TIDMIERE
RNS Number : 1851E
Invista European Real Estate Trust
28 May 2012
28 May 2012
INVISTA EUROPEAN REAL ESTATE TRUST SICAF
("IERET" or the "Company')
ANNOUNCEMENT OF HALF YEARLY RESULTS AND UNAUDITED NAV
Report for the six month period ENDed 31 March 2012
Invista European Real Estate Trust SICAF today announces its
results for the six month period to 31 March 2012, including its
unaudited Net Asset Value ("NAV") for the last quarter, calculated
using International Financial Reporting Standards and adjusted to
add back the change in fair value of the warrants and deferred
tax.
Highlights
-- Unaudited NAV per share decreased by 4.4% over the quarter
and 11.7% over the six month period to EUR0.46 or 39p (30 September
2011: EUR0.52; 31 December 2011: EUR0.48), principally due to the
reduction in the fair value of the properties of EUR16.2m (3.59%)
in the first 6 months.
-- Property portfolio comprising 39 properties valued at
EUR434.9 million on a like-for-like basis (30 September 2011:
EUR451.1 million; 31 December 2011: EUR441.1 million), the fall
reflecting the continued discount on non-core assets with short
leases or vacancy, as well as the weakening macro-economic growth
across European markets.
-- Portfolio vacancy increased to 16.3% from 10.2% at 30
September 2011 as the difficult economic environment led to a
higher proportion of tenants exercising lease breaks and so putting
pressure on rental income during 2012.
-- Continued focus on stabilising portfolio income and
repositioning assets for sale has resulted in:
o Letting 2,270 sqm of vacant space to generate an additional
EUR233,000 rental income pa.
o Securing a nine year lease with an existing tenant fully
occupying a 3,744 sqm office asset in Brussels, Belgium, achieving
a rent above ERV.
o Negotiating heads of terms with existing tenants representing
11.5% of portfolio income to extend those lease terms by additional
average 4.4 years.
o The Commission de Surveillance du Secteur Financier ("CSSF")
has acknowledged the Company's new investment strategy, under the
Company's original investment policy, to pursue a structured
realisation of its assets. The Company is executing this strategy
and currently widely marketing an initial EUR60 million of
assets.
Change of Investment Strategy
On 14 October 2011, an Extraordinary General Meeting ("EGM") of
the Company's shareholders was held to approve a proposed new
investment objective and policy which would realise the existing
property portfolio owned by the Group and return capital to
shareholders. This resolution was approved by shareholders subject
to approval by the CSSF. The Company has now concluded discussions
with the CSSF, and the CSSF has acknowledged the resolution passed
at the EGM. The Company may now pursue a structured realisation of
its assets in line with the resolution approved by Company's
shareholders at the EGM on 14 October 2011, as an investment
strategy under the Company's original investment policy.
The investment restrictions contained in the Company's
prospectus dated 16 November 2009 will not apply to the extent that
such restrictions are inconsistent with the Company's new
investment strategy.
Tom Chandos, Chairman, commented:
"The Company has a new investment manager with strong experience
of realisation strategies; sufficient cash to be able to optimise
the value of key properties prior to sale and an encouraging
pipeline of asset disposals. Although market conditions are likely
to remain difficult and the Company needs to manage its debt
position carefully over the next eighteen months, the Board remains
confident that, over the medium term, the realisation strategy can
be delivered."
For further information:
Ludovic Bernard
Internos Real Investors 020 7355 8800
Michael Sandler
Hudson Sandler 020 7796 4133
Invista European Real Estate Trust SICAF Interim Financial
Information 2012
Company Summary
As at 31 March 2012, Invista European Real Estate Trust SICAF
(the "Company") and its subsidiaries (together the "Group") held a
diversified real estate portfolio comprising 39 commercial
properties across six Continental European countries. The combined
aggregate value of these properties was EUR434.9 million. The
property will next be valued by an external valuer as at 30 June
2012 and the next quarterly NAV per share is expected to be
published in September 2012.
The long term investment objective of the Company is to provide
shareholder returns through investing in a diversified commercial
real estate portfolio in Continental Europe with the potential for
income and capital growth. The geographical focus of the Group is
France and Germany due to the relative stability, transparency and
liquidity of these markets.
The Company is now pursuing a structured realisation of its
assets in line with the resolution approved by the Company's
shareholders at the EGM on 14 October 2011, as an investment
strategy under the Company's original investment policy.
Financial Summary
v Net Asset Value(1,2) decreased during the 6 month period from
EUR136.1 million to EUR120.1 million
v Loss per share of EUR0.05524(3) (September 2011: EUR0.04503(3)
)
Period ended Year ended
31 Mar 12 30 Sep 11
------------------------------------- ------------- -----------
Net Asset Value ("NAV")(1,2) EUR120.1m EUR136.1m
------------------------------------- ------------- -----------
NAV per share (EUR)(1,2) EUR0.46 EUR0.52
------------------------------------- ------------- -----------
NAV per share (GBP)(1,2,4) GBP0.39 GBP0.46
------------------------------------- ------------- -----------
NAV per preference share (EUR)(5) EUR1.23 EUR1.18
------------------------------------- ------------- -----------
NAV per preference share (GBP)(4,5) 102.6p 102.7p
------------------------------------- ------------- -----------
Ordinary share price 23.0p 28.0p
------------------------------------- ------------- -----------
Preference share price 97.3p 103.9p
------------------------------------- ------------- -----------
Warrant price 2.0p 6.8p
------------------------------------- ------------- -----------
Share price discount to NAV (1,2) 40.3% 39.1%
------------------------------------- ------------- -----------
NAV total return -11.7% -2.8%
------------------------------------- ------------- -----------
Total Group assets less current
liabilities (6) EUR469.7m EUR494.8m
------------------------------------- ------------- -----------
EPRA profit / (loss) (7) (EUR0.4m) EUR4.7m
------------------------------------- ------------- -----------
EPRA NAV(8) EUR138.7m EUR156.2m
------------------------------------- ------------- -----------
Sources: Internos Real Investors Ltd; [DataStream]
(1) NAV is calculated using International Financial Reporting
Standards and adjusted to add back the change in fair value of the
warrants and deferred tax. IFRS NAV was EUR118.1m on 31 March 2012
and EUR131.2m on 30 September 2011.
(2) As at 31 March 2012, deferred tax liabilities of EUR21.7
million, based upon temporary differences at the time of initial
recognition arising from transactions treated as asset acquisitions
have not been recognised in accordance with IAS 12. The Group has
deferred tax assets of EUR14.1 million which also have not been
recognised.
(3) Loss for the period divided by the weighted average number
of ordinary shares in the year.
(4) EUR:GBP exchange rate used was EUR1.19855 as at 31 March
2012, EUR1.14915 as at 30 September 2011.
(5) The NAV per preference share is equal to the nominal value
plus accrued interest divided by the total number of preference
shares.
(6) Current liabilities exclude banking facilities.
(7) EPRA (European Public Real Estate Association) earnings
excludes capital gains / (losses) during the period.
(8) EPRA NAV ignores fair value of financial instruments and
deferred tax.
Chairman's Half Yearly Results Statement
Adjusted net asset value decreased by 11.7% over the six month
period from EUR0.52 (GBP0.46) to a figure of EUR0.46 (GBP0.39),
principally driven by a decline in property valuation of 3.59%.
Despite weakening performance over the last six months, the Company
has been active in mitigating increased borrowing costs and
implementing asset management initiatives. The Company however has
not been immune from the challenging occupational market in which
tenant retention has been difficult. Portfolio vacancy increased to
16.3% on 31 March 2012 which has weakened revenues by 3.9%(1) on a
like for like basis. However, successful results in new lettings
and lease re-gears are encouraging and have helped to mitigate
further loss of rental income and decline in asset valuation.
The change of investment strategy to a structured realisation,
under the Company's original investment policy, alongside the
appointment of Internos as Investment Manager, mean that the
Company has taken the necessary steps to ensure it can deliver upon
what it considers to be the best opportunity in the current
environment to optimise realisable value for shareholders.
