RNS Number:7856G
Speymill Deutsche Immobilien Co PLC
01 November 2007
Speymill Deutsche Immobilien Company plc ("SDIC" or "the Company")
Preliminary Results for the Year Ended 30 June 2007
Speymill Deutsche Immobilien Company plc (AIM: SDIC; SDCC), the pan-German
residential property investment company listed on AIM, is pleased to announce
its preliminary results for the year ended 30 June 2007.
Highlights:
Overall:
- After tax profit of EUR27.3 million (#18.6 million), with net financing income
of EUR29.0 million (#19.7 million) and profit before tax of EUR29.4 million
(#20.0 million)
- Financing income includes a gain from the revaluation of swaps of
EUR39.6 million (#27.0 million)
Ordinary Shares:
- Ordinary Share NAV per share of EUR1.49 (100.5 pence) or EUR1.48 (99.7 pence)
after adjustment for deferred tax as per IFRS)
- Final dividend for the period of 0.7 Euro cents per share to existing holders
of Ordinary Shares
- Net profit before tax totalled EUR21.2 million (#14.4 million), with profit
after tax of EUR19.0 million (#13.0 million) after a deferred tax provision of
EUR2.0 million (#1.4 million)
C Shares:
- Issue of C Shares in May 2007, raising EUR250 million
- C Share NAV per share of 99.7 Euro cents (67.1 pence) as per IFRS
- Financing facility for up to EUR500 million for further property purchases
agreed, with an estimated maximum overall cost of borrowing of 5%
Raymond Apsey, Chairman of SDIC, stated:
"The past year was one of delivery on our initial objectives and of significant
expansion. Investment of the proceeds of our first fundraising is now complete
and, following the raising of a further EUR250 million from the issue of C
Shares in May 2007, investment of the new monies is well under way. The Manager
and Investment Advisor continue to believe that the German residential property
market will deliver attractive returns for investors going forward and that the
Company is well positioned to capture that return."
1 November 2007
For further information, please contact:
Azhic Basirov / Siobhan Sergeant
Smith & Williamson Corporate Finance Limited 020 7131 4000
Paul Richards / James King
Fairfax I.S. PLC 020 7598 5368
Ian Dungate / Suzanne Jones
Galileo Fund Services Limited 01624 692600
Notes to editors:
- Speymill Deutsche Immobilien Company plc is a pan-German residential property
investment company which listed on AIM in March 2006, raising #170 million on
admission.
- In May 2007, the Company raised a further EUR250 million through a placing of
C Shares which were admitted to trading on AIM on 10 May 2007.
- The Company was established to invest in the German property market and,
predominantly, in the residential sector. It is anticipated that once fully
invested, the Company will have a balanced portfolio of properties throughout
Germany.
- The Company's objective is to provide Shareholders with an attractive level of
income together with the prospect for long-term capital growth.
- The Manager is Speymill Property Managers Limited and the Investment Adviser
is GOAL Service GmbH. The Manager and Investment Adviser are responsible for
identifying new investment opportunities.
- The Manager is a subsidiary of Speymill Group plc (AIM: SYG) while the
Investment Adviser is a joint venture partner of Speymill Group plc (which
owns 51% of the venture).
Chairman's Statement
I am pleased to present the results of the Company for the year to 30 June 2007
with an NAV per share of EUR1.49 (100.5 pence) for the Ordinary Shares. Adjusted
for deferred taxes as per IFRS, the NAV per share is EUR1.48 (99.7 pence). The
past year was one of delivery on our initial objectives and of significant
expansion. Investment of the proceeds of our first fundraising is now complete
and, following the raising of a further EUR250 million from the issue of C
Shares in May 2007, investment of the new monies is well under way.
The Company remains committed to assembling a large pan-German residential
property portfolio positioned to generate income and with the potential to
achieve significant price appreciation. Subject to approval at the AGM, the
Board has declared the payment of a final dividend for the period of 0.7 Euro
cents per share to existing holders of Ordinary Shares and the Company expects
to pay a higher dividend on both the Ordinary Shares and the C Shares in the
periods following full investment.
For the Ordinary Shares, residential properties notarised (committed to be
purchased) as of 30 June 2007 amounted to a consideration value of EUR925.5
million ('the Ordinary Share Portfolio'). This concluded notarisations for the
Ordinary Share Portfolio and, by the end of June, approximately EUR841.2 million
of payments (excluding acquisition costs) to sellers had been made. The last of
the Ordinary Share Portfolio properties have now completed and the planned
refurbishment programme is now under way.
