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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Phoenix Spree Deutschland Limited | LSE:PSDL | London | Ordinary Share | JE00B248KJ21 | SHS NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 140.50 | 140.50 | 144.50 | 0.00 | 08:32:36 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Investment Trust | 26.29M | -15.44M | -0.1681 | -8.36 | 129.02M |
From Apr 2019 to Apr 2024
TIDMPSDL
RNS Number : 7395R
Phoenix Spree Deutschland Limited
26 September 2017
Phoenix Spree Deutschland Limited
(The "Company" or "PSDL")
Interim Results for the half year to 30 June 2017
STRONG OPERATING PERFORMANCE DRIVING PORTFOLIO VALUATION GAINS
Phoenix Spree Deutschland (LSE: PSDL.LN), the UK listed investment company specialising in German residential real estate, announces its Interim Results for the six months ended 30 June 2017.
Financial highlights
- Gross rental income up 25% year-on-year to EUR9.5m, (H1 2016 EUR7.6m) - Profit before tax up 303% year-on-year to EUR63.1m, (H1 2016 EUR15.7m)
- EPRA NAV per share up 22.3% in H1 2017 to EUR3.34 per share (31 December 2016: EUR2.73) EPRA NAV per share total return in H1 2017 of 23.7% (six months to 30 June 2016: 7.8%)
- Net loan to value of 31.6% at 30 June 2017 (31 December 2016: 39.4%)
- Increased first half dividend to EUR2.28cents (GBP 2.0p), up 25% year-on-year (H1 2016: EUR1.92cents (1.6p))
Operational highlights
- Portfolio value increased by 22.6% in H1 2017 to EUR519.7 million. (31 December 2016: EUR423.8 million), and by 15.6% on a like-for-like basis.
- Berlin posted largest like-for-like increase at 18.2% - Strong annual like-for-like rent per sqm growth of 5.0% (30 June 2016 5.7%)
- Significant embedded value within the portfolio: Berlin new leases signed at a 44% premium to passing rents
- First half condominium sales achieve an average value per sqm of EUR3,687, a 59.8% premium to portfolio average value per sqm at 30 June 2017
- Five property acquisitions in Berlin completed for EUR27.7m in H1 2017, with a further two notarised in H1 and due to complete in H2 2017 with a value of EUR11.6m
- Nuremberg and Fürth portfolio disposed for EUR35.2m on 1 July 2017, an 11% premium to its book value as at 31 December 2016
- Berlin represented 78.2% of PSDL portfolio by value as at 30 June 2017, and 84.2%* on a pro-forma basis
*following completion of Nuremberg and Fürth disposal, and the completion of Berlin assets notorised in the first half of 2017, but not completed at30 June 2017
Outlook
- Berlin property market outlook remains favourable, underpinned by strong demand for apartments, lack of supply and low interest rates
- Significant further potential to create value through reversionary letting and condominium sales
- Scope for further growth in property values, particularly in central Berlin - Strong balance sheet locking in long-term fixed rate debt at low interest rates - The Company is on track to deliver a strong financial performance for the full year 2017
Robert Hingley, Chairman of Phoenix Spree Deutschland, commented:
"I am delighted to announce another strong set of results following an active start to the year in which the Company has delivered strong rental growth and enhanced its portfolio in Berlin where the outlook remains particularly positive. The Portfolio has seen another significant valuation uplift, driven by the positive market backdrop and our active asset management strategy, resulting in an EPRA NAV per share total return of 23.7% for the six months. Nothwithstanding the significant rises in property values to date, and corresponding rental yield compression, Management continues to see significant embedded value within the Portfolio, with further reversionary rental potential and opportunities to create value through the sale of apartment blocks as condominiums. The Company has also strengthened its balance sheet, bolstered by non-core disposals, leaving it well placed to continue to grow the Portfolio."
For further information please contact:
Phoenix Spree Deutschland Limited +44 (0)20 3937 8777
Stuart Young
Liberum Capital Limited (Corporate Broker) +44 (0)20 3100 2222
Christopher Britton
Tulchan Communications (Financial PR) +44 (0)20 7353 4200
Tom Murray
Chairman's Statement
I am pleased to be able to report another strong set of interim results. Our active asset management strategy has continued to deliver rental growth at a premium to listed peers; we have made value enhancing acquisitions while successfully disposing of non-core assets; and have secured additional debt financing on highly competitive terms.
Market dynamics are favourable with a continuation of positive growth trends in both rental and property values. During the first six months of 2017, the value of the Portfolio has increased by EUR95.9m, with like-for-like growth of 15.6%, while EPRA NAV per share grew by 22.3%. Notwithstanding these growth rates, the Board believes significant embedded value remains within the Portfolio, evidenced by first half new leases signed at an average 44% premium to in-place rents in Berlin, and condominium sales at a substantial premium to average Portfolio property valuations.
The market outlook remains positive, particularly in Berlin where, on a pro-forma basis, 84.2% of the Portfolio is located. Demographic trends are supportive as demand for housing stock from owner occupiers and investors continues to significantly outstrip supply. The funding environment is also positive, with rising property values and low interest rates combining to allow the Company to refinance maturing debt facilities on attractive terms.
The Board is confident that the Company is well positioned to take advantage of the favourable outlook to deliver future capital growth and income to its investors. The Board is pleased to declare a dividend of EUR2.28cents (2.0p) per share for the first half, which is expected to be paid on or around 13 October 2017.
Operational and Financial Review
Financial Highlights
Financial Summary EUR million unless otherwise stated 30-Jun-17 30-Jun-16 31-Dec-16 Gross rental income 9.5 7.6 15.9 Profit Before Tax 63.1 15.7 48.9 Pre-Exceptional Profit Before Tax 63.1 17.2 48.9 Reported EPS (EUR) 0.55 0.14 0.42 Investment Property Value 519.7 329.8 423.8 Gross Debt 197.2 143.6 185.6 Gross Cash 32.9 42.0 18.5 Net LTV (1) 31.6% 30.8% 39.4% EPRA NAV per share (EUR) 3.34 2.42 2.73 EPRA NAV per share (GBP) (2) 2.94 2.02 2.33 Dividend per share (EUR cents) 2.3 1.9 6.3 Dividend per share (GBP pence) (2) 2.0 1.6 5.3 EPRA NAV per share total return for period (EUR%) 23.7% 7.8% 22.5% EPRA NAV per share total return for period (GBP%) 26.9% 22.7% 41.7% (1) Debt less cash as a proportion of value of investment property (2) Exchange rate of 1.14 at 30 June 2017, 1.20 at 30 June 2016, 1.17 at 31 December 2016
Like-for-like portfolio value increase of 15.6%
As at 30 June 2017, the portfolio was valued at EUR519.7 million (31 December 2016: EUR423.8 million) by Jones Lang LaSalle GmbH, the Company's external property valuer. This represents an increase of 22.6% over the six-month period, equating to an average value per square metre of EUR2,308 (31 December 2016: EUR1,965) and a gross fully occupied yield of 4.1% (31 December 2016: 4.8%). Included within the portfolio are condominium properties with an aggregate value of EUR25.5m (31 December 2016: EUR24.2m). This increase in valuation reflects a combination of yield compression and growth in Portfolio rents.
On a like-for-like basis, after adjusting for the impact of acquisitions and disposals, the Portfolio valuation rose by 15.6% per cent in the six months ended 30 June 2017. This compares to an increase of 9.8% for the half year to 30 June 2016 and an increase of 19.4% for the full financial year ended 31 December 2016. The appreciation in the Portfolio valuation reflects a combination of market growth, improved rents and the impact of rising condominium values on multi-family home pricing.
