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RNS

Final Results

Released 07:00 27-Apr-2018

RNS Number : 3153M
Phoenix Spree Deutschland Limited
27 April 2018
 

Phoenix Spree Deutschland Limited

(The "Group")

FINANCIAL RESULTS FOR YEAR ENDED 31 DECEMBER 2017

ANOTHER YEAR OF STRONG PERFORMANCE - OUTLOOK REMAINS POSITIVE

 

Phoenix Spree Deutschland (LSE: PSDL.LN), the UK listed investment company specialising in Berlin residential real estate, today announces its full year results for the year ended 31 December 2017.

 

Financial Highlights

·     EPRA NAV per share grew by 50.5% to €4.11 (£3.65) at 31 December 2017 (31 December 2016: €2.73 (£2.33)).

·     EPRA total return per share of 53.0% for the year (2016: 22.5%).

·     IFRS NAV per share grew by 56.5% to €3.96 (£3.52) at 31 December 2017 (31 December 2016: €2.53 (£2.16)).

·     Gross rental income up 13.5% year-on-year to €18.1 million (2016: €15.9m).

·     Profit before tax up 183.3% to €138.5 million (2016: €48.9 million).

·     Net loan to value of 32.0% at 31 December 2017 (31 December 2016: 39.4%). All of the Group's debt has been refinanced within previous 18 months.

·     New debt of €57.8 million signed during 2017. Average debt maturity now exceeds eight years. Average interest rate 2.1%.

·     Final dividend per share of €5.0 cents (GBP: 4.4p), giving a total dividend per share of €7.3 cents (GBP: 6.4p) for 2017 (2016: €6.3 cents (GBP: 5.3p)).

 

Operational Highlights

·     Portfolio value increased by 43.8% to €609.3 million (31 December 2016: €423.8 million), 40.1% on a like-for-like basis.

·     Berlin posted largest like-for-like valuation increase at 41.8%.

·     Rent per sqm increased by 4.2% to €8.0 (31 December 2016: €7.6), 6.9% on a like-for-like basis.

·     Berlin like-for-like rent per sqm increased by 8.4% to €8.4 (31 December 2016: €7.7).

·     Rent on new lettings of €10.3 per sqm, a 7.9% increase over 2016.

·     €6.7 million invested in renovations and modernisations across the entire Portfolio during 2017, representing over one third of rental income.

·     EPRA Vacancy remains low at 2.9% (31 December 2016 2.6%).

·     Condominium sale completion proceeds up 191.8% to €9.5m with an average value per sqm of €3,868, a 20.1% premium to Berlin Portfolio average value per sqm as at 31 December 2017.

 

Portfolio now purely focussed on the attractive Berlin market

·     Targeted acquisition and disposal strategy during 2017 has created a pure-play Berlin portfolio with potential for greater economies of scale and strategic benefits.

·     Disposal of Central and Northern Germany portfolio notarised in December 2017 for €73.0 million, a 26% premium to the Jones Lang LaSalle valuation as at 30 June 2017.

·     Sale of other non-Berlin assets during 2017, for combined proceeds of €48.3 million. All disposals at a significant premium to last reported book value. 

·     Contracts to acquire 366 units notarised during 2017, representing an aggregate purchase price of €55.9 million and an average price per sqm of €2,224.

·     As at 20 April 2018, contracts to acquire a further 160 units in Berlin have been notarised since 31 December 2017 year end for an aggregate value of €24.8 million, representing an average price per sqm of €2,348.

 

Outlook

·     Berlin residential demographics remain favourable, driven by strong population growth, job creation and the ongoing process of urbanisation.

·     Berlin residential property prices should continue to benefit from a lack of supply and growing demand from both owner-occupiers and investors.

·     High embedded value within portfolio: Berlin new leases signed at 40.1% premium to in-place rents during 2017, and 45.7% in the fourth quarter of 2017.

·     Strong balance sheet, locking in long-term fixed rate debt at low interest rates, creates scope for further selective acquisitions.

·     Due to careful selection, acquisition prices remain below value of in-place housing stock within the Portfolio and cost of new build construction.

·      Further new condominium projects and sales are planned for the year ahead.

 

Robert Hingley, Chairman of Phoenix Spree Deutschland commented:

"I am delighted with the Company's performance and continued growth, our strongest year yet. Since listing in 2015, we have successfully delivered against our strategy of investing in and growing the portfolio, and realising the value from within it, resulting in a total return to shareholders of 106%. This year, we have made significant progress in focusing and growing the portfolio in Berlin, where we have an attractive pipeline of opportunities and where the market outlook remains positive, given the ongoing undersupply of rental property.  With the portfolio now purely Berlin focused, I am confident that our strategy of managing the portfolio for growth, investing in the quality of our properties and selective acquisitions will continue to deliver further returns for our shareholders."

