
Margin deposit increase - (1,300) (3,030)
---------------------------------------------- ----- ------------ ------------ -----------
Net cash used in financing activities (198) (6,338) (3,637)
Foreign exchange gains / (loss) on
bank accounts - (2) 12
Net decrease in cash and cash equivalents 2,585 (3,200) 2,270
Cash and cash equivalents at start
of year 6,348 4,078 4,078
Cash and cash equivalents at end of
year 8,933 876 6,348
Cash and cash equivalents comprise:
Cash at bank 8,933 876 6,348
1. Reporting entity
Taliesin Property Fund Limited (the "Company") is a company domiciled in Jersey and was incorporated on 17 November 2005. The condensed consolidated interim financial statements of the Company for the 6 months ended 30 June 2017 comprise the Company and its subsidiaries (together referred to as the "Group"). The Group invest in primarily residential property in Berlin and the former German Democratic Republic.
The audited consolidated financial statements of the Group as at and for the year ended 31 December 2016 are available upon request from the Company`s registered office at P.O. Box 1075, JTC House, 28 Esplanade, St Helier, Jersey, JE4 2QP.
2. Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with international Accounting Standard (IAS) 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2015.
The condensed consolidated interim financial statements were approved by the Board of Directors on 11 August 2017.
3. Significant accounting policies
The accounting policies applied by the Group in these condensed consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2016. The Group has had a revaluation of its property portfolio at 30 June 2017.
The financial information for the 6 months to 30 June 2017 and 30 June 2016 has been extracted from the accounting records of the Group. The balances as at 31 December 2016 and the results for the year then ended have been extracted from the audited financial statements. The auditor's report on those financial statements was unqualified.
4. Segment Reporting
The Group monitors its business of investing in primarily residential property in Berlin, Potsdam and Dresden in two segments:
First, the procurement and oversight of management of its rent portfolio, which includes the modernisation and maintenance of the Group's investment properties, the management of rent contracts, caring for tenants and the marketing of apartments. The focus of managing the rent units is to optimise rents, therefore all capital expenditures to the properties are analysed for rent improvement potential. On the other hand service charges are sought to be reduced and to be passed on to tenants.
The second segment is privatisation, the sale of individual apartments. The Group has started in fiscal year 2015 to sell a number of apartments as a means to demonstrate to shareholders the value potential in its property portfolio in privatisation.
Segment by activity
--------------------------------
Income statement
Total Rental portfolio Sale segment
30 June 30 June
2017 30 June 2017 2017
EUR(000) EUR(000) EUR(000)
Rental Income 5,324 5,269 55
Service charge receipts 1,486 1,483 3
----------------------------------------- --------- ----------------- -------------
Revenue 6,810 6,752 58
Sale of investment properties 3,203 - 3,203
Sold properties book value (2,786) - (2,786)
----------------------------------------- --------- ----------------- -------------
Profit on sale of investment properties 417 - 417
Other operating income 238 238 -
----------------------------------------- --------- ----------------- -------------
Total operating revenues 7,465 6,990 475
Net change in fair value of investment
properties 42,614 42,561 53
Total operating expenses (14,307) (14,224) (83)
----------------------------------------- --------- ----------------- -------------
Profit from operating activities 35,772 35,327 445
Net financing costs (665) (651) (14)
----------------------------------------- --------- ----------------- -------------
Profit before income tax 35,107 34,676 431
Income tax charge (7,265) (7,274) 9
----------------------------------------- --------- ----------------- -------------
Total profit for the year 27,842 27,402 440
Segment by activity
--------------------------------
Total Rental portfolio Sale segment
30 June 30 June
2016 30 June 2016 2016
EUR(000) EUR(000) EUR(000)
Rental Income 5,240 5,213 27
Service charge receipts 1,406 1,406 -
----------------------------------------- --------- ----------------- -------------
Revenue 6,646 6,619 27
Sale of investment properties 3,960 - 3,960
Sold properties book value (3,921) - (3,921)
----------------------------------------- --------- ----------------- -------------
Profit on sale of investment properties 39 - 39
Other operating income 169 164 5
----------------------------------------- --------- ----------------- -------------
Total operating revenues 6,854 6,783 71
Net change in fair value of investment
properties 23,212 22,973 239
Total operating expenses (9,684) (9,576) (108)
----------------------------------------- --------- ----------------- -------------
Profit from operating activities 20,382 20,180 202
Net financing costs (898) (841) (57)
----------------------------------------- --------- ----------------- -------------
Profit before income tax 19,484 19,339 145
