RNS Number:0966R
Speymill Deutsche Immobilien Co PLC
31 March 2008
31 March 2008
Speymill Deutsche Immobilien Company plc
("SDIC" or "the Company")
Interim Results for the Six Months to 31 December 2007
Speymill Deutsche Immobilien Company plc (AIM: SDIC; SDCC), the pan-German
residential investment company, is pleased to announce its interim results for
the six months to 31 December 2007.
Highlights - Ordinary Share Portfolio
* Interim dividend to be paid on 18 June 2008 of 7.62 Euro cents (equivalent to
six pence per share) to shareholders on the register on 11 April 2008.
* Successful investment of original placing proceeds: the Ordinary Share
Portfolio is now fully invested.
* Increase on purchase value of portfolio (excluding acquisition costs) of
5.86% (purchase cost: Euro925.5 million; current market value: Euro979.8 million).
* Net operating profit of Euro1.649 million (31 December 2007: loss Euro0.517
million).
* Current annualised net contracted rents of Euro63 million equates to a
yield of 6.8% on purchase value.
* Euro32 million refurbishment programme due to finish in June 2008 is
expected to have further positive effect on rental income and valuations.
Approximately 6.7% of units are presently unavailable as they are in the
refurbishment programme.
* 6% vacancy rate in available apartments.
Highlights - C Share Portfolio
* Euro373 million of properties notarised as at 31 December 2007.
* Economic yield of notarisation of 7.2% on purchase price (including
rental guarantees).
* Initial yield of 6.7% with an estimated stabilised yield of 7.1% on
purchase value.
* Approximately Euro508 million of properties notarised as at the end of
March 2008, including those acquired, with an approximate initial yield of
6.7% (or 7.2% including rental guarantees).
* Well-positioned to take advantage of opportunities created by current
market conditions.
Raymond Apsey, Chairman of SDIC, said,"The prices of both the Ordinary and C
shares have not been immune to the current market conditions. Unlike many of its
peers however, the Company has financial resources at its disposal that enable
it not only to adopt a defensive strategy in the current economic climate, but
also to take advantage of any opportunity that it might bring. The Manager and
Investment Adviser are confident that despite the reactions of the market
towards property stocks, the fundamentals of the German residential property
market are sound and accordingly, so is our investment strategy."
For more information, please visit www.sdic.co.im or contact:
Speymill Property Group Smith & Williamson Corporate Finance Tavistock
(Manager) Limited (Nomad) Communications
Floris van Dijkum, Azhic Basirov Jeremy Carey
Global Chief Investment Joanne du Plessis Simon Hudson
Officer +44 20 7131 4000 Gemma Bradley
+44 20 7659 0763 +44 20 7920 3150
Paul Smith, CFO Funds
+44 1624 640864
Fairfax I.S. PLC (Brokers)
James King
+44 20 7598 5368
Chairman's Statement
It is my pleasure to present the interim results of the Company for the six
months ended 31 December 2007, a period during which the Company made
significant further progress in accomplishing its stated investment strategy.
Speymill Deutsche Immobilien Company plc ("SDIC") is a pan-German residential
investment company created to provide shareholders with an attractive level of
income together with the prospect for long-term capital growth.
Our results must be viewed in the context of a company that is still reaching
maturity and where the good work of the Manager and the Investment Adviser is
now only starting to translate into positive financial performance.
Results
As at 31 December 2007, the value of the Ordinary Share Portfolio stood at 5.6%
above the market value of the underlying investment properties at notarisation.
This reflects well upon the quality of the assets acquired. The full cost of the
portfolio as reflected in the books of the Company includes acquisition costs,
including legal and notary costs as well as transfer taxes, in the region of 8%
of the purchase cost. As a result of such costs we are obliged to reflect a
revaluation loss in our accounts even though their market value has in fact
increased.
The net asset value attributable to the Ordinary Share Portfolio decreased by
5.9% during the 6 months to Euro228.907 million (30 June 2007: Euro243.139 million),
giving net assets per share of Euro1.35 (30 June 2007: Euro1.43). The net assets
attributable to the C Share Portfolio decreased by 3.5% to Euro232.158 million (30
June 2007: Euro240.591 million), giving net assets per share of Euro0.94 (30 June
2007: Euro0.96). The latter must be viewed in the context of the share buyback
described below.
During the 6 months ended 31 December 2007, the Company made a loss after
taxation of Euro36.182 million (6 months ended 31 December 2006: profit Euro1.086
million). A large part of this negative performance is attributable to an
unrealised loss caused by a reduction in the value on our interest hedging
instruments of Euro20.963 million (now valued at Euro40.022 million) and to the
absorption of the acquisition costs, described earlier, that have created a loss
on revaluation of investment property of Euro9.529 million. The Ordinary Share
Portfolio has also incurred certain fixed costs for the entire period, but
having only finally completed its acquisitions programme in November 2007,
received just a proportion of the full annual rental income that it may expect
to receive in the future.
Ordinary Share Portfolio
Property acquisitions were completed in November 2007. The Ordinary Share
Portfolio consists of 597 properties and 17,098 units. Annualised net rents as
at notarisation were Euro67.3 million representing an initial yield of 7.1%. Prompt
action was taken to implement value-enhancing portfolio management policies as
soon as the properties were acquired.
A refurbishment programme is underway that it is expected will have a
substantial positive effect on both rental income and property values. The
programme, which will cost approximately Euro32 million, is due for completion by
June 2008.