((1) Marktkauf rental income is included, despite their vacating
the property, as the tenant is contracted to pay rent until 2017 as
per legal advice provided to the Company)
Property Portfolio
The Company owns a diversified portfolio of 39 commercial
property investments located mainly in France and Germany. As at 31
March 2012, the Company's property portfolio was valued at EUR434.9
million. The fall in valuation reflects accrued pressure on income
and depreciation on assets with shortening lease lengths.
During the period, the Investment Manager successfully
negotiated with tenants on a number of lease extensions and new
lettings, thus strategically positioning assets for disposal and
mitigating the impact of other tenants vacating at break. Since the
start of the financial year to date, 2,270 sqm of vacant retail and
office space has been let which will benefit the portfolio in
reducing vacancy cost and generating additional rental income.
Despite letting success on a number of sites, portfolio vacancy
level rose to 16.3% as at 31 March 2012 from 10.2% as at 30
September 2011 as occupiers in France and Germany relinquished
50,088 sqm of accommodation at lease break or expiry.
The Company generated income return of 7.17% at 31 March 2012
down from a net initial yield of 7.53% as at 30 September 2011.
The Investment Manager is now focusing its efforts on preparing
assets for sale and repositioning the portfolio ahead of December
2013 when the senior debt facility expires (EUR286.7 million). Four
assets are now being widely marketed which are anticipated to
generate EUR60 million of proceeds.
Results
The Company reports a decrease in the unaudited NAV per share
(adjusted to add back warrants and deferred taxation) to EUR0.46
(38.5p), equating to a fall of 11.7% over the six month period to
31 March 2012. The decrease in NAV has arisen principally from the
reduction in fair value of the properties of EUR16.2m (3.59%) in
the first 6 months.
On 26 January 2012 the Company announced that it had used
EUR11.3 million from its existing cash balances to make a further
repayment of the senior debt facility and thus reduce its drawn
down debt facilities to EUR286.7 million, thereby decreasing the
Loan to Value ratio (LTV) to below 65% and maintaining a loan
margin of 2.25%.
European Markets
The past six months has seen many European economies enter into
a second recession. Despite the Fund's key markets of France and
Germany being among the stronger performing Eurozone economies
during 2011, with growth of 1.3% and 2.0% respectively, they have
experienced a stalling in economic output over the past two
quarters. The ongoing sovereign debt crisis has significantly
reduced consumer and business confidence and therefore it is
unsurprising that growth in economic output, retail sales and
industrial production have declined over the past six months. This
has been reflected in the real estate markets where occupiers have
become increasingly cautious, leading to postponements of expansion
plans and a focus on securing prime assets. Investors are
predominantly risk-averse and are attracted to prime assets in core
markets that offer long-term income stability.
With the French and German economies expected to experience low
growth of 0.3% and 0.7% in 2012, we expect the pressure on
occupiers and investments to remain high for the remainder of the
year.
Change of Investment Strategy
On 14 October 2011, an Extraordinary General Meeting ("EGM") of
the Company's shareholders was held to approve a proposed new
investment objective and policy which would realise the existing
property portfolio owned by the Group and return capital to
shareholders. This resolution was approved by shareholders subject
to approval by the Commission de Surveillance du Secteur Financier
("CSSF").
The Company has now concluded discussions with the CSSF, and the
CSSF has acknowledged the resolution passed at the EGM. The Company
may now pursue a structured realisation of its assets in line with
the resolution approved by Company's shareholders at the EGM on 14
October 2011, as an investment strategy under the Company's
original investment policy.
The investment restrictions contained in the Company's
prospectus dated 16 November 2009 will not apply to the extent that
such restrictions are inconsistent with the Company's new
investment strategy.
Investment Manager
The Company announced on 30 June 2011 that it proposed to
appoint Internos Real Limited ("Internos") as the new investment
manager, subject to the satisfaction of a number of conditions. On
15 December 2011 the Company announced that all these conditions
had either been met or waived and Internos, a wholly owned
subsidiary of Internos Real Investors LLP, had therefore taken on
the role of investment manager with effect from that date. The
CSSF, the Luxembourg financial regulator, has approved the
appointment of Internos as investment manager and promoter of the
Company.
Structured realisation
Under the new investment strategy the Investment Manager is now
focusing its efforts on preparing assets for sale and repositioning
the portfolio ahead of December 2013 when the senior debt facility
expires (EUR286.7 million). After a strategic review of the
portfolio, initially four assets are being widely marketed and are
anticipated to generate EUR60 million of proceeds. Achieving these
sales over the 2012 financial year would be an encouraging step
towards deleveraging the portfolio. However, given the current
investment market, asset level initiatives and the impact of
unrecognised deferred tax liabilities, we remain fully aware of the
challenges ahead in order to further mitigate these
constraints.
Outlook
Weak conditions in both the investment and occupier markets
present a challenge for the Company and inevitably have an impact
on the approach within which the structured realisation strategy
can be pursued. In particular, the timescale for a realisation may
be longer than previously expected, in order to avoid unnecessary
sacrifice of value.
A thorough strategic review on an asset and corporate level
basis is being undertaken to ensure the Company remains flexible to
the market conditions. Ultimately, achieving the structured
realisation strategy will require a disciplined and innovative
management approach to improve asset liquidity and enhance earnings
on sale. The key focus in the coming months is to stabilise
portfolio rental income and deleverage the portfolio ahead of
expiry of the current senior debt facility in December 2013. The
Company has a new investment manager with strong experience of
realisation strategies; sufficient cash to be able to optimise the
value of key properties prior to sale and an encouraging pipeline
of asset disposals. Although market conditions are likely to remain
difficult and the Company needs to manage its debt position
carefully over the next eighteen months, the Board remains
confident that, over the medium term, the realisation strategy can
be delivered.
Tom Chandos
Chairman
Invista European Real Estate Trust SICAF
21 May 2012
INVESTMENT MANAGER'S REPORT
As at 31 March 2012, the Company's property portfolio was valued
at EUR434.9 million and comprised 39 assets (EUR441.1 million: 31
December 2011). On a like for like basis, the portfolio value
decreased by EUR6.2 million or 1.41% during the quarter to 31 March
2012 and EUR16.2 million or 3.59% in the six months to 31 March
2012. Values have come under pressure over the first half of the
financial year as economic indicators and outlook have weakened
across Europe. Active asset management to secure new tenants and
extend existing leases is crucial in maintaining and improving
portfolio valuation.
The Company's portfolio generated a gross income of EUR35.4
million per annum as at 31 March 2012 from 133 individual leases
and 129 tenants. The portfolio had a Gross Income Yield ("GIY") of
7.88% and a Net Initial Yield ("NIY") of 7.17%.
As previously reported, the Company recognises the risks and
challenges in generating stable rental income during 2012 as a
number of tenants have lease breaks or expiries during this
financial year that represented 25% of the total income as of 30
September 2011. Portfolio level vacancy has increased from 10.2% on
30 September 2011 to 16.3% on 31 March 2012. The increase over the
last six months reflects logistics operators in France vacating
41,409 sqm of warehouse space as well as anchor tenant, Marktkauf,
vacating 8,678 sqm of retail space in a shopping centre in Roth,
Germany.
As a result, over the last six months to 31 March 2012, like for
like portfolio income decreased slightly by 3.9%(2) . The income
loss was in part mitigated by leasing of vacant space and
indexation on a number of leases. Nevertheless, downward pressure
on portfolio income and increasing vacancy is anticipated in the
coming months as tenants representing 9.4% of estimated rental
value have given notice to break. The Company will remain active in
discussing lettings with new and existing tenants and confident
that additional income will be secured.
((2) Marktkauf rental income is included, despite their vacating
the property, as the tenant is contracted to pay rent until 2017 as
per legal advice provided to the Company)
As at 31 March 2012, the weighted average lease length to first
break was 4.63 years and 5.74 years to lease expiry. The Company
has an attractive line up of tenants with 60.9% of tenants by
income classified as negligible or low risk by the Investment
Property Databank's M-IRIS credit analysis system in April 2012.