Income tax charge (4,207) (4,228) 21 ----------------------------------------- --------- ----------------- ------------- Total profit for the year 15,277 15,111 166
5. Investment properties
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
Group Group Group
(unaudited) (unaudited) (audited)
EUR(000) EUR(000) EUR(000)
Book cost brought forward at 1 January 146,261 148,924 148,924
Fair value adjustments brought forward 164,650 113,587 113,587
---------------------------------------- ------------ ------------ -----------
Valuation brought forward at 1 January 310,911 262,511 262,511
Capital expenditure on properties held 1,902 2,150 4,907
Reclassification to assets held for
sale - (7,570) (7,570)
Property sold during the period - - -
---------------------------------------- ------------ ------------ -----------
312,813 257,091 259,848
Revaluation (fair value adjustments) 42,509 22,941 51,063
---------------------------------------- ------------ ------------ -----------
Valuation as at 30 June 2017 355,322 280,032 310,911
Properties held for long-term rental yields or for capital appreciation or both are classified as investment properties and the provisions of IAS 40 "Investment Property" apply.
Investment properties comprise undeveloped land, land and rights equivalent to land with buildings, and land with third party hereditary building rights. Investment properties are measured initially at cost including related transaction costs. After initial recognition, investment properties are measured at their fair values, with subsequent changes in fair values recognised in the consolidated statement of comprehensive income.
The property portfolio, which is carried in the balance sheet at fair value, is valued six-monthly by professionally qualified external valuers using recognised valuation techniques and the principles of IFRS 13. The Directors ensure that they are satisfied that the valuation of the Group's properties is appropriate for the accounts. Investment properties are valued by adopting the 'investment method' of valuation. This approach involves applying market-derived capitalisation yields to current and market-derived future income streams with appropriate adjustments for income voids arising from vacancies or rent-free periods. These capitalisation yields and future income streams are derived from comparable property and leasing transactions and are considered to be the key inputs in the valuation. Other factors that are taken into account in the valuations include the tenure of the property, tenancy details and ground and structural conditions.
The fair value of investment properties is based on valuations experts, Jones Lang LaSalle (JLL), using recognised valuation techniques and the principles of IFRS 13. Fair value is the price that would be received to sell a property in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset takes place either in the principal market for the property or in the absence of a principal market, in the most advantageous market at the measurement date.
The fair value of an investment property is measured using the assumptions that market participants would use when pricing the property, assuming to act in their economic best interest. Thus the fair valuation takes into account a market participant's ability to generate economic benefits by using the property in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group operates in large cities in Germany where there is a well-developed and active property market for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Such inputs include current and recent sale prices of similar properties, and rents based on current market rates with which to calculate discounted cash flows based on reliable estimates of future rental income and discount rates that reflect current market assessments of uncertainties in the amount and timing of cash flows. Estimates of the values of investment properties include assumptions regarding vacancy rates, discount rates, rental income and privatisation potential of investment properties (ie the value potential in the split and separate sale of freeholds) and the Group has established specific criteria relating to the progress of the privatisation process that must be met for a property`s privatisation value to be considered.
All of the investment properties owned by the Group have been pledged as security for the Group`s financial liabilities. (See note 10). Other than capital expenditure on existing properties held, there have been no property acquisitions in the period to 30 June 2017.
6. Assets held for sale
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
Group Group Group
(unaudited) (unaudited) (audited)
EUR(000) EUR(000) EUR(000)
--------------------------------------------- ------------ ------------ -----------
Valuation brought forward at 1 January 7,070 - 5,220
Reclassification from Investment properties - 7,570 7,570
Apartments sold (2,786) (3,921) (6,521)
Valuation gain on apartments held for
sale 106 5,491 801
--------------------------------------------- ------------ ------------ -----------
4,390 9,140 7,070
An investment property is reclassified as an asset held for sale when a number of criteria have been satisfied in order to commence with the privatisation of that property. Kavalierstrasse was reclassified as an asset held for sale in the first half of 2016 and 12 remaining apartments in that property are held for sale as at 30 June 2017.