Such extensive work necessarily causes some pain in the short-term with a
resultant increase in vacancies and decrease in rental income. Vacancies are
currently in the region of 12.7%, made up of 6.7% that are unavailable because
they are being refurbished and 6% that are available. As well as making
apartments unavailable to rent, refurbishments can also have the effect of
increasing vacancy in available apartments as people may move out to avoid the
works. In this way, completion of the refurbishment programme will be very good
news for the portfolio.
Letting activity both now and after refurbishment is a key priority in meeting
our strategic objectives. Considerable progress has been made in assimilating
the properties acquired on behalf of the Ordinary Share Portfolio and the
Manager is confident that this will shortly become apparent in terms of
financial performance.
C Share Portfolio
During May 2007, the Company raised a further Euro250 million through the placing
of C shares.
At the time of writing the Company has notarised Euro508 million of properties with
an initial yield of 6.8%, equal to an annualised net rent of Euro36 million,
and a stabilised yield of 7.1% expected within 12 months of completion. Actual
vacancy as at notarisation was 9.8% but the economic vacancy rate that takes
into account rental guarantees was approximately 4.4%.
The global credit crunch has resulted in adverse consequences for leveraged
property companies in terms of depressed share prices and a lack of available
finance. Against this economic backdrop, we are adopting a prudent approach with
regard to the overall size of the C Share Portfolio and therefore the amount of
leverage.
The Company originally purchased interest rate hedging instruments to cover
expected borrowings of Euro800 million. As part of our defensive strategy, Euro150
million of those instruments were disposed of and we will adjust our final
hedging position once we have completed acquisitions for this portfolio.
We successfully negotiated a loan facility of up to Euro500 million with a
consortium of banks for drawdown before 30 April 2008. The effective interest
rate on this facility, adjusted for hedging, is approximately 5%. Even on the
basis of a full draw down of the facility, the C Share Portfolio will still have
some cash resources at its disposal.
Given current market conditions, and dependent upon the drawdown of the current
debt facility, the Board will review the appropriate timing of the merger of the
Ordinary and C Share classes. This is an attractive proposition in terms of
enhancing the Company's overall liquidity, reducing leverage and achieving
better strategic positioning in order to take advantage of opportunities that
may arise in the current market. A consequence of this reduced leverage however
will be a lower dividend yield from the combined entity.
C Share Buy-Back
On 9th October 2007 the Company received an Order from the High Court of Justice
of the Isle of Man to cancel its share premium account arising from the issue of
C shares and to credit the same amount to distributable reserves. Since that
date the Company has bought back 7,701,000 C shares at an average price of Euro0.79
per share. The average discount to NAV for the shares purchased was
approximately 12%.
Dividend
The Board intends to pay an interim dividend of 7.62 Euro cents per share to
existing holders of Ordinary Shares on 18 June 2008. The dividend per share is
the equivalent of 6 pence, converted at the spot Euro-Sterling exchange rate
published on Bloomberg at 5pm (GMT) on 27 March 2008 of �1=Euro1.2700.
Market Outlook
The prices of both the Ordinary and C shares have not been immune to the current
market conditions. Unlike many of its peers however, the Company has financial
resources at its disposal that enable it not only to adopt a defensive strategy
in the current economic climate, but also to take advantage of any opportunity
that it might bring. The Manager and Investment Adviser are confident that
despite the reactions of the market towards property stocks, the fundamentals of
the German residential property market are sound and accordingly, so is our
investment strategy.
Raymond Apsey
Chairman
28 March 2008
Report of the Manager and Investment Adviser
Business Highlights
Ordinary shares
* Interim dividend to be paid on 18 June 2008 of 7.62 Euro cents per share
(equivalent to 6 pence per share)
* Successful investment of original placing proceeds: the Ordinary Share
Portfolio is now fully invested.
* Increase on purchase value of portfolio (excluding acquisition costs) of
5.86% (purchase cost: Euro925.5 million; current market value: Euro979.8 million).
* Net operating profit of Euro1.649 million (31 December 2006: loss Euro0.517
million).
* Current annualised net contracted rents of Euro63 million equates to a
yield of 6.8% on purchase value.
* Euro32 million refurbishment programme due to finish in June 2008 is
expected to have further positive effect on rental income and valuations.
Approximately 6.7% of units are presently unavailable as they are in the
refurbishment programme.
* 6% vacancy rate in available apartments.
C shares
* Euro373 million of properties notarised as at 31 December 2007.
* Economic yield at notarisation of 7.2% on purchase price (including
rental guarantees).
* Initial yield of 6.7% with an estimated stabilised yield of 7.1% on
purchase value.
* Approximately Euro508 million of properties notarised as at the end of
March 2008, including those acquired, with an approximate initial yield of
6.7% (or 7.2% including rental guarantees).
* Well-positioned to take advantage of opportunities created by current
market conditions.
Financial Summary
The key financial information for the Company is presented in the following
tables:
Overall
Financial position
31 December 2007 30 June 2007
Euro'000 Euro'000
Portfolio value 1,125,454 861,805
Purchase value of completed acquisitions
(excluding acquisition costs) 1,063,816 841,200
Borrowings (843,380) (681,139)
Net assets 461,065 483,731
Adjusted net assets (NAV excluding provision
for deferred taxation) 463,106 485,648
Loan to value 74.9% 79%
Financial performance
6 months ended 6 months ended Year ended
31 December 2007 31 December 2006 30 June 2007
Euro'000 Euro'000 Euro'000
Gross rents received 51,573 6,179 35,613
Valuation losses on (9,529) - (3,799)
property portfolio
Net operating profit 1,649 (517) 456
(Loss)/ profit before tax (35,926) 1,293 28,765
Funds from operations (1) (3,464) (972) (5,762)
(Loss)/ profit after tax (36,182) 1,086 26,698
(1) Funds from operations ("FFO") is calculated on the basis of profit after
tax, adjusted for unrealised movements on hedging instruments and investment
properties, movements in the deferred tax provisions and any profits or losses
on disposal, and is a measure of the Company's profitability from recurring
income streams.
