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Company Announcements

Half-year Report

By LSE RNS

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 €9.5m, (H1 2016 €7.6m)

-       Profit before tax up 303% year-on-year to €63.1m, (H1 2016 €15.7m)

-       EPRA NAV per share up 22.3% in H1 2017 to €3.34 per share (31 December 2016: €2.73) 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 €2.28cents (GBP 2.0p), up 25% year-on-year (H1 2016: €1.92cents (1.6p))

 

Operational highlights

-       Portfolio value increased by 22.6% in H1 2017 to €519.7 million. (31 December 2016: €423.8 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 €3,687, a 59.8% premium to portfolio average value per sqm at 30 June 2017

-       Five property acquisitions in Berlin completed for €27.7m in H1 2017, with a further two notarised in H1 and due to complete in H2 2017 with a value of €11.6m

-       Nuremberg and Fürth portfolio disposed for €35.2m 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 €95.9m, 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 €2.28cents (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




 

€ 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 (€)

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 (€)

3.34

2.42

            2.73


 

EPRA NAV per share (£) 2

          2.94

          2.02

            2.33


 

Dividend per share (€ cents)

          2.3

          1.9

            6.3


 

Dividend per share (£ pence) 2

          2.0

          1.6

            5.3


 

EPRA NAV per share total return for period (€%)

23.7%

7.8%

22.5%


 

EPRA NAV per share total return for period (£%)

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 €519.7 million (31 December 2016: €423.8 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 €2,308 (31 December 2016: €1,965) 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 €25.5m (31 December 2016: €24.2m). 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 €3.34 (£2.94) (31 December 2016: €2.73 (£2.33)). After taking into account the 2016 final dividend of €4.3cents (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 €19.2m (30 June 2016: €15.1m). 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 €7.7 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 €10.0 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 €11.2 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 €27.7 million and representing an average price per square metre of €2,050. 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 €11.6 million and representing an average price per square metre of €2,045.

 

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 €48.4 million, excluding purchase costs. Of this, €19.4 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 €35.2m. These properties had been acquired in 2007 and 2008 for an aggregate purchase price of €13.9m 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 €10.5 million. A further non-Berlin asset was notarised for sale in August 2017 with a value of €2.1 million. Of these properties notarised for sale, €9.5 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 €3.0 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 €3.9 million. The average sales' value per sqm achieved was €3,687, 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

 

Market

Buildings

Residential

Commercial

Total

Total sqm

Annualised Gross rent

Fully occupied gross yield

Valuation

% of fund  by value

Value


number

units

units

units

('000)

 (€m)

(%)

 (€m)

(%)

 per sqm (€)

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 €7.9 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 €7.5, 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

 

Market

Average Rent per sqm
(€)

Average Rent per sqm
(€)

Average rent growth
(%)

LFL Growth

(%)

LFL Growth

(%)

Reported Vacancy
(%)

Reported Vacancy
(%)

EPRA Vacancy

(%)

EPRA Vacancy

(%)


H1 2017

H1 2016

H1 2017

H1 2017

H1 2016

H1 2017

H1 2016

H1 2017

H1 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 € 9.5 million (30 June 2016: €7.6 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 €63.1 million (30 June 2016 : €15.7 million). This is after charging/crediting the following non-cash items totalling net €8.2  million, consisting of:

-       An accrual of €10.7million 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 €2.5 million (30 June 2016: loss of €2.9m)

The results were positively impacted by a revaluation gain of €70.1 million (30 June 2016: €21.7 million). Excluding the revaluation gain, the performance fee accrual and the gain on the Swaps, the Company reported a profit before tax of €1.2 million (30 June 2016: loss before tax of €0.3 million).

Reported earnings per share for the period were €55 cents (June 2016: €14 cents).

 

The Board is pleased to declare an interim dividend €2.28 cents per share (GBP 2.0 pence per share), (30 June 2016: €1.92cents, 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 €197.2 million (31 December 2016: €185.6m) and cash balances of €32.9 million (31 December 2016: €18.5 million), resulting in net debt of €164.3 million (31 Dec 2016 : €167.1m) 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 €43.3 million, €11.3m of which was used to refinance existing Group debt and ii) the repayment of €18.3 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 €79.6 million of existing debt, while securing a further equity release of €14.8 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 €3.9 million in the half year to 30 June 2017 (H1 2016: €1.2 million)

·      EPRA NAV per share increased by 38% to €3.34 as at 30 June (30 June 2016 €2.42),

·      the declared dividend for the half year 2017 was €2.28 cents (2.0p) per share, an increase of 15% in Euro terms (H1 2016 €1.92 cents (1.60p) per share).

 

Key Performance Indicator

2017HY

2016FY

2016 HY

2015 FY

2015 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 €

                  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 €m

3.9

5.7

1.2

4.7

-

-

-

EPRA NAV per share €

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 ended

Six months ended

Year
 ended

30 June
2017

30 June
2016

31 December 2016

 

 

(unaudited)

(unaudited)

(audited)

Continuing Operations

 

€'000

€'000

€'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 (€)

23

0.55

0.14

0.42

Diluted (€)

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
2017

30 June
2016

31 December 2016

 

 

(unaudited)

(unaudited)

(audited)

 

 

€'000

€'000

€'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



 


Stated capital

Share based payment reserve

Retained earnings

Total

Non-controlling interest

Total equity

 

€'000

€'000

€'000

€'000

€'000

€'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 ended

Six months ended

Year
 ended


30 June
2017

30 June
2016

31 December 2016


(unaudited)

(unaudited)

(audited)


€'000

€'000

€'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 in advance

35,170

-

-

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


€'000

€'000

€'000

€'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


€'000

€'000

€'000

€'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


€'000

€'000

€'000

€'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


€'000

€'000

€'000

€'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


€'000

€'000

€'000

€'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


€'000

€'000

€'000

€'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
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)



€'000

€'000

€'000






 Rental income


9,489

7,624

15,934

 

 

6. Property expenses







30 June
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)



€'000

€'000

€'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
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)



€'000

€'000

€'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
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)



€'000

€'000

€'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 €3,800,000, resulting in no gain; and condominium sales, accounting for the remainder of the disposal proceeds and net book value.