The total portfolio credit rating is stable at 73 out of 100, which
is classified as within a "Low to Medium risk band". As at 31 March
2012 the portfolio composition was as follows:
Sector Weightings
Sector %*
----------- -------
Office 31.62%
----------- -------
Logistics 50.35%
----------- -------
Retail 18.03%
----------- -------
Total 100.0%
----------- -------
*Percentage of aggregate asset value as at 31 March 2012
Country Weightings
Country %*
---------------- -------
France 43.26%
---------------- -------
Germany 42.69%
---------------- -------
Spain 4.72%
---------------- -------
Netherlands 3.44%
---------------- -------
Belgium 3.74%
---------------- -------
Czech Republic 2.15%
---------------- -------
Total 100.0%
---------------- -------
*Percentage of aggregate asset value as at 31 March 2012
Top 10 Properties
Property Location Sector %*
---------------------------- ----------- -------
Heusenstamm, Frankfurt,
Germany Office 14.14%
---------------------------- ----------- -------
Riesa, Germany Retail 10.16%
---------------------------- ----------- -------
Lutterberg, Germany Logistics 6.64%
---------------------------- ----------- -------
Cergy, Paris, France Office 6.59%
---------------------------- ----------- -------
Sun, Grenoble, France Office 3.92%
---------------------------- ----------- -------
Miramas, France Logistics 3.63%
---------------------------- ----------- -------
Roth, Germany Retail 3.59%
---------------------------- ----------- -------
Monteux II, France Logistics 3.58%
---------------------------- ----------- -------
Fos-Distriport, Marseille,
France Logistics 3.36%
---------------------------- ----------- -------
Pocking, Germany Retail 3.31%
---------------------------- ----------- -------
Total 58.92%
----------------------------------------- -------
*Percentage of aggregate asset value plus cash as at 31 March
2012
Top 10 Tenants
Tenant Name %*
----------------------- -------
Deutsche Telekom 16.64%
----------------------- -------
DHL 10.92%
----------------------- -------
Norbert Dentressangle 8.40%
----------------------- -------
Valeo 6.28%
----------------------- -------
Schenker Logistics 4.99%
----------------------- -------
Carrefour 4.66%
----------------------- -------
AVA Marktkauf 3.46%
----------------------- -------
SDV Logistique 3.04%
----------------------- -------
Tech Data 2.90%
----------------------- -------
Real SB-Warenhaus 2.88%
----------------------- -------
Total 64.17%
----------------------- -------
* Percentage of aggregate gross rent as at 31 March 2012
Click or paste the following link into your web browser to view
the associated PDF document. Refer to page 8 for the relevant graph
or view data table below.
http://www.rns-pdf.londonstockexchange.com/rns/1851E_-2012-5-25.pdf
Break dates of lease contracts
Financial Year of the % Annual gross income due
Company to break
----------------------- --------------------------
2012 11.06%
----------------------- --------------------------
2013 5.63%
----------------------- --------------------------
2014 11.29%
----------------------- --------------------------
2015 22.75%
----------------------- --------------------------
2016 2.11%
----------------------- --------------------------
2017 13.66%
----------------------- --------------------------
2018 0.59%
----------------------- --------------------------
2019 1.73%
----------------------- --------------------------
2020 6.41%
----------------------- --------------------------
2021+ 24.54%
----------------------- --------------------------
Click or paste the following link into your web browser to view
the associated PDF document. Refer to page 9 for the relevant graph
or view data table below.
http://www.rns-pdf.londonstockexchange.com/rns/1851E_-2012-5-25.pdf
Expiry dates of lease contracts
Financial Year of the % Annual gross income due
Company to expire
----------------------- --------------------------
2012 8.64%
----------------------- --------------------------
2013 2.09%
----------------------- --------------------------
2014 1.95%
----------------------- --------------------------
2015 11.98%
----------------------- --------------------------
2016 4.29%
----------------------- --------------------------
2017 17.46%
----------------------- --------------------------
2018 5.72%
----------------------- --------------------------
2019 11.20%
----------------------- --------------------------
2020 10.64%
----------------------- --------------------------
2021+ 25.81%
----------------------- --------------------------
Property Market Performance
Economy
The European sovereign debt crisis in second half 2011 led to a
significant weakening in the economic performance and short term
outlook for the majority of European countries. Eurozone industrial
production contracted in January and February by 1.7% and 1.8%
respectively, year on year and manufacturing confidence declined
further in March and April. Consumer confidence remains
significantly below the long run average which is reflected in the
volume of retail sales that has contracted for both food and
non-food sales on an annual basis since August 2011.
Occupier Market
In the French logistics market total take-up for Q1 2012was
373,000 sqm which was up on Q1 2011, but lower than recorded in the
last two quarters in 2011 (BNP Paribas). The Paris region continued
to be the favoured location for logistics occupiers with 72% of
total French logistic transactions completed in this region. With a
weakening outlook for manufacturing and international trade, demand
from occupiers will remain focused on modern stock that meets their
needs. Secondary assets are likely to require the offer of
incentives to retain/attract tenants in the weakening economy,
reducing the effective rental values of the assets.
In the German retail market the level of demand for prime
locations remains stable with the decline in retail sales yet to
influence prime rental levels. The lack of prime property available
for occupiers has led to some good secondary locations experiencing
stable demand from tenants either priced out or unable to find
suitable locations. Tenants in poor quality secondary and tertiary
assets are either vacating or negotiating more favourable lease
terms with vacancy rates increasing in these locations. This is
indicative of retailers rationalising their operations through
focusing on the best performing locations.
Investment Market
Investors and banks have become increasingly cautious over where
they are prepared to invest/lend with a trend towards prime assets
located in core markets with relatively strong economies.
Across Europe a total of EUR24bn was invested in Q1 2012, which
represents a decline of 31% on Q4 2011 and 18% on Q1 2011 (CBRE).
Investors in the European commercial market continue to reflect the
prevalent risk-averse sentiment. The relative economic stability of
the countries appears to have been reflected in the location
preference for investment, with the UK, Germany and Nordic
countries accounting for 80% of the quarterly total European
investment. In fact, investment in the Nordic countries was up 49%
on Q1 2011.
The region with the most significant reduction on the previous
quarter was France, where EUR1.7bn of transactions were recorded in
Q1 2012, down significantly on the EUR6.5bn transacted in Q4 2011
(CBRE).
The office sector remained the most popular with investors while
there was a surprising decrease in the value of retail investments
made across Europe. Just EUR3.8bn were transacted in retail
investments in Q1 2012, compared to EUR9.9bn in Q1 2011 and
EUR8.4bn in Q4 2011 (JLL). This may be partly due to a significant
reduction in the number of large investment transactions, typically
shopping centres that significantly increased the volumes in Q1
2012 and Q4 2011, and the lack of available prime investment
product.
Disposals
The investment manager has undertaken a detailed business plan
evaluation on both a corporate level and property by property level
to determine an optimal strategy for realisation. This strategy is
influenced by the challenges posed from rising vacancy at asset
level, a weak debt and investment market, and unrecognised deferred
tax liabilities especially on the French portfolio. The first phase
of the disposal strategy is to sell down assets that can optimise
and accelerate the deleveraging process while ensuring all debt
covenants continue to be met. The resulting portfolio will
therefore be well positioned ahead of senior debt expiry in
December 2013. In achieving this strategy, the Company is executing
asset management initiatives across the portfolio in order to
maximise return on disposals. An initial wide marketing is underway
on four assets where it is believed the Company can capitalise on
completed asset management initiatives and/or opportunities in the
investment market.
The Company is targeting the disposal of these four assets to
generate EUR60 million of proceeds.
Active Asset Management
Investors' risk appetite remains low and thus assets with short
leases or vacancy are being heavily discounted on the market.