For further information please contact:

Phoenix Spree Deutschland
Stuart Young

+44 (0)20 3937 8760

 

Liberum Capital Limited (Corporate Broker)
Richard Crawley                                                                  
Christopher Britton

+44 (0)20 3100 2222

 

Tulchan Communications (Financial PR)
Tom Murray
Elizabeth Snow

 

+44 (0)20 7353 4200

 

 

 

 

CHAIRMAN'S STATEMENT

2017 was another year of strong performance for the Company. Market conditions in the Berlin residential property sector have remained favourable and I am delighted to report that the Portfolio has recorded its best period of growth since Phoenix Spree was founded in 2007. Our financial results for the year provide further confirmation of our strategy of creating and actively managing a high-quality portfolio of Berlin assets.  

 

A more focused portfolio

We have made significant progress in our strategy to focus the portfolio on Berlin, having disposed of a series of non-Berlin assets at a premium to book value. The proceeds from these disposals have been used to invest in the current portfolio and to fund further acquisitions in Berlin. Completion of the €73.0 million disposal of the Central and Northern Germany portfolio at a 26% premium to book value is expected in April 2018 whereupon Phoenix Spree will effectively become a pure-play Berlin fund, creating greater economies of scale.

 

The Board is of the view that the Berlin market remains attractive with scope to continue the strategy of investing in the existing portfolio and to grow it further through the selective acquisition of residential assets. Although the competition for assets is intense, the expertise and strong local relationships of our property advisor have enabled the Company to identify a pipeline of attractive acquisition opportunities. We are pleased to have completed or notarised a further €75.8 million of acquisitions during 2017, all of which met our acquisition criteria.

 

Enhancing the portfolio

The Company has continued to invest in its programme of renovations and modernisations throughout the year, as well as making a further outlay on the overall infrastructure of its properties. Many of the buildings acquired by the Company were over 100 years old and, at the time, were in a poor state of repair. The Board is committed to improving the quality of its accommodation, working in partnership with its tenants to make a positive contribution both to living standards and the environment in areas where our properties are located. Substantial investment has been made in projects encompassing outdated heating systems, plumbing, electrics, double glazing, hallways, building facades and outdoor communal areas. During 2017, the Company re-invested over a third of its rental income on improvement programmes, the highest level to date, and it is anticipated that this process will continue into 2018 as we maintain our focus on improving the overall standard of our tenanted buildings.

 

Strong financial performance

The Portfolio valuation has continued to benefit from strong market fundamentals in Berlin, with the ongoing undersupply of available rental property resulting in further yield compression. Portfolio and rental growth have also been driven by our active asset management strategy, including the modernisation and renovation of apartments.

 

On a like-for-like basis, excluding the impact of acquisitions and disposals, the Portfolio value increased by 40.1% and Berlin rental income grew by 9.1%. Our EPRA Net Asset Value per share rose by 50.5% to €4.11 and the EPRA vacancy rate remains low, ending the year below 3%. The period closed with a strong balance sheet, with a net loan to value of 32% and cash balances of €27.2 million.
 

The investment in the Portfolio continues to provide strong reversionary potential, with new leases in Berlin signed at an average 40.1% premium to in-place rents during the year. Rent levels for new tenants in fully refurbished apartments are set with reference to prevailing market levels and increases for existing tenants comply with the relevant regulations and local rent tables.

 

The Property Advisor has also continued to identify opportunities to divide and resell a small number of carefully selected apartment blocks as condominiums, the proceeds of which part fund the dividend with the balance reinvested in further acquisitions and Portfolio improvements. The average price per square metre achieved for condominiums sold or notarised represented a 26.9% premium to the average valuation per square metre for the Berlin Portfolio.

 

Share price and dividend

The year to 31 December 2017 provided the strongest period of share price performance since the Company's stock market listing in 2015. Between 1 January 2017 and the end of the year, the share price rose from 232 pence to 393 pence, representing an increase of 69.4%. I am delighted that Phoenix Spree ended the year as not only the best-performing listed German residential fund, but also the best-performing UK listed real estate investment company in 2017.

 

The Board is pleased to recommend a final dividend of €5.0 cents per share (GBP 4.4 pence per share), taking the full year dividend to €7.3 cents per share (GBP 6.4 pence per share), representing a 16% increase on the 2016 full year Euro-denominated dividend. This dividend growth is reflective of the increase in the Portfolio value during the year and is paid from operating cashflows including the disposal proceeds from condominium projects. The Company has historically aimed to provide its shareholders with a secure and progressive dividend over the medium term, and subject to the distribution requirements for Non-Mainstream Pooled Investments. Following the disposal of the non-core portfolio in Northern Germany, the Company's portfolio is almost entirely focused on Berlin, where the Board continues to see significant potential for further acquisitions and capital growth, but where rental yields have historically been lower than in other parts of Germany. These factors may affect future dividend growth.

