TIDMSRE TIDMPCX
RNS Number : 6425D
Sirius Real Estate Limited
07 December 2009
Sirius Real Estate Limited
("Sirius", "the Group" or "the Company")
Half-Yearly Results for the six months ended 30 September 2009
Results Highlights
* Adjusted NAV per share 78.6c1 (31 March 2009: 83.5c)
* Property assets were revalued at EUR500 million (flat vs. 31 March 2009)
* Adjusted profit before tax attributable to equity holders of EUR1.0 million2
* Adjusted EPS of 0.63c2 per share (30 September 2009)
* Gross LTV across the portfolio at 63% (30 September 2009), following a full
drawdown of the new BerlinHyp facility
Operational Highlights
* Returns from investment into the portfolio being evidenced by increased rental
values
*
* New lettings in period of 45,283 sqm compared to 55,900 sqm for the full year
ended 31 March 2009
* Average new lease rate achieved of EUR5.20 per sqm up from EUR4.50 per sqm in the
previous year
* Positive market data from German SME sector
* Introduced new Smartspace scheme to take advantage of demand for highly flexible
short lets
* Approval on debt restructuring post period end, ensuring good financial
flexibility
1 Excluding related deferred tax and change in fair value on derivative
financial instruments.
2 Excluding property revaluation, related deferred tax and non-controlling
interest and change in fair value on derivative financial instruments.
Dick Kingston, Chairman of Sirius Real Estate, said:
"During the first six months of the financial year, we continued to focus on
developing the portfolio, the benefits of which are demonstrated by our
continued ability to drive rental growth above market rates. A number of move
outs in our largest site created an opportunity to increase rental returns and
helped us achieve a highly encouraging level of new lettings during the period,
almost reaching the number achieved during the full year to 31 March 2009.
Tenant demand is improving as confidence returns to the SME sector and this is
certainly borne out by the increase in enquiry levels."
Enquiries:
Principle Capital Sirius Real Estate Asset Management Limited
Kevin Oppenheim, CEO 020 7632 4130
Alistair Marks, CFO
Mark Whitfeld, Investor Relations 020 7240
3222
JPMorgan Cazenove
Robert Fowlds020 7588 2828
Bronson Albery
Cardew Group
Tim Robertson 020 7930 0777
Shan Shan Willenbrock
Catherine Maitland
A copy of the presentation to investors will be available on the Group's website
at www.sirius-real-estate.com.
A presentation to analysts will be held on the day at J.P. Morgan Cazenove (20
Moorgate, London EC2R 6DA) at 9.30am.
Chairman's statement
Introduction
I am pleased to announce the Group's Interim Results for the six months ended 30
September 2009. We have continued to focus on asset management of the existing
portfolio, transforming the individual properties into modern business parks
offering flexible, affordable, high quality workspace. Demand for such space has
been strong from local markets; we have maintained occupancy, grown revenue and
achieved impressive rental growth during a period of extremely challenging
economic conditions, thus demonstrating the resilience of the Sirius business
model.
Results
During the period under review, approximately EUR17.4 million has been invested in
our portfolio; tenant demand has remained strong evidenced by the fact that we
let 81% of the total space let in the last financial year in the first six
months, at an average rate of circa 16% higher than last year's average.
Consequently the average rent psm achieved on the portfolio has increased from
EUR4.15 to EUR4.26, an increase of 2.7% since 31 March 2009.
New tenant enquiry levels are averaging 120 per week and have been rising
consistently throughout the period. We therefore believe the portfolio is well
positioned to continue to benefit from the increase in confidence across the
German SME sector. Added to this is our new Smartspace scheme, where we offer
small refurbished modular premises of sub 100 sqm on highly flexible terms. In
response to strong demand for this product we have now converted approximately
13,000 sqm of previously vacant premises into the Smartspace product, on which
we are able to achieve premium rents.
We are also implementing a number of efficiency measures to reduce the inherited
irrecoverable running costs of the portfolio. Under an internal initiative, the
Asset Manager is looking at various areas of portfolio management in order to
reduce the cost base through supplier consolidation and economies of scale, as
well as other initiatives to significantly improve the recoverability of the
remaining costs. These measures have reduced profitability in the current year,
however, they are expected to have a material financial benefit over the
following years.
Gross rental income for the period was EUR22.0 million. Excluding property
revaluations, related deferred tax and non-controlling interest and fair value
adjustments for financial derivatives, profit before tax for the period was EUR1.0
million. This reflected the Company's additional investment in efficiency
initiatives and the net cost of borrowing significantly increasing as we fully
drew down the new EUR45 million BerlinHyp facility, together with interest income
earned on deposits dropping significantly with the falls in base rate. As at 30
September 2009, the portfolio of 38 properties had an annualised gross rent roll
of EUR42.3 million and total lettable area of circa 1.2m sqm.
Occupancy was 73.1%, which is broadly level with the beginning of the financial
year, as anticipated occupancy was held back due to two large move outs.
However, we were able to let a substantial amount of space at improved rates in
the six month period. 45,283 sqm of new leases were signed at an average rent of
EUR5.20 psm, compared to 55,900 sqm signed at an average of EUR4.50 psm for the full
year ended 31 March 2009. 52,807 sqm of vacated space in the period was let at
an average rate of EUR3.26 psm. Recent letting activity has been encouraging,
demonstrated by our ability to attract tenants at advantageous rates, and
significantly higher than the rates of vacating tenants.
The adjusted EPS, which excludes property revaluation, related deferred tax and
non-controlling interest and change in fair value on derivative financial
instruments, was 0.63c as at 30 September 2009 (2008: 1.19c).
Further to the announcement dated 6 November 2009 noting press speculation with
regard to the potential acquisition by the Company of a German property
portfolio, the Company announced on 3 December 2009 that it is no longer in
discussions concerning this potential acquisition. The decision by the Company
not to pursue the acquisition at this time was made at the latter stages of
negotiations with the vendor. The Company expects that professional advisory
fees of approximately EUR1 million (which are the subject of ongoing negotiations)
were incurred in connection with the potential transaction.
Net Asset Value (NAV)
The portfolio has been independently valued by DTZ Zadelhoff Tie Leung GmbH
("DTZ") as at 30 September 2009 at EUR500 million, which has resulted in a
revaluation deficit of EUR17.4m. The valuation deficit arises because of the capex
invested into the portfolio in the period, effectively being written off,
through the revaluation adjustment.
The portfolio including vacant space is now valued on an average net initial
yield of 7.0% off an average passing rent of EUR4.26 psm. The average capital
value psm is EUR436 and the valuation takes no account of the surplus land.