Therefore, the Company has continued to focus asset management on
securing new and existing income to stabilise portfolio income as
well as enable the Company to optimise value on disposals. Over the
six months to 31 March 2012, the Company successfully secured 3.9%
of portfolio income by re-gearing leases with existing tenants for
average weighted lease term to break of 6.4 years. One lease
extension was secured with Communaute Francaise, a tenant fully
occupying a 3,744 sqm office asset in central Brussels, Belgium.
The lease, due to expire in August 2012, has been extended for
fixed nine years at a rent of EUR599,000 which is slightly above
ERV. An additional 11.5% of portfolio income has secured heads of
terms with existing tenants. This includes re-gearing the lease
with DHL at Lutterberg, Germany for a fixed 10 year term until 2022
which will become effective upon sale of the asset. As a result,
asset liquidity is significantly enhanced and the Company
anticipates disposal of this asset within the next six months.
Vacancy in the portfolio has risen over the six months to 31
March 2012 as a number of occupiers have struggled to maintain
clients for their logistics operations on sites in France. In
Germany, Marktkauf, the anchor tenant in a shopping centre in Roth,
vacated the site at the quarter end following a dispute over their
contracted lease terms which expire in 2017. Negotiations with the
tenant are ongoing. The situation presents an opportunity for the
Company to restructure and improve the retail centre, thus
attracting new tenants before disposing of the asset.
Frequent communication with tenants and local agents has
resulted in leasing a total 2,270 sqm of vacant office and retail
space to existing tenants who required additional space on assets
in France, Belgium and Germany. Post quarter end, the Company
agreed heads of terms with a local occupier to let a fully vacant
warehouse in Chateauneuf-de-Gadagne, France. The 17,435 sqm asset
is in a difficult location, has been vacant since 2008 and no
longer qualifies for user health and safety permits. With a 9 year
firm lease, the Company will benefit from additional income of
EUR250,000 pa and a reduction in void costs of EUR46,000 pa.
The success in securing existing leases and new tenants will
help reduce the impact of future income loss in the portfolio. With
tenants representing 9.4% of estimated rental value having served
notice to break in the next six to nine months, portfolio rental
income will come under increasing pressure in the short term.
Negotiations are ongoing with existing and prospective tenants to
agree new lease terms. In addition, tenants occupying logistics and
office accommodation in Spain and France, representing 7.0% of
portfolio income have waived their upcoming break options and have
thus ensured income security for an additional two to three
years.
Finance
As at 31 March 2012, the Company had drawn down a total of
EUR286.7 million of senior debt in respect of its EUR359.3 million
facility with the Bank of Scotland. In addition, the Company had
cash balances of EUR24.7 million (excluding tenant deposits of
EUR4.2 million and escrow items of EUR2.4 million) at that date,
giving a net debt position of EUR262 million.
The Company's gross Loan To Value ("LTV") ratio as at 31 March
2012 was 65.91% and the net debt LTV was 60.2%. As a result of the
valuation decline this quarter, the Company's gross LTV under the
Finance Documents with the Bank of Scotland rose to 65.91% (30
September 2011:66.1%) which still remains substantially below the
LTV covenant of 80% in 2012. On 26 January 2012, the Company
announced that it had used EUR11.3 million from its existing cash
balances to make a further repayment of the senior debt facility
and thus reduce its drawn debt facilities to EUR286.7 million,
thereby decreasing the LTV to below 65% (as calculated by reference
to 31(st) December 2011 valuation) and maintaining a loan margin of
2.25%.The bank margin is currently determined by reference to the
31 December 2011 valuation and the next semi-annual ICR covenant
test will be at 30 June 2012 valuation.
All debt is fully hedged against changes in European interest
rates until December 2013, giving a total interest cost of 6.45%
per annum at current LTV levels.
With the senior debt facility expiry in December 2013, the
Company is focusing its efforts on positioning the portfolio for
refinancing. This means selling down assets and using proceeds to
lower the LTV ratio while making sure ICR ratio per country stays
at an attractive level. Given the current investment and occupier
markets there remain challenges ahead but the Company is confident
these initiatives will result in a successful outcome.
Strategy
The Investment Manager is fully committed to implementing the
structured realisation strategy which the Board has recognised may
be over a longer timescale than originally expected. The four
assets being widely marketed are the results of a full strategic
review of the portfolio both at asset and at corporate levels.
These sales will be the first step towards deleveraging and
ultimately returning cash to shareholders. Given the coming senior
debt expiry and forecast rise in vacancy across the portfolio over
the next 12 months, we remain focused on making sure the Company
will be in a better position following these short term challenges.
Asset management is key in maximizing income and achieving the
designed sales programme. While applying this strategy and making
the Company stronger with repositioned assets and a leaner balance
sheet, the Company will remain open to opportunities both on a
portfolio basis and at corporate level.
Ludovic Bernard
Fund Manager
Internos Real Investors
21 May 2012
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed consolidated interim financial statements for
the six months ended 31 March 2012 have been prepared in accordance
with International Accounting Standard (IAS) 34 - "Interim
Financial Reporting" and gives a true and fair view of the assets,
liabilities, financial position and profit or loss of the
Group;
(b) the interim Financial Information includes a fair review
of:
i. important events having occurred during the six months ended
31 March 2012, together with their impact on the condensed
consolidated interim financial statements;
ii. the principal risks and uncertainties for the remaining six
months of the financial year; and
iii. the information relating to related parties' transactions and changes therein.
By order of the Board,
Tom Chandos Robert DeNormandie
Chairman Chairman of Audit Committee
21 May 2012 21 May 2012
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited for the six months ended 31 March 2012
Six months Six months Twelve months
to 31 Mar to to 30 Sep
Notes 12 31 Mar 11 11
EUR000 EUR000 EUR000
------------------------------------- ------- ------------ ------------ ---------------
Rental income 18,135 21,110 40,749
Other income 88 115 757
------------------------------------- ------- ------------ ------------ ---------------
Total revenue 18,223 21,225 41,506
Property operating expenses (1,702) (1,005) (2,960)
------------------------------------- ------- ------------ ------------ ---------------
Net rental and related income 16,521 20,220 38,546
------------------------------------- ------- ------------ ------------ ---------------
Investment management fees 12 (1,296) (1,745) (3,797)
Administration fees (1,130) (834) (1,986)
Professional fees (1,036) (1,019) (1,252)
Directors' fees 11 (82) (94) (204)
Other expenses (1,107) (347) (706)
------------------------------------- ------- ------------ ------------ ---------------
Total expenses (4,651) (4,039) (7,945)
------------------------------------- ------- ------------ ------------ ---------------
Net gain on disposal of investment
property 4 - 11 494
Net valuation losses on investment
property 4 (16,924) (6,095) (16,237)
Profit/ (loss) before net financing
costs and tax (5,054) 10,097 14,858
------------------------------------- ------- ------------ ------------ ---------------
Finance income 933 138 675
Finance expense (13,285) (13,367) (27,196)
Net profit/(loss) on derivative
financial instruments 1,856 (37) 152
------------------------------------- ------- ------------ ------------ ---------------
Net financing costs (10,496) (13,266) (26,369)
------------------------------------- ------- ------------ ------------ ---------------
Loss before tax (15,550) (3,169) (11,511)
------------------------------------- ------- ------------ ------------ ---------------
Deferred taxation 1,292 (257) (167)
Current taxation (96) (289) (29)
Other taxes (8) - -
------------------------------------- ------- ------------ ------------ ---------------
Total taxation 1,188 (546) (196)
------------------------------------- ------- ------------ ------------ ---------------
Loss for the period attributable
to the equity holders of the
Company (14,362) (3,715) (11,707)
------------------------------------- ------- ------------ ------------ ---------------
Basic loss per share (Euro) 8 (0.05524) (0.01429) (0.04503)
Diluted loss per share (Euro) 8 (0.05524) (0.01429) (0.04503)
------------------------------------- ------- ------------ ------------ ---------------
The accompanying notes 1 to 16 form an integral part of these
condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited for the six months ended 31 March 2012
Six months Six months Twelve months
to 31 Mar to 31 Mar to 30 Sep
Notes 12 11 11
EUR000 EUR000 EUR000
----------------------------------- -------- ----------- ----------- --------------
Loss for the period (14,362) (3,715) (11,707)
--------------------------------------------- ----------- ----------- --------------
Other comprehensive income
Effective portion of changes
in fair value of cash flows
hedged since 12 January 2010 1,245 13,372 7,933
--------------------------------------------- ----------- ----------- --------------
Other comprehensive profit/(loss)
for the period, net of tax 1,245 13,372 7,933
--------------------------------------------- ----------- ----------- --------------
Total other comprehensive
profit/(loss) for the period
attributable to owners of
the Company (13,117) 9,657 (3,774)
--------------------------------------------- ----------- ----------- --------------
All items in the above statement are derived from continuing
operations.