During the 6 months ended 31 December 2007, the net operating profit of the
Company was Euro1.649 million (31 December 2006: loss Euro0.517 million). It made a
loss before taxation of Euro35.926 million (31 December 2006: profit Euro1.293
million) and a loss after taxation of Euro36.182 million (31 December 2006: profit
Euro1.086 million).
A large part of the losses before and after taxation are attributable to a fall
in the value of the interest hedging instruments used by the Company, that it is
obliged to revalue under International Financial Reporting Standards ("IFRS"),
as well as unrealised losses on property investments caused by the absorption of
acquisition costs. Based on a Funds from operations ("FFO") measure that is
achieved by removing unrealised losses on hedging instruments and movements in
the valuation of the investment properties, any profits or losses on disposal of
assets and movements in the deferred tax provision from the loss after tax, the
Company returned a loss of Euro3.464 million from its rental activities (6 months
ended 31 December 2006: loss Euro0.972 million).
The overall net assets of the Company decreased by 4.7% on the 6 month period to
Euro461.065 million (30 June 07: Euro483.731 million).
Ordinary share portfolio
Financial position
31 December 2007 30 June 2007
Euro'000 Euro'000
Portfolio value 979,780 861,805
Purchase value of completed acquisitions
(excluding acquisition costs) 925,500 841,200
Borrowings (811,689) (681,139)
Loan to value 82.8% 79.0%
Net assets 228,907 243,139
Net assets per share (cents) 134.65 143.03
Adjusted net assets per share (cents) 136.00 144.15
Financial performance
6 months ended 6 months ended Year ended
31 December 31 December 30 June 2007
2007 2006
Euro'000 Euro'000 Euro'000
Gross rents received 48,587 6,179 35,613
Valuation losses on
property portfolio (3,920) - (3,798)
Net operating profit/
(loss) 7,560 (517) 916
(Loss)/ profit before tax (21,612) 1,293 19,233
Funds from operations (6,638) (972) (6,339)
(Loss)/ profit after tax (22,051) 1,086 17,167
Basic (loss)/ earnings
per share (cents) (12.97) 0.64 10.10
The net operating profit for the period ended 31 December 2007 was Euro7.560
million (31 December 2006: loss Euro0.517 million). The loss before taxation
attributable to the ordinary shareholders was Euro21.612 million (31 December 2006:
profit Euro1.293 million) and the loss after taxation was Euro22.051 million (31
December 2006: profit Euro1.086 million).
On an FFO basis the portfolio returned a loss of Euro6.638 million (31 December
2006: loss Euro0.972 million). The main reason for this is that the portfolio has
had to absorb certain fixed costs for the entire period but, having completed
its acquisitions in November 2007, received only a proportion of its annualised
rental income.
The net asset value attributable to the Ordinary Share Portfolio decreased by
5.9% during the 6 months to Euro228.907 million (30 June 2007: Euro243.139 million),
giving net assets per share of Euro1.35 (30 June 2007: Euro1.43). Compared to purchase
price, the market value of the Ordinary Share Portfolio as at 31 December 2007
has remained stable compared with the valuation carried out on the properties
notarised as at 30 June 2007.
C share portfolio
Financial position
31 December 2007 30 June 2007
Euro'000 Euro'000
Portfolio value 145,674 -
Purchase value of completed acquisitions
(excluding acquisition costs) 138,316 -
Borrowings (31,693) -
Loan to value 21.8% N/A
Net assets 232,158 240,591
Net assets per share (cents) 94.45 96.23
Adjusted net assets per share (cents) 94.34 96.23
Financial performance
6 months ended For the period
31 December 2007 from 10 May
2007 (date of
placing) to
30 June 2007
Euro'000 Euro'000
Gross rents received 2,986 -
Valuation losses on property (5,608) -
portfolio
Net operating (loss) (5,909) (460)
(Loss)/profit before tax (14,312) 9,532
Funds from operations 3,174 577
(Loss)/ profit after tax (14,129) 9,532
Basic (loss)/ earnings per (5.66) 3.81
share (cents)
The net operating loss for the 6 months ended 31 December 2007 was Euro5.909
million. The loss before taxation attributable to the C shareholders was Euro14.312
million. The loss after taxation was Euro14.129 million. On an FFO basis the
portfolio returned a positive Euro3.174 million.
Overall the net assets attributable to the C shares decreased by 3.5% to
Euro232.158 million (30 June 2007: Euro240.591 million) giving a net asset value per
share of Euro0.94 (30 June 2007: Euro0.96).
Ordinary Share Portfolio Update
With the acquisition of the final properties completed during November 2007, we
have lost no time in working to extract maximum value from the portfolio.
We are currently engaged in a major refurbishment programme that it is expected
will have a further positive impact on both rental income and property values.
The refurbishment programme is due for completion during June 2008.
It must be appreciated however that the programme has had a short-term adverse
effect on vacancies and therefore on rental income and valuations. Vacancies are
currently running at approximately of 12.7% of total units, 6.7% of which are
the subject of refurbishment and are therefore not available to let, with the
other 6% being true vacancies.