The financial turmoil has led to valuers taking a very cautious approach. Having
said that, we believe that we will continue to let new space as it becomes
available following the transformation process, and the higher rates being
achieved from new lettings are keeping the values stable.
The adjusted NAV per share, which excludes deferred tax and change in fair value
adjustment on financial derivative instruments, was 78.6c at 30 September 2009
(31 March 2009: 83.5c).
Capital Expenditure
During the six months ended 30 September 2009, the Company invested
approximately EUR17.4 million in its ongoing programme of upgrading the portfolio,
the benefits of which are being evidenced by higher rental rates and improved
tenant retention.
Dividend
As reported previously, in order to sustain investment in the Group's portfolio
whilst also keeping the LTV ratio at modest levels and ensuring cash resources
are preserved, the Board decided to keep dividend payments suspended. We will
continue to review this policy.
Finance
As at 30 September 2009 Sirius's borrowings, excluding capitalised loan costs,
totalled EUR315.7 million representing an LTV of 63%.
As announced post the period end, the Company has received approval following
negotiations to consolidate its two portfolios financed with ABN Amro Bank N.V.
("ABN") for a one-off fee of EUR250,000 plus legal costs and an increase in the
cost of borrowing of 40 basis points. In addition the loan must be paid down by
circa EUR1 million plus a EUR66,000 repayment penalty. While one of the two
portfolios has significant headroom, the other was believed to be in breach of
its LTV covenant based on the Company's valuations. Following the consolidation
of these portfolios, the new LTV covenant is 85%, creating the headroom to
accommodate a 14% drop in property values, as valued by DTZ.
In addition a cure provision has been added so that should a financial covenant
be breached again it can be cured by paying down an appropriate portion of the
loan. Consequently all of the Company's banking facilities are now within their
respective covenants and the Company has sufficient cash to fund its planned
capital expenditure programme for the foreseeable future.
Asset Management
The fundamentals of the Sirius business model remain positive, and tenant demand
during and post the period has been encouraging. According to the German Ifo
survey, German business confidence rose for an eighth consecutive month in
November. The Ifo business climate index rose to 93.9 points in November from 92
points in October.
While the Sirius model enables higher rents to be achieved on transformed space,
importantly the space remains good value and we continue to receive a high level
of enquiries from potential tenants. The occupancy rate across the portfolio of
38 properties is 73.1%.
In April 2009, the Smartspace campaign was launched, offering very small
ready-made units for office, light industrial and storage purposes. This product
targets start-up companies and small businesses and is proving successful having
achieved lettings of 2,788 sqm at an average of EUR8.40 psm which represents a
significant premium above conventional letting rates. The Smartspace product is
now available at ten sites across the portfolio with the intention of converting
20,000 sqm by January 2010. The Sirius team continues to monitor and adapt to
local market trends, and our flexibility combined with the high quality and
affordable space we offer remains a key advantage in the current market.
Developing on surplus land on a pre-let basis continues to be an important
component of the Group's strategy, and three new deals have been signed and
construction started since 31 March 2009: with Burger King at Pfungstadt, ZK
Glasbau in Maintal and OPC in Düsseldorf. A total of nine pre-let development
deals have now been signed since IPO, creating an additional 5,877 sqm of
pre-let space at a net initial yield on cost of 12.4%.
Outlook
We believe there has been an improvement in market conditions over the last six
months. Tenant demand is improving as confidence returns to the German SME
market. Enquiry levels continue to increase and during the period we have let
more than 80% of the space that we did in the previous financial year and,
critically, new lettings are achieving significant rental increases. We will
continue to focus on increasing rents where we have the opportunity to do so,
and investing in transforming the portfolio under the proven Sirius model. We
therefore look forward to further developing the business and delivering value
to shareholders.
Dick Kingston
Chairman
+--------------------------------------+--------+--------------+-------------+-----------+
| Unaudited consolidated statement of | | (Unaudited) | (Unaudited) | (Audited) |
| comprehensive income | | | | |
| for the six months ended 30 | | | | |
| September 2009 | | | | |
| | | | | |
+--------------------------------------+--------+--------------+-------------+-----------+
| | | six | six | twelve |
| | | months | months | months |
| | | ended | ended | ended |
+--------------------------------------+--------+--------------+-------------+-----------+
| | | 30 | 30 | 31 March |
| | | September | September | |
+--------------------------------------+--------+--------------+-------------+-----------+
| | | 2009 | 2008 | 2009 |
+--------------------------------------+--------+--------------+-------------+-----------+
| | Notes | EUR000 | EUR000 | EUR000 |
+--------------------------------------+--------+--------------+-------------+-----------+
| Gross rental income | 4 | 22,008 | 19,081 | 43,742 |
+--------------------------------------+--------+--------------+-------------+-----------+
| Direct costs | 5 | (9,854) | (7,033) | (19,271) |
+--------------------------------------+--------+--------------+-------------+-----------+
| Net rental income | | 12,154 | 12,048 | 24,471 |
+--------------------------------------+--------+--------------+-------------+-----------+
| Deficit on revaluation of investment | | (17,336) | (10,280) | (42,721) |
| properties | | | | |
+--------------------------------------+--------+--------------+-------------+-----------+
| Administrative expenses | 5 | (2,138) | (2,810) | (5,159) |
+--------------------------------------+--------+--------------+-------------+-----------+
| Other operating expenses | 5 | (833) | (400) | (947) |
+--------------------------------------+--------+--------------+-------------+-----------+
| Operating loss | | (8,153) | (1,442) | (24,356) |
+--------------------------------------+--------+--------------+-------------+-----------+
| Finance income | 6 | 24 | 1,154 | 1,714 |
+--------------------------------------+--------+--------------+-------------+-----------+
| Finance expense | 6 | (8,534) | (6,667) | (15,219) |
+--------------------------------------+--------+--------------+-------------+-----------+
| Change in fair value of derivative | | 172 | (2,151) | (13,523) |
| financial instruments | | | | |
+--------------------------------------+--------+--------------+-------------+-----------+
| Loss before tax | | (16,491) | (9,106) | (51,384) |
+--------------------------------------+--------+--------------+-------------+-----------+
| Taxation | 7 | 1,281 | (1,615) | (1,283) |
+--------------------------------------+--------+--------------+-------------+-----------+
| Loss for the period | | (15,210) | (10,721) | (52,667) |
+--------------------------------------+--------+--------------+-------------+-----------+
| Other comprehensive income | | - | - | - |
+--------------------------------------+--------+--------------+-------------+-----------+
| Total comprehensive income for the | | (15,210) | (10,721) | (52,667) |
| period | | | | |
+--------------------------------------+--------+--------------+-------------+-----------+
| | | | | |
+--------------------------------------+--------+--------------+-------------+-----------+
| Loss attributable to: | | | | |
+--------------------------------------+--------+--------------+-------------+-----------+
| Owners of the Company | | (14,277) | (10,345) | (51,989) |
+--------------------------------------+--------+--------------+-------------+-----------+
| Non-controlling interest | | (933) | (376) | (678) |
+--------------------------------------+--------+--------------+-------------+-----------+
| Loss for the period | | (15,210) | (10,721) | (52,667) |
+--------------------------------------+--------+--------------+-------------+-----------+
| | | | | |
+--------------------------------------+--------+--------------+-------------+-----------+
| | | | | |
+--------------------------------------+--------+--------------+-------------+-----------+
| Earnings per share | | | | |
+--------------------------------------+--------+--------------+-------------+-----------+
| Basic and diluted, for comprehensive | 8 | (4.72)c | (3.37)c | (17.05)c |
| income for the period attributable | | | | |
| to ordinary equity holders of the | | | | |
| parent company | | | | |
+--------------------------------------+--------+--------------+-------------+-----------+
The notes below form an integral part of these financial statements.