By geographic segment, Berlin posted the largest like-for-like increase at 18.2%. As at 30 June 2017, Berlin represented 78.2% of the portfolio by value, up from 75.2% as at 31 December 2016. On a pro-forma basis, including the impact of the sale of the Company's Nuremberg and Fürth portfolio and assets notarised, but not completed, in H1 2017, Berlin represents 84.2% of the portfolio by value.
EPRA NAV increase of 22.3% in H1 2017
EPRA NAV per share rose by 22.3% in the first half of 2017 to EUR3.34 (GBP2.94) (31 December 2016: EUR2.73 (GBP2.33)). After taking into account the 2016 final dividend of EUR4.3cents (GBP: 3.7p), which was paid in June 2017, the EPRA NAV total return in the first half of 2017 was 23.7% (H1 2016: 7.8%).
Accelerating rental growth
Against a backdrop characterised by undersupply of available rental property and population growth in Berlin, the Company's active asset management strategy has continued to deliver strong rental growth. Annualised rental income for the period to 30 June 2017 was EUR19.2m (30 June 2016: EUR15.1m). Adjusting for acquisitions and disposals, this represents a like-for-like increase of 8.5% compared with 30 June 2016 (30 June 2016: 3.3%).
Average in place rent was EUR7.7 per sqm as at 30 June 2017, an increase of 1.1% compared with 30 June 2016. On a like-for-like basis, the increase was 5.0% (year to 30 June 2016: 5.7%).
Reported vacancy at 30 June 2017 was 8.2% (30 June 2016: 11.1%). On an EPRA basis, which adjusts for units undergoing development and made available for sale, the vacancy rate was 3.7% (30 June 2016 3.2%).
Further increase in new lettings premium
During the period, 234 new leases were signed, representing an annualised letting rate of 14.4% of units. The average rent achieved on new lettings was EUR10.0 per sqm, a 6.4% increase on the same period in 2016.
Notwithstanding growth in rental prices, the Company continues to re-let units at a substantial premium to in-place rents. During the first six months of 2016, new leases were signed at an average premium of 30.6% to passing rents. In Berlin, new leases were signed at an average rate of EUR11.2 per sqm, a 43.6% (30 June 2016: 37.4%) premium to passing rents.
The Company believes this reversionary uplift illustrates the significant embedded opportunity for continued future rental growth within the Portfolio, as lower paying tenants move out and prices on re-letting converge with current market levels.
Active portfolio management
The Company continues to source and acquire attractive assets in central Berlin. The Board considers this location offers the best medium-term potential for future rental and capital growth. In the six months to 30 June 2017, the Company completed on five Berlin property packages, consisting of 146 residential and 11 commercial units, for an aggregate purchase price of EUR27.7 million and representing an average price per square metre of EUR2,050. Two of these five properties were notarised in H1 2017, the others being notarised in the prior year. At 30 June 2017, Berlin represented 78.2% of the Portfolio by value.
Since 30 June 2017, the acquisitions of two further properties have been completed, comprising 75 residential and 3 commercial units, for an aggregate purchase price of EUR11.6 million and representing an average price per square metre of EUR2,045.
Overall, during the current year to September 2017, the Company has notarised a total of six new property packages, comprising 310 residential and 5 commercial units for an aggregate purchase price of EUR48.4 million, excluding purchase costs. Of this, EUR19.4 million of property was notarised in H1 2017.
In April 2017, the Company announced that it had exchanged contracts to sell a portfolio of 17 non-core properties in Nuremberg and Fürth for an aggregate cash consideration of EUR35.2m. These properties had been acquired in 2007 and 2008 for an aggregate purchase price of EUR13.9m and the sale proceeds represent an 11% premium to the 31 December 2016 Jones Lang LaSalle valuation. This disposal was completed on the 1 July 2017.
The disposal represents a complete exit from the Nuremberg & Fürth region, the proceeds of which will be used to reduce debt, fund further acquisitions in Berlin and invest in the existing Portfolio. Including the impact of this disposal on the 30 June 2017 figures, as well as Berlin acquisitons notarised in H1 but not yet completed, the Berlin proportion of the Portfolio increased to 84.2% by value on a pro-forma basis.
The Company has also notarised for disposal five other non-Berlin assets during the first half of 2017, with a total consideration of EUR10.5 million. A further non-Berlin asset was notarised for sale in August 2017 with a value of EUR2.1 million. Of these properties notarised for sale, EUR9.5 million has completed.
The Company continues to invest in its Portfolio through a carefully planned process of modernisation and renovation of apartments, upgrades to communal areas such as building facades and staircases, as well as investment in more efficient heating systems. The Company invested EUR3.0 million during the first half of 2017, the majority of which related to vacant apartments, which are refurbished and subsequently re-let at higher rents. This process of targeted investment enables the Company to access the reversionary rental potential that exists within the Portfolio and it is expected that investment will continue at a similar rate during the second half of the year.
Condominium sales
The Company's condominium strategy is to divide and resell a small number of carefully selected apartment blocks as condominiums, in order to monetise the value difference that exists between the value of an apartment block and the value of the same property sold as single apartments.
During the first half of 2017, sixteen apartments were notarised for sale, with an aggregate value of EUR3.9 million. The average sales' value per sqm achieved was EUR3,687, a 59.8% premium to the Fund's 30 June 2017 average Portfolio valuation.
Since June, a further two apartments have been notarised for sale. As at 31 August 2017, all but one of the available units at the two Berlin Kreuzberg apartment blocks had been sold and over 20% of Boxhagenerstrasse units have been sold.
Portfolio regional overview as at 30 June 2017
Hot Features
Premium
Buildings Residential Commercial Total Total Annualised Fully Valuation % Value
sqm Gross occupied of
rent gross fund
yield by
Market value
------------
per
sqm
number units units units ('000) (EURm) (%) (EURm) (%) (EUR)
Berlin
(inc.Greater
Area) 75 1,890 128 2,018 147.3 12.8 3.5 406.2 78.2 2,757.6
Central
& North
Germany 43 804 47 851 50.3 4.1 6.4 68.4 13.1 1,363.7
Nuremberg
& Fürth 17 189 37 226 19.2 1.5 5.3 35.2 6.8 1,828.3
Baden-Wuerttemberg 2 18 24 42 8.4 0.8 8.9 9.8 1.8 1,160.2
Total 137 2,901 236 3,137 225.2 19.2 4.1 519.7 100.0 2,307.7
==================== ========== ============ =========== ====== ======= =========== ========= ========== ====== ========
Berlin has continued its strong performance in the first half, with significant underlying growth in rents and property values. Reported average rent per sqm stood at EUR7.9 an increase of 0.4% compared with 30 June 2016, reflecting strong underlying like-for-like rental growth partially offset by the impact of recent acquisitons which typically exhibit lower rental values upon takeover. On a like-for-like basis, (excluding the impact of acquisitions and disposals), the increase in rent per sqm was 6.1%. The Berlin EPRA vacancy rate stood at 4.0% in the first half of 2017 (H1 2016: 2.7%).
Nuremberg & Fürth, which was notarised for sale in the first half of 2017, reported rent per sqm of EUR7.5, a like-for-like increase of 4.9% (30 June 2016 2016 9.5%). First half 2017 EPRA vacancy stood at 5.9% (H1 2016: 1.4%).
Central & Northern Germany delivered a like-for-like increase in rent per sqm of 2.9% and an improved EPRA vacancy of 2.1% (H1 2016: 5.5%).