The annualised expected initial net rental income at notarisation in respect of
the 16,960 units in properties in the Ordinary Share Portfolio notarised was
EUR67.3 million. The blended net initial property yield at notarisation
including estimated refurbishment costs at that time was 7.1%, anticipated to
rise to 7.5% within 12 months of full investment. There were, at notarisation,
1,278 vacant units (c.7.5% vacancy including units to be refurbished or
redecorated prior to letting).
Purchasing activities in respect of the funds raised from the issue of C Shares
('the C Share Portfolio') were just beginning as of 30 June 2007, with the
cumulative cash consideration of properties notarised standing at EUR50.9
million. No property transactions had completed by this date but property
payments, including deposits or part payments and excluding acquisitions costs,
amounted to EUR3.9 million. As at 19 October 2007, EUR200.1 million of
predominantly residential property purchases in various German cities had been
notarised, equating to 3,954 units.
The Manager's report highlights in more detail how, during the investment phase
of the Ordinary Shares, after tax profit across all classes of share reached
EUR27.3 million (#18.6 million). With the change in fair value and
administrative expenses at the expected level, the Company achieved net
financing income of EUR29.0 million (#19.7 million) giving a profit before tax
of EUR29.4 million (#20.0 million). The level of profit for this year is mainly
driven by the financing income which includes a gain from the revaluation of
swaps across both share classes of EUR39.6 million (#27.0 million) reduced by
interest expenses of EUR10.7 million (#7.3 million). However, this revaluation
amount is not realised and, therefore, will not increase the free cash flow of
the Company.
Financing
Given the level of leverage employed by the Company, financing is a key part of
the business and it is believed that the Company is well positioned for the
current more challenging credit market environment.
EUR811.6 million of financing has been arranged to date for the Ordinary Share
Portfolio of which EUR705.9 million (#474.7 million) had been drawn down by 30
June 2007 and the remainder was drawn down by 12 October 2007. These Ordinary
Share borrowings have been fully hedged against interest rate risk, giving an
estimated maximum overall fixed cost of borrowing of 4.6%.
For the C Share Portfolio, a financing facility for up to EUR500 million of
further property purchases has been agreed, with an estimated maximum overall
cost of borrowing of 5%. The contractual arrangements for the facility were
concluded on 1 October 2007. It is anticipated that an additional EUR300 million
of borrowings will be put in place over time.
The expected floating rate debt (3 month Euribor) for the C Share existing and
future property acquisitions (anticipated to eventually total around EUR800
million) has also been fully hedged against interest rate risk.
Looking Forward
We currently expect that property investment for both share classes will be
completed within the timeframes anticipated in the respective Admission
Documents. Accordingly, it is believed that the Company is well placed to fulfil
its stated objectives. Given the level of leverage employed in the business, the
NAV could prove relatively volatile but the operating business and cash flows
should be relatively stable going forward as property takeover processes are
completed. At an average valuation of EUR880 per square metre, the current
valuation of the Company's Ordinary Share Portfolio remains very reasonable
compared to other portfolios of this scale leaving room for further price
appreciation. Importantly, the Manager and Investment Advisor continue to
believe that the German residential property market will deliver attractive
returns for investors going forward and that the Company is well positioned to
capture that return.
The Board warmly commends and thanks the Manager and Investment Advisor and all
of their staff for their excellent achievements over the last year.
Raymond Apsey
Chairman
Report of the Manager and Investment Advisor
During the period, the Company continued to make good progress towards its
objective of building a pan-German portfolio of properties positioned to
generate income and with the potential to achieve significant capital
appreciation.
We are pleased to report an NAV per share for the Ordinary Shares of EUR1.49
(100.5 pence). Adjusted for deferred tax as per IFRS, the NAV per share for the
Ordinary Shares is EUR1.48 (99.7 pence). Given the significant one-off
acquisition costs incurred in the period, we believe this is a very satisfactory
result.
In respect of the C Shares, notarisation activities were just commencing as at
30 June 2007 and the IFRS NAV per share for the C Shares was 99.7 Euro cents
(67.1 pence).
Summary Results Highlights for the Period
Ordinary Shares
* Annualised contracted net rent as at notarisation for the entire
portfolio was EUR67.3 million.