+----------------------------------+----------+-------------+-------------+-----------+
| Unaudited consolidated statement | | (Unaudited) | (Unaudited) | (Audited) |
| of financial position | | | | |
| as at 30 September 2009 | | | | |
| | | | | |
+----------------------------------+----------+-------------+-------------+-----------+
| | | 30 | 30 | 31 March |
| | | September | September | |
+----------------------------------+----------+-------------+-------------+-----------+
| | | 2009 | 2008 | 2009 |
+----------------------------------+----------+-------------+-------------+-----------+
| | Notes | EUR000 | EUR000 | EUR000 |
+----------------------------------+----------+-------------+-------------+-----------+
| Non-current assets | | | | |
+----------------------------------+----------+-------------+-------------+-----------+
| Investment properties | 10 | 500,020 | 519,100 | 500,400 |
+----------------------------------+----------+-------------+-------------+-----------+
| Assets under construction | 11 | 3,338 | 2,637 | 2,222 |
+----------------------------------+----------+-------------+-------------+-----------+
| Plant and equipment | | 4,627 | 3,069 | 3,452 |
+----------------------------------+----------+-------------+-------------+-----------+
| Total non-current assets | | 507,985 | 524,806 | 506,074 |
+----------------------------------+----------+-------------+-------------+-----------+
| Current assets | | | | |
+----------------------------------+----------+-------------+-------------+-----------+
| Trade and other receivables | | 11,213 | 5,493 | 7,586 |
+----------------------------------+----------+-------------+-------------+-----------+
| Prepayments | | 901 | 815 | 136 |
+----------------------------------+----------+-------------+-------------+-----------+
| Cash and cash equivalents | 12 | 46,708 | 41,279 | 29,652 |
+----------------------------------+----------+-------------+-------------+-----------+
| Total current assets | | 58,822 | 47,587 | 37,374 |
+----------------------------------+----------+-------------+-------------+-----------+
| Total assets | | 566,807 | 572,393 | 543,448 |
+----------------------------------+----------+-------------+-------------+-----------+
| Current liabilities | | | | |
+----------------------------------+----------+-------------+-------------+-----------+
| Trade and other payables | 13 | (16,964) | (12,921) | (18,248) |
+----------------------------------+----------+-------------+-------------+-----------+
| Interest-bearing loans and | 14 | (101,671) | (4,421) | (102,447) |
| borrowings | | | | |
+----------------------------------+----------+-------------+-------------+-----------+
| Current tax liabilities | | (343) | (1,095) | (1,663) |
+----------------------------------+----------+-------------+-------------+-----------+
| Derivative financial instruments | 15 | (13,351) | (43) | (13,523) |
+----------------------------------+----------+-------------+-------------+-----------+
| Total current liabilities | | (132,329) | (18,480) | (135,881) |
+----------------------------------+----------+-------------+-------------+-----------+
| Non-current liabilities | | | | |
+----------------------------------+----------+-------------+-------------+-----------+
| Interest-bearing loans and | 14 | (210,250) | (269,184) | (167,821) |
| borrowings | | | | |
+----------------------------------+----------+-------------+-------------+-----------+
| Derivative financial instruments | 15 | - | (2,108) | - |
+----------------------------------+----------+-------------+-------------+-----------+
| Deferred tax liabilities | 7 | (2,174) | (3,411) | (2,482) |
+----------------------------------+----------+-------------+-------------+-----------+
| Total non-current liabilities | | (212,424) | (274,703) | (170,303) |
+----------------------------------+----------+-------------+-------------+-----------+
| Total liabilities | | (344,753) | (293,183) | (306,184) |
+----------------------------------+----------+-------------+-------------+-----------+
| Net assets | | 222,054 | 279,210 | 237,264 |
+----------------------------------+----------+-------------+-------------+-----------+
| Equity | | | | |
+----------------------------------+----------+-------------+-------------+-----------+
| Issued share capital | 16 | - | - | - |
+----------------------------------+----------+-------------+-------------+-----------+
| Other distributable reserve | | 300,111 | 300,111 | 300,111 |
+----------------------------------+----------+-------------+-------------+-----------+
| Retained earnings | | (78,057) | (22,136) | (63,780) |
+----------------------------------+----------+-------------+-------------+-----------+
| Total equity attributable to the | | 222,054 | 277,975 | 236,331 |
| equity holders of the parent | | | | |
| company | | | | |
+----------------------------------+----------+-------------+-------------+-----------+
| Non-controlling interests | | - | 1,235 | 933 |
+----------------------------------+----------+-------------+-------------+-----------+
| Total equity | | 222,054 | 279,210 | 237,264 |
+----------------------------------+----------+-------------+-------------+-----------+
The notes below form an integral part of these financial statements.