Rent and vacancy by region
Average Average Average LFL LFL Reported Reported EPRA EPRA
Rent Rent rent Growth Growth Vacancy Vacancy Vacancy Vacancy
per per growth (%) (%)
sqm sqm (%) (%) (%) (%) (%)
Market (EUR) (EUR)
H1 H1 H1 H1 2017 H1 H1 H1 H1 H1
2017 2016 2017 2016 2017 2016 2017 2016
Berlin
(inc.Greater
Area) 7.9 7.8 0.4 6.1 6.5 8.2 12.6 4.0 2.7
Central
& North
Germany 7.2 7.0 2.9 2.9 (6.0) 5.8 7.6 2.1 5.5
Nuremberg
& Fürth 7.5 7.2 4.9 4.9 0.8 16.1 14.4 5.9 1.4
Baden-Wuerttemberg 8.6 8.5 0.4 0.4 (1.0) 4.4 4.4 2.0 0.9
Total 7.7 7.6 1.1 5.0 5.7 8.2 11.1 3.7 3.2
==================== ======== ======== ======== ======== ======== ========= ========= ========= =========
Financial results
Reported revenue for the six-month period was EUR 9.5 million (30 June 2016: EUR7.6 million). This increase represents a combination of organic growth in rental income and the net impact of acquisitions and disposals.
The Company has reported a profit before taxation for the period to 30 June 2017 of EUR63.1 million (30 June 2016 : EUR15.7 million). This is after charging/crediting the following non-cash items totalling net EUR8.2 million, consisting of:
- An accrual of EUR10.7million relating to the Property Advisor performance fee (30 June 2016: 2.8 million). The accrual reflects the potential fee payable to the Property Advisor at the year end, based on the increase in EPRA NAV, under the terms of the Property Advisor Agreement; and
- mark-to-market interest rate swap gains of EUR2.5 million (30 June 2016: loss of EUR2.9m)
The results were positively impacted by a revaluation gain of EUR70.1 million (30 June 2016: EUR21.7 million). Excluding the revaluation gain, the performance fee accrual and the gain on the Swaps, the Company reported a profit before tax of EUR1.2 million (30 June 2016: loss before tax of EUR0.3 million).
Reported earnings per share for the period were EUR55 cents (June 2016: EUR14 cents).
The Board is pleased to declare an interim dividend EUR2.28 cents per share (GBP 2.0 pence per share), (30 June 2016: EUR1.92cents, GBP 1.6 pence) for the first half of the year. The dividend is expected to be paid on or around 13 October 2017 to shareholders on the register at close of business on 29 September 2017, with an ex-dividend date of 28 September 2017.
Debt and gearing
As at 30 June 2017, the Company had gross borrowings of EUR197.2 million (31 December 2016: EUR185.6m) and cash balances of EUR32.9 million (31 December 2016: EUR18.5 million), resulting in net debt of EUR164.3 million (31 Dec 2016 : EUR167.1m) and a net loan to value of 31.6% (31 Dec 2016: 39.4%). The increases in gross debt in the period reflects: i) the drawdown from new and existing loan facilities in an aggregate amount of EUR43.3 million, EUR11.3m of which was used to refinance existing Group debt and ii) the repayment of EUR18.3 million of debt in relation to the sale of the Nuremburg & Fürth portfolio. The increase in cash balances, and resulting fall in net loan to value, reflects the cash received in advance of the period end from the disposal of the Nurnberg & Fürth portfolio.
At 30 June 2017, the blended interest rate of the Company's loan book was 1.9% (30 June 2016: 2.0%). The average remaining duration of the loan book at 30 June 2017 was 6.3 years (30 June 2016: 4.7 years).
Since 30 June 2017, the Group has successfully refinanced EUR79.6 million of existing debt, while securing a further equity release of EUR14.8 million on the same pool of properties. The equity release will be used to fund new property acquisitions and also to invest in the existing portfolio. Including the impact of this new financing, the average remaining duration of the loan book would be just under 9 years, providing the Group with stable, long term, low cost funding for many years to come.
Although currently well funded, the Group will continue to assess its funding options for growth, including further debt, equity and joint ventures.
Outlook
Market dynamics are favourable, particularly in Berlin, where demand for rental property is significantly outstripping supply. The demand for rental apartments is driven by inward migration, high job creation levels, and falling unemployment. By contrast, supply of housing stock is limited, constrained by lack of available land for development and new-build construction costs that exceed the value of existing housing stock in most locations.
The net effect of this supply-demand imbalance is upward pressure on new letting prices which, in turn, has created a significant reversionary rental opportunity for the future. The fact that new leases in our Berlin portfolio have been signed at an average 44% premium to in-place rents during the first half of this year suggests that significant potential remains to improve rental incomes even in the event that market rental values were to stabilise.
The rising trend within the Berlin market for private individuals buying apartments is also creating a reversionary opportunity within the Portfolio through selling individual units as condominiums at significant premiums to book carrying values. This potential was clearly demonstrated in our results during the first six months of 2017 and additional properties are in the process of being evaluated as future condominium projects.
Following the disposal of the Company's Nuremberg and Fürth portfolio, and a series of carefully targeted property acquisitions, the Board believes that the Portfolio, with its focus on Central Berlin, is well positioned to take advantage of these trends. Positive market tailwinds, combined with the Company's active asset management strategy, have the potential to generate further growth in rental incomes and property values during the second half of the year.
Identification of business risks
The Group's principal risks and uncertainties are consistent with those set out in the Annual Report for the year ended 31 December 2016 being compliance with financial covenants on bank borrowing, tenant default, liquidity, interest rate hedging instruments, insufficient investment opportunities and interest rate movements on bank borrowings. The Directors consider that the significant areas of judgement made by management that have significant effect on the Group's performance and estimates with a significant risk of material adjustment in the second half of the year are unchanged from those identified in the Annual Report for the year ended 31 December 2016.
Key Performance Indicators
The Company has chosen a number of Key Performance Indicators (KPI's), which the Board believes may help investors understand the performance of the Company and the underlying property portfolio.
In the six months to 30 June 2017:
-- the value of the property portfolio grew by 15.6% on a like-for-like for basis. This increase was driven by yield compression and an increase in like-for-like average rent per let sqm of 5.0% (H1 2016: 5.7%)
-- the EPRA vacancy of the Portfolio at 30 June 2017 stood at 3.7% (30 June 2016: 3.2%)
-- the Group continued with its targeted condominium programme, agreeing sales of EUR3.9 million in the half year to 30 June 2017 (H1 2016: EUR1.2 million)
-- EPRA NAV per share increased by 38% to EUR3.34 as at 30 June (30 June 2016 EUR2.42),
-- the declared dividend for the half year 2017 was EUR2.28 cents (2.0p) per share, an increase of 15% in Euro terms (H1 2016 EUR1.92 cents (1.60p) per share).
Key Performance 2016 2015 2015
Indicator 2017HY 2016FY HY FY HY 2014 2013
Like-for-like
property value
growth 15.6% 19.4% 9.8% 10.6% 5.5% 8.6% 8.8%
Like-for-like
property rent
per sqm EUR 7.8 8.0 7.7 7.4 7.2 7.1 6.8
EPRA vacancy 3.7% 2.6% 3.2% 3.9% 5.6% 4.1% 8.0%
Condominium sales
EURm 3.9 5.7 1.2 4.7 - - -
EPRA NAV per
share EUR 3.34 2.73 2.42 2.28 2.19 2.06 1.92
Dividend per
share p 2.0 5.3 1.6 4.2 1.3 - -
Forward looking statements
The interim management report contains certain
forward looking statements in respect of Phoenix
Spree Deutschland Limited and the operation of
its subsidiaries. These statements and forecasts
involve risk and uncertainty because they relate
to events and depend upon circumstances that
may or may not occur in the future. There are
a number of factors that could cause actual results
or developments to differ materially from those
expressed or implied by these forward looking
statements and forecasts. Nothing in this announcement
should be construed as a profit forecast.