 

 

9. Exceptional costs







30 June
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)



€'000

€'000

€'000











Professional fees associated with share placing


-

1,592

-



-

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 ended

Six months ended

Year
 ended



30 June
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)



€'000

€'000

€'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 ended

Six months ended

Year
 ended


30 June
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)

The tax charge for the period is as follows:


€'000

€'000

€'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 gains on properties

Interest rate swaps

Total

The movement in respect of deferred taxation is as follows:


€'000
(Liability)

€'000
Asset

€'000
(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
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)



€'000

€'000

€'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 €2.28c (2.00p) (2016: 1.60p (€1.92c)) per share

2,108

1,771

-

Proposed final dividend for the year ended 31 December 2016 of €4.30c (3.70p) (2015: €3.90c (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 €1.92c (1.60p) (2015: €1.80c (1.30p)) per share

-

-

1,634

Final dividend for the year ended 31 December 2016 of €4.30c (3.70p) (2015: €3.90c (2.90p)) per share

3,899

3,414

-

 

 

13. Investment properties









€'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
2017

30 June
2016

31 December 2016

 



€'000

€'000

€'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




€'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
2017

30 June
2016

31 December
2016



(unaudited)

(unaudited)

(audited)



€'000

€'000

€'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 €5.1 million payment, including acquisition costs, for property Mittelbruchzeile 112; as well as a €0.7 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
2017

30 June
2016


(unaudited)

(unaudited)

(audited)



€'000

€'000

€'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 period


(12)

-

-



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
2017

30 June
2016

31 December 2016

 


(unaudited)

(unaudited)

(audited)

 



€'000

€'000

€'000

 






 

Current liabilities





 

Bank loans  - Kreissparkasse Boblingen




 

                      District Savings Bank

2,793

-

2,869

 

Bank loans  - Sparkasse Langenfeld

-

-

6,300

 

Bank loans  - Deutsche Hypothekenbank AG

-

8,418

-

 



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
2017

30 June
2016

31 December
2016

 



(unaudited)

(unaudited)

(audited)

 



€'000

€'000

€'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
2017

30 June
2016

31 December 2016


(unaudited)

(unaudited)

(audited)



€'000

€'000

€'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 €182,948,000 (31 December 2016: €175,932,000, 30 June 2016: €133,436,000). 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
2017

30 June
2016

31 December 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
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)



€'000

€'000

€'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



€'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
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)



€'000

€'000

€'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 €1,592,000 were shown as an exceptional item in the financial statements. The total amount of €1,600,000 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 ended

Six months ended

Year ended


30 June
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)






Earnings for the purposes of basic earnings per share being net profit attributable to owners of the parent (€'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 (€)


0.55

0.14

0.42

Diluted earnings per share (€)


0.52

0.14

0.40






 

 

 

 

 

 

 

24. Net asset value per share and EPRA net asset value






30 June
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)



 

 

 

Net assets (€'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 (€)


3.16

2.26

2.53











EPRA net asset value


30 June
2017

30 June
2016

31 December 2016



(unaudited)

(unaudited)

(audited)



 

 

 

Net assets (€'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 (€'000)


309,341

223,569

252,953

EPRA net asset value per share (€)


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


 

 

€'000

€'000

€'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


 

 

€'000

€'000

€'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 €328,952 (June 2016: €378,664 and December 2016: €657,751) was payable to Estera Fund Administrators (Jersey) Limited for accounting, administration and secretarial services. At June 2017, €182,222 (June 2016: €330,229 and December 2016: €187,515) was outstanding.






During the six month period ended 30 June 2017, an amount of €24,570 (June 2016: €39,523 and December 2016: €60,337) was payable to Appleby, law firm for legal and professional services. At June 2017 €2,568 (June 2016: €30,354 and December 2016: €9,495) 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 €2,027,000 (June 2016: €1,543,000 and December 2016: €3,387,000) was payable to PMM Partners (UK) Limited. At June 2017 €Nil (June 2016: €Nil and December 2016: €Nil) 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 €10,653,000 (June 2016: €2,837,000 and December 2016 €6,350,000).






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 €669,000 at first issue in 2015, and as at the June 2017 €727,900 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 €22.0 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 €7.0 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 €11.6 million prior to the balance sheet date, which had not yet completed at the balance sheet date. The single property with value of €4.5 million completed in Q3 2017, and the Investix Portfolio with a purchase price €7.1 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 €35.2 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 €12.6 million which had yet to complete at the balance sheet date. Of these notarised assets €9.5 million have since completed, leaving €3.1 million remaining to complete.

 

One of these disposals was the sole property securing against a €2.8 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 €1.2 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 €0.3 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 €98.0 million facility, obtaining an equity release of €14.8 million. The debt was secured against the value of current properties.

 

The group signed a new loan of €8.7 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
 
 
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