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| Unaudited consolidated | | | | | Total | | |
| statement of changes | | | | | equity | | |
| in equity | | | | | | | |
| for the six months | | | | | | | |
| ended 30 September | | | | | | | |
| 2009 | | | | | | | |
| | | | | | | | |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| | | | | | attributable | | |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| | | Issued | Other | | to the | | |
| | | | | | equity | | |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| | | share | distributable | Retained | holders | Non-controlling | |
| | | | | | of | | |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| | | capital | reserve | earnings | the | interests | Total |
| | | | | | company | | equity |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| | | EUR000 | EUR000 | EUR000 | EUR000 | EUR000 | EUR000 |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| As at 31 March 2008 | | - | 311,625 | (7,258) | 304,367 | 1,611 | 305,978 |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| Loss for the period | | - | - | (10,345) | (10,345) | (376) | (10,721) |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| Own shares acquired | | - | (11,514) | - | (11,514) | - | (11,514) |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| Equity dividends | | - | - | (4,533) | (4,533) | - | (4,533) |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| As at 30 September | | - | 300,111 | (22,136) | 277,975 | 1,235 | 279,210 |
| 2008 | | | | | | | |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| Loss for the period | | - | - | (41,644) | (41,644) | (302) | (41,946) |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| As at 31 March 2009 | | - | 300,111 | (63,780) | 236,331 | 933 | 237,264 |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| Loss for the period | | - | - | (14,277) | (14,277) | (933) | (15,210) |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
| As at 30 September | | - | 300,111 | (78,057) | 222,054 | - | 222,054 |
| 2009 | | | | | | | |
+------------------------+--------+---------+---------------+----------+--------------+-----------------+----------+
The notes below form an integral part of these financial statements.
+---------------------------------------------+-------------+-------------+-----------+
| Unaudited consolidated statement of cash | (Unaudited) | (Unaudited) | (Audited) |
| flow | | | |
| for the six months ended 30 September 2009 | | | |
| | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | six | six | twelve |
| | months | months | months |
| | ended | ended | ended |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Operating activities | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Loss before tax | (16,491) | (9,106) | (51,384) |
+---------------------------------------------+-------------+-------------+-----------+
| Adjustments for: | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Deficit on revaluation of investment | 17,336 | 10,280 | 42,721 |
| properties | | | |
+---------------------------------------------+-------------+-------------+-----------+
| (Surplus)/deficit on revaluation of | (172) | 2,151 | 13,523 |
| derivative financial instruments | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Depreciation | 208 | 161 | 416 |
+---------------------------------------------+-------------+-------------+-----------+
| Finance income | (24) | (1,154) | (1,714) |
+---------------------------------------------+-------------+-------------+-----------+
| Finance costs | 8,534 | 6,667 | 15,219 |
+---------------------------------------------+-------------+-------------+-----------+
| Cash flows from operations before changes | 9,391 | 8,999 | 18,781 |
| in working capital | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Changes in working capital | | | |
+---------------------------------------------+-------------+-------------+-----------+
| (Increase)/decrease in trade and other | (4,541) | (813) | (2,228) |
| receivables | | | |
+---------------------------------------------+-------------+-------------+-----------+
| (Decrease)/increase in trade and other | (1,328) | 37 | 3,791 |
| payables | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Taxation paid | (346) | - | - |
+---------------------------------------------+-------------+-------------+-----------+
| Cash flows from operating activities | 3,176 | 8,223 | 20,344 |
+---------------------------------------------+-------------+-------------+-----------+
| Investing activities | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Purchase of investment properties | (1,347) | (138,112) | (138,187) |
+---------------------------------------------+-------------+-------------+-----------+
| Development expenditure | (17,794) | (8,303) | (22,137) |
+---------------------------------------------+-------------+-------------+-----------+
| Purchase of plant and equipment | (874) | (17) | (722) |
+---------------------------------------------+-------------+-------------+-----------+
| Proceeds on disposal of plant and equipment | - | - | 89 |
+---------------------------------------------+-------------+-------------+-----------+
| Interest received | 24 | 1,154 | 1,703 |
+---------------------------------------------+-------------+-------------+-----------+
| Cash flows used in investing activities | (19,991) | (145,278) | (159,254) |
+---------------------------------------------+-------------+-------------+-----------+
| Financing activities | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Dividends paid to equity holders of the | - | (4,533) | (4,533) |
| Parent Company | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Purchase of own share capital | - | (11,514) | (11,514) |
+---------------------------------------------+-------------+-------------+-----------+
| Proceeds from loans | 44,706 | 178,110 | 178,110 |
+---------------------------------------------+-------------+-------------+-----------+
| Repayment of loans | (3,468) | (26,457) | (29,309) |
+---------------------------------------------+-------------+-------------+-----------+
| Finance charges paid | (7,367) | (6,795) | (13,715) |
+---------------------------------------------+-------------+-------------+-----------+
| Cash flows from financing activities | 33,871 | 128,811 | 119,039 |
+---------------------------------------------+-------------+-------------+-----------+
| Increase/(decrease) in cash and cash | 17,056 | (8,244) | (19,871) |
| equivalents | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Cash and cash equivalents at the beginning | 29,652 | 49,523 | 49,523 |
| of the period | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Cash and cash equivalents at the end of the | 46,708 | 41,279 | 29,652 |
| period | | | |
+---------------------------------------------+-------------+-------------+-----------+
The notes below form an integral part of these financial statements.
Notes forming part of the financial statements
for the six months ended 30 September 2009
1. General information
Sirius Real Estate Limited (the "Company") is a Company incorporated and
domiciled in Guernsey whose shares are publicly traded on AIM.
The consolidated financial statements of Sirius Real Estate Limited comprise the
Company and its subsidiaries (together referred to as the "Group").
The principal activity of the Group is investment in and development of
commercial property to provide flexible workspace in Germany.
The consolidated financial statements of the Group as at and for the year ended
31 March 2009 are available upon request from the Company's registered office at
PO Box 119, Martello Court, Admiral Park, St. Peter Port, Guernsey GY1 3HB,
Channel Islands or at www.sirius-real-estate.com.
The Company acts as the investment holding company of the Group.
2. Significant accounting policies
(a) Basis of preparation
The consolidated financial statements have been prepared on a historical cost
basis, except for investment properties, assets under construction and
derivative financial instruments which have been measured at fair value. The
consolidated financial statements are presented in euros and all values are
rounded to the nearest thousand (EUR000) except where otherwise indicated.
The consolidated financial statements of the Group for the year ended 31 March
2009 have been prepared in accordance with IFRSs adopted for use in the EU
("Adopted IFRSs") and The Companies (Guernsey) Law, 2008. The interim set of
financial statements included in this interim report has been prepared in
accordance with the recognition and measurement requirements of Adopted IFRSs.
The interim set of financial statements has 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
March 2009 except for IAS 1 Presentation of Financial Statements (Revised), IFRS
8 Operating Segments and improvements to IFRSs (2008) amends IAS 40 'Investment
Property' which have been adopted for the first time. They do not include all of
the information required for full annual financial statements, and should be
read in conjunction with the consolidated financial statements of the Group as
at and for the year ended 31 March 2009.
These financial statements have been prepared on a going concern basis as it is
the view of the Directors that this is the most appropriate basis of preparation
to adopt having considered the issue identified below.