 

The total dividend in respect of the 2017 financial year amounts to €7.1 million, covered from operating cashflows of €5.8 million and condominium disposal proceeds of €9.1 million (Total: €14.9 million). Since listing on the London Stock Market in June 2015, and including the final dividend for 2017, €17.3 million been returned to shareholders.

 

Property Advisor

The Group has continued to benefit from the expertise of its property advisor, PMM Partners ("PMM"), which combines day-to-day asset management activities, capital structure management and a busy acquisition and disposal pipeline. During 2017, PMM has continued actively to manage the Portfolio, whilst simultaneously leveraging their local network and relationships to source and acquire an attractive pipeline of new Berlin properties, as well as completing the divestment of the remainder of the Company's non-core buildings, at a premium to book value.

 

On the basis of the Company's strong performance over the three year's ending 31 December 2017, and the impressive growth achieved in EPRA NAV over that period, resulting in a total shareholder return for the three-year period, after all fees, of 106.4%, a performance fee under the Property Advisory Agreement to the Property Advisor of circa €34.0 million has become due. The parties have agreed to settle the performance fee (but not any further performance fees that may become due) through the issuance by the Company to the Property Advisor of 8,260,065 new shares in the Company at EPRA NAV per share. 50% of the shares issued in settlement of this fee are subject to a 12-month restriction on disposal. Application will be made for the new shares, once issued, to be admitted to trading on the premium segment of the Official List and to trading on the Main Market of the London Stock Exchange with such admission expected to occur on or around 4 May 2018. The Board would like to thank all at PMM for their valued contribution, which is a key component of our ongoing success.

 

Corporate governance

The Board remains fully committed to high standards of corporate governance and behaving as a responsible business, addressing its environmental and social impacts as encapsulated in developing the Company's Corporate Responsibility Strategy. It takes very seriously its duties to operate with integrity, transparency and clear accountability towards its shareholders, tenants and other key stakeholders.

 

Following the year end, the Company announced the appointments of Charlotte Valeur, Jonathan Thompson and Monique O'Keefe as Independent Non-Executive Directors, and that Matthew Northover, Richard Prosser and Andrew Weaver were stepping down as a Non-Executive Directors. As well as strengthening the Board's independence, Charlotte, Jonathan and Monique bring with them a wealth of experience and insight across the real estate and advisory worlds which will be of great value to the Company as it continues to grow in years to come. Jonathan Thompson will also chair the Audit Committee.

 

On behalf of the Board, I thank Matthew, Richard and Andrew for their invaluable contribution to the Company during a period of considerable growth and its transition to a listed company on the Main Market of the London Stock Exchange in 2015. The Company will continue to benefit from Matthew's expertise through his ongoing involvement with PMM.

 

The Board has considered the principles and recommendations of the UK Corporate Governance Code and is pleased to confirm that the company complies with the provisions of the Code, where applicable.

 

Market Outlook

The German economy continues to benefit from record high employment levels and historically low interest rates. Economic growth reached a six-year high in 2017 and Government forecasts suggest this rate of growth will be sustained in 2018. 

 

Berlin's economic growth continues to outstrip the broader economy, with strong growth in the business services, media and technology sectors likely to lead to job creation and net inward migration trends remaining strong.

 

Against this backdrop, the fundamentals of the Berlin residential market remain attractive: strong demand combined with limited supply, and high levels of transaction activity likely to be sustained by demand from both investors and owner-occupiers. With our business now fully focussed on Berlin, and underpinned by the Property Advisor's active asset management strategy, the Board looks forward to the year ahead with confidence.

 

 

 

OPERATING & FINANCIAL REVIEW

 

Financial highlights

 

€ million (unless otherwise stated)

31 Dec 2017

31 Dec 2016

Gross rental income

18.1

15.9

Profit before tax (PBT)

138.5

48.9

Reported EPS (€)

1.21

0.42

Investment property value

609.3

423.8

Net debt

195.1

167.1

Net LTV

32.0%

39.4%

IFRS NAV per share (€)

3.96

2.53

IFRS NAV per share (£)

3.52

2.16

EPRA NAV per share (€)

4.11

2.73

EPRA NAV per share (£)

3.65

2.33

Dividend per share (€ cents)

7.3

6.3

Dividend per share (£ pence)

6.4

5.3

EPRA NAV per share total return for period (€)

53.0%

22.5%

EPRA NAV per share total return for period (£)

57.7%

41.7%

 

Financial results

Reported revenue for the period was 13.5% higher at €18.1 million (2016: €15.9 million). PBT grew to €138.5 million (2016: €48.9 million). The results include a significant net valuation gain of €157.4 million (2016: €55.2 million) and a performance fee due to the Property Advisor of €26.3 million. As previously mentioned, the cumulative fee due under the terms of the Property Advisory Agreement for the 3-year measurement period from January 2015 to December 2017 amounts to €34.0 million, to be satisfied in new shares issued at EPRA Net Asset Value. Reported earnings per share for the period were €1.21c (2016: €0.42c).