7. Financial liabilities at fair value through profit or loss
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
Group Group Group
(unaudited) (unaudited) (audited)
EUR(000) EUR(000) EUR(000)
---------------------------------------------- ------------ ------------ -----------
Liabilities at valuation at start of
period / year (406) (1,953) (1,953)
Fair value adjustment taken to consolidated
statement of comprehensive income 163 630 1,547
---------------------------------------------- ------------ ------------ -----------
Liabilities at valuation at end of period
/ year (243) (1,323) (406)
Maturity of derivative financial liabilities
Within one year (243) (371) (406)
After more than one year - (952) -
---------------------------------------------- ------------ ------------ -----------
(243) (1,323) (406)
The above table represents the fair value of interest swap arrangements which the German subsidiaries entered into with their bankers in order to manage their exposure to upward movements in interest rates. These arrangements were entered into along with the loan agreements with the banks detailed in note 10. They require that the Group pays interest on any loans drawn down at the contractual EURIBOR rate plus the contractual margin and to receive (or pay) the difference between this EURIBOR rate and the fixed interest swap rate specified in the swap agreement.
The fair values of these interest swap arrangements represent the price at which one party would assume the rights and obligations of the counterparty. The fair value was determined by discounting the anticipated future cash flows. For this purpose, the market interest rates applicable for the remaining term of the contract are used as a basis.
The following table summarises the swap facilities in existence as at 30 June 2017.
Expiry
date
Amount Fair value of interest
of Swap of Swap swap Fixed
Bank in EUR(000) in EUR(000) agreement rate
29 Mar
DZ BANK 8,302 (243) 2018 3.585%
--------- ------------ ------------ ------------ -------
8,302 (243)
8. Stated capital account
6 month to 30 June Year ended 31 Dec
Ordinary shares of no par value 2017 2016
(unaudited) (audited)
Number EUR(000) Number EUR(000)
Stated capital account - Issued
and fully paid
At start of period / year 4,840,187 49,381 4,483,672 48,041
Shares issued 259,806 10,470 356,515 11,020
Shares buyback - - - (9,680)
----------------------------------- ---------- --------- ---------- ---------
At end of period / year 5,099,993 59,851 4,840,187 49,381
Shares to be issued
At start of period / year - 6,282 - 6,643
Shares issued - (6,282) - (6,643)
Provision for shares to be issued - - - 6,282
----------------------------------- ---------- --------- ---------- ---------
At the end of period / year - - - 6,282
On 29 April 2017, 259,806 Ordinary shares were issued at a price of EUR 40,30 per share to Taliesin Management Limited and JJ Investment Management Limited, the Investment Advisers to the Group, as consideration for part of the performance fee due for the year ended 31 December 2016. The full amount of the performance fee was charged in the consolidated income statement for the year ended 31 December 2016.
9. Net foreign exchange differences
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
Group Group Group
(unaudited) (unaudited) (audited)
EUR(000) EUR(000) EUR(000)
Realised loss on settlement of currency
forward contracts (222) (1,080) (4,080)
Unrealised loss on fair value of currency
forward contracts (356) (1,388) (76)
Foreign exchange loss/gain on bank accounts - (2) 12
Foreign exchange gain on ZDP valuation 437 2,318 2,761
Foreign exchange loss on margin collateral - (14) (9)
--------------------------------------------- ------------ ------------ -----------
Net foreign exchange differences (141) (166) (1,392)
The principal operating currency of the Group is Euros. The Group has, however, issued Zero Dividend Preference Shares denominated in Pounds Sterling. In order to hedge this future Pound Sterling liability, the Group has entered into forward foreign currency contracts on that portion of the ZDP proceeds that has been converted into Euros. The foreign exchange losses on the ZDPs in the period reflect the appreciation of the Pound Sterling against the Euro. The offsetting items represent the realised and unrealised gains on the forward foreign currency contracts and the translation gains on the Pound Sterling bank balances at the reporting date.