The Group's property portfolios are partly funded by external debt facilities.
Under the terms of the debt agreements each debt obligation is "ring-fenced"
within a sub-group of companies. Sirius Real Estate Limited, the ultimate parent
company, itself is not a party to any of the finance documents (in any capacity
including as borrower, guarantor or security provider). The finance providers
would therefore not have any recourse to the ultimate parent under the finance
arrangements.
Due to falling property values in the current economic climate ABN AMRO
instructed a valuation to test the LTV covenants of the two facilities they have
in place with the company. This proved one of the facilities to be in breach for
which a resolution was agreed subsequent to the period end. The total amount
outstanding for the two facilities was EUR98 million, of which the second has
significant headroom on the LTV covenant. The Company has received approval
following negotiations with the finance provider to consolidate the two
portfolios for covenant testing purposes for a one off fee of EUR250,000 plus
legal costs and an increase in the cost of borrowing of 40 basis points. In
addition the loan will be paid down by EUR975,000 plus a EUR66,000 repayment
penalty. Following the consolidation of the two portfolios, the new LTV covenant
will be 85%, creating headroom to accommodate a 14% drop in property values.
Under the terms of the breached facility the lender has no recourse against any
other assets outside the ABN AMRO financed portfolios. The Group has EUR46.7
million of cash reserves which means the Group has significant liquid assets at
its disposal. The group also has EUR48.7 million worth of unencumbered assets.
(b) Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at 30 September 2009. The financial statements
of the subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies.
All intra?group balances, transactions, income and expenses and profits and
losses resulting from intra?group transactions that are recognised in assets,
are eliminated in full.
Subsidiaries are fully consolidated from the date of acquisition, being the date
on which the Group obtains control, and continue to be consolidated until the
date that such control ceases.
Non-controlling interests represent the portion of profit or loss and net assets
not held by the Group and are presented separately in the consolidated statement
of comprehensive income and within equity in the consolidated statement of
financial position, separately from parent shareholders' equity.
(c) Significant accounting policies
Except as described below, the accounting policies applied by the Group in these
consolidated financial statements are the same as those applied by the Group in
its consolidated financial statements as at and for the year ended 31 March
2009.
Changes in accounting policies
IAS 1 Presentation of Financial Statements (Revised) introduces the possibility
of either a single statement of comprehensive income (combining the income
statement and a statement of comprehensive income) or to retain the income
statement with a supplementary statement of comprehensive income. The first
option has been adopted by the Group. As this standard is concerned with
presentation only it does not have any impact on the results or the net assets
of the Group.
IFRS 8 Operating Segments requires the disclosure of segment information based
on the internal reports regularly reviewed by the Group's Chief Operating
Decision Maker ('CODM') in order to assess each segment's performance and to
allocate resources to them. The ultimate decision making of the Group is the
board of directors of the Company. The directors of subsidiaries make decisions
relating to specific assets. The Directors have appointed the Asset Manager
through the Asset Management Agreement. The Asset Manager has power of attorney
for decisions up to EUR50,000. Collectively they are all referred to as
"management".
"Improvements to IFRSs (2008)" amends IAS 40 "Investment property". According to
the amendment, investment property which is under construction will be carried
at fair value at the earlier of when the fair value first becomes reliably
measurable and the date of completion of the property. Any gain or loss will be
recognised in statement of comprehensive income, consistent with the policy
adopted for all other investment properties carried at fair value. This
amendment resulted in changes in the Group's accounting policies regarding the
accounting treatment for properties under development. Previously, such
properties were carried at cost. The changes in accounting policy are applied
when the fair value of the properties under development first becomes reliably
measurable, which is from the first period they are presented in the financial
statements. The impact on the financial statements for the six month period to
30 September 2009 is not material.
3. Operating segments
Segment information is presented in respect of the Group's operating segments.
The operating segments are based on the Group's management and internal
reporting structure. Segment results and assets include items directly
attributable to a segment as well as those that can be allocated to a segment on
a reasonable basis.
Management considers that there is only one geographical segment which is
Germany and one business segment which is investment in commercial property.
4. Revenue
+---------------------------------------------+-------------+-------------+-----------+
| | (Unaudited) | (Unaudited) | (Audited) |
| | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | six | six | twelve |
| | months | months | months |
| | ended | ended | ended |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Rental income from investment properties | 22,008 | 19,081 | 43,742 |
+---------------------------------------------+-------------+-------------+-----------+
5. Operating loss
The following items have been charged or (credited) in arriving at operating
loss:
Direct costs
+---------------------------------------------+-------------+-------------+-----------+
| | (Unaudited) | (Unaudited) | (Audited) |
| | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | six | six | twelve |
| | months | months | months |
| | ended | ended | ended |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Service charge income | (10,849) | (8,639) | (18,965) |
+---------------------------------------------+-------------+-------------+-----------+
| Property costs | 18,126 | 13,770 | 33,633 |
+---------------------------------------------+-------------+-------------+-----------+
| Irrecoverable property costs | 7,277 | 5,131 | 14,668 |
+---------------------------------------------+-------------+-------------+-----------+
| Property management fee | 921 | 704 | 1,496 |
+---------------------------------------------+-------------+-------------+-----------+
| Asset management fee | 1,486 | 1,198 | 2,834 |
+---------------------------------------------+-------------+-------------+-----------+
| Development fee | 170 | - | 273 |
+---------------------------------------------+-------------+-------------+-----------+
| Direct costs | 9,854 | 7,033 | 19,271 |
+---------------------------------------------+-------------+-------------+-----------+
| | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Administrative expenses | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | (Unaudited) | (Unaudited) | (Audited) |
| | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | six | six | twelve |
| | months | months | months |
| | ended | ended | ended |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Audit fee | 100 | 200 | 253 |
+---------------------------------------------+-------------+-------------+-----------+
| Legal and professional fees | 1,019 | 1,365 | 2,763 |
+---------------------------------------------+-------------+-------------+-----------+
| Other administration costs | 1,019 | 1,245 | 2,143 |
+---------------------------------------------+-------------+-------------+-----------+
| Administrative expenses | 2,138 | 2,810 | 5,159 |
+---------------------------------------------+-------------+-------------+-----------+
| | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Other operating expenses | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | (Unaudited) | (Unaudited) | (Audited) |
| | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | six | six | twelve |
| | months | months | months |
| | ended | ended | ended |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Directors' fees | 85 | 121 | 214 |
+---------------------------------------------+-------------+-------------+-----------+
| Bank fees | 79 | 77 | 120 |
+---------------------------------------------+-------------+-------------+-----------+
| Depreciation | 208 | 161 | 416 |
+---------------------------------------------+-------------+-------------+-----------+
| Marketing and other expenses | 461 | 41 | 197 |
+---------------------------------------------+-------------+-------------+-----------+
| Other operating expenses | 833 | 400 | 947 |
+---------------------------------------------+-------------+-------------+-----------+
The Group has no full-time employees.