 

Positive pricing trends

The year to December 2017 showed a continuation of the positive pricing trends in Berlin residential property, driven by an overall improvement in German economic growth, as well as the positive demographic trends in Berlin, creating an ongoing supply-demand imbalance of available rental properties within the city. The Portfolio has also benefitted from PMM's active asset management strategy and, following a targeted programme of non-core disposals and further Berlin acquisitions, the Company is now a pure-play Berlin investment, well positioned to benefit from these positive macro and demographic factors.

 

Portfolio value rises by 40.1%

The Portfolio value grew by 43.8% from €423.8 million to €609.3 million during the year. Excluding the impact of acquisitions and disposals, the like-for-like increase was 40.1% (2016: 19.4%), representing the highest rate of growth in the fund's 10-year history. At the year end, the Portfolio was valued at €2,853 per sqm (31 December 2016: €1,965) which represents a gross fully-occupied yield of 3.4% (31 December 2016: 4.8%) and a net yield, using EPRA methodology, of 2.8% (31 December 2016: 4.2%). 

 

All geographic markets registered valuation gains during the period, with Berlin seeing the largest like-for-like increase at 41.8%, followed by Central and North Germany 35.2%.  

EPRA NAV increases by 50.5%

EPRA NAV per share increased by 50.5% in the period to €4.11 (£3.65) compared to €2.73 31 December 2016 (£2.33). Taking into account the dividends paid during 2017, EPRA total return per share was 53.0%, compared with 22.5% in 2016.

 

EPRA Vacancy remains historically low

Reported vacancy as at 31 December 2017 was 6.8%, down from 9.1% as at 31 December 2016. On an EPRA basis, which adjusts for units undergoing redevelopment or reserved for resale, vacancy was 2.9% as at 31 December 2017, compared to 2.6% as at 31 December 2016. This reflects the ongoing strength in the rental market as well as steps undertaken by the Property Advisor to reduce the time associated with re-letting.

 

Rental income - Growth trend continues

Gross rental income increased 13.5% to €18.1 million, compared with €15.9 million in 2016. On a like-for-like basis, rental income grew by 7.2% compared with 2016. Headline average in-place rent per sqm was €8.0 as at 31 December 2017, compared with €7.6 as at 31 December 2016. On a like-for-like basis, rent per sqm grew by 6.9% compared to 2016. Berlin saw a like-for-like increase in rent per sqm of 8.4%, and Central and North Germany 3.8%. Following the publication in May of the new Mietspiegel, or rent table, rent adjustment notifications were issued to the relevant Berlin tenants in the second half of the year. The majority of new leases signed with the Portfolio include annual indexation (or "Staffel") increases.

 

As at 31 December 2017, the Company annualised contracted rental income was €19.1 million.

 

Recent letting prices achieve new highs for the Group

The Group enjoyed another strong letting performance in 2017. A total of 382 new leases were signed, representing 13.4% of the average units owned during the period. In Berlin, average new letting prices grew by 9.4% to €11.3 per sqm (2016: €10.6 per sqm). The non-Berlin portfolio also witnessed growth, with new letting prices rising by 2.3% to €8.0 per sqm.

 

Significant reversionary rental potential remains

The premiums achieved on new letting prices when compared to in place rents demonstrate the significant reversionary potential within the Berlin portfolio.

 

During the final quarter of 2017, new lettings were signed at an average premium of 36.2% to passing rents and a record 45.7% in Berlin. The Group believes this reversionary gap should underpin rental growth in the medium term, providing a buffer against any potential slow-down in the rental market.

 

 

Further investment in the portfolio

The Group continued with its programme of renovations and modernisations, investing €6.7 million across the entire Portfolio during 2017. In the Berlin rental portfolio, €3.7 million was invested across 117 vacant units, representing an average outlay of €301 per sqm. The average premium achieved on re-letting these vacant Berlin units was 60%.

 

An additional €1.0 million was invested in the development of condominium projects with the remaining €2.0 million invested in the infrastructure of properties within the Portfolio for items such as heating system upgrades and improvements to indoor and outdoor communal areas. All of these are recorded in the accounts as capital expenditure. A further €1.4 million spent on repairs and maintenance was expensed through the profit and loss account, compared to €1.1 million in 2016.