* Contracted revenues began to accrue from the various points of
completion as properties were gradually acquired throughout the year. The
total of these accruals for contracted net rent was EUR28.2 million. The
total revenue rises to EUR36.4 million (#24.8 million) with the inclusion
of related service charge income.
* Recurring direct operating costs were EUR15.6 million comprised mainly
of operating expenses such as service charges, maintenance, and rental
administration fees. Service charges for apartments let are recharged to
tenants and this portion of recurring direct costs was EUR8.2 million (#5.6
million) (these costs were invoiced to tenants and are therefore included
in gross revenues).
* Administrative expenses were EUR10.5 million (#7.1 million) comprised of
Manager's fees and professional, audit and other expenses.
* Recurring EBITDA for the period was EUR10.4 million (#7.1 million).
* Net interest expense for the period was EUR11.7 million (#8.0 million).
* Recurring funds from operations (FFO) for the period was negative EUR1.3
million.
* Non-recurring direct costs comprised EUR6.0 million of expenses relating
to one-off lending costs, bringing total direct costs for the period to
EUR21.6 million (#14.7 million).
* There was a gain through revaluation of swaps of EUR30.5 million (#20.8
million).
* One off acquisition costs to 30 June 2007 were EUR55.8 million (i.e.
intermediaries' fees, stamp duty, notarial fees).
* Acquisition costs were substantially offset by the gain to 30 June 2007
of EUR53.9 million in the annual fair market valuation carried out by DTZ
Zadelhoff Tie Leung GmbH ("DTZ")
* Net profit before tax totalled EUR21.2 million (#14.4 million) for
the period. Profit after tax was EUR19.0 million (#13.0 million), after a
deferred tax provision of EUR2.0 million (#1.4 million)
Ordinary Shares
NAV per share EUR1.49 (100.5 pence)
Adjusted NAV per share (including deferred tax EUR1.48 (99.7 pence)
provision as per IFRS)
Purchase Value of Completed Acquisitions EUR841.2 million
as of 30 June 2007
Valuation of Completed Acquisitions EUR893.1 million
as of 30 June 2007 (DTZ)
Purchase Value of Notarised Acquisitions EUR925.5 million
as of 30 June 2007*
Valuation of Notarised Acquisitions EUR979.7 million
as of 30 June 2007 (DTZ)*
Drawn Debt (as of 30 June 2007) EUR705.9 million
Total Debt (Fully Drawn) EUR811.6 million
Loan to Value (Total Debt to Valuation of Notarised 82.9%
Acquisitions)
Annualised Net Rents (as at notarisation) EUR67.3 million
*There were no further notarisations for the Ordinary Shares after 30 June 2007
C Shares
* Acquisition activities were just commencing as at 30 June 2007, with the
cumulative cash consideration of properties notarised at EUR50.9 million.
* The IFRS NAV at 30 June 2007 was 99.7 Euro cents (67.1 pence). This
figure includes a gain from the revaluation of C Share swaps of EUR9.2
million.
Acquisition Environment
We are pleased to report that the acquisition process to date has progressed
well.
We take a local, research-based approach and try to target smaller portfolios
and assets typically in off-market transactions. We believe this minimises the
extent of competition and allows us to achieve more favourable pricing. We try
to acquire assets where there is a gap between wholesale purchase prices and
retail prices and continue to believe that, across the portfolio, there is
attractive upside potential in values versus today's price levels.
The Company's strategy is to buy well-tenanted pan-German residential
properties, the majority of which are at a significant discount to replacement
cost. Through economies of scale, we will seek to increase occupancy, rental
levels and operating efficiencies to grow funds from operations and to deliver
dividends. The Company will seek to pay significantly all of its distributable
cash flow to its shareholders. Over time, there is the potential to post
significant NAV growth if German residential values converge with replacement
cost.
Overall, we believe the market remains very attractive from an acquisition
perspective.
*SDIC paid on average EUR829 per square metre to purchase its Ordinary Share
Portfolio, a significant discount to estimated replacement cost.
*For the Ordinary Shares, acquisitions were largely focused on smaller
investments with an average transaction size of EUR6 million and it is
believed that this has created value for the Company versus participating in
larger and more competitive acquisition processes.
*Over 40% of the Ordinary Share properties by value are located in and around
major German cities including Berlin, Munich, Dusseldorf, Hamburg, Frankfurt,
Leipzig, and Hannover. We believe these cities are likely to perform
well in a rising market.