The accompanying notes 1 to 16 form an integral part of these
condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited as at 31 March 2012
As at As at As at
31 Mar 31 Mar 30 Sep 11
Notes 12 11 EUR000
EUR000 EUR000
------------------------------------- ------- ---------- ---------- -----------
Assets
Investment property 4 434,945 465,530 451,050
Deferred tax assets 5,613 3,693 4,108
------------------------------------- ------- ---------- ---------- -----------
Total non-current assets 440,558 469,223 455,158
------------------------------------- ------- ---------- ---------- -----------
Trade receivables 10,335 9,625 10,326
Other current assets 6,194 7,035 7,632
Cash and cash equivalents 31,222 44,010 43,892
------------------------------------- ------- ---------- ---------- -----------
Non-current assets classified
as held for sale 5 - 47,497 -
------------------------------------- ------- ---------- ---------- -----------
Total current assets 47,751 108,167 61,850
------------------------------------- ------- ---------- ---------- -----------
Total assets 488,309 577,390 517,008
------------------------------------- ------- ---------- ---------- -----------
Equity
Share capital 6 25,998 25,998 25,998
Share premium 164,992 164,992 164,992
Restricted reserves 120,468 120,484 120,484
Retained earnings (195,759) (173,421) (181,413)
Hedging reserve 2,427 6,621 1,182
------------------------------------- ------- ---------- ---------- -----------
Total equity attributable to
equity holders of the Company 7 118,126 144,674 131,243
------------------------------------- ------- ---------- ---------- -----------
Liabilities
Interest bearing loans and
borrowings 10 285,168 319,112 295,868
Preference shares 31,986 29,729 30,333
Warrants 13 698 2,317 2,258
Long term provision 6,457 6,737 6,626
Derivative financial instruments 13 18,684 17,325 20,133
Deferred tax liabilities 8,552 8,004 8,386
------------------------------------- ------- ---------- ---------- -----------
Total non-current liabilities 351,545 383,224 363,604
------------------------------------- ------- ---------- ---------- -----------
Trade and other payables 807 693 1,008
Income tax and other taxes
payable 4,204 4,820 6,594
------------------------------------- ------- ---------- ---------- -----------
Accrued expenses and other
current liabilities 10,155 11,393 10,269
Deferred income 3,472 4,289 4,290
Liabilities directly associated
with non-current assets classified
as held for sale 5 - 28,297 -
------------------------------------- ------- ---------- ---------- -----------
Total current liabilities 18,638 49,492 22,161
------------------------------------- ------- ---------- ---------- -----------
Total liabilities 370,183 432,716 385,765
------------------------------------- ------- ---------- ---------- -----------
Total equity and liabilities 488,309 577,390 517,008
------------------------------------- ------- ---------- ---------- -----------
Net Asset Value per ordinary
share (Euro) 7 0.454 0.556 0.505
Diluted Net Asset Value per
ordinary share (Euro) 7 0.444 0.534 0.488
------------------------------------- ------- ---------- ---------- -----------
The condensed consolidated financial statements were approved by
the Board of Directors on 21 May 2012 and signed on its behalf
by:
Tom Chandos Robert DeNormandie
Chairman Chairman of Audit Committee
The accompanying notes 1 to 16 form an integral part of these
condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited for the six months ended 31 March 2012
Share capital Share premium Restricted Retained Hedging Total equity
reserves earnings reserve
Notes EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
Balance as at 30
September 2010 25,998 164,991 120,477 (169,699) (6,751) 135,016
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
Warrants
exercised 6 - 1 - - - 1
Recapitalisation
of subsidiaries - - 7 (7) - -
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
Total equity
movement - 1 7 (7) - 1
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
Total
comprehensive
income/(loss) - - - (3,715) 13,372 9,657
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
Total movement in
equity and
comprehensive
income/(loss)
for the period - 1 7 (3,722) 13,372 9,658
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
Balance as at 31
March 2011 25,998 164,992 120,484 (173,421) 6,621 144,674
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
Total
comprehensive
loss - - - (7,992) (5,439) (13,431)
Total movement in
comprehensive
loss for the
period - - - (7,992) (5,439) (13,431)
Balance as at 30
September 2011 25,998 164,992 120,484 (181,413) 1,182 131,243
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
Warrants 6 - - - - - -
exercised
Recapitalisation
of subsidiaries - - (16) 16 - -
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
Total equity
movement - - (16) 16 - -
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
Total
comprehensive
income/(loss) - - - (14,362) 1,245 (13,117)
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
Total movement in
equity and
comprehensive
income/(loss)
for the period - - (16) (14,346) 1,245 (13,117)
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
Balance as at 31
March 2012 25,998 164,992 120,468 (195,759) 2,427 118,126
------------------ ------ -------------- -------------- ------------ ------------- ------------- --------------
The accompanying notes 1 to 16 form an integral part of these
condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited for the six months ended 31 March 2012
Six months Six months Twelve months
to 31 Mar to 31 Mar to 30 Sep
Notes 12 11 11
EUR000 EUR000 EUR000
--------------------------------------- ------- ----------- ----------- --------------
Loss before tax (15,550) (3,169) (11,511)
Adjustment for:
Net gain on disposal of investment
property 4 - (11) (494)
Net valuation losses on investment
property 4 16,924 6,095 16,237
Unrealised change in fair value
of derivative financial instruments (204) 200 109
Unrealised change in fair value
of warrants (1,652) (161) (261)
Interest expense 10,908 12,932 25,136
Interest income (111) (140) (329)
Amortisation of transaction costs
relating to debt 875 790 1,672
Net unrealised foreign currency
losses/(gains) 1,470 (355) 388
Changes in working capital:
Decrease/(increase) in current
assets 1,382 2,481 2,961
(Decrease)/increase in current
liabilities (1,176) (2,721) (5,693)
--------------------------------------- ------- ----------- ----------- --------------
Cash generated from operations 12,866 15,941 28,215
Interest paid (11,034) (13,416) (26,032)
Interest received 157 61 173
Tax paid (2,540) (2,556) (739)
--------------------------------------- ------- ----------- ----------- --------------
Net cash flows from (used in)
operating activities (551) 30 1,617
--------------------------------------- ------- ----------- ----------- --------------
Investing activities
Capital expenditure (819) (345) (539)
Net proceeds from disposal of
investment property - 432 49,436
--------------------------------------- ------- ----------- ----------- --------------
Net cash flows from (used in)
investing activities 4 (819) 87 48,897
--------------------------------------- ------- ----------- ----------- --------------
Financing activities
Proceeds from bank loans 10
- Gross proceeds - 4,973 4,973
- Gross repayments (11,300) (1,135) (50,657)
- Transaction costs - (314) (228)
Swap breakage costs - (21) (2,563)
Gain on forward transaction - 77 156
Proceeds from exercise of warrants - - 1
Net proceeds from capital contributed - 1 -
--------------------------------------- ------- ----------- ----------- --------------
Net cash flows from (used in)
financing activities (11,300) 3,581 (48,318)
--------------------------------------- ------- ----------- ----------- --------------
Effects of changes in exchange
rates - (417) (724)
Net increase (decrease) in cash
and cash equivalents for the
period (12,670) 3,281 1,472
--------------------------------------- ------- ----------- ----------- --------------
Opening cash and cash equivalents
(includes cash associated on
assets held for sale) 43,892 42,420 42,420
--------------------------------------- ------- ----------- ----------- --------------
Closing cash and cash equivalents
(includes cash associated on
assets held for sale) 31,222 45,701 43,892
--------------------------------------- ------- ----------- ----------- --------------
Cash directly associated with
non-current assets held for sale - (1,691) -
--------------------------------------- ------- ----------- ----------- --------------
Closing cash and cash equivalents 31,222 44,010 43,892
--------------------------------------- ------- ----------- ----------- --------------
All items in the above statement are derived from continuing
operations. The accompanying notes 1 to 16 form an integral part of
these condensed consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 MARCH 2012
1 Reporting entity
Invista European Real Estate Trust SICAF ("the Company") was
incorporated as a "societe anonyme" under the laws of Luxembourg on
6 June 2005. On 17 November 2006 the Company was converted into an
investment company with fixed capital "societe d'investissement a
capital fixe" ("SICAF"). Through its subsidiaries (together "the
Group") its main activity is to evaluate, make and actively manage
direct and indirect investments in real estate in Continental
European countries.