Responsibility statement
We confirm that to the best of our knowledge;
(a) the condensed set of financial statements
gives a true and fair view of the assets, liabilities,
financial position and profit or loss of the
Group, included in the consolidation as a whole
as required by DTR 4.2.4R;
(b) the condensed set of financial statements
has been prepared in accordance with IAS 34 'Interim
Financial Reporting';
(c) the interim management report includes a
fair review of the information required by DTR
4.2.7R (indication of important events during
the first six months and their impact on the
condensed set of financial statements and description
of principal risks and uncertainties for the
remaining six months of the year); and
(d) the interim management report includes a
fair review of the information required by DTR
4.2.8R (disclosure of related party transactions
and changes therein).
By order of the Board of Directors
Robert Hingley
Non-executive Director and Chairman
25 September 2017
Condensed Consolidated Statement of Comprehensive
Income
For the six months ended
30 June 2017
Notes Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
Continuing Operations EUR'000 EUR'000 EUR'000
Revenue 5 9,489 7,624 15,934
Property expenses 6 (14,439) (6,324) (13,351)
------------ ------------ ------------
Gross (loss)/profit (4,950) 1,300 2,583
Other operating income - 57 -
Administrative expenses 7 (1,397) (1,406) (2,977)
Gain on disposal of investment
property 8 767 422 799
Investment property fair
value gain 13 70,084 21,662 55,226
------------ ------------ ------------
Operating profit before
exceptional costs 64,504 22,035 55,631
Exceptional items - transaction
costs 9 - (1,592) -
------------ ------------ ------------
Operating profit 64,504 20,443 55,631
Net finance charge 10 (1,406) (4,788) (6,756)
Profit before taxation 63,098 15,655 48,875
Income tax expense 11 (11,833) (3,269) (10,913)
Profit after taxation 51,265 12,386 37,962
Other comprehensive income - - -
Total comprehensive income
for the period 51,265 12,386 37,962
============ ============ ============
Total comprehensive income
attributable to:
Owners of the parent 50,998 12,144 36,998
Non-controlling interests 267 242 964
------------ ------------ ------------
51,265 12,386 37,962
============ ============ ============
Earnings per share attributable
to the owners of the parent:
From continuing operations
Basic (EUR) 23 0.55 0.14 0.42
Diluted (EUR) 23 0.52 0.14 0.40
============ ============ ============
Condensed Consolidated Statement of Financial
Position
As at 30 June 2017
Notes As at As at As at
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
ASSETS
Non-current assets
Investment properties 13 436,226 329,493 395,829
Property, plant and equipment 55 31 40
Deferred tax asset 11 370 749 770
Loans and receivables 16 2,282 1,409 2,253
438,933 331,682 398,892
Current assets
Investment properties
- held for sale 14 83,504 354 27,970
Trade and other receivables 15 12,893 2,037 7,503
Cash and cash equivalents 32,876 42,039 18,450
129,273 44,430 53,923
Total assets 568,206 376,112 452,815
============ ============ ============
EQUITY AND LIABILITIES
Current liabilities
Borrowings 17 2,793 8,418 9,169
Trade and other payables 18 37,108 935 1,331
Derivative financial
instruments 19 - - 392
Current tax 19 9 24
39,920 9,362 10,916
Non-current liabilities
Borrowings 17 194,404 135,218 176,423
Derivative financial
instruments 19 2,336 4,734 4,477
Other financial liabilities 20 4,696 3,113 3,590
Deferred tax liability 33,572 14,500 22,150
------------ ------------ ------------
235,008 157,565 206,640
------------ ------------ ------------
Total liabilities 274,928 166,927 217,556
------------ ------------ ------------
Equity
Stated capital 22 162,630 164,230 162,630
Share based payment reserve 21 18,267 4,101 7,614
Retained earnings 111,173 40,854 64,074
------------ ------------ ------------
Equity attributable to
owners of the parent 292,070 209,185 234,318
Non-controlling interest 1,208 - 941
Total equity 293,278 209,185 235,259
------------ ------------ ------------
Total equity and liabilities 568,206 376,112 452,815
============ ============ ============
Condensed Consolidated Statement of Changes in
Equity
For the six months ended
30 June 2017
Attributable to the owners
of the parent
Share
based
Stated payment Retained Non-controlling Total
capital reserve earnings Total interest equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1
January
2016 115,150 1,264 32,125 148,539 2,626 151,165
Comprehensive
income:
Profit for the
period - - 12,144 12,144 242 12,386
Other comprehensive - - - - - -
income
------------------- --------- ---------- -------- ---------------- --------
Total comprehensive
income for the
period - - 12,144 12,144 242 12,386
Transactions with
owners - recognised
directly in equity:
Issue of share
capital 49,080 - - 49,080 - 49,080
Dividends paid - - (3,414) (3,414) - (3,414)
Performance fee - 2,837 - 2,837 - 2,837
Recognition of
redemption
liability - - (1) (1) (2,868) (2,869)
Balance at 30
June 2016 164,230 4,101 40,854 209,185 - 209,185
Comprehensive
income:
Profit for the
period - - 24,854 24,854 722 25,576
Other comprehensive - - - - - -
income
------------------- --------- ---------- -------- ---------------- --------
Total comprehensive
income for the
period - - 24,854 24,854 722 25,576
Transactions with
owners - recognised
directly in equity:
Dividends paid - - (1,634) (1,634) - (1,634)
Performance fee - 3,513 - 3,513 - 3,513
Recognition of
redemption
liability - - - - (722) (722)
Acquisition of
subsidiaries - - - - 941 941
Cost related to
share placing (1,600) - - (1,600) - (1,600)
Balance at 31
December 2016 162,630 7,614 64,074 234,318 941 235,259
Comprehensive
income:
Profit for the
period - - 50,998 50,998 267 51,265
Other comprehensive - - - - - -
income
------------------- --------- ---------- -------- ---------------- --------
Total comprehensive
income for the
period - - 50,998 50,998 267 51,265
Transactions with
owners - recognised
directly in equity:
Dividends paid - - (3,899) (3,899) - (3,899)
Performance fee - 10,653 - 10,653 - 10,653
Balance at 30
June 2017 162,630 18,267 111,173 292,070 1,208 293,278
=================== ========= ========== ======== ================ ========
Condensed Consolidated Statement of Cash Flows
For the six months ended 30
June 2017
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Profit before tax 63,098 15,655 48,875
Adjustments for:
Net finance charge 1,406 4,788 6,756
Gain on disposal of investment
property (767) (422) (799)
Investment property revaluation
gain (70,084) (21,662) (55,226)
Depreciation 11 5 12
Performance fee charge 10,653 2,837 6,350
------------ ------------ ------------
Operating cash flows before
movements in working capital 4,317 1,201 5,968
(Increase)/decrease in receivables (5,362) 481 (3,808)
Increase/(decrease) in payables 607 (1,749) (1,353)
Cash (used in)/generated from
operating activities (438) (67) 807
Income tax (paid)/received - - -
------------ ------------ ------------
Net cash (used in)/generated
from operating activities (438) (67) 807
Cash flow from investing activities
Proceeds on disposal received 35,170 - -
in advance
Proceeds on disposal of investment
property 9,063 2,277 4,250
Bank interest received 106 102 168
Capital expenditure on investment
property (2,950) (1,303) (4,189)
Property additions (31,037) (25,183) (72,808)
Additions to property, plant
and equipment (26) (6) (22)
Loans issued to minority shareholders - - (806)
Net cash used in investing
activities 10,326 (24,113) (73,407)
Cash flow from financing activities
Interest paid on bank loans (3,161) (1,756) (3,173)
Repayment of bank loans (31,771) (6,815) (6,040)
Drawdown on bank loan facilities 43,365 16,650 45,394
Share issue - 49,080 47,480
Dividends paid (3,899) (3,414) (5,049)
Net cash generated from financing
activities 4,534 53,745 78,612
Net increase in cash and cash
equivalents 14,422 29,565 6,012
Cash and cash equivalents at
beginning of period 18,450 12,757 12,757
Exchange gains/(losses) on
cash and cash equivalents 4 (283) (319)
Cash and cash equivalents at
end of period 32,876 42,039 18,450
============ ============ ============
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 30 June 2017
1. General information
Phoenix Spree Deutschland Limited is a public limited
company which is listed on the premium segment of
the main market of the London Stock Exchange and
is incorporated and domiciled in Jersey, and operates
out of Jersey and Germany. The Group's principal
activity is the holding of investment properties
located in Germany. The Company's ordinary shares
were admitted to trading on the London Stock Exchange
on 15 June 2015.