6. Finance income and expense
+---------------------------------------------+-------------+-------------+-----------+
| | (Unaudited) | (Unaudited) | (Audited) |
| | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | six | six | twelve |
| | months | months | months |
| | ended | ended | ended |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Bank interest receivable | 24 | 1,154 | 1,714 |
+---------------------------------------------+-------------+-------------+-----------+
| Finance income | 24 | 1,154 | 1,714 |
+---------------------------------------------+-------------+-------------+-----------+
| Bank loan interest payable | (7,971) | (6,182) | (14,232) |
+---------------------------------------------+-------------+-------------+-----------+
| Amortisation of capitalised finance charges | (563) | (485) | (987) |
+---------------------------------------------+-------------+-------------+-----------+
| Finance expense | (8,534) | (6,667) | (15,219) |
+---------------------------------------------+-------------+-------------+-----------+
| Net finance expense | (8,510) | (5,513) | (13,505) |
+---------------------------------------------+-------------+-------------+-----------+
7. Taxation
Consolidated statement of comprehensive income
+---------------------------------------------+-------------+-------------+-----------+
| | (Unaudited) | (Unaudited) | (Audited) |
| | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | six | six | twelve |
| | months | months | months |
| | ended | ended | ended |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Current income tax | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Current income tax charge | (300) | (53) | (650) |
+---------------------------------------------+-------------+-------------+-----------+
| Adjustments in respect of prior period* | 1,273 | - | - |
+---------------------------------------------+-------------+-------------+-----------+
| | 973 | (53) | (650) |
+---------------------------------------------+-------------+-------------+-----------+
| Deferred tax | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Relating to origination and reversal of | 308 | (1,562) | (633) |
| temporary differences | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Income tax credit/(charge) reported in the | 1,281 | (1,615) | (1,283) |
| statement of comprehensive income | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Deferred income tax liability | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | (Unaudited) | (Unaudited) | (Audited) |
| | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | six | six | twelve |
| | months | months | months |
| | ended | ended | ended |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Opening balance | 2,482 | 1,849 | 1,849 |
+---------------------------------------------+-------------+-------------+-----------+
| Revaluation of investment properties to | (308) | 1,562 | 633 |
| fair value | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Balance as at period end | 2,174 | 3,411 | 2,482 |
+---------------------------------------------+-------------+-------------+-----------+
* During the period under report the German government made tax changes in light
of an economic growth programme. The most important change for the Group is the
increase of the interest threshold from EUR1 million to EUR3 million with
retroactive effect as of the tax assessment from 1 January 2008 and is
guaranteed until 31 December 2009.
Management does not recognise deferred tax assets in respect of revaluation
losses as they may not be used to offset taxable profits elsewhere in the group.
8. Earnings per share
The calculation of the basic, diluted and adjusted earnings per share ('EPS') is
based on the following data:
+---------------------------------------------+-------------+-------------+-------------+
| | (Unaudited) | (Unaudited) | (Audited) |
| | | | |
+---------------------------------------------+-------------+-------------+-------------+
| | six | six | twelve |
| | months | months | months |
| | ended | ended | ended |
+---------------------------------------------+-------------+-------------+-------------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-------------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-------------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-------------+
| Earnings | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Loss for the period attributable to the | (14,277) | (10,345) | (51,989) |
| equity holders of the parent | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Basic and diluted earnings | (14,277) | (10,345) | (51,989) |
+---------------------------------------------+-------------+-------------+-------------+
| Add back revaluation deficits (net of | 16,362 | 11,842 | 43,354 |
| related tax) | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Add back change in fair value of derivative | (172) | 2,151 | 13,523 |
| financial instruments | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Adjusted earnings | 1,913 | 3,648 | 4,888 |
+---------------------------------------------+-------------+-------------+-------------+
| Number of shares | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Weighted average number of ordinary shares | 302,223,176 | 307,038,914 | 304,840,217 |
| for the purpose of basic and diluted EPS | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Weighted average number of ordinary shares | 302,223,176 | 307,038,914 | 304,840,217 |
| for the purpose of adjusted EPS | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Basic and diluted earnings per share | (4.72)c | (3.37)c | (17.05)c |
+---------------------------------------------+-------------+-------------+-------------+
| Adjusted earnings per share | 0.63c | 1.19c | 1.60c |
+---------------------------------------------+-------------+-------------+-------------+
The number of shares has been adjusted for the 25,576,824 shares held by the
Group as Treasury Shares as at both 30 September 2009 and 31 March 2009.
The Directors have chosen to disclose adjusted EPS in order to provide a better
indication of the Group's underlying business performance. Accordingly it
excludes the effect of deferred tax and the revaluation deficits on the
investment properties and derivative instruments adjusted for non-controlling
interests.
As there are no share options in issue, the diluted EPS is identical to the
basic EPS.
9. Net assets per share
+---------------------------------------------+-------------+-------------+-------------+
| | (Unaudited) | (Unaudited) | (Audited) |
| | | | |
+---------------------------------------------+-------------+-------------+-------------+
| | six | six | twelve |
| | months | months | months |
| | ended | ended | ended |
+---------------------------------------------+-------------+-------------+-------------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-------------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-------------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-------------+
| Net assets | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Net assets for the purpose of assets per | 222,054 | 277,975 | 236,331 |
| share (assets attributable to the equity | | | |
| holders of the parent) | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Deferred tax arising on revaluation of | 2,174 | 3,411 | 2,482 |
| properties | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Derivative financial instruments | 13,351 | 2,151 | 13,523 |
+---------------------------------------------+-------------+-------------+-------------+
| Adjusted net assets attributable to equity | 237,579 | 283,537 | 252,336 |
| holders of the parent | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Number of shares | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Number of ordinary shares for the purpose | 302,223,176 | 302,223,176 | 302,223,176 |
| of net assets per share | | | |
+---------------------------------------------+-------------+-------------+-------------+
| Net assets per share | 73.47c | 91.98c | 78.20c |
+---------------------------------------------+-------------+-------------+-------------+
| Adjusted net assets per share | 78.61c | 93.82c | 83.49c |
+---------------------------------------------+-------------+-------------+-------------+
The number of shares has been adjusted for the 25,576,824 shares held by the
Group as Treasury Shares as at both 30 September 2009 and 31 March 2009.