* We believe that very large residential portfolios continue to receive premium
pricing.
* Recently, a new class of large local German investors appears to be targeting
the potential of their home residential market and making significant
investments.
* The recent credit market turmoil may curtail the demand from some highly
leveraged investors, allowing SDIC to potentially purchase some mid-sized
residential portfolios at attractive prices.
* We continue to believe that there is potential for German residential prices
to move towards the estimate of replacement cost over the next 5 to 7 years
as the German economy resumes its upward trajectory.
* Certain non-core owners including corporations and local municipalities, as
well as early opportunity fund investors, are liquidating their holdings
creating significant acquisition opportunities.
Ordinary Share Portfolio Acquisition Update
SDIC has notarised a total of EUR925.5 million worth of properties with a
blended net initial yield at notarisation of 7.1%, including expected
refurbishment costs, projected to rise to 7.5% after 12 months of full
investment post completion of refurbishments. The profile of the Ordinary Share
Portfolio is diversified across Germany with the notarised properties in
geographic clusters.
SDIC has notarised properties containing 16,960 units at an overall average
price of approximately EUR829 per square metre. Total rentable space is
1,115,549 square metres. In terms of purchase price of properties notarised for
the Ordinary Share Portfolio, approximately 63% falls in the former West
Germany, 12% in Berlin and 25% in the former East Germany.
The contractual net rental income at notarisation was approximately EUR67.3
million per annum and the vacancy level was approximately 7.5%. We expect this
vacancy to rise to approximately 10% during the handover period. This increase
in vacancy is largely a function of the fact that previous owners have little
incentive to keep tenants following notarisation while we are legally prevented
from contacting our prospective tenants until completion of the acquisition.
The Company is still taking over these properties, reconciling funds with former
owners and booking them into the tenant accounting systems. This is an ongoing
process that takes an average of 5 months from completion. Approximately 55% of
the properties had been reconciled and booked as of 1 September 2007 with the
remainder expected to be substantially reconciled and booked by the end of the
first quarter of 2008.
Approximately EUR26.4 million was planned to be allocated for refurbishment of
the Ordinary Share Portfolio and this expenditure is expected to be yield and
value enhancing. Engineering studies have been carried out, identifying
potential refurbishment expenditure of a further EUR5.5 million. The majority of
this additional cost represents newly identified work to enhance the value of
the buildings and individual apartments although, additionally, it is our
experience that there has been a minor rise in construction costs in Germany.
C Share Portfolio Acquisition Update
As at 30 June 2007, SDIC had notarised properties for the C Share Portfolio for
a cumulative cash consideration of EUR50.9 million. No purchases had been
completed by this date, but property payments, including deposits or part
payments and excluding acquisitions costs, amounted to EUR3.9 million.
As at 19 October 2007, EUR200.1 million of predominantly residential property
purchases in various German cities had been notarised (committed to be
purchased).
The expected initial net rental income of these properties was expected to be
approximately EUR13.6 million per annum. The blended net initial yield at
notarisation, including estimated refurbishment costs, was 6.6%; with the
inclusion of rental guarantees received from the outset, this equates to
approximately 7.3%. The normalised rent (at 95% of maximum contracted income) is
also projected to rise to 7.3% in the second year (i.e. after full investment
and after completion of refurbishments.)
The Company has notarised apartment blocks for the C Share Portfolio containing
3,954 units at an overall average price of EUR766 per square metre. There were,
at notarisation, approximately 592 vacant units (c. 15% vacancy including units
to be refurbished or redecorated prior to letting). Some of the buildings have
initial rental guarantees in place (most at 95% of maximum rental income as at
notarisation) during the period of refurbishment and until one year following
the completion of those refurbishments. Effectively 417 units are covered by the
initial rental guarantees, thus the adjusted vacancy in terms of rental income
is approximately 4.4%.
Refurbishment costs of approximately EUR12.3 million are to be borne by the
selling entities for approximately EUR78.5 million of the current notarised
properties. Refurbishment related costs of over EUR6.3 million are to be borne
by the fund entities in addition to any costs covered by sellers for all the
properties notarised as at 19 October 2007. This expenditure is expected to be
yield and value enhancing.
It is envisaged that the properties purchased for the C Share Portfolio will be
located in geographic clusters right across Germany as with the Ordinary Share
portfolio.