The registered office of the Company is 13-14 Esplanade,
St. Helier, Jersey JE1 1EE.
2. Basis of preparation
The interim set of condensed consolidated financial
statements has been prepared in accordance with the
Disclosure and Transparency Rules of the Financial
Conduct Authority and with IAS 34 Interim Financial
Reporting as adopted by the European Union.
The interim condensed consolidated financial statements
do not include all the information and disclosures
required in the annual financial statements, and
should be read in conjunction with the Group's annual
financial statements for the year ended 31 December
2016.
As required by the Disclosure and Transparency Rules
of the Financial Conduct Authority, the financial
statements have been prepared applying the accounting
policies and presentation that were applied in the
preparation of the Company's published consolidated
financial statements for the year ended 31 December
2016.
The comparative figures for the financial year ended
31 December 2016 are extracted from but do not comprise,
the Group's annual financial statements for that
financial year.
The interim condensed consolidated financial statements
were authorised and approved for issue on 25 September
2017.
The interim condensed consolidated financial statements
are neither reviewed nor audited, and do not constitute
statutory accounts within the meaning of Section
105 of the Companies (Jersey) Law 1991.
Going concern
The interim condensed consolidated financial statements
have been prepared on a going concern basis which
assumes the Group will be able to meet its liabilities
as they fall due for the foreseeable future. The
Directors have prepared cash flow forecasts which
show that the cash generated from operating activities
will provide sufficient cash headroom for the foreseeable
future.
3. Critical accounting judgements and
estimates
The preparation of the interim condensed consolidated
financial statements in conformity with IFRS requires
the Group to make certain critical accounting estimates
and judgements. In the process of applying the Group's
accounting policies, management has decided the following
estimates and assumptions have a significant risk
of causing a material adjustment to the carrying
amounts of assets and liabilities recognised in the
condensed consolidated financial statements.
Estimate of fair value of investment properties
The best evidence of fair value is current prices
in an active market for similar properties and other
contracts. In the absence of such information, the
Group determines the amount within a range of reasonable
fair value estimates. In making its judgement, the
Group considers information from a variety of sources
including:
a) Current prices in an active market, and the opinion
of its third party independent experts, for properties
of different nature, condition or location (or subject
to different lease or other contracts), adjusted
to reflect those differences.
b) Recent prices of similar properties in less active
markets, with adjustments to reflect any changes
in economic conditions since the date of the transactions
that occurred at those prices.
c) Discounted cash flow projections based on reliable
estimates of future cash flows, derived from the
terms of any existing lease and other contracts,
and (where possible) from external evidence such
as current market rents for similar properties in
the same location and condition, and using discount
rates that reflect current market assessments of
the uncertainty in the amount and timing of the cash
flows.
For further information with regards to the movement
in the fair value of the Group's investment properties,
refer to the management report on pages 3 to 4.
4. Segmental Information
Information reported to the Board of Directors, which
is the chief operating decision maker, for the purposes
of resource allocation and assessment of segment
performance is focussed on the different revenue
streams that exist within the Group. The Group's
principal reportable segments under IFRS 8 are therefore
as follows:
-- Residential
-- Commercial
All revenues are earned in Germany with property
and administrative expenses incurred in Jersey and
Germany.
4. Segmental Information
(continued)
31 December 2016 (audited)
Residential Commercial Unallocated Total
EUR'000 EUR'000 EUR'000 EUR'000
Investment property 332,496 63,333 - 395,829
Loans and receivables - - 2,253 2,253
Assets held for sale 23,495 4,475 - 27,970
Other assets 22,447 4,276 40 26,763
Liabilities (179,711) (34,231) (3,614) (217,556)
------------ ----------- ------------ ----------
Net assets 198,727 37,853 (1,321) 235,259
============ =========== ============ ==========
Residential Commercial Unallocated Total
EUR'000 EUR'000 EUR'000 EUR'000
Revenue 13,385 2,549 - 15,934
Property expenses (11,215) (2,136) - (13,351)
Administrative expenses - - (2,977) (2,977)
Gain on disposal of
investment property 799 - - 799
Investment property
fair value gain 46,390 8,836 - 55,226
Operating profit 49,359 9,249 (2,977) 55,631
------------ ----------- ------------ ----------
Net finance charge (6,756)
Income tax expense (10,913)
Profit for the year 37,962
==========
30 June 2016 (unaudited)
Residential Commercial Unallocated Total
EUR'000 EUR'000 EUR'000 EUR'000
Investment property 273,479 56,014 - 329,493
Loans and receivables - - 1,409 1,409
Other assets 37,559 7,620 31 45,210
Liabilities (135,958) (27,847) (3,122) (166,927)
------------ ----------- ------------ ----------
Net assets 175,080 35,787 (1,682) 209,185
============ =========== ============ ==========
Residential Commercial Unallocated Total
EUR'000 EUR'000 EUR'000 EUR'000
Revenue 6,328 1,296 - 7,624
Property expenses (5,249) (1,075) - (6,324)
Other operating income - - 57 57
Administrative expenses - - (1,406) (1,406)
Gain on disposal of
investment property 422 - - 422
Investment property
fair value gain 17,979 3,683 - 21,662
Operating profit 19,480 3,904 (1,349) 22,035
------------ ----------- ------------ ----------
Exceptional costs (1,592)
Net finance charge (4,788)
Income tax expense (3,269)
Profit for the period 12,386
==========
4. Segmental Information
(continued)
30 June 2017 (unaudited)
Residential Commercial Unallocated Total
EUR'000 EUR'000 EUR'000 EUR'000
Investment property 368,306 67,920 - 436,226
Loans and receivables - - 2,282 2,282
Assets held for sale 70,502 13,002 - 83,504
Other assets 38,955 7,184 55 46,194
Liabilities (228,141) (42,072) (4,715) (274,928)
------------ ----------- ------------ ----------
Net assets 249,622 46,034 (2,378) 293,278
============ =========== ============ ==========
Residential Commercial Unallocated Total
EUR'000 EUR'000 EUR'000 EUR'000
Revenue 8,012 1,477 - 9,489
Property expenses (12,191) (2,248) - (14,439)
Administrative expenses - - (1,397) (1,397)
Gain on disposal
of investment property 767 - - 767
Investment property
fair value gain 59,172 10,912 - 70,084
Operating profit 55,760 10,141 (1,397) 64,504
------------ ----------- ------------ ----------
Net finance charge (1,406)
Income tax expense (11,833)
Profit for the period 51,265
==========
5. Revenue
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Rental income 9,489 7,624 15,934
============ ============ ============
6. Property expenses
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Property management
expenses 572 529 1,100
Repairs and maintenance 599 543 1,102
Doubtful debt expense 182 130 88
Other property expenses 406 742 1,324
Property advisors' fees and expenses 2,027 1,543 3,387
Property advisors' performance fee accrual 10,653 2,837 6,350
14,439 6,324 13,351
============ ============ ============
7. Administrative
expenses
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Secretarial & administration
fees 330 304 658
Legal & professional
fees 754 587 1,494
Directors' fees 76 44 150
Accountancy fees 167 121 445
Audit fees 79 51 141
Bank charges 11 11 32
(Profit)/loss on foreign
exchange (4) 283 319
Depreciation 11 5 12
Other income relating
to cost recovery (27) - (274)
1,397 1,406 2,977
============ ============ ============
8. Gain on disposal of investment property
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Proceeds 9,063 2,277 4,250
Book value of disposals (8,140) (1,855) (3,405)
Disposal costs (156) - (46)
------------ ------------ ------------
767 422 799
------------ ------------ ------------
Disposals consist of one rental property sold in
February 2017 at its book value of EUR3,800,000,
resulting in no gain; and condominium sales, accounting
for the remainder of the disposal proceeds and
net book value.