In addition to reducing the number of units available for letting, the
refurbishment programme is also increasing vacancy in available apartments as
tenants may move out to avoid the nuisance created by the work. Consequently,
completion of the refurbishment programme will be very good news for the
portfolio. The adverse economic effect caused by un-let units has been mitigated
because of rental guarantees that have been negotiated for some properties.
Following a valuation of the Ordinary Share Portfolio as at 31 December 2007,
its market value was calculated as Euro979.780 million representing an uplift of
5.86% on purchase cost. Valuations have therefore remained stable by comparison
with those carried out at 30 June 2007.
A major driver of the valuation methodology employed by our independent valuers
is the net present value of future expected rental income. To some extent the
current stabilisation in value of the Ordinary Share Portfolio reflects the fact
that we are engaged in a major refurbishment programme that has caused an
increase in vacancies in the near-term and has had a negative effect on rental
income as a consequence.
We continue to takeover full management of units and to work with our
sub-contractors in order to reconcile and book funds with previous owners. By
the end of March 2008, it is expected that substantially all 597 properties
(17,098 units) will have been booked. Letting activity continues to be the key
priority for SDIC over the next months.
We are confident that the effects of our active property management policies and
the refurbishment will soon start to become apparent in terms of financial
performance.
C Share Acquisition Update
As at 31 December 2007, residential properties located in various German cities
of an approximate value of Euro373 million had been notarised (i.e. committed to be
purchased). The purchase value of properties actually acquired by 31 December
2007 was Euro138.3 million. The blended net yield at notarisation, including
estimated refurbishment costs, was 6.6% (or 7.2% including rental guarantees).
The stabilised yield is expected to be 7.1%.
Of the 7,248 units notarised as at the end of December 2007, 11.6% of units were
vacant. However, taking into account rental guarantees, the economic effect is
equivalent to a vacancy rate of approximately 4.7%.
Refurbishment costs of approximately Euro17.3 million are to be borne by the
selling entities for approximately Euro132.3 million of the current notarised
properties. In addition, refurbishment costs of over Euro15.4 million are to be
borne by the fund entities. This expenditure is expected to be both income and
value enhancing to the Company.
As at 28 March 2008, residential properties located in various German cities of
an approximate value of Euro508 million had been notarised. The blended yield at
notarisation, including estimated refurbishment costs, was 6.8% (or 7.2%
including rental guarantees). The stabilised yield is expected to be 7.1%. The
stabilised (normalised) rent represents a target income level based on 95% of
the rental value at the time of purchase. It is envisaged that, if not achieved
already, the stabilised level will be reached in the second year following
takeover.
Taxation
The total charge to tax is Euro0.256 million made up of a current tax charge of
Euro0.132 million and movement in the deferred tax provision of Euro0.124 million. The
deferred tax provision as at the period end was Euro2.041 million.
The deferred tax provision, that relates to property revaluation gains, is
required under International Financial Reporting Standards as German capital
gains taxes would be payable in the event that the actual properties were sold.
No capital gains tax liability should arise if the Company disposed of its
shareholdings in its SPVs.
Financing
As at 31 December 2007, Euro811.689 million of finance had been arranged and drawn
down in respect of the Ordinary Share Portfolio. These borrowings have been
fully hedged against interest rate risk for the full terms of the loans (that
expire in 2013 and 2014), giving a maximum overall fixed borrowing cost of
approximately 4.6%.
For the C Share Portfolio a financing facility of up to Euro500 million has been
put in place. This facility has also been fully hedged for its full term (until
31 December 2014), giving an overall fixed borrowing cost of approximately 5%.
Euro203.405 million has been drawn down to date on this facility with further draw
downs anticipated on properties notarised thus far.
Resources
The Manager and the Investment Adviser have significant resources at their
disposal. The adviser employs over 200 staff in Berlin, working on acquisitions,
finance, property management and operations, as well as a small office in
Munich. The acquisitions team in Berlin is made up of 25 people who are
dedicated to sourcing, analysing and purchasing property as well as carrying out
due diligence and negotiations. All financing arrangements are undertaken by a
specialist team and all valuations for the purposes of arranging finance are
conducted by independent specialists, DTZ Zadelhoff Tie Leung GmbH.
Market Update and Outlook
It is our firm view that the recent turmoil involving real estate stocks is not
reflective of the stable nature of the underlying market. The fundamentals of
the German residential property market are sound and it remains an attractive
investment proposition, underpinned by:
* Relatively strong and stable German economic activity within Europe,
benefitting from a period of improved productivity and wage growth
* The possibility of buying below the cost of new construction
* The potential for German residential prices to move towards their
replacement cost over the next 5 to 7 years
* The recent liberalisation of the German mortgage market.
Following the successful acquisition programme for the Ordinary Share Portfolio,
we are applying the same acquisition methodology to the C Share Portfolio. We
take a local, research-based approach and aim to target smaller portfolios and
individual assets in off-market transactions. We aim to acquire assets where
there is a gap between wholesale purchase prices and retail prices in order to
maximise the upside potential that exists in values compared to current purchase
prices. As a result of the resources available to it, the C share class is
well-positioned to take full advantage of the current market and continues to
build an attractive and value-enhancing portfolio.
SDIC has made good progress in assimilating the properties acquired on behalf of
the Ordinary Share Portfolio. During the next 6 - 9 months we expect that the
results of our active portfolio management policies and refurbishment programme
will start to become apparent.