Repositioning the Portfolio

When Phoenix Spree listed on the main market of the London Stock Exchange in June 2015, 63% of the assets by value were located in Berlin. Since then, the Company has been transitioning the geographic focus of assets to create a larger, more focussed Berlin portfolio offering greater economies of scale. This has involved a process of carefully selected Berlin acquisitions, combined with the disposal of non-Berlin assets. Since 2015, the Company has acquired €194.8 million of Berlin residential property, while disposing or notarising for sale assets outside of Berlin with an aggregate value of €130 million. The geographic transition was essentially completed at the end of 2017 with the notarisation of the Company's remaining Northern Germany portfolio, the sale of which is expected to complete in the second quarter of 2018. At 31 December 2017, Berlin assets were valued at €528.5 million.

 

Following completion of all acquisitions and disposals notarised to date, Berlin is expected to represent over 99% of the Company's portfolio value on a pro-forma basis. The Company will effectively be a pure play on Berlin's positive demographics and attractive growth prospects.

 

Targeted acquisitions

The Group has continued to grow in Berlin with a number of targeted acquisitions. In total, 366 units (354 residential and 12 commercial) were notarised during 2017 for an aggregate purchase price of €55.9 million, at an average price per sqm of €2,224, and annual fully occupied rent of €2.0 million. As at 31 December, 2017 €48.4 million of the notarised acquisitions had completed, with the remainder completing in the first quarter of 2018. Acquisitions have been financed using a combination of debt and equity, with a target net loan-to-value ratio of approximately 50%.

 

In the period from listing in June 2015 to 31 December 2017, the properties acquired by the Group were valued at €240.6 million at 31 December 2017. Properties that had completed by December 2017 were revalued by Jones Lang LaSalle ("JLL") as at December 2017 at an average 48.1% premium to purchase prices.

 

The Group intends to continue with its strategy of growing the Portfolio through selective Berlin acquisitions and, as at 20 April 2018, a further 160 units in Berlin had been notarised since the December 2017 year end for an aggregate value of €24.8 million, representing an average price per sqm of €2,348.

 

 

Acquisitions notarised since 2015 stock market listing

Year

Region

Purchase price

Units

Sqm

Purchase price per sqm

Fully occupied yield

2015

Berlin

35,760,000

227

18,197

1,963

4.3%

2016

Berlin

78,305,000

634

41,406

1,891

4.4%

2017

Berlin

55,890,000

366

25,135

2,224

3.6%

2018 YTD

Berlin

24,845,000

160

10,583

2,348

3.8%

Total

 

194,800,000

1,387

95,321

2,044

4.0%

 

Profitable non-core disposals

The Group has also sold or notarised for sale a number of properties located outside Berlin, which had been classified as non-core. These disposals generated a profitable exit and release of capital which is expected to be re-deployed into further Berlin acquisitions and further investment in the Berlin portfolio.

 

In April 2017, the Group completed the sale of a mixed-use property, with a high commercial component, located in Teltow, Brandenburg. The sale proceeds of €3.8 million represented a 19% premium to June 2016 book value.

 

In July 2017, the Group completed the sale of a portfolio of 17 properties, located in Nuremberg and Fürth, for an aggregate consideration of €35.2 million. These properties were acquired in 2007 and 2008 for an aggregate purchase price of €13.9 million and the sale proceeds represented an 11% premium to the 31 December 2016 book value.

 

In December 2017, the Group exchanged contracts to sell a portfolio of 34 properties located in Bremen, Hannover, Hildesheim, Verden, Delmenhorst, Kiel, Oldenburg, Lüneburg and Lübeck for an aggregate cash consideration of €73.0 million. These buildings were acquired in 2006/2007 for an aggregate purchase price of € 38.7 million and the sale price represented a 26% premium to the Jones Lang LaSalle valuation as at 30 June 2017.

 

Additionally, since 30 June 2017, a further four properties located in Central & North Germany were notarised for sale for a combined consideration of €6.7 million, 11% above the Jones Lang LaSalle valuation as at 30 June 2017.