The Company is a public limited liability company incorporated
for an unlimited term. The registered office of the Company is
established at 25C, Boulevard Royal, L-2449 Luxembourg. Information
pertaining to the Company is included to the extent required by the
London Stock Exchange listing rules. This information should not
deem to represent statutory annual accounts, which are separately
prepared in accordance with International Financial Reporting
Standard (IFRS) as adopted by the European Union.
2 Basis of preparation
2.1 Statement of compliance
These condensed consolidated financial statements for the six
months ended 31 March 2012 have been approved for issue by the
Board of Directors on 21 May 2012 and have been prepared in
accordance with IAS 34 Interim Financial Reporting.
These condensed consolidated financial statements do not include
all the information and disclosures required in the annual
consolidated financial statements, and should be read in
conjunction with the Company's annual consolidated financial
statements for the year ended 30 September 2011.
2.2 Going concern
The directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the condensed consolidated financial statements.
2.3 Basis of measurement
The condensed consolidated financial statements have been
prepared on the historical cost basis except for the following
material items:
- Investment in properties have been revalued as at 31 March 2012 (note 4),
- Derivative financial instruments are measured at fair value as at 31 March 2012 (note 13).
The significant accounting estimates and judgment applied in the
preparation of the condensed consolidated financial statements are
consistent with those applied in the preparation of the Company's
annual consolidated financial statements for the year ended 30
September 2011.
2.4 significant accounting policies
The accounting policies applied by the Group in these condensed
consolidated financial statements are consistent with those
followed in the preparation of the Group's annual consolidated
financial statements for the year ended 30 September 2011.
3 Seasonality of operations
Rental income, other revenues and costs are received and
incurred smoothly over the accounting period. Therefore no
additional disclosures need to be made in the condensed
consolidated financial statements as a result of seasonality.
4 Investment property
Six months Six months Twelve months
to 31 Mar to 31 Mar to 30 Sep
12 11 11
EUR000 EUR000 EUR000
Historic cost
Cost at the beginning of the
period 620,192 664,586 664,586
Capital expenditure 819 345 539
Disposals - (461) (44,933)
Transfer to assets held for sale - (43,345) -
(note 5)
----------------------------------- ----------- ----------- --------------
Cost at the end of the period 621,011 621,125 620,192
----------------------------------- ----------- ----------- --------------
Net unrealised losses related
to property
Net unrealised losses at the
beginning of the period (169,142) (148,896) (148,896)
Valuation gains on investment
property during the period 2,444 2,690 1,831
Valuation losses on investment
property during the period (19,368) (8,785) (18,068)
Reversal of accumulated valuation
of disposal - 41 (4,009)
Reversal of accumulated valuation
of assets held for sale (note - (645) -
5)
----------------------------------- ----------- ----------- --------------
Net unrealised losses at the
end of the period (186,066) (155,595) (169,142)
----------------------------------- ----------- ----------- --------------
Fair value at the end of the
period 434,945 465,530 451,050
----------------------------------- ----------- ----------- --------------
All of the above investment properties have been pledged as
collateral on the interest bearing loans and borrowings disclosed
in note 10.
The net change in the value of the investment property also
includes the valuation of assets sold:
Six months Six months Twelve months
to 31 Mar to 31 Mar to 30 Sep
12 11 11
EUR000 EUR000 EUR000
---------------------------------------- ------------ ----------- --------------
Net proceeds* from disposal of
investment property - 432 49,436
Carrying value of investment disposals - (421) (48,942)
---------------------------------------- ------------ ----------- --------------
Net gain on disposal of investment
property - 11 494
---------------------------------------- ------------ ----------- --------------
* Includes sale costs
5 Non-current assets classified as held for sale
As at 31 March 2012, no non-current assets were classified as
held for sale.
Six months to Six months Twelve months
31 Mar 12 to to 30 Sep 11
EUR000 31 Mar 11 EUR000
EUR000
------------------------------- -------------- ----------- --------------
Assets classified as held for
sale
Investment properties (note - 43,990 -
4)
Deferred tax asset - 59 -
Trade and other receivables - 1,757 -
Cash and cash equivalents - 1,691 -
------------------------------- -------------- ----------- --------------
Total - 47,497 -
------------------------------- -------------- ----------- --------------
Liabilities classified as held
for sale
Deferred tax liabilities - 249 -
Loan and borrowings (note 10) - 25,542 -
Trade and other payables - 2,506 -
Total - 28,297 -
------------------------------- -------------- ----------- --------------
6 Issued capital
Number of ordinary Number of warrants
shares
---------------------------------- ------------------- -------------------
In issue as at 30 September 2010 259,976,943 29,109,140
---------------------------------- ------------------- -------------------
Exercise of warrants 2,937 (2,937)
---------------------------------- ------------------- -------------------
In issue as at 31 March 2011 259,979,880 29,106,203
---------------------------------- ------------------- -------------------
Exercise of warrants 859 (859)
---------------------------------- ------------------- -------------------
In issue as at 30 September 2011 259,980,739 29,105,344
---------------------------------- ------------------- -------------------
Exercise of warrants 170 (170)
---------------------------------- ------------------- -------------------
In issue as at 31 March 2012 259,980,909 29,105,174
---------------------------------- ------------------- -------------------
Issuance of ordinary shares
The Company has an issued share capital of EUR25,998,091 (30
September 2011: EUR25,998,074; 31 March 2011: EUR25,997,988)
consisting of 259,980,909 shares (30 September 2011: 259,980,739
shares; 31 March 2011 259,979,880 shares) without indication of
nominal value all of which have been fully paid up.
7 Net asset value per ordinary share
The net asset value per ordinary share is based on net assets of
EUR118 million as at 31 March 2012 (30 September 2011: EUR131
million; 31 March 2011: EUR145) and 260.0 million ordinary shares
outstanding at 31 March 2012 (30 September 2011: 260.0 million; 31
March 2011: 260.0 million).
Six months Six months Twelve months
to to to 30 Sep 11
31 Mar 12 31 Mar 11 EUR000
EUR000 EUR000
------------------------------- ---- ------------- ------------- --------------
Net asset value 118,126 144,674 131,243
------------------------------------- ------------- ------------- --------------
Assuming exercise of all
dilutive potential ordinary
shares
Listed warrants(1,2) 10,116 9,598 9,699
------------------------------------- ------------- ------------- --------------
Fully diluted net asset value 128,242 154,272 140,942
------------------------------------- ------------- ------------- --------------
Number Number Number
------------------------------- ---- ------------- ------------- --------------
Number of ordinary shares 259,980,909 259,979,880 259,980,739
Number of warrants 29,105,174 29,106,203 29,105,344
------------------------------------- ------------- ------------- --------------
Fully diluted ordinary share
capital 289,086,083 289,086,083 289,086,083
------------------------------------- ------------- ------------- --------------
Net asset value per ordinary
share (Euro) 0.454 0.556 0.505
Diluted net asset value per
ordinary share (Euro) 0.444 0.534 0.488
------------------------------------- ------------- ------------- --------------
(1) EUR:GBP exchange rate of 1.1986 as at 31 March 2012; EUR
1.1492 as at 30 September 2011; EUR 1.137 as at 31 March 2011.