Rental Income
The contracted net rents for the Ordinary Share Portfolio (i.e. the net rental
amount entitled to be received - excluding the service charge element) for the
period to 30 June 2007 was EUR28.2 million of which EUR21.0 million was received
in the period. Some properties will have certain contractual rental guarantees
that also have to be reconciled after a year. Rental guarantees outstanding from
previous owners were EUR0.35 million.
The relatively high level of arrears is in-line with our expectations as it is
typical that a number of tenants will continue to pay the previous owner or send
the money to the wrong account in the months that follow completion, though the
Company is entitled to receive that money in due course. Once the acquisition
process is completed, the Company contacts tenants to organise correct payment
arrangements.
Taxation
There is a current tax charge of EUR0.13 million (#0.09 million) and a deferred
tax provision of EUR2.0 million (#1.4 million). This tax provision is included
in the adjusted NAV calculation. The deferred tax provision, relating to
property revaluation gains, is required under International Financial Reporting
Standards as German capital gains tax would be payable if the actual properties
were sold. No capital gains tax liability should arise if the Company disposed
of its shareholdings in the Company's SPVs.
Borrowings
As of 30 June 2007, the borrowings at the SPV level for the Ordinary Share
Portfolio totalled EUR705.9 million, all of which were secured on the
properties.
After taking into account the cash position, the net debt at the SPV level for
the Ordinary Share Portfolio as of 30 June 2007 was EUR691.6 million.
Financing
As at 30 September 2007, EUR811.6 million of financing had been arranged in
respect of the Ordinary Share Portfolio, of which EUR705.9 million had been
drawn down by 30 June 2007, and the remainder was drawn down by 12 October 2007.
These borrowings have been fully hedged against interest rate risk, giving a
maximum overall fixed borrowing cost of approximately 4.6%.
For the C Share Portfolio, a financing facility of up to EUR500 million has been
put in place with NIBC, HSH Nordbank, and Nord LB. In conjunction with the
interest rate hedging, it is anticipated that overall borrowing costs on these
borrowings will not exceed 5%. It is anticipated that an additional EUR300
million of borrowings will be put in place for the C Share Portfolio over time.
The entire expected floating rate debt (3 month Euribor) of EUR800 million for
the C Share Portfolio existing and future property acquisitions have also been
fully hedged against interest rate risk.
Resources
The Manager and Investment Advisor continue to have significant resources at
their disposal. There are over 150 employees in Berlin (acquisitions, finance,
property management and operations) and a small satellite office in Munich
(acquisitions only). An acquisitions team of approximately 25 people is
dedicated to sourcing, analysis, due diligence, negotiation and purchasing.
Finance and accounting is handled by a team of experienced finance specialists
and accountants and all valuations for financing to date have been conducted by
DTZ.
On the property management side, there is a team of over 60 property managers
and book-keepers/accountants. The management team of any newly acquired property
portfolio is retained when appropriate and a "cluster" property management
strategy is employed for the pan-German coverage which includes the use of
specialist sub-contractor regional firms for satellite operations.
Alistair Curry Florian Lanz
For the Manager For the Investment Advisor
Speymill Property Managers Ltd Goal Service GmbH
Consolidated Income Statement
For the year For the period
ended 30 June from 1 March
2007 2006 (date of
incorporation)
to 30 June 2006
#'000 #'000
Rent and
related income 24,817 -
Direct costs (14,716) -
---------- ------------
Gross profit 10,101 -
---------- ------------
Change in fair value of
investment property (2,647) -
---------- ------------
Manager's fees (3,810) (103)
Professional fees (2,455) -
Audit fees (143) (7)
Other expenses (734) (137)
---------- ------------
Administrative expenses (7,142) (247)
---------- ------------
Net operating profit/(loss)
before net financing income 312 (247)
----------- ------------
Financial income 28,849 1,296
Financial expenses (9,116) (1)
----------- ------------
Net financing income 19,733 1,295
----------- ------------
Profit before taxation 20,045 1,048
Income tax expense:
Current (86) -
Deferred (1,355) -
----------- -------------
Retained profit for the year 18,604 1,048
----------- -------------
Basic earnings per Ordinary Share (pence) 7.04 0.62
Diluted earnings per Ordinary Share (pence) 7.03 0.62
Basic earnings per C Share (pence) 2.66 -
Diluted earnings per C Share (pence) 2.66 -
----------- -------------
The Directors consider that all results derive from continuing activities
Consolidated Balance Sheet
At 30 June 2007 At 30 June 2006
#'000 #'000