 

Disposals notarised since June 2015 stock market listing

Region

2015

(€)

2016

(€)

2017

(€)

Premium to prior FY book value

Nuremberg & Furth

870,000

 

 

77%

Berlin (including Greater Area)

 

3,800,000

 

19%

Baden-Wuerttemberg

 

 

6,100,000

7%

Central & North Germany

 

 

84,050,000

33%

Nuremberg & Furth

 

 

35,170,000

11%

Total

870,000

3,800,000

125,320,000

26%

 

 

Portfolio regional overview 31 December 2017

 

Market

% of fund by value

Buildings

Resi units

Comm units

Total units

Total sqm ('000)

Annualised Gross rent (€m)

Valuation (€m)

Value per sqm (€)

Fully occupied gross yield %

Vacancy %

EPRA Vacancy %

Berlin (incl. Greater Area)*

86.7

85

2,140

134

2,274

164.1

14.9

528.5

3,220.3

3.1

7.1

2.7

Central & North Germany

12.7

36

758

34

792

45.8

3.8

77.1

1,682.8

5.3

5.7

4.3

Baden-Wurttemberg

0.6

1

18

11

29

3.6

0.3

3.7

1,026.1

10.0

6.0

0

Total

100%

122

2,916

179

3,095

213.5

19

609.3

2,853.4

3.4

6.8

2.9

 

*Excludes 8 properties (180 units) notarised between September 2017 and March 2018 which had not yet completed at December 31st 2017

The Berlin portfolio delivered its strongest performance since the fund's inception, with a like-for-like uplift in value of 41.8% (31 December 2016: 19.4%). The Board continues to believe that Berlin offers excellent potential for further growth in property and rental values.

 

The Group's Berlin portfolio is valued at €3,220 per sqm on average. Reported average rent per sqm stood at €8.1, a year-on-year increase of 4.7% compared with 2016, reflecting strong underlying like-for-like rental growth, partially offset by the impact of recent purchases, which typically exhibit lower rental values upon acquisition. On a like-for-like basis (excluding the impact of acquisitions and disposals), the increase in rent per sqm was 8.4%. The Berlin EPRA vacancy rate remained low at 2.7% (31 December 2016: 2.6%). New leases were signed at an average rent of €11.3 per sqm during the year, a record high and a premium of 40.7% to the average in-place rent during 2017. 

 

The Northern Germany portfolio, which was notarised for sale in its entirety in December 2017, and consisted of properties in the cities and surrounding areas of Bremen, Hanover and Kiel, reported a like-for-like valuation increase 35.2% (31 December 2016: 10.4%). Average like-for-like rent per sqm rose by 3.8% and EPRA vacancy stood at 4.3%.

 

Condominiums

The Group has continued with its strategy of crystallising latent value through selectively reselling apartment blocks as individual units at significant premiums to book values. This strategy is designed to take advantage of the differential that exists between the market value of a rental unit within an apartment block and the resale value of a unit as a private apartment. The process involves legally splitting the freeholds in a small number of carefully selected buildings and the sales comprise a combination of vacant and occupied units. As at 31 December 2017, 29% of properties (41% of Berlin portfolio) had been legally split to allow the Company the flexibility to decide on condominium projects, should the circumstances be advantageous.

 

Across the Group's three condominium projects, a total of 31 units were notarised for sale in 2017, with an aggregate sales value of €9.1 million, a 58.9% increase on 2016 notarisations. This represents an average price per sqm of €4,027, or €4,107 excluding commercial units and parking.

 

Condominium sales proceeds during 2017 represented a 20.1% premium to 31 December 2017 book value and the average price achieved per sqm for notarised condominiums represents a 73.6% premium to the average valuation per sqm for properties in the Berlin portfolio as at 31 December 2016, confirming the potential for valuation creation that can be achieved through apartment privatisation.

 

As at 31 December 2017, 65 units, representing aggregate proceeds of €17.0 million, had completed since condominium sales commenced in mid-2015. The Company expects to identify and prepare additional condominium projects for sale, either to tenants or new buyers, during 2018.

 

Dividend

The Board is pleased to have declared a final dividend of €5.0 cents per share (GBP 4.4 pence per share), (2016 €4.3 cents) (GBP 3.7 pence per share), which is expected to be paid on or around 29 June 2018 to shareholders on the register at close of business on 8 June 2018, with an ex-dividend date of 7 June 2018. Taking into account the interim dividend paid in October 2017, the declared dividend for 2017 is €7.3 cents per share (GBP 6.4 pence per share), (2016: €6.3 cents per share) (GBP 5.3 pence per share).

 

Financing

As at 31 December 2017, the Group had gross borrowings of €222.3 million (31 December 2016: €185.6 million) and cash balances of €27.2 million (31 December 2016: €18.5 million) equating to a net debt of €195.1 million (31 December 2016: €167.1 million) and a net loan to value on the Portfolio of 32.0% (31 December 2016: 39.4%). Nearly all loans have fixed interest rates and, at 31 December 2017, the blended interest rate of all loans across the Portfolio was 2.1%. The average remaining duration of the loan book at 31 December 2017 was 8.4 years (31 December 2016: 6.3 years). By 31 December 2017, all the Group's debt had been refinanced within the previous 18 months.