Alistair Curry Florian Lanz
For the Manager For the Investment Advisor
Speymill Property Group Limited Goal Service GmbH
28 March 2008
Consolidated Income Statement (unaudited)
For the period For the period
1 July 2007 to 1 July 2006 to
31 December 2007 31 December 2006
(Restated)
Euro'000 Euro'000
Rent and related income 51,573 6,179
Direct costs (33,508) (4,760)
-------------- ---------------
Gross profit 18,065 1,419
-------------- ---------------
Change in fair value of investment (9,529) -
property
-------------- ---------------
Manager's fees (5,087) (1,523)
Professional fees (1,254) -
Audit fees (120) (10)
Other expenses (426) (403)
-------------- ---------------
Administrative expenses (6,887) (1,936)
-------------- ---------------
Net operating profit/(loss) before net 1,649 (517)
financing (expenses)/income
-------------- ---------------
Financial income 6,543 3,538
Financial expenses (44,118) (1,728)
-------------- ---------------
Net financing (expenses)/income (37,575) 1,810
-------------- ---------------
(Loss)/profit before taxation (35,926) 1,293
Income tax expense:
Current (132) (83)
Deferred (124) (124)
-------------- ---------------
Retained (loss)/profit for the period (36,182) 1,086
-------------- ---------------
Basic and diluted (loss)/earnings per (12.97) 0.64
ordinary share (cents)
Basic and diluted (loss) per C share (5.66) -
(cents)
The Directors consider that all results derive from continuing activities
Consolidated Balance Sheet
(Unaudited) (Audited)
At 31 December 2007 At 30 June 2007
(Restated)
Euro'000 Euro'000
Investment property 1,125,454 861,805
-------------- ---------------
Total non-current assets 1,125,454 861,805
-------------- ---------------
Derivative financial instruments 40,022 61,541
Trade and other receivables 56,932 33,439
Cash and cash equivalents 132,707 244,239
-------------- ---------------
Total current assets 229,661 339,219
-------------- ---------------
Total assets 1,355,115 1,201,024
-------------- ---------------
Issued share capital 69,949 203,774
Share premium 132,774 54,248
Retained earnings 256,265 224,683
Other reserves 2,077 1,026
-------------- ---------------
Total equity 461,065 483,731
-------------- ---------------
Trade and other payables 48,338 34,121
Interest bearing loans - 2,524
Income tax payable 291 115
-------------- ---------------
Total current liabilities 48,629 36,760
-------------- ---------------
Interest bearing loans 843,380 678,616
Deferred tax liability 2,041 1,917
-------------- ---------------
Total non-current liabilities 845,421 680,533
-------------- ---------------
Total liabilities 894,050 717,293
-------------- ---------------
Total equity & liabilities 1,355,115 1,201,024
-------------- ---------------
Net asset value per ordinary share 134.65 143.03
(cents)
Net asset value per C share (cents) 94.45 96.23
Consolidated Statement of Changes in Equity (unaudited)
Share Share Retained Other 31 December 31 December
capital premium earnings reserves 2007 2006
(Restated)
Euro'000 Euro000 Euro000 Euro'000 Euro'000 Euro'000
------- ------- ------- ------- -------- --------
Balance at 1 203,774 54,248 224,683 1,026 483,731 232,255
July 2007
Shares issued 71,000 (71,000) - - - -
in the year
Shares (203,774) 203,774 - - - -
cancelled
in year
Shares (1,051) - (3,429) 1,051 (3,429) -
cancelled
following
market
purchases/
transfer to
capital
redemption
reserve
Foreign exchange - - 18,135 - 18,135 (5,872)
translation
differences
Cancellation - (54,248) 54,248 - - -
of share premium
Dividend paid - - (1,190) - (1,190) -
Revaluation of - - - - - 1,409
SWAPs
Retained (loss)/ - - (36,182) - (36,182) 1,086
profit for the
year
------- -------- --------- ------- -------- --------
Balance at 31
December 2007 69,949 132,774 256,265 2,077 461,065 228,878
------- -------- --------- ------- -------- --------
Analysis by share
Ordinary shares 8,500 15,895 203,486 1,026 228,907 228,878
C shares 61,449 116,879 52,779 1,051 232,158 -
------- -------- --------- ------- -------- --------
Balance at 31 69,949 132,774 256,265 2,077 461,065 228,878
December 2007
------- -------- --------- ------- -------- --------
On 9 October 2007 the Company was granted an order from the High Court of
Justice of the Isle of Man giving approval to cancel its share premium account
arising on the issue of its C Shares and for such amount to be credited as a
distributable reserve.
The Company was granted a further order from the High Court of Justice of the
Isle of Man on 9 October 2007 confirming that it may cancel its entire share
capital by extinguishing and cancelling all of the issued and unissued ordinary
shares of 10 pence each and C shares of 50 pence each in the Company for the
purposes of redenominating the shares of the Company from Sterling into Euros.
In the place of ordinary shares of 10 pence each the Company allotted and issued
paid up new ordinary shares with a nominal value of 5 Euro cents and in place of
the C shares of 50 pence each the Company allotted and issued new C Shares with
a nominal value of 25 Euro cents each.
During the period the Company purchased a total of 4,201,000 C Shares of 25 Euro
cents each for a total consideration of Euro3,429,000 and cancelled these shares.