(2) Exercise price of warrants of GBP0.29
8 Earnings per share
The calculation of the basic earnings per share for the
financial period ended 31 March 2012 is based on the loss
attributable to ordinary shareholders of EUR14 million (30
September 2011: loss of EUR12 million; 31 March 2011: loss of EUR4
million), and the weighted average number of ordinary shares
outstanding during the period ended 31 March 2012. The calculation
of diluted earnings per share at 31 March 2012 is based on a
diluted loss attributable to ordinary shareholders of EUR14 million
(30 September 2011: loss of EUR12 million; 31 March 2011: loss of
EUR4 million), and a weighted average number of ordinary shares
outstanding during the period ended 31 March 2012 after the
adjustment for the effect of all dilutive potential ordinary
shares.
Six months Six months Twelve months
to 31 Mar to to 30 Sep
12 31 Mar 11 11
EUR000 EUR000 EUR000
------------------------------- ------------- ------------- --------------
Loss for the period (14,362) (3,715) (11,707)
Loss attributable to ordinary
shareholders (14,362) (3,715) (11,707)
------------------------------- ------------- ------------- --------------
Issued ordinary shares at
1 October 259,980,739 259,976,943 259,976,943
Effect of shares issued
Effect of warrants exercised 102 1,958 2,734
------------------------------- ------------- ------------- --------------
Weighted average number of
ordinary shares 259,980,841 259,978,901 259,979,677
------------------------------- ------------- ------------- --------------
Basic loss per ordinary share
(Euro) (0.05524) (0.01429) (0.04503)
------------------------------- ------------- ------------- --------------
Diluted loss per ordinary
share (Euro) (0.05524) (0.01429) (0.04503)
------------------------------- ------------- ------------- --------------
The conversion and assumed exercise of warrants to ordinary
shares are ignored in the calculation of diluted loss per share
since these are anti dilutive.
9 Preference shares dividend
On 30 December 2009 the Company issued 29,137,134 redeemable
preference shares with one warrant attached per preference share.
The preference shares confer the right to a cumulative preference
share dividend payable semi-annually.
Six months Twelve months
to 31 Mar to 30 Sep
12 Payment date 11
accrued EUR000 accrued
EUR000 EUR000
------------------------------------ ----------- -------------- --------------
From 29 December 2009 to 28 - 1,207 -
May 2010
From 29 May 2010 to 30 September - - -
2010
From 1 October 2010 to 24 December - 1,698 -
2010
From 25 December 2010 to 24 - 1,463 -
June 2011
From 25 June 2011 to 30 September
2011 - - 787
From 1 October 2011 to 23 December - 1,462 -
2011
From 24 December 2011 to 31 827 - -
March 2012
Total 827 5,830 787
------------------------------------ ----------- -------------- --------------
The payment dates for the preference share dividend are in the
third week of June and the third week of December respectively, as
changed by the Board on 23 November 2010.
Since 30 December 2009, four dividends of GBP0.09 per preference
shares issued were paid on 28 May 2010 (EUR1.2 million), on 24
December 2010 (EUR1.7 million), on 24 June 2011 (EUR1.5 million)
and 23 December 2011 (EUR1.5 million).
The Group signed a forward exchange contract with Bank of
Scotland's Treasury Group to protect the Euro payment of the next
four GBP dividend payments until December 2013.
10 Interest bearing loans and borrowings
This note provides information about the contractual terms of
the Group's interest bearing loans and borrowings, which are
measured at amortised cost.
Six months Six months Twelve months
to 31 Mar to to 30 Sep
12 31 Mar 11 11
EUR000 EUR000 EUR000
------------------------------- ----------- ----------- --------------
Balance at the beginning
of the period 297,977 343,661 343,661
Additions during the period - 4,973 4,973
Repayment during the period (11,300) (1,135) (50,657)
------------------------------- ----------- ----------- --------------
Balance at the end of the
period 286,677 347,499 297,977
Less assets held for sale - 25,705 -
------------------------------- ----------- ----------- --------------
Gross book value of bank
loans net of current portion 286,677 321,794 297,977
------------------------------- ----------- ----------- --------------
As at 31 March 2012, the Group had EUR286.7 million of
outstanding indebtedness with the Bank of Scotland (30 September
2011: EUR298.0 million). The Company's loan to value ("LTV") (gross
debt divided by market value of properties) under the Bank of
Scotland loan documentation at that date was 65.9% (30 September
2011: 66.1%), against a covenant of 80.0% (30 September 2011:
82.5%).
Terms and debt repayment schedule
Six months to 31 Mar 12 Six months to 31 Mar 11 Twelve months to 30 Sep 11
EUR000 EUR000 EUR000
------------------------------------- ------------------------ ------------------------ ---------------------------
Proceeds
Bank loans maturing beyond five - - -
years
Bank loans maturing between two to
five years 286,677 321,794 297,977
Bank loans maturing within one year - - -
------------------------------------- ------------------------ ------------------------ ---------------------------
Total proceeds from long term bank
loans 286,677 321,794 297,977
------------------------------------- ------------------------ ------------------------ ---------------------------
Transaction costs
------------------------------------- ------------------------ ------------------------ ---------------------------
Costs
Balance at the beginning of the
period 7,912 7,978 7,978
Additions during the period - 314 228
Retirements and amounts written off (169) (275) (294)
------------------------------------- ------------------------ ------------------------ ---------------------------
Gross transaction costs balance at
the end of the period 7,743 8,017 7,912
------------------------------------- ------------------------ ------------------------ ---------------------------
Amortisation
Balance at the beginning of the
period 5,803 4,931 4,931
Additions during the period 600 513 947
Retirements and amounts written off (169) (109) (75)
------------------------------------- ------------------------ ------------------------ ---------------------------
Accumulated depreciation balance at
the end of the period 6,234 5,335 5,803
------------------------------------- ------------------------ ------------------------ ---------------------------
Net book value of transaction costs 1,509 2,682 2,109
------------------------------------- ------------------------ ------------------------ ---------------------------
Net book value of proceeds from bank
loans 285,168 319,112 295,868
11 Related party transactions
The Company and the Group have related party transactions with
its subsidiaries, shareholders and certain Directors.
There has been no material changes in the related party
transactions described on page 70 of the annual report for the year
ended 30 September 2011.
Directors' fees
The Directors of the Company and its subsidiaries were paid a
total of EUR82,434 (2011 six months: EUR93,859) in Directors' fees
during the period.
The Group also operates an inter-group trading account facility
with its subsidiaries whereby it may receive income on behalf of
its subsidiaries or pay expenses on their behalf. These balances
are non-interest bearing and are settled on demand.
12 Investment management fees
Invista Real Estate Investment Management Limited ("Invista
REIM") acted as the Investment Manager of the Group until 14
December 2011. Invista REIM received Investment Management fees of
EUR0.7 million. The conditions for payment of a performance fee to
the Investment Manager were not met during the period under review
and as such no provision for performance fees was made in the
condensed consolidated income statement.
With effect from 15 December 2011 Internos Real Limited
("Internos") took over the management of the Group's assets and
received investment management fees of EUR453,004. In addition the
Group paid to Internos a transition fee of EUR84,677 as well as a
fee of GBP60,000 (EUR71,900) in connection with the on boarding of
the entire Invista REIM Paris team to Internos.