 

During the course of 2017, the following ten-year loan facilities were entered into in order to finance newly acquired properties: March 2017, €13.0 million facility; September 2017, €8.7 million facility; November 2017, €14.2 million facility. All the funds available from these facilities had been drawn as at 31 December 2017.

 

In February 2017, the Group successfully refinanced existing debt within Laxpan Mueller GmbH and Invador Grundbesitz GmbH, two companies acquired in 2016, which owned portfolios of Berlin properties. Existing debt of €11.2 million was repaid and a new 10 year loan of €17.5 million was arranged, resulting in an equity release to the Group of €6.2 million before costs, all of which was drawn by 31 December 2017. 

 

In July 2017, the Group successfully refinanced €79.6 million of existing debt, while securing a further equity release of €15.7 million before costs on the same pool of properties by way of a new 10-year loan facility. With the exception of €0.6 million, all of these funds had been drawn by 31 December 2017.

In April 2017, the Group announced the disposal of a non-core portfolio of 17 properties in Nuremberg and Furth for €35.2 million. €18.3 million of the sale proceeds was used to repay debt. Further single property disposals amounting to €16.9 million were also completed during the year with related debt of €9.3 million being repaid.

In December 2017, the Group announced that it had exchanged contracts to sell a portfolio of 34 properties located in Central and North Germany for a cash consideration €73.0 million. The transaction is due to complete in the first half of 2018 and it is expected that €41.2 million of the proceeds will be used to repay debt.

Funds made available to the Group by way of equity releases or through disposals are used to invest in the existing portfolio and to fund new acquisitions. While currently well funded, the Group continues to assess its funding options for growth, including further debt, equity and joint ventures.

 

Market outlook

With the Portfolio now almost entirely focussed in Berlin, it is now effectively a pure-play on the positive demographics and economic trends driving the performance of the Berlin residential market.

 

The outlook for Germany's economy has become increasingly favourable, with positive momentum underpinned by unprecedented European Central Bank stimuli. Thanks to record-low interest rates the Bundesbank calculates that the fiscal surplus in 2017 was the highest since the country's reunification. The Ifo Institute for Economic Research estimates that the German economy will expand by 2.6% in 2018, pointing to a broad upswing that is generating record-high employment and buoyant tax revenues. Business sentiment surveys and industrial data also point towards a vibrant German performance for 2018.

 

Focussing specifically on Berlin, the favourable supply-demand demographics look set to remain for the foreseeable future. JLL estimate that the Berlin population grew by 18,500 in the first half of 2017, with a similar trend expected in the second half. Whilst population growth continues to fuel strong demand for Berlin residential property, scarcity of available development land, a shortage in new-build permits and high costs of construction continue to restrict supply. All-in new-build construction costs per sqm in Berlin are still estimated to be substantially higher than equivalent value per sqm of existing housing stock and the economic viability of new build projects by state-owned companies is constrained by the requirement to have at least 50% of new builds as social housing, with rents capped at €10 / sqm for at least the next 5 years.

 

The Berlin residential rental sector remains well regulated, offering tenants higher levels of protection. Whilst many key elements of potential new rent and planning regulations still need to be clarified following the creation of a new Grand Coalition, the direction of travel is likely to be the same, focussing on a combination of conservation areas which limit the ability to split properties into condominiums, subsidies to stimulate new supply and further rent controls. Phoenix Spree remains fully committed to operating within the regulatory framework and the Company's strategy will continue to evolve to ensure this is maintained.

 

The reversionary potential within the Portfolio both for rental apartments and condominiums should continue to drive performance positively in the event of any slowdown in the broader market. The Company's balance sheet remains strong, with scope for further refinancing following record appreciation in the value of our properties in 2017. We anticipate that the proceeds will be deployed into further enhancements to the existing Portfolio and, subject to the availability of properties which meet the Fund's acquisition criteria, additional Berlin acquisitions.

 

 

 

KEY PERFORMANCE INDICATORS

The Company has chosen a number of Key Performance Indicators, which the Board believes are relevant to help all stakeholders understand the performance of the Company and the underlying property portfolio. Our key performance metrics are stated below.

In 2017, the value of the property portfolio grew by 40.1% on a like-for-like basis (2016: 19.4%). This increase was assisted by an increase in like-for-like average rent per let sqm of 6.9% (2016: 5.3%). The EPRA vacancy rate of 2.9% has remained relatively unchanged compared with prior year (2016: 2.6%), and in line with expectations.

The Group continued with its targeted condominium programme, agreeing sales of €9.1 million during the financial year (2016: €5.7 million). EPRA NAV per share increased by 50.5% to €4.11 (2016: €2.73), and the total dividend for the year was €7.3 cents per share (GBP 6.4 pence per share) an increase of 16% (2016: €6.3 cents per share, GBP €5.3 pence per share).