9. Exceptional costs
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Professional fees - 1,592 -
associated with share
placing
- 1,592 -
============ ============ ============
Exceptional costs comprise of costs directly attributable
to the share placing on the London Stock Exchange.
The fees were reallocated against equity in the
financial statements for the year ended 31 December
2016 in accordance with IAS 32
10. Net finance charge
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Interest income (77) (102) (113)
Interest accrued from
partner loans (29) - (55)
(Gain)/loss on interest
rate swaps (2,533) 2,865 3,000
Interest payable on
bank borrowings 2,403 1,640 3,924
Fees associated with
early termination
of debt finance 536 141 -
Finance cost of redemption
liability 1,106 244 -
1,406 4,788 6,756
==================== ==================== ============
11. Taxation
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
The tax charge for
the period is as
follows: EUR'000 EUR'000 EUR'000
Current tax charge 11 8 24
Adjustment in respect
of prior year - - (1)
Deferred tax charge 11,822 3,261 10,890
Current tax charge
for the period 11,833 3,269 10,913
============ ============ ============
Capital Interest Total
gains rate swaps
on properties
The movement in respect EUR'000 EUR'000 EUR'000
of deferred taxation
is as follows:
(Liability) Asset (Net
liability)
Balance at 1 January
2016 (10,786) 296 (10,490)
Movement for the
period (3,714) 453 (3,261)
--------------- ------------ -------------
Deferred tax at 30
June 2016 (14,500) 749 (13,751)
Movement for the
period (7,650) 21 (7,629)
--------------- ------------ -------------
Deferred tax at 31
December 2016 (22,150) 770 (21,380)
Movement for the
period (11,422) (400) (11,822)
--------------- ------------ -------------
Deferred tax at 30
June 2017 (33,572) 370 (33,202)
=============== ============ =============
12. Dividends
As at As at As at
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Dividends on participating
shares proposed for approval
(not recognised as a liability
at 30 June 2017)
Proposed interim dividend
for the year ended 31 December
2017 of EUR2.28c (2.00p)
(2016: 1.60p (EUR1.92c))
per share 2,108 1,771 -
Proposed final dividend for
the year ended 31 December
2016 of EUR4.30c (3.70p)
(2015: EUR3.90c (2.90p))
per share - - 3,977
============ ============ ============
Amounts recognised as distributions
to equity holders in the
period:
Interim dividend for the
year ended 31 December 2016
of EUR1.92c (1.60p) (2015:
EUR1.80c (1.30p)) per share - - 1,634
Final dividend for the year
ended 31 December 2016 of
EUR4.30c (3.70p) (2015: EUR3.90c
(2.90p)) per share 3,899 3,414 -
============ ============ ============
13. Investment properties
EUR'000
Fair Value
At 1 January 2016 283,554
Capital expenditure 1,303
Disposals (1,855)
Reclassified as investment
properties held for sale (354)
Property additions 25,183
Revaluation gain 21,662
----------
At 30 June 2016 329,493
Capital expenditure 2,886
Disposals (1,550)
Reclassified as investment
properties held for sale (27,616)
Property additions 59,052
Revaluation gain 33,564
----------
At 31 December 2016 395,829
Capital expenditure 2,950
Reclassified as investment properties -
held for sale (63,674)
Property additions 31,037
Revaluation gain 70,084
----------
At 30 June 2017 436,226
==========
The property portfolio was valued at 30 June 2017
by the Group's independent valuers, Jones Lang
LaSalle GmbH ("JLL"), in accordance with the following
described methodology.
The valuation is performed on a building-by-building
basis and the source information on the properties
including current rent levels, void rates and non-recoverable
costs was provided to JLL by the Property Advisors
PMM Partners (UK) Limited. Assumptions with respect
to rental growth, adjustments to non-recoverable
costs and the future valuation of these are those
of JLL. Such estimates are inherently subjective
and actual values can only be determined in a sales
transaction.
Having reviewed the JLL report, the Directors are
of the opinion that this represents a fair and
reasonable valuation of the properties and have
consequently adopted this valuation in the preparation
of this financial information.
The valuations have been prepared by JLL on a consistent
basis at each reporting date and the methodology
is consistent and in accordance with IFRS, which
requires that the 'highest and best use' value
is taken into account where that use is physically
possible, legally permissible and financially feasible
for the property concerned, and irrespective of
the current or intended use.
All Properties are valued as level 3 measurements
under the fair value hierarchy (see note 25) as
the inputs which have significant effect on the
recorded fair value are not observable for the
discounted cash flow method.
The unrealised fair value gain in respect of investment
property is disclosed in the Statement of Comprehensive
Income as "Investment property fair value gain".
Discounted cash flow method (DCF)
Under the DCF method, a property's fair value is
estimated using explicit assumptions regarding
the benefits and liabilities of ownership over
the asset's life including an exit or terminal
value. As an accepted method within the income
approach to valuation the DCF method involves the
projection of a series of cash flows on a real
property interest. To this projected cash flow
series, an appropriate, market-derived discount
rate is applied to establish the present value
of the income stream associated with the real property.
The duration of the cash flow and the specific
timing of inflows and outflows are determined by
events such as rent reviews, lease renewal and
related lease up periods, re-letting, redevelopment,
or refurbishment. The appropriate duration is typically
driven by market behaviour that is a characteristic
of the class of real property. Periodic cash flow
is typically estimated as gross income less vacancy,
non-recoverable expenses, collection losses, lease
incentives, maintenance cost, agent and commission
costs and other operating and management expenses.
The series of periodic net operating incomes, along
with an estimate of the terminal value anticipated
at the end of the projection period, is then discounted.
The frequency of inflows and outflows (monthly,
quarterly, annually) is contract and market-derived.
An appropriate discount rate is then applied to
the cash flow. If the frequency of the time points
selected for the cash flow is, for example, quarterly,
the discount rate must be the effective quarterly
rate and not a nominal rate. The DCF method assumes
that cash outflows occur in the same period that
expenses are recorded. The exit yield is normally
separately determined and differs from the discount
rate.
The discount rate reflects the opportunity and
risk aspects of the market yield demanded by investors,
and consist of an interest rate for a risk-free
investment, as well as a premium, to account for
specific investment risks associated with real
estate investments.
The exit yield (capitalisation rate) is used to
capitalise the stabilised net operating income
at year 10 in to perpetuity, as it is assumed that
properties are kept in stock after the detailed
10 year planning period. The exit yield is based
on each property's individual discount rate.
Comparable Valuation Method
The properties held for sale are also valued with
the DCF method, but with a privatisation scenario
(sale of all units within a defined period of time)
based on comparable sales prices for condominiums.
The properties with the sales potential are valued
using the same DCF method as with a rental scenario,
however, the sales potential is reflected by using
lower discount rate.
The total of properties under a privatisation scenario
will not equal Investment property - held for sale
as there are other properties notarised for sale
or being marketed for sale.
Notarised disposal price
Where the group has notarised properties for sale,
and which have not completed at the reporting date,
the properties have been valued at their disposal
price. These have also been included for reference
in the following table. (Disposal Scenario).
The table below sets out the assets valued using
the discounted cash flow method (Rental scenario),
comparable valuation (Privatisation scenario),
and the assets notarised for disposal (Disposal
scenario).