Consolidated Cash Flow Statement (unaudited)
For the period For the period
1 July 2007 to 1 July 2006 to
31 December 2007 31 December 2006
(Restated)
Euro'000 Euro'000
--------------- ---------------
Operating activities
Group (loss)/profit for the period (36,182) 1,293
Adjustments for:
Financial income (6,543) (3,538)
Financial expenses 44,118 1,728
Change in fair value of 9,529 -
investment property
--------------- ---------------
Operating profit/(loss) before changes 10,922 (517)
in working capital and provisions
Increase in trade and other receivables (16,572) (2,876)
Increase in trade and other payables 12,435 12,508
--------------- ---------------
Cash flow from operations 6,785 9,115
Interest paid (21,109) (1,728)
Interest received 6,543 1,480
Income tax received/(paid) 55 (4)
--------------- ---------------
Cash flow from operating activities (7,726) 8,863
--------------- ---------------
Investing activities
Acquisition of investment property (211,936) (420,486)
Deposits relating to property acquisitions (24,403) (40,765)
Disposals/ (acquisitions) of investments 1,589 (10,255)
--------------- ---------------
Cash flow from investing activities (234,750) (471,506)
--------------- ---------------
Financing activities
Purchase of C Shares (3,429) -
Dividend paid (1,190) -
New interest bearing loans 126,684 317,173
--------------- ---------------
Cash flow from financing activities 122,065 317,173
--------------- ---------------
Net decrease in cash and cash equivalents (120,411) (145,470)
Effect of exchange rate fluctuations 8,967 -
to date of redenomination
Effect of exchange rate fluctuations (88) (5,070)
on cash held
Cash and cash equivalents at beginning of 244,239 200,753
period
--------------- ---------------
Cash and cash equivalents at 132,707 50,213
end of period
--------------- ---------------
Notes
1 The Company
Speymill Deutsche Immobilien Company plc (the "Company") was incorporated and
registered in the Isle of Man under the Isle of Man Companies Act 1931-2004 on 1
March 2006 as a public company with registered number 115746C.
Pursuant to an admission document dated 13 March 2006 there was a placing of 170
million Ordinary Shares which were admitted to trading on AIM following the
close of the placing on 17 March 2006.
Pursuant to an admission document dated 17 April 2007 there was a placing of 250
million C Shares which were admitted to trading on AIM following the close of
the placing on 10 May 2007.
The Company was granted an Order from the High Court of Justice of the Isle of
Man on 9 October 2007 confirming that it may cancel its entire share capital by
extinguishing and cancelling all of the issued and unissued Ordinary shares of
10 pence each and C shares of 50 pence each in the Company for the purposes of
redenominating the shares of the Company from Sterling into Euro. Following the
granting of this Order, with effect from close of trading on Tuesday 16 October
2007, the Company cancelled all of the Ordinary shares of 10 pence each and C
shares of 50 pence each and in the place of the Ordinary 10 pence shares so
cancelled, allotted and issued new paid up Euro ordinary shares with a nominal
value of 5 Euro cents each and in the place of the 50 pence C shares so
cancelled, allotted and issued new paid up Euro C shares with a nominal value of
25 Euro cents each; the effective date of redenomination of all shares into
Euros was 16 October 2007.
2 The Subsidiaries
During the period the Company established 20 Isle of Man companies to hold
German investment property. The percentage of shares held in all these
subsidiaries is 100%. At the end of the period the Company owns 100% of the
shares in 100 Isle of Man incorporated property owning companies and 1 Cayman
incorporated intermediate holding company.
3 Segment reporting
The Group has one segment focusing on achieving capital growth investing in the
residential property market in Germany. No additional disclosure is included in
relation to segment reporting, as the Group's activities are limited to one
business and geographic segment.
4 Net financing income
Unaudited Unaudited
For the period ended For the period ended
31 December 2007 31 December 2006
(Restated)
Euro'000 Euro'000
Interest income 6,543 1,480
Unrealised gain on derivative - 2,058
financial instruments
--------------- ---------------
Financial income 6,543 3,538
--------------- ---------------
Interest charges (21,107) (1,728)
Realised loss on derivative (2,046) -
financial instruments
Unrealised loss on derivative (20,963) -
financial instruments
Bank charges (2) -
--------------- ---------------
Financial expenses (44,118) (1,728)
--------------- ---------------
Net financing (costs)/income (37,575) 1,810
--------------- ---------------
5 Investment property
Unaudited Audited
31 December 2007 30 June 2007
(Restated)
Euro'000 Euro'000
Brought forward 861,805 -
Effect of exchange rate fluctuations to date 43,009 -
of redenomination
Additions 230,169 865,604
Net revaluation deficit (9,529) (3,799)
---------------- ---------------
Value of investment property at end of year 1,125,454 861,805
---------------- ---------------
The fair value of the Group's investment property at 31 December 2007 has been
arrived at on the basis of a valuation carried out at that date by DTZ Zadelhoff
Tie Leung GmbH ("DTZ"), independent valuers that are not related to the Group.
DTZ have appropriate qualifications and recent experience in the valuation of
properties in the relevant locations. The valuation, which conforms to
International Valuation Standards, was arrived at by primarily assessing the
current rental income as well as an estimate of the future potential net income
generated by use of the properties supported by comparable recent portfolio
transactions on arm's length terms.
Security
At 31 December 2007, there was a first rank mortgage on the above properties
securing the bank loan of Euro843,380,468 (30 June 2007: Euro681,138,898).