The Group provided an amount of GBP612,948 as margin collateral with the brokerage firm, which is providing forward foreign currency services to the Group.
10. Financial liabilities
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
Group Group Group
(unaudited) (unaudited) (audited)
EUR(000) EUR(000) EUR(000)
Due within one year 47,416 26,386 29,714
Liabilities directly associated with
assets classified as held for sale 3,292 4,464 3,789
Due after more than one year 85,426 88,222 101,254
----------------------------------------- ------------ ------------ -----------
136,134 119,072 134,757
Zero Dividend Preference Share Deferred
issue costs (331) (614) (473)
----------------------------------------- ------------ ------------ -----------
135,803 118,458 134,284
The above financial liabilities represent loans from banks for the purpose of purchasing property for the Group which are secured on all of the properties owned by the Group and a five year 7,5% p.a. Zero Dividend Preference Share (ZDP) of EUR21,329,000 (December 2016: EUR20,987,000) which was issued by Taliesin Property Fund Limited in September 2013.
The total amounts of loans drawn down under all loan facilities, including the ZDP, as at 30 June 2017 was EUR136,430,000 (30 June 2016: EUR119,072,000, December 2016: EUR134,757,000), represented in these accounts at their fair value of EUR136,430,000 (30 June 2016: EUR119,072,000, December 2016: EUR134,284,000).
11. Operating expenses
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
Group Group Group
(unaudited) (unaudited) (audited)
EUR(000) EUR(000) EUR(000)
Service charge expenses 1,572 1,458 2,870
Property maintenance costs 640 644 1,392
Administrative costs 303 274 542
Investment advisory and performance fees 10,892 6,407 13,724
Directors`fees 56 56 109
Legal and professional fees 127 160 315
Other operating expenses 580 522 1,333
Provision for bad debts 121 77 152
Auditor's remuneration 71 86 136
------------------------------------------ ------------ ------------ -----------
Total operating expenses 14,362 9,684 20,573
The Group paid the following fees to 6 months 6 months
its Auditor: to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
Group Group Group
(unaudited) (unaudited) (audited)
EUR(000) EUR(000) EUR(000)
Fees payable to the Group's Auditor for
the audit of the Group's consolidated
annual accounts 61 57 114
Tax compliance services 10 29 22
Total 71 86 136
12. Income tax expense
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
Group Group Group
(unaudited) (unaudited) (audited)
EUR(000) EUR(000) EUR(000)
Current tax on profits (460) (252) (443)
Prior year corporate tax income / expense 56 35 (29)
Deferred tax charge (6,819) (3,990) (8,823)
------------------------------------------- -------------------- ------------ -----------
Total income tax expense for the period
/ year (7,223) (4,207) (9,295)
The net tax liability at the end of the
period comprises:
Deferred tax asset 3,427 3,463 3,415
Deferred tax liabiltity (40,984) (29,359) (34,144)
------------------------------------------- -------------------- ------------ -----------
(37,557) (25,896) (30,729)
Taxes on profits of the Group arising in Germany are computed using the tax rate of 15,83 % (2016: 15,83%), both for current and deferred tax. Taxable income arising in Cyprus is taxed at 12,5% (2016: 12,5%).
The applicable tax rate in Jersey is 0%.
All taxation charges and credits are recognised in the statement of comprehensive income.
13. Earnings per ordinary share and net asset value per ordinary share
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
Group Group Group
(unaudited) (unaudited) (audited)
EUR(000) EUR(000) EUR(000)
Profit and total comprehensive income
attributable to owners of the parent
(EUR000) 26,291 14,317 30,795
Weighted average number of ordinary shares 4,930,617 4,607,081 4,724,271
-------------------------------------------- ------------ ------------ -----------
Basic earnings per share (EUR) 5.33 3.11 6.52
Weighted average number of ordinary shares
including shares to be issued 4,930,617 4,607,081 4,880,165
Diluted earnings per share (EUR) 5.33 3.11 6.31
Net asset value attributable to holders
of ordinary shares (EUR000) 184,480 140,918 154,001
Ordinary shares at reporting date note
8 5,099,993 4,840,187 4,840,187
-------------------------------------------- ------------ ------------ -----------
Net asset value per share (EUR) 36.17 29.11 31.82
Ordinary shares and shares to be issued
at period / year end 5,099,993 4,840,187 4,996,071
Net asset value per share (EUR) 36.17 29.11 30.82
Adjusted Net Asset Value
In addition to the net asset values disclosed above, which are based on the net consolidated assets attributable to Ordinary shareholders as stated in the financial statements ("Accounting NAV"), the Directors monitor the performance of the Group as measured by a Key Performance Indicator ("KPI") known as the Adjusted Net Asset Value ("Adjusted NAV").