As at As at As at
30 June 30 June 31 December
2017 2016 2016
EUR'000 EUR'000 EUR'000
Rental Scenario 448,622 325,197 388,509
Privatisation Scenario 25,463 4,650 35,290
Disposal scenario 45,645 - -
--------- -------- ------------
Total 519,730 329,847 423,799
========= ======== ============
14. Investment properties - held for sale
Fair Value EUR'000
At 1 January 2016 -
Reclassified from investment
properties 354
---------
At 30 June 2016 354
Reclassified from investment
properties 27,616
---------
At 1 January 2017 27,970
Disposals (8,140)
Reclassified from investment
properties 63,674
---------
At 30 June 2017 83,504
=========
Under IFRS 5, Investment properties are re-classified
as current assets, and described as 'held for sale'
when at the reporting date, the Group has obtained
and implemented all relevant permissions required
to sell individual the assets; and efforts are
being made to dispose of the assets. The assets
held for sale are disclosed in the Segmental Information
note 4.
Held for sale includes three different types of
property: Properties notarised for sale, properties
being privatised under the condominium strategy,
and properties which are being marketed for sale
but currently have not been notarised.
Investment properties - held for sale are all expected
to be sold within 12 months of the reporting date.
15. Trade and other
receivables
As at As at As at
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Trade receivables 1,135 995 1,344
Less: Impairment provision (565) (318) (383)
------------ ------------ ------------
Net receivables 570 677 961
Prepayments and accrued
income 7,203 1,051 6,050
Investment property
disposal proceeds receivable 3,490 - 21
Sundry receivables 1,630 309 471
12,893 2,037 7,503
============ ============ ============
Prepayments and accrued income contains a EUR5.1 million payment, including acquisition costs, for property Mittelbruchzeile 112; as well as a EUR0.7 million deposit for the Investix Portfolio. Mittelbruchzeile 112 completed in July 2017, and the Investix portfolio is expected to complete in September 2017.
Investment Property Disposal Proceeds Receivable consists of cash held on the notary account from sales of condominiums in Boxhagener Str. which is expected to be transferred across to the fund in October 2017
16. Loans and receivables
As at As at As at
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Loans issued - Balance
at start of period 2,253 1,338 1,382
Loans issued to minority
interest - initial recognition - - 806
Accrued interest 41 71 65
Loan repayments made in (12) - -
period
------------- ------------ --------------
2,282 1,409 2,253
============= ============ ==============
In 2015 the Group entered into loan agreements
with Mike Hilton and Paul Ruddle in connection
with the acquisition of Phoenix Spree Property
Fund Ltd. & Co KG ('PSPF'). The loans bear interest
at 4% per annum, and have a maturity of less than
five years.
The group also entered into a loan agreement with
the minority interest (Accentro Real Estate KG)
in relation to the acquisition of Laxpan Mueller
GmbH and Invador Grundbesitz GmbH in 2016. This
loan bears interest at 3% per annum.
17. Borrowings
As at As at As at
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Current liabilities
Bank loans - Kreissparkasse
Boblingen
District Savings Bank 2,793 - 2,869
Bank loans - Sparkasse Langenfeld - - 6,300
Bank loans - Deutsche Hypothekenbank - 8,418 -
AG
------------ ------------ ------------
2,793 8,418 9,169
Non-current liabilities
Bank loans - Deutsche Genossenschafts
-Hypothekenbank AG 164,023 132,275 171,418
Bank loans - HypoVereinsbank - - 5,005
Bank loans - Berliner Sparkasse 30,381 - -
Bank loans - Kreissparkasse
Boblingen
District Savings Bank - 2,943 -
------------ ------------ ------------
194,404 135,218 176,423
197,197 143,636 185,592
============ ============ ============
For further information on borrowings, refer to the management report on page 7.
18. Trade and other
payables
As at As at As at
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Trade payables 978 641 791
Other payables 596 - -
Consideration received
in advance on sale
of Nurnberg Furth
Portfolio 35,170 - -
Other provisions and
accrued liabilities 363 294 533
Tenant deposits 1 - 7
VAT - - -
------------ ------------ ------------
37,108 935 1,331
============ ============ ============
19. Derivative financial
instruments
As at As at As at
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Interest rate swaps -
carried at fair value
through profit or loss
Balance at start of period 4,869 1,869 1,869
Additions on acquisition - - 392
(Gain)/loss in movement
in fair value through
profit or loss (2,533) 2,865 2,608
------------ ------------ ------------
Balance at end of period 2,336 4,734 4,869
============ ============ ============
The notional principal amounts of the outstanding interest rate swap contracts at 30 June 2017 were EUR182,948,000 (31 December 2016: EUR175,932,000, 30 June 2016: EUR133,436,000). At 30 June 2017, the fixed interest rates varied from 0.27% to 1.85% above the main factoring Euribor rate.
Maturity analysis of interest rate swaps
As at As at As at
30 June 30 June 31 December
2017 2016 2016
Less than 1 year - - 392
Between 1 and 2 years - 1,250 -
Between 2 and 5 years 1,161 3,484 -
More than 5 years 1,175 - 4,477
-------- -------- ------------
2,336 4,734 4,869
======== ======== ============
20. Other financial liabilities
As at As at As at
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Balance at start of period 3,590 - -
Recognition of redemption
liability - 2,869 2,626
Finance cost on redemption
liability 1,106 244 -
Increase in profit attributable
to NCI - - 964
------------ ------------ ------------
Balance at end of period 4,696 3,113 3,590
============ ============ ============
The redemption liability relates to the put option
held by the minority shareholders of PSPF for the
purchase of the minority interest in PSPF. The option
period starts on 6 June 2020. The valuation of the
purchase price will be based on the last published
financial results as at the date the option is put
to the parent.
The recognition of the redemption liability has
been accounted for as a financial obligation to
the fund; and any movement in this liability is
recognised as a charge to the Condensed Consolidated
Statement of Comprehensive Income under net finance
charge. Also see the Condensed Consolidated Statement
of Changes in Equity for the recognition accounting.
21. Share based payment reserves
Performance
fee
EUR'000
Balance at 1 January
2016 1,264
Fee accrued for the period 2,837
------------
Balance at 30 June 2016 (unaudited) 4,101
Fee accrued for the period 3,513
------------
Balance at 31 December 2016 (audited) 7,614
Fee accrued for the period 10,653
------------
Balance at 30 June 2017 (unaudited) 18,267
============
22. Stated capital
As at As at As at
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Issued and fully paid:
40,522,364 participating
shares of no par value,
issued at a consideration
of GBP1 each 60,027 60,027 60,027
5,896,369 participating
shares of no par value,
issued at a consideration
of GBP1.11 each 7,681 7,681 7,681
19,237,484 participating
shares of no par value,
issued at a consideration
of GBP1.46 each 39,052 39,052 39,052
4,216,080 participating
shares of no par value,
issued at a consideration
of GBP1.44 each 8,390 8,390 8,390
22,619,047 participating
shares of no par value,
issued at a consideration
of GBP1.68 each on 4 March
2016 47,480 49,080 47,480
------------ ------------ ------------
162,630 164,230 162,630
============ ============ ============
During the period ended 30 June 2016, placing costs
of EUR1,592,000 were shown as an exceptional item
in the financial statements. The total amount of
EUR1,600,000 was reallocated against equity in the
financial statements for the year ended 31 December
2016 in accordance with IAS 32. The total number
of shares in issue at 31 December 2016 was 92,491,344.