6 Derivative financial instruments
Group
Unaudited Audited
31 December 2007 30 June 2007
(Restated)
Euro'000 Euro'000
Fair value of interest rate swap contracts 40,022 61,541
--------------- ---------------
7 Interest-bearing loans
Group
Unaudited Audited
31 December 2007 30 June 2007
(Restated -
note 13)
Euro'000 Euro'000
The interest bearing loans are repayable as
follows:
On demand or within one year - 2,524
In the second year 6,904 6,531
In the third to fifth years inclusive 35,712 35,873
After five years 800,764 636,212
---------------- ----------------
843,380 681,140
---------------- ----------------
Less: amount due for settlement within 12 - 2,524
months (shown under current liabilities)
---------------- ----------------
Amount due for settlement over the remaining 843,380 678,616
period of the loans
---------------- ----------------
The Group has pledged properties and the rental income of the properties to
secure related interest bearing facilities granted to the Group for the purchase
of such properties. The average effective rate is 4.6%.
8 Net Asset Value per Share
Ordinary shares Unaudited Audited
31 December 2007 30 June 2007
Net assets attributable to ordinary 228,907 243,140
shareholders (Euro'000) (Restated - note 13)
Ordinary shares in issue (thousands) 170,000 170,000
--------------- ---------------
Net asset value per ordinary share (in 134.65 143.03
cents)
--------------- ---------------
C Shares
Net assets attributable to C shareholders 232,158 240,591
(Euro'000) (Restated - note 13)
C shares in issue (thousand) 245,799 250,000
--------------- ---------------
Net asset value per ordinary share (in 94.45 96.23
cents)
--------------- ---------------
The net proceeds received from the Company's Ordinary Share issue and C Share
issue are accounted for as two separate pools of funds. The C Shares will
convert into Ordinary Shares on such date as the Directors may decide on the
basis of the conversion ratio set out in the C Share admission document, which
will reflect the proportion of the Group's net asset value attributable to each
C Share compared with the fully diluted net asset value attributable to each
Ordinary Share at the calculation date.
9 Basic and Diluted (Loss)/Earnings per Share
Basic and diluted loss/earnings per Ordinary Share and C Share are calculated by
dividing the loss/earnings attributable to the ordinary shareholders and the
loss/earnings attributable to the C shareholders by the number of Ordinary
Shares and the number of C Shares respectively in issue during the period.
Basic and diluted (loss)/earnings per Share
31 December 2007 31 December 2006
(Restated)
Ordinary shares
(Loss)/earnings attributable to ordinary (22,051) 1,086
shareholders (Euro'000)
Weighted average ordinary shares in 170,000 170,000
issue for the period to 31 December 2007
(thousands)
--------------- ---------------
Basic (loss)/earnings per ordinary share (12.97) 0.64
(cents per share)
--------------- ---------------
Basic and diluted loss per share 31 December 31 December
2007 2006
C Shares
Loss attributable to C shareholders (Euro'000) (14,129) -
Weighted average C shares in issue for 249,756 -
the period to 31 December 2007 (thousands)
--------------- ---------------
Basic and fully diluted loss per C share (5.66) -
(cents per share)
--------------- ---------------
The average share price of the Ordinary Shares during the period 1 July 2007 to
31 December 2007 was Euro1.0749 which is below the option price (Euro1.4350) and hence
the share options are not dilutive at 31 December 2007. The conversion of C
shares in to Ordinary shares is not considered to be dilutive.
10 Dividends
A dividend in respect of the year ended 30 June 2007 of 0.47 pence (0.70 Euro
cents) per share to the holders of the Ordinary Shares, amounting to a total
dividend of �800,161 (Euro1,190,000), was approved at the Annual General Meeting on
30 November 2007 and paid on 11 December 2007.
11 Currency redenomination
On 15 October 2007, the Company cancelled all the existing Ordinary Shares and
existing C Shares and issued new Euro Ordinary and C Shares for the purposes of
redenominating the shares of the Company from Sterling to Euro.
The new Ordinary Shares have a nominal value of 5 Euro cents each and the new C
Shares have a nominal value of 25 Euro cents each.
As at that date the presentational currency of the Company was converted into
Euro from Sterling using the Sterling/Euro exchange rate of Euro1 = �0.69685.
The comparative figures within these consolidated financial statements have been
converted into Euro at the rate stated at the date of the conversion.
12 Commitments
As at 31 December 2007, property purchases of Euro373.5 million were notarised
(committed to be purchased).
13 Post balance sheet events
In the period between 9 January 2008 and 28 January 2008 the Company purchased a
total of 3 million C Shares for cancellation at a total cost of Euro2,280,000.
On 28 March 2008 the Board resolved to pay an interim dividend of 7.62 Euro
cents per share to existing holders of Ordinary Shares on 18 June 2008.
The dividend per share is the equivalent of 6 pence, converted at the spot
Euro-Sterling conversion rate published on Bloomberg at 5pm (GMT) on 27 March
2008 of �1=Euro1.2700.
14 Related party transactions
Parties are considered to be related if one party has the ability to control the
other party or to exercise significant influence over the other party in making
financial or operational decisions.
The Manager is considered a related party. Management fees paid to the Manager
during the period amounted to Euro4,381,642.
GOAL Service GmbH (the Investment Advisor) is related to the Manager and
performs property management services. Management Fees payable to GOAL Service
GmbH for the period amounted to Euro705,354 in addition property management fees
payable to Goal Services GmbH for the period amounted to Euro2,741,304.