Investment property 600,549 -
----------- -----------
Total non-current assets 600,549 -
----------- -----------
Derivative financial instruments 42,885 -
Trade and other receivables 23,302 22,108
Cash and cash equivalents 170,198 139,895
----------- ------------
Total current assets 236,385 162,003
----------- ------------
Total assets 836,934 162,003
----------- ------------
Issued share capital 142,000 17,000
Share premium 37,803 -
Retained earnings 163,437 145,548
Foreign currency translation reserve (6,867) (701)
Other reserves 715 -
------------ ------------
Total equity 337,088 161,847
------------ ------------
Trade and other payables 23,778 156
Interest bearing loans 1,759 -
Income tax payable 80 -
------------ ------------
Total current liabilities 25,617 156
------------ ------------
Interest bearing loans 472,893 -
Deferred tax liability 1,336 -
------------ ------------
Total non-current liabilities 474,229 -
------------ ------------
Total liabilities 499,846 156
------------ ------------
Total equity & liabilities 836,934 162,003
------------ ------------
IFRS net asset value per Ordinary Share (pence) 99.67 95.20
IFRS net asset value per C Share (pence) 67.06 -
Company Balance Sheet
At 30 June 2007 At 30 June 2006
#'000 #'000
Investment in subsidiaries 42,070 -
---------- ------------
Total non-current assets 42,070 -
---------- ------------
Derivative financial instruments 29,023 -
Inter company loans 100,409 -
Trade and other receivables 5,583 22,108
Cash and cash equivalents 160,588 139,895
---------- ------------
Total current assets 295,603 162,003
---------- ------------
Total assets 337,673 162,003
---------- ------------
Issued share capital 142,000 17,000
Share premium 37,803 -
Retained earnings 162,288 145,548
Foreign currency translation reserve (6,789) (701)
Other reserves 715 -
---------- ------------
Total equity 336,017 161,847
---------- ------------
Trade and other payables 1,656 156
---------- ------------
Total current liabilities 1,656 156
---------- ------------
Total equity & liabilities 337,673 162,003
---------- ------------
The profit earned by the Company for the year ended 30 June 2007 was #17,455,525
(2006: #1,047,941).
Consolidated Statement of Changes in Equity
Share Share Retained Other 30 June 30 June
capital premium earnings reserves 2007 2006
(note 17)
#'000 #'000 #000 #'000 #'000 #'000
Balance at 1
July 2006 17,000 - 145,548 (701) 161,847 -
Shares issued
in the year 125,000 44,942 - - 169,942 17,000
Share issue
expenses (7,139) (715) 715 (7,139) -
Foreign exchange
translation
differences - - - (6,166) (6,166) (701)
Retained profit
for the year - - 18,604 - 18,604 145,548
------- --------- --------- -------- -------- --------
Balance at 30
June 2007 142,000 37,803 163,437 (6,152) 337,088 161,847
------- --------- --------- -------- -------- --------
Analysis by share
Ordinary Shares 17,000 - 156,795 (4,363) 169,432 161,847
C Shares 125,000 37,803 6,642 (1,789) 167,656 -
------- --------- --------- -------- -------- --------
Balance at 30
June 2007 142,000 37,803 163,437 (6,152) 337,088 161,847
------- --------- --------- -------- -------- --------
Consolidated Cash Flow Statement
For the year For the period
ended 30 June from 1 March
2007 2006 (date of
incorporation)
to 30 June 2006
#'000 #'000
Operating activities
Group profit for the period 20,045 1,048
Adjustments for:
Financial income (28,849) (1,296)
Financial expenses 9,116 1
Change in fair
value of investment property 2,647 -
-------- ---------
Operating profit/(loss)
before changes in working
capital and provisions 2,959 (247)
Increase in trade and other
receivables (9,971) (620)
Increase in trade and
other payables 21,343 156
--------- ---------
Cash flow from operations 14,331 (711)
Interest paid (9,116) (1)
Interest received 2,228 1,296
Income tax paid - -
--------- ----------
Cash flow from operating
activities 7,443 584
--------- ----------
Investing activities
Acquisition of investment property (579,429) -
Deposits relating to property
acquisitions (12,711) (21,488)
Acquisitions of investments (16,264) -
--------- -----------
Cash flow from investing activities (608,404) (21,488)
--------- -----------
Financing activities
Proceeds from the issue of
Ordinary Share capital 169,942 170,000
Share issue expenses (7,139) (8,500)
New interest bearing loans 474,652 -
--------- ----------
Cash flow from financing activities 637,455 161,500
--------- ----------
Net increase in cash and
cash equivalents 36,494 140,596
Effect of exchange rate
fluctuations on cash held (6,191) (701)
Cash and cash equivalents at
beginning of period 139,895 -
---------- ------------
Cash and cash
equivalents at end of period 170,198 139,895
---------- ------------
Notes to the Consolidated Financial Statements
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 up
to 170 million Ordinary Shares. The Shares of the Company were admitted to
trading on AIM, a market of the London Stock Exchange, following the close of
the placing on 17 March 2006. In total, 170 million Ordinary Shares were issued.