13 Derivative financial instruments
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined
as follows:
i. Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
ii.Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or the liability, either
directly (e.g. as prices) or indirectly (i.e. derived from
prices);
iii.Level 3: inputs for the asset or liability that are not
based on observable market data.
Level 1 Level 2 Total
EUR000 EUR000 EUR000
------------------------- -------- --------- ---------
As at 31 March 2012
Warrants (698) - (698)
Interest rate swap - (18,829) (18,829)
Currency rate swap - 145 145
------------------------- -------- --------- ---------
As at 31 March 2011
Warrants (2,317) - (2,317)
Interest rate swap - (17,255) (17,255)
Currency rate swap - (70) (70)
------------------------- -------- --------- ---------
As at 30 September 2011
Warrants (2,258) - (2,258)
Interest rate swap - (20,133) (20,133)
Currency rate swap - - -
------------------------- -------- --------- ---------
Risk and Uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause actual
results to differ materially from expected and historical results.
The directors do not consider that the principal risks and
uncertainties have changed since the publication of the annual
report for the year ended 30 September 2011. A detailed explanation
of the riskssummarisedbelow, together with the Group's objectives,
policies and processes for measuring and managing them, can be
found on pages 71 - 75 of the annual report and cover the following
areas:
-- market and operational risks;
-- currency risk;
-- credit risk;
-- liquidity risk; and
-- financial risk management.
14 Segment reporting
The operating segments derive their revenue primarily from
rental income from lessees. All of the Group's business activities
and operating segments are reported within the segments below.
Holdings activities and
inter-segmental
EUR000
France Germany Belgium Others Total
As at 31 March 2012 EUR000 EUR000 EUR000 EUR000 EUR000
--------------------------- ----------- ----------- ---------- ---------- -------------------------- -----------
Rental income 7,013 7,863 793 2,479 (13) 18,135
--------------------------- ----------- ----------- ---------- ---------- -------------------------- -----------
Profit/(loss) before net
financing costs and tax 1,887 (5,325) 1,978 (25) (3,569) (5,054)
--------------------------- ----------- ----------- ---------- ---------- -------------------------- -----------
Finance income 323 182 210 13 205 933
Finance expense (3,807) (4,296) (511) (1,533) (3,138) (13,285)
Net change in derivatives - - - - 1,856 1,856
Taxation (832) 443 (471) 243 1,805 1,188
--------------------------- ----------- ----------- ---------- ---------- -------------------------- -----------
Profit/(loss) for the
period (2,429) (8,996) 1,206 (1,302) (2,841) (14,362)
--------------------------- ----------- ----------- ---------- ---------- -------------------------- -----------
Reportable segments'
assets 260,065 220,921 27,766 48,212 (68,655) 488,309
--------------------------- ----------- ----------- ---------- ---------- -------------------------- -----------
Reportable segments'
liabilities (156,838) (135,828) (21,704) (56,515) 702 (370,183)
--------------------------- ----------- ----------- ---------- ---------- -------------------------- -----------
The segment information for the year ended 30 September 2011 is
as follows:
Holdings
activities
and inter-segmental
As at 30 September France Germany Belgium Others EUR000 Total
2011 EUR000 EUR000 EUR000 EUR000 EUR000
----------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Rental income 18,385 15,822 1,326 5,281 (65) 40,749
----------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Profit/(loss)
on disposal 605 - - - (111) 494
----------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Profit/(loss)
before net financing
costs and tax 10,616 9,924 443 (1,564) (4,561) 14,858
----------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Finance income 645 371 482 28 (851) 675
Finance expense (9,611) (8,977) (1,106) (3,718) (3,784) (27,196)
Net change in
derivatives (173) - (62) (554) 941 152
Taxation (3,232) (473) (41) (78) 3,628 (196)
----------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Profit/(loss)
for the year ended (1,755) 845 (284) (5,886) (4,627) (11,707)
----------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Reportable segments'
assets 283,204 236,254 26,429 58,944 (87,823) 517,008
----------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Reportable segments'
liabilities (174,611) (142,164) (21,384) (65,111) 17,505 (385,765)
----------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Holdings
activities
and inter-segmental
France Germany Belgium Others EUR000 Total
As at 31 March EUR000 EUR000 EUR000 EUR000 EUR000
2011
--------------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Rental income 9,789 8,004 681 2,649 (13) 21,110
--------------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Profit on disposal 11 - - - - 11
--------------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Profit/(loss) before
net financing costs
and tax 6,978 7,174 183 (1,821) (2,417) 10,097
--------------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Finance income 308 179 273 13 (635) 138
Finance expense (4,669) (4,501) (564) (1,953) (1,680) (13,367)
Net change in derivatives (21) - - - (16) (37)
Taxation (820) (441) (88) 49 754 (546)
--------------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Profit /(loss)
for the period 1,776 2,411 (196) (3,712) (3,994) (3,715)
--------------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Reportable segments'
assets 295,344 238,823 26,543 60,866 (44,186) 577,390
--------------------------- ----------- ----------- ---------- ---------- --------------------- -----------
Reportable segments'
liabilities (183,221) (143,167) (21,411) (64,860) (20,057) (432,716)
--------------------------- ----------- ----------- ---------- ---------- --------------------- -----------
15 Contingencies
Montowest litigation
In April 2010, the Court ruled in favour of Montowest, a
subsidiary company of the Group, in respect of a litigation process
in relation to roof damage that occurred in 2006. Total rental
receivable as at 31 March 2012 was EUR7.4 million, representing an
insurance receivable of EUR2 million and a tenant debt of EUR5.4
million. A provision of EUR1.1 million has been booked against the
insurance receivable, leaving a net total exposure of EUR6.3
million (including VAT and deferred income). Rents paid by the
tenant of EUR4.8 million are currently held in an escrow account,
pending the completion of the litigation.
16 Subsequent events
For the period ended 31 March 2012 there were no significant
post balance sheet events.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 MARCH 2012
Glossary
Adjusted gross assets is the aggregate value of all of the
assets of the Group, including net distributable but undistributed
income, less current liabilities of the Group (excluding from
current liabilities any proportion of monies borrowed for
investment whether or not treated under accounting rules as current
liabilities), as shown in the consolidated accounts of the
Group.
Earnings per share (EPS) is the profit after taxation divided by
the weighted average number of shares in issue during the
period.
Net equivalent yield is the time weighted average yield between
the net initial yield and the reversionary yield.
Estimated rental value (ERV) is the Group's external valuers'
reasonable opinion as to the open market rent which, on the date of
valuation, could reasonably be expected to be obtained on a new
letting or rent review of a property.
Gross rental income or gross rent is the annualised rental
income receivable in the period prior to payment of non-recoverable
expenditure such as ground rents, local taxes, insurance and
property outgoings.
Gross initial yield (GIY) is the gross rent expressed as a
percentage of the net valuation of property portfolio.
Net asset value (NAV) are shareholders' funds, plus the surplus
of the open market value over the book value of both development
and trading properties, adjusted to add back the change in fair
value of the warrants and deferred tax.
Net initial yield (NIY) is the net rental income expressed as a
percentage of the gross valuation of the property portfolio.
Net rental income or net rent is the annualised rental income
receivable in the period after payment of non-recoverable
expenditure items such as ground rents, local taxes, insurance and
property outgoings.
Potential rent is the rent achievable if all the remaining
vacant space is let at the estimated rental value and added to the
current gross rental income.
Reversionary yield is the anticipated yield, which the Net
initial yield will rise to once the rent reaches the estimated
rental value.
RNS, Regulatory News Services (UK stock market), which is the
service used by the London Stock Exchange to publish company
results, share issues, changes in the board of directors and other
items which may affect the price of shares
CSSF, "Commission de Surveillance du Secteur Financier", which
is responsible for the prudential supervision of credit
institutions, other professionals of the financial sector,
undertakings for collective investment, pension funds, SICARs,
securitisation undertakings issuing securities to the public on a
continuous basis, regulated markets and their operators,
multilateral trading facilities and payment institutions. It also
supervises the securities markets, including their operators.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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