10. Investment properties
+---------------------------------------------+-------------+-------------+-----------+
| | (Unaudited) | (Unaudited) | (Audited) |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Opening balance | 500,400 | 375,950 | 375,950 |
+---------------------------------------------+-------------+-------------+-----------+
| Additions | 16,956 | 153,430 | 167,171 |
+---------------------------------------------+-------------+-------------+-----------+
| Revaluation of investment properties to | (17,336) | (10,280) | (42,721) |
| fair value | | | |
+---------------------------------------------+-------------+-------------+-----------+
| Balance as at period end | 500,020 | 519,100 | 500,400 |
+---------------------------------------------+-------------+-------------+-----------+
The fair value of the Group's investment properties at 30 September 2009 has
been arrived at on the basis of a valuation carried out at that date by DTZ
Zadelhoff Tie Leung GmbH, an independent valuer.
The value of each of the properties has been assessed in accordance with the
RICS Valuation Standards on the basis of market value.
11. Assets under construction
+---------------------------------------------+-------------+-------------+-----------+
| | (Unaudited) | (Unaudited) | (Audited) |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Opening balance | 2,222 | - | - |
+---------------------------------------------+-------------+-------------+-----------+
| Additions | 1,116 | 2,637 | 2,222 |
+---------------------------------------------+-------------+-------------+-----------+
| Balance as at period end | 3,338 | 2,637 | 2,222 |
+---------------------------------------------+-------------+-------------+-----------+
12. Cash and cash equivalents
+---------------------------------------------+-------------+-------------+-----------+
| | (Unaudited) | (Unaudited) | (Audited) |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Cash at banks and in hand | 46,708 | 35,858 | 29,652 |
+---------------------------------------------+-------------+-------------+-----------+
| Short-term deposits | - | 5,421 | - |
+---------------------------------------------+-------------+-------------+-----------+
| Balance as at period end | 46,708 | 41,279 | 29,652 |
+---------------------------------------------+-------------+-------------+-----------+
As at 30 September 2009, EUR3,886,740 of cash is held in blocked accounts. Of this
EUR3,090,178 is under control of lenders who release this to the Group upon
request to be used for capital expenditure on properties. The remainder relates
to deposits received from tenants totalling EUR796,562. Most tenant deposits are
taken by way of bank guarantee.
13. Trade and other payables
+---------------------------------------------+-------------+-------------+-----------+
| | (Unaudited) | (Unaudited) | (Audited) |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Trade payables | 4,770 | 2,306 | 3,970 |
+---------------------------------------------+-------------+-------------+-----------+
| Accrued expenses | 6,652 | 5,315 | 4,405 |
+---------------------------------------------+-------------+-------------+-----------+
| Accrued interest | 2,282 | 1,193 | 1,675 |
+---------------------------------------------+-------------+-------------+-----------+
| Other payables | 2,231 | 2,828 | 3,698 |
+---------------------------------------------+-------------+-------------+-----------+
| Related party payables | 1,029 | 1,279 | 4,500 |
+---------------------------------------------+-------------+-------------+-----------+
| Balance as at period end | 16,964 | 12,921 | 18,248 |
+---------------------------------------------+-------------+-------------+-----------+
14. Interest-bearing loans and borrowings
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| | | | (Unaudited) | (Unaudited) | (Audited) |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| | Effective | | 30 | 30 | 31 March |
| | | | September | September | |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| | interest | | 2009 | 2008 | 2009 |
| | rate | | | | |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| | % | Maturity | EUR000 | EUR000 | EUR000 |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| Current | | | | | |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| ABN AMRO Loan | 5.48 | 15 October | 98,115 | 1,332 | 98,963 |
| | | 2012 | | | |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| Berlin-Hannoversche | 5.46 | 30 March | 997 | 1,426 | 1,010 |
| Hypothekenbank AG - | | 2013 | | | |
| fixed rate facility | | | | | |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| Berlin-Hannoversche | Hedged | 31 March | 4,866 | 2,100 | 3,519 |
| Hypothekenbank AG - | floating | 2013 - | | | |
| hedged floating rate | | 31 December | | | |
| facility | | 2013 | | | |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| Capitalised finance | | | (2,307) | (437) | (1,045) |
| charges on all loans | | | | | |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| | | | 101,671 | 4,421 | 102,447 |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| Non-current | | | | | |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| ABN AMRO Loan | 5.48 | 15 October | - | 98,477 | - |
| | | 2012 | | | |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| Berlin-Hannoversche | 5.46 | 30 March | 49,219 | 49,768 | 49,748 |
| Hypothekenbank AG - | | 2013 | | | |
| fixed rate facility | | | | | |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| Berlin-Hannoversche | Hedged | 31 March | 162,512 | 124,048 | 120,936 |
| Hypothekenbank AG - | floating | 2013 - | | | |
| hedged floating rate | | 31 December | | | |
| facility | | 2013 | | | |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| Capitalised finance | | | (1,481) | (3,109) | (2,863) |
| charges on all loans | | | | | |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| | | | 210,250 | 269,184 | 167,821 |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
| Total | | | 311,921 | 273,605 | 270,268 |
+--------------------------+-----------+--------------+-------------+-------------+-----------+
The Group has pledged 33 investment properties to secure related
interest-bearing debt facilities granted to the Group. The 33 properties had a
combined valuation of EUR451,360,000.
ABN AMRO Bank N.V.
This facility had EUR100,951,940 drawn down, of which EUR2,836,595 has been
amortised to date, resulting in a net liability of EUR98,115,345 as at
30 September 2009. The facility is split into two portfolios. The interest is
fixed at a weighted average interest rate of 5.48% per annum. The final
repayment date of the latest drawdown is 15 October 2012. This loan is secured
over 16 property assets. With the exception of one LTV covenant (see note 2a)
the Group complied with all the loan covenants.
Berlin-Hannoversche Hypothekenbank AG
Facilities of EUR224,000,000 have been granted by Berlin-Hannoversche
Hypothekenbank AG, which have now been fully drawn down. To date EUR6,406,185 has
been amortised, resulting in a net liability of EUR217,593,815 at September 2009.
The facility is split into three portfolios: Portfolio I is split with either an
interest rate of 1.18 margin over three months EURIBOR fixed by a SWAP at 4.42%
or a fixed rate of 5.46%, Portfolio II has an interest rate of 1.08 margin over
three months EURIBOR fixed by a SWAP at 4.95% and Portfolio III is at a floating
rate caped at 5.99%. This loan is secured over 17 property assets.
Due to the single breach detailed in note 2a, the entire ABN facility has been
shown as current. The consolidation of the loan covenants is conditional upon
signing the revised loan agreement. Until this has been signed the loan is shown
entirely as current.