23. Earnings per share
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
Earnings for the purposes
of basic earnings per
share being net profit
attributable to owners
of the parent (EUR'000) 50,998 12,144 36,998
Weighted average number
of ordinary shares for
the purposes of basic
earnings per share (Number) 92,491,344 84,661,574 88,587,235
Effect of dilutive potential
ordinary shares (Number) 5,471,487 2,075,930 2,829,885
Weighted average number
of ordinary shares for
the purposes of diluted
earnings per share (Number) 97,962,831 86,737,504 91,471,120
Earnings per share (EUR) 0.55 0.14 0.42
Diluted earnings per share
(EUR) 0.52 0.14 0.40
24. Net asset value per share
and EPRA net asset value
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
Net assets (EUR'000) 292,070 209,185 234,318
Number of participating
ordinary shares 92,491,344 92,491,344 92,491,344
Net asset value per share
(EUR) 3.16 2.26 2.53
EPRA net asset value 30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
Net assets (EUR'000) 292,070 209,185 234,318
Add back deferred tax assets
and liabilities, derivative
financial instruments,
goodwill and adjusting
for the dilutive effect
of shares to be issued
in respect of the performance
fee 17,271 14,384 18,635
EPRA net asset value (EUR'000) 309,341 223,569 252,953
EPRA net asset value per
share (EUR) 3.34 2.42 2.73
25. Financial instruments
The Group is exposed to the risks that arise from
its use of financial instruments. This note describes
the objectives, policies and processes of the Group
for managing those risks and the methods used to
measure them. Further quantitative information in
respect of these risks is presented throughout this
financial information.
Principal financial instruments
The principal financial instruments used by the
Group, from which financial instrument risk arises,
are as follows:
* Financial assets
* Cash and cash equivalents
* Trade and other receivables
* Trade and other payable
* Borrowings
* Derivative financial instruments
The Group held the following financial assets at
each reporting date:
30-Jun-17 30-Jun-16 31-Dec-16
EUR'000 EUR'000 EUR'000
Loans and receivables:
Trade and other receivables:
current 5,690 986 1,453
Cash and cash equivalents 32,876 42,039 18,450
Loans and receivables 2,282 1,409 2,253
---------- ---------- ----------
40,848 44,434 22,156
---------- ---------- ----------
The Group held the following financial liabilities
at each reporting date:
30-Jun-17 30-Jun-16 31-Dec-16
EUR'000 EUR'000 EUR'000
Held at amortised cost:
Borrowings payable: current 2,793 8,418 9,169
Borrowings payable: non-current 194,404 135,218 176,423
Other financial liabilities 4,696 3,113 3,590
Trade and other payables 37,108 935 1,331
239,001 147,684 190,513
========== ========== ==========
Fair value through profit
or loss:
Derivative financial liability
- interest rate swaps 2,336 4,734 4,869
-------- -------- --------
2,336 4,734 4,869
241,337 152,418 195,382
======== ======== ========
With the exception of the variable rate borrowings,
the fair values of the financial assets and liabilities
are not materially different to their carrying values
due to the short-term nature of the current assets
and liabilities or due to the commercial variable
rates applied to the long term liabilities.
Interest rate swaps are initially recognised at
fair value at the date of inception and are subsequently
remeasured at their fair value at the reporting
date.
The interest rate swaps are expected to mature between
November 2017 and February 2027.
The Group uses the following hierarchy for determining
and disclosing the fair value of financial instruments
by valuation technique:
Level 1: quoted (unadjusted) prices in active markets
for identical assets or liabilities;
Level 2: other techniques for which all inputs which
have a significant effect on the recorded fair value
are observable, either directly or indirectly; and
Level 3: techniques which use inputs which have
a significant effect on the recorded fair value
that are not based on observable market data.
During each of the reporting periods, there were
no transfers between valuation levels.
Under interest rate swap contracts, the Group agrees
to exchange the difference between fixed and floating
rate interest amounts calculated on agreed notional
principal amounts. Such contracts enable the Group
to mitigate the risk of changing interest rates
on the cash flow exposures on the issued variable
rate debt held.
Sensitivity analysis has not been performed as all
variable rate borrowings have been swapped to fixed
interest rates and potential movements on cash at
bank balances are immaterial.
26. Related party
transactions
Related party transactions not disclosed elsewhere
are as follows:
R Prosser is a director of Estera Fund Administrators
(Jersey) Limited which provides administration services
to the Company.
A Weaver is a partner of the Jersey law firm, Appleby,
which provides legal services to the Company and
a member of Appleby group.
During the six month period ended 30 June 2017, an
amount of EUR328,952 (June 2016: EUR378,664 and December
2016: EUR657,751) was payable to Estera Fund Administrators
(Jersey) Limited for accounting, administration and
secretarial services. At June 2017, EUR182,222 (June
2016: EUR330,229 and December 2016: EUR187,515) was
outstanding.
During the six month period ended 30 June 2017, an
amount of EUR24,570 (June 2016: EUR39,523 and December
2016: EUR60,337) was payable to Appleby, law firm
for legal and professional services. At June 2017
EUR2,568 (June 2016: EUR30,354 and December 2016:
EUR9,495) was outstanding.
M Northover is a Director of, and shareholder of
PMM Partners (UK) Limited, the Company's appointed
Property Advisor. During the six month period ended
30 June 2017, an amount of EUR2,027,000 (June 2016:
EUR1,543,000 and December 2016: EUR3,387,000) was
payable to PMM Partners (UK) Limited. At June 2017
EURNil (June 2016: EURNil and December 2016: EURNil)
was outstanding.
The Property Advisor is also entitled to an asset
and estate management performance fee. The charge
for the period in respect of the performance fee
was EUR10,653,000 (June 2016: EUR2,837,000 and December
2016 EUR6,350,000).
The Group entered into unsecured loan agreements
with M Hilton and P Ruddle (both Directors of and
shareholders in PMM Partners (UK) Limited) in connection
with the acquisition of PSPF. The nominal value of
the loan was EUR669,000 at first issue in 2015, and
as at the June 2017 EUR727,900 each was owed to the
Group. The loans bear interest of 4% per annum.
27. Subsequent events
The Group exchanged contracts in September 2017 for
the acquisition of a portfolio of seven properties
in Berlin for consideration of EUR22.0 million. This
transaction is expected to complete in November 2017.
The Group also exchanged contracts in September 2017
for a property in Berlin for consideration of EUR7.0
million. This portfolio is expected to complete in
December 2017.
The Group had exchanged contracts for the acquisition
of a portfolio and a single property in Berlin with
an aggregate purchase price of EUR11.6 million prior
to the balance sheet date, which had not yet completed
at the balance sheet date. The single property with
value of EUR4.5 million completed in Q3 2017, and
the Investix Portfolio with a purchase price EUR7.1
million is expected to complete in September 2017.
The Group has notarised for sale all the properties
held by a subsidiary fund, which are located in the
Nurnberg and Furth area, for a gross consideration
of EUR35.2 million. The transaction completed in
July 2017.
The Group had notarised for sale six properties in
non-Berlin regions prior to the balance sheet date
for EUR12.6 million which had yet to complete at
the balance sheet date. Of these notarised assets
EUR9.5 million have since completed, leaving EUR3.1
million remaining to complete.
One of these disposals was the sole property securing
against a EUR2.8 million loan from Kreissparkasse
Boblingen District Savings Bank. This loan was subsequently
repaid on disposal of the property in August 2017.
The Group had exchanged contracts for the sale of
four condominiums in Berlin with an aggregate sales
price of EUR1.2 million prior to the balance sheet
date, which as at the 30 June 2017 had not completed.
One of these condominium sales has subsequently completed
in Q3 2017 at a value of EUR0.3 million. The remaining
three are due to complete in Q3 2017.
In July 2017, the Group refinanced the majority of
its existing loans with Deutsche Genossenschafts-Hypothekenbank
Aktiengesellschaft with a EUR98.0 million facility,
obtaining an equity release of EUR14.8 million. The
debt was secured against the value of current properties.
The group signed a new loan of EUR8.7 million secured
against new property acquisitions, which is yet to
disperse.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BXGDCGUDBGRU
(END) Dow Jones Newswires
September 26, 2017 02:00 ET (06:00 GMT)
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