This KPI is defined as the Accounting NAV of the Group as adjusted by adding any portfolio premium not already reflected in the accounts, the gross deferred tax liability from which the Accounting NAV is derived and deducting any goodwill shown as an asset in such accounts.
These adjustments and the calculations are as shown below:
6 months 6 months
to to Year ended
30 June 30 June 31 Dec
2017 2016 2016
Group Group Group
(unaudited) (unaudited) (audited)
EUR(000) EUR(000) EUR(000)
Net consolidated assets attributable
to Ordinary shareholders 184,480 140,918 154,001
Gross deferred tax liabiltity 40,984 29,359 34,146
Plus: Capital return to owners - - 9,680
Less: Shares to be issued - - (6,282)
Less: Gross deferred tax liability attributable
to non-controlling interest (327) (152) (216)
------------------------------------------------- ------------ ------------ -----------
Adjusted Net Assets attributable to Ordinary
shareholders 225,137 170,125 191,329
Number of Ordinary shares outstanding
at 30 June 5,099,993 4,840,187 4,840,187
------------------------------------------------- ------------ ------------ -----------
Adjusted Net Assets Value per Ordinary
share (EUR) 44.14 35.15 39.53
Adjusted Net Assets attributable to Ordinary
shareholders deducting
capital return to owners 225,137 170,125 181,649
Adjusted Net Assets Value per Ordinary
share (EUR) 44.14 35.15 37.53
14. Commitments and contingencies
As at 30 June 2017, the Group had authorised capital investments of EUR1,550,000 (December 2016: EUR3,040,000).
15. Related party transactions
Nigel Le Quesne is a shareholder and director of JTC Group Limited of which JTC (Jersey) Limited and JTC (Luxembourg) S.A. are wholly owned subsidiaries. Stephen Burnett is a non-executive director for the JTC Group. JTC (Jersey) Limited is the Secretary to the Company and provider of administration services to the Company and its subsidiaries. JTC (Jersey) Limited charged fees totalling EUR126,000 (2016: EUR89,000) to the Group during the half year, of which EUR45,000 (2016: EUR43,000) was outstanding as at 30 June 2017. JTC (Luxembourg) S.A. provides administrative services to the Company's Luxembourg subsidiaries. JTC (Luxembourg) S.A. charged fees totalling EUR117,000 (2016: EUR75,600) to the Group during the half-year of which EUR67,000 (2016: EURnil) was outstanding at 30 June 2017.
Mark Smith is a director and shareholder of TML and JJIM, the Investment Advisers of the Group, which charged investment advisory fees totalling EUR2,064,898 (55% JJIM / 45% TML) (2016: EUR1,549,755) to the Group during the half-year, of which EUR1,777,732 (2016: EUR413,417) was outstanding as at 30 June 2017. TML and JJIM together made a provision for performance fee of EUR8,773,181 (71.3% JJIM / 28.7% TML) (2016: EUR4,978,916) to the Group during the half-year, all of which was outstanding as at 30 June 2017.
As at the balance sheet date Mark Smith owns 75.62% of TML which holds 680,897 shares in the Group, representing 13.35%. These shares were issued in respect of previous performance fees. In addition, Mark Smith holds 598,304 ordinary shares in the Group (including the ordinary shares issued to JJIM which is wholly owned by Mark Smith), representing 11.73% of the Company`s voting rights.
There were no other related party transactions with the Company or the Group other than remuneration payable to the Directors, who are the only key management personnel.
There are no employee benefits accrued by directors or key management personnel in the current half-year (2016: EURnil).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BLGDIRDBBGRB
(END) Dow Jones Newswires
August 14, 2017 02:00 ET (06:00 GMT)
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