15 Pro-forma data for the Ordinary Shares and the C Shares
Consolidated Income Statement for the Ordinary Shares (unaudited)
For the period For the period For the year
1 July 2007 to 1 July 2006 to ended 30 June
31 December 2007 31 December 2006 2007
(Restated -
note 13)
Euro'000 Euro'000 Euro'000
-------------- ------------- -------------
Rent and related income 48,587 6,179 35,613
Direct costs (31,515) (4,760) (21,110)
-------------- ------------- -------------
Gross profit 17,072 1,419 14,503
-------------- ------------- -------------
Change in fair value of (3,920) - (3,798)
investment property
-------------- ------------- -------------
Manager's fees (4,188) (1,523) (5,467)
Professional fees (1,221) - (3,279)
Audit fees (70) (10) (179)
Other expenses (113) (403) (864)
-------------- ------------- -------------
Administrative expenses (5,592) (1,936) (9,789)
-------------- ------------- -------------
Net operating profit/(loss) 7,560 (517) 916
before net financing
(expenses)/profit
-------------- ------------- -------------
Financial income 2,985 3,538 31,398
Financial expenses (32,157) (1,728) (13,081)
-------------- ------------- -------------
Net financing
(expenses)/income (29,172) 1,810 18,317
-------------- ------------- -------------
(Loss)/Profit before (21,612) 1,293 19,233
taxation
Income tax expense:
Current (49) (83) (123)
Deferred (390) (124) (1,943)
-------------- ------------- -------------
Retained (loss)/profit (22,051) 1,086 17,167
for the period
-------------- ------------- -------------
Basic earnings per ordinary (12.97) 0.64 10.10
share (cents)
15 Pro-forma data for the Ordinary Shares and the C Shares (continued)
Consolidated Balance Sheet for the Ordinary Shares
(Unaudited) At 30 June 2007
At 31 December 2007 (Restated - note 13)
Euro'000 Euro'000
-------------- ---------------
Investment property 979,780 861,805
-------------- ---------------
Total non-current assets 979,780 861,805
-------------- ---------------
Derivative financial instruments 30,151 40,210
Trade and other receivables 41,426 22,504
Cash and cash equivalents 25,073 32,040
-------------- ---------------
Total current assets 96,650 94,754
-------------- ---------------
Total assets 1,076,430 956,559
-------------- ---------------
Issued share capital 8,500 24,395
Share premium 15,895 -
Retained earnings 203,486 217,718
Other reserves 1,026 1,026
-------------- ---------------
Total equity 228,907 243,139
-------------- ---------------
Trade and other payables 33,318 30,248
Interest bearing loans - 2,524
Income tax payable 208 115
-------------- ---------------
Total current liabilities 33,526 32,887
-------------- ---------------
Interest bearing loans 811,689 678,615
Deferred tax liability 2,308 1,918
-------------- ---------------
Total non-current liabilities 813,997 680,533
-------------- ---------------
Total liabilities 847,523 713,420
-------------- ---------------
Total equity & liabilities 1,076,430 956,559
-------------- ---------------
Net asset value per ordinary
share (cents) 134.65 143.03
15 Pro-forma data for the Ordinary Shares and the C Shares (continued)
Consolidated Income Statement for the C Shares (unaudited)
For the period For the period
1 July 2007 to 10 May 2007 (date of
31 December 2007 placing) to 30 June 2007
(Restated - note 13)
Euro'000 Euro'000
-------------- --------------
Rent and related income 2,986 -
Direct costs (1,993) -
-------------- --------------
Gross profit 993 -
-------------- --------------
Change in fair value of (5,608) -
investment property
-------------- --------------
Manager's fees (899) -
Professional fees (32) (244)
Audit fees (50) (27)
Other expenses (313) (189)
-------------- --------------
Administrative expenses (1,294) (460)
-------------- --------------
Net operating profit/(loss) (5,909) (460)
before net financing (expenses)/profit
-------------- --------------
Financial income 3,559 10,001
Financial expenses (11,962) (9)
-------------- --------------
Net financing (expenses)/income (8,403) 9,992
-------------- --------------
(Loss)/Profit before taxation (14,312) 9,532
Income tax expense:
Current (83) -
Deferred 266 -
-------------- --------------
Retained (loss)/profit for the period (14,129) 9,532
-------------- --------------
Basic (loss)/earning s per C share (5.66) 3.81
(cents)
15 Pro-forma data for the Ordinary Shares and the C Shares (continued)
Consolidated Balance Sheet for the C Shares
At 31 December At 30 June 2007
2007 (Restated - note 13)
Euro'000 Euro'000
-------------- ---------------
Investment property 145,674 -
Deferred tax asset 267 -
-------------- ---------------
Total non-current assets 145,941
-------------- ---------------
Derivative financial instruments 9,871 21,331
Trade and other receivables 15,506 10,934
Cash and cash equivalents 107,635 212,199
-------------- ---------------
Total current assets 133,012 244,464
-------------- ---------------
Total assets 278,953 244,464
-------------- ---------------
Issued share capital 61,449 179,379
Share premium 116,879 54,248
Retained earnings 52,779 6,964
Other reserves 1,051 -
-------------- ---------------
Total equity 232,158 240,591
-------------- ---------------
Trade and other payables 15,020 3,873
Income tax payable 82 -
-------------- ---------------
Total current liabilities 15,102 3,873
-------------- ---------------
Interest bearing loans 31,693 -
-------------- ---------------
Total non-current liabilities 31,693 -
-------------- ---------------
Total liabilities 46,795 3,873
-------------- ---------------
Total equity & liabilities 278,953 244,464
-------------- ---------------
Net asset value per C share (cents) 94.45 96.23
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DVLFLVXBXBBZ
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