Pursuant to an admission document dated 17 April 2007 there was a placing of up
to 250 million C Shares. The Shares of the Company were admitted to trading on
AIM, a market of the London Stock Exchange, following the close of the placing
on 10 May 2007. In total, 250 million C Shares were issued.
The Company's agents and the Manager perform all significant functions.
Accordingly, the Company itself has no employees.
Duration
The Company currently does not have a fixed life.
Dividend policy
Due to the anticipated regular rental income from the property instruments, it
is the intention of the Directors that the Company will distribute substantially
all of its surplus income profits or funds from operations in relation to the
Current Portfolio and C Share Portfolio to the Ordinary Shareholders and the C
Shareholders respectively.
The Board intends to pay a nominal dividend to existing Ordinary Shareholders in
the short-term and, in line with the stated dividend policy on Initial
Admission, intends to be able to pay a dividend equivalent to an annualised
amount of 6 per cent. of the Initial Placing Price within the first 12 months of
the Company becoming substantially fully invested (completed).
It is the intention of the Directors that in the first 12 months after
substantially all of the net proceeds of the C Share Placing have been invested,
the net distributable income generated by the Company from the investment of the
net proceeds of the Placing should be equivalent to an annualised net
distributable income return of 5 per cent. of the Placing Price. The Manager
believes that substantially all of the net proceeds of the Placing will be
notarised by 30 June 2008.
2 The Subsidiaries
During the year the Company established 65 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 year the Company owns 100% of the shares in 80 Isle of
Man incorporated property owning companies and 1 Cayman incorporated
intermediate holding company.
3 Basis of presentation
These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS"). They are prepared on the
historical cost basis except for derivative financial instruments and investment
properties, which are stated at fair value.
The preparation of financial statements requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the estimate is
revised and in any future periods affected.
The most significant area requiring estimation and judgement by the Directors is
the valuation of investment property.
4 Segment reporting
The Group has one segment focusing on achieving income with the potential for
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.
5 Net financing income
For the year For the period
ended ended
30 June 2007 30 June 2006
#'000 #'000
Interest income 2,228 1,296
Unrealised gain on derivative
financial instruments 26,621 -
--------- ----------
Financial income 28,849 1,296
-------- ----------
Interest charges (9,111) -
Bank charges (5) (1)
--------- ----------
Financial expenses (9,116) (1)
--------- ----------
Net financing income 19,733 1,295
--------- ----------
6 Investment property
30 June 2007 30 June 2006
#'000 #'000
Brought forward - -
Additions 603,196 -
Net revaluation deficit (2,647) -
--------- ---------
Value of investment property at end of year 600,549 -
--------- ----------
The fair value of the Group's investment property at 30 June 2007 has been
arrived at on the basis of a valuation carried out at that date by DTZ Zadelhoff
Tie Leung GmbH, independent valuers that are not related to the Group. DTZ
Zadelhoff Tie Leung GmbH 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 30 June 2007, there was a first rank mortgage on the above properties
securing the bank loan of #474,651,641.