15. Financial instruments
Fair values
Set out below is a comparison by category of carrying amounts and fair values of
all the Group's financial instruments that are carried in the financial
statements:
+--------------------------------+---+------+---------+---+------+---------+---+------+---------+
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+--------------------------------+---+----------------+---+----------------+---+----------------+
| | | 30 September | | 30 September | | 31 March 2009 |
| | | 2009 | | 2008 | | |
+--------------------------------+---+----------------+---+----------------+---+----------------+
| | Carrying | Fair | Carrying | Fair | Carrying | Fair |
+--------------------------------+----------+---------+----------+---------+----------+---------+
| | amount | value | amount | value | amount | value |
+--------------------------------+----------+---------+----------+---------+----------+---------+
| | EUR000 | EUR000 | EUR000 | EUR000 | EUR000 | EUR000 |
+--------------------------------+----------+---------+----------+---------+----------+---------+
| Financial assets | | | | | | |
+--------------------------------+----------+---------+----------+---------+----------+---------+
| Cash | 46,708 | 46,708 | 41,279 | 41,279 | 29,652 | 29,652 |
+--------------------------------+----------+---------+----------+---------+----------+---------+
| Trade receivables | 3,088 | 3,088 | 1,986 | 1,986 | 2,343 | 2,343 |
+--------------------------------+----------+---------+----------+---------+----------+---------+
| Financial liabilities | | | | | | |
+--------------------------------+----------+---------+----------+---------+----------+---------+
| Trade payables | 4,770 | 4,770 | 2,306 | 2,306 | 3,970 | 3,970 |
+--------------------------------+----------+---------+----------+---------+----------+---------+
| Derivative financial | 13,351 | 13,351 | 2,151 | 2,151 | 13,523 | 13,523 |
| instruments | | | | | | |
+--------------------------------+----------+---------+----------+---------+----------+---------+
| Interest-bearing loans and | | | | | | |
| borrowings: | | | | | | |
+--------------------------------+----------+---------+----------+---------+----------+---------+
| Floating rate borrowings | 167,378 | 167,378 | 126,148 | 126,148 | 124,455 | 124,455 |
+--------------------------------+----------+---------+----------+---------+----------+---------+
| Fixed rate borrowings | 148,332 | 157,586 | 151,003 | 151,003 | 149,721 | 155,848 |
+--------------------------------+---+------+---------+---+------+---------+---+------+---------+
The Group holds interest rate swap contracts designed to manage the interest
rate and liquidity risk of expected cash flows under EUR122,695,800 of borrowing
for the Group's variable rate facility with Berlin-Hannoversche Hypothekenbank
AG. The swap contracts mature at the same time as the loans between March
and December 2013.
16. Issued share capital
+----------------------------------------------+---------------+---------------+
| | Number | Share capital |
+----------------------------------------------+---------------+---------------+
| Authorised | | |
+----------------------------------------------+---------------+---------------+
| Ordinary shares of no par value | Unlimited | - |
+----------------------------------------------+---------------+---------------+
| As at 30 September 2009 | Unlimited | - |
+----------------------------------------------+---------------+---------------+
| Issued and fully paid | | |
+----------------------------------------------+---------------+---------------+
| Ordinary shares of no par value | 327,800,000 | - |
+----------------------------------------------+---------------+---------------+
| Share brought back and held in treasury | (25,576,824) | - |
+----------------------------------------------+---------------+---------------+
| As at 30 September 2009 | 302,223,176 | - |
+----------------------------------------------+---------------+---------------+
As at 30 September 2009 the Company has bought back 25,576,824 ordinary shares
with a total nominal value of EURnil, at a weighted average price of EUR0.71 per
share. These shares are being held by the Company as Treasury Shares
17. Dividends
+---------------------------------------------+-------------+-------------+-----------+
| | (Unaudited) | (Unaudited) | (Audited) |
+---------------------------------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 March |
| | September | September | |
+---------------------------------------------+-------------+-------------+-----------+
| | 2009 | 2008 | 2009 |
+---------------------------------------------+-------------+-------------+-----------+
| | EUR000 | EUR000 | EUR000 |
+---------------------------------------------+-------------+-------------+-----------+
| Final dividend of 1.5c for the period ended | - | 4,533 | 4,533 |
| 31 March 2008 | | | |
+---------------------------------------------+-------------+-------------+-----------+
| | - | 4,533 | 4,533 |
+---------------------------------------------+-------------+-------------+-----------+
In order to sustain investment in the Group's portfolio whilst also ensuring
cash resources are preserved the Board has proposed to not pay a dividend in the
period ended 30 September 2009.
18. Capital commitments
As at 30 September 2009 the Group had contracted capital expenditure on existing
properties of EUR8,139,113. These were committed but not yet provided for.
19. Carried interest
Marba Holland B.V. is a joint venture between a subsidiary of Principle Capital
Holdings S.A., Frank and Kevin Oppenheim and certain other individuals. Marba
Holland B.V. has a right to a carried interest. In any year Marba Holland B.V.
is not entitled to any carried interest unless the Group's NAV total return per
ordinary share has increased by an amount equal to the performance hurdle
applicable to that financial period. For the period ended September 2009 the
performance hurdle applicable is the average of the initial NAV per ordinary
share and 10% above the NAV per ordinary share at the end of the financial
period ended 31 March 2008.
If the hurdle is achieved then Marba Holland B.V. will be entitled to 20% of the
amount by which the performance hurdle is exceeded by the Group in respect of
that financial period. The carried interest will also be payable on the
occurrence of certain other events, such as a take over or liquidation of the
Group.
No amount has been provided as at 30 September 2009 as the minimum hurdle rate
required has not been achieved.
20. Subsequent events
The Company has received approval following negotiations to consolidate its two
portfolios financed with ABN AMRO Bank N.V. for a one off fee of EUR250,000 plus
legal costs and an increase in the cost of borrowing of 40 basis points. In
addition the loan will be paid down by EUR975,000 plus a EUR66,000 repayment
penalty. This will correct the breach of the facility detailed in note 2a.
Further to the announcement dated 6 November 2009 noting press speculation with
regard to the potential acquisition by the Company of a German property
portfolio, the Company announced on 3 December 2009 that it is no longer in
discussions concerning this potential acquisition. The decision by the Company
not to pursue the acquisition at this time was made at the latter stages of
negotiations with the vendor. The Company expects that professional advisory
fees of approximately EUR1 million, which are subject of ongoing negotiations,
were incurred in connection with the potential transaction.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BLBDDSUGGGCS
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