7 Derivative financial instruments
Group
30 June 2007 30 June 2006
#'000 #'000
Fair value of interest rate swap contracts 42,885 -
---------- ---------
The fair value of the interest rate swap contracts comprises 31 contracts as
follows:-
Notional amount Premium Maturity Fixed rate Variable rate Fair value at
30 June 2007
#'000 #'000 #'000
400,000 4,377 02.04.2014 3.745% Euribor 14,159
800,000 8,624 31.12.2014 4.1963% Euribor 14,864
191,650 1,496 30.09.2013 3.7% Euribor 6,635
215,134 2,115 30.09.2013 3.7325% Euribor 7,227
------- -------- ---------- -------- -------- ----------
42,885
----------
Company
30 June 2007 30 June 2006
#'000 #'000
Fair value of interest rate swap contracts 29,023 -
-------- ----------
The fair value of the interest rate swap contracts comprises 4 contracts as
follows:-
Notional amount Premium Maturity Fixed rate Variable rate Fair value at
30 June 2007
#'000 #'000 #'000
400,000 4,377 02.04.2014 3.745% Euribor 14,159
800,000 8,624 31.12.2014 4.1963% Euribor 14,864
------- -------- ---------- -------- --------- -------
29,023
-------
8 Interest-bearing loans
Group
30 June 2007 30 June 2006
#'000 #'000
The interest bearing loans are repayable as
follows:
On demand or within one year 1,759 -
In the second year 4,551 -
In the third to fifth years inclusive 24,998 -
After five years 443,344 -
-------- ----------
474,652 -
-------- -----------
Less: amount due for settlement within 12
months 1,759 -
(shown under current liabilities) --------- ----------
Amount due for settlement over the remaining
period of the loans 472,893 -
---------- -----------
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%.
9 IFRS adjusted Net Asset Value per Share (adjusted for Deferred Tax)
Ordinary Shares
Net assets attributable to Ordinary Shareholders 169,432 161,847
(#'000)
Ordinary Shares in issue at 30 June 2007 170,000 170,000
(thousands) --------- ---------
IFRS net asset value per Ordinary Share (in 99.67p 95.20p
pence) ---------- ---------
C Shares
Net assets attributable to C Shareholders 167,656 -
(#'000)
C Shares in issue at 30 June 2007 (thousand) 250,000 -
-------- -----------
IFRS net asset value per Ordinary Share (in 67.06p -
pence) -------- -----------
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. The Directors intend to trigger
conversion of the C Shares once 85 per cent. of the funds raised from the C
Share issue have been fully invested (completed).
10 Basic and Diluted Earnings per Share
Basic and diluted earnings per Ordinary Share and C Share are calculated by
dividing the profit attributable to the Ordinary Shareholders and the profit
attributable to the C Shareholders by the number of Ordinary Shares and the
number of C Shares respectively in issue during the year.
Basic Earnings per Share
2007 2006
Ordinary Shares
Profit attributable to Ordinary Shareholders 11,962 1,048
(#'000)
Ordinary Shares in issue at 30 June 2007 170,000 170,000
(thousands) -------- --------
Basic earnings per Ordinary Share (pence per 7.04p 0.62p
share) -------- --------
C Shares
Profit attributable to C Shareholders (#'000)
for the period from 10 May 2007 (date of issue)
to 30 June 2007 6,642 -
C Shares in issue at 30 June 2007 (thousands) 250,000 -
--------- -----------
Basic and fully diluted earnings per C Share
(pence per share) 2.66p -
--------- -----------
The difference between basic and diluted Ordinary Shares in issue arises from
the assumption that dilutive share options were exercised.
The conversion of C Shares in to Ordinary Shares is not considered to be
dilutive.
Diluted earnings per share
2007 2006
Ordinary Shares
Profit attributable to Ordinary Shareholders 11,962 1,048
(#)
Ordinary Shares in issue at 30 June 2007 170,000 170,000
(thousands) --------- ---------
Adjustment for share options 227 51
--------- ---------
Ordinary Shares in issue for diluted earnings 170,227 170,051
per share --------- ----------
Fully diluted earnings per Ordinary Share
(pence per share 7.03p 0.62p
-------- ---------
11 Post balance sheet events
On 9 October 2007 the Company was granted an order from the High Court of
Justice approval for the Company to cancel its share premium account arising on
the issue of the C Shares. 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 redominating the shares of the Company
from Sterling into Euros. Following the granting of this Order, with effect from
16 October 2007 the Company issued new paid up Euro Ordinary Shares with a
nominal value of 5 Euro cents each and new paid up Euro C Shares with a nominal
value of 25 Euro cents each.
12 Copies of the Annual Report
The full audited accounts for the year ended 30 June 2007 will be sent to
shareholders shortly and will be available from the Company's registered office
at Jubilee Buildings, Victoria Street, Douglas, Isle of Man IM1 2SH.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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