Net loan to value has reduced from 39.4% at 31 December 2016 to 32% at 31 December 2017.

 

CORPORATE RESPONSIBILITY

Being a responsible company, balancing the different interests of our key stakeholders and addressing our environmental and social impacts is intrinsically linked to our Company Values and our business strategy and ultimately the success and sustainability of our business.

As a Board, we recognise the increasing expectation from stakeholders for companies to demonstrate that they are operating responsibly and striking a meaningful balance between pursuing economic interests whilst managing their social and environmental impacts for the benefit of all stakeholders.

Sustainability lies at the core of our business model. We often acquire properties that are in relatively poor condition and, through significant reinvestment, we modernise the apartments to improve the standard of accommodation for our customers and improve the look of the local neighbourhood. 

The Board and our property advisor, PMM, have reviewed how sustainability is managed within our business and aligned these with the views of our stakeholders and business priorities to create our "Better Futures" Corporate Responsibility (CR) Plan. This Plan provides a framework to measure existing activities better while adding new initiatives to improve our overall sustainability.

Our CR Plan has four key pillars that are integrated throughout our business operations: Respecting our Environment, Investing in People, Valuing our Customers and Building our Communities.

The day-to-day running of the Company's operations is undertaken by our property advisor, PMM, who represent the majority of the operational headcount of the business, based out of offices in London and Berlin. We focus on PMM's employees within our Investing in People pillar and their offices when reviewing our direct environmental impact.

From a governance perspective, a CR Committee has been established to oversee the implementation of the Better Futures Plan, reporting on the progress to the Board and advising on any CR related material issues. We look forward to communicating our CR plans and progress to stakeholders, in due course.

 

 

 

 

POST BALANCE SHEET EVENTS

·     In January 2018, the Company exchanged contracts for the acquisition of one individual property and a portfolio of four properties in Berlin with an aggregate consideration of €17.7 million. The Company also exchanged contracts to acquire two individual properties, one in February and the other in April, with an aggregate consideration of €7.1 million. These properties are still awaiting completion.

 

·     The Company had exchanged contracts for the acquisition of two properties in Berlin with an aggregate purchase price of €7.5 million prior to the balance sheet date, which as at the balance sheet date had not yet completed. Both properties completed in Q1 2018.

 

·     The Company exchanged contracts for the sale of 9 condominiums in Berlin with an aggregate consideration of €3.5 million. Three of these condominium sales have subsequently completed at a value of €1.1 million. The remainder are expected to complete in Q2 2018.

 

·     The Company had exchanged contracts for the sale of five condominiums in Berlin with an aggregate sales price of €1.8 million prior to the balance sheet date, which as at the balance sheet date had not yet completed. These condominium sales have subsequently completed.

 

·     In March 2018, The Company refinanced the debt held against a portfolio of buildings in Berlin. The new facility released equity of €7.8 million which was drawn in March 2018.

 

·     The company has signed for a €12 million loan secured against seven properties notarised for acquisition in Q4 2017 and Q1 2018.

 

·     The Company and the Property Advisor reached an agreement to settle the Performance fee through the issuance of 8,260,065 new shares in the Company at EPRA NAV. The settlement is expected to take place in May 2018.

 

 

EXTRACTS FROM DIRECTORS REPORT

The Directors are pleased to present their Annual Report and the audited consolidated financial statements for the year ended 31 December 2017.

 

General information

The Company is a public limited company and incorporated in Jersey, Channel Islands under the Companies (Jersey) Law 1991. The Company was admitted to the premium segment of the Main Market of the London Stock Exchange on 15 June 2015.

 

The Group's objective is to generate an attractive return for shareholders through the acquisition and active management of high quality pre-let properties in Germany. The Group is primarily invested in the residential market, supplemented with selective investments in commercial property. The majority of commercial property within the portfolio is located within residential and mixed-use properties.

 

Dividends

The Directors recommend a final dividend of €5.3 cents (2016: €4.3 cents) per Ordinary Share to be paid on or around 29 June 2018 to ordinary shareholders on the register on 8 June 2018. 

 

The Directors declared a dividend of €4.3 cents per share on 26 April 2017, paid on 30 June 2017 to ordinary shareholders on the register on 9 June 2017 and a further dividend of €2.28 cents per share on 26 September 2017, paid on 20 October 2017 to ordinary shareholders on the register on 6 October 2017 (2016: €1.9 cents).

 

Auditor

Each of the Directors at the date of approval of this Annual Report has taken all the steps that he or she ought to have taken as a Director in order to make him or herself aware of any relevant audit information and to establish that the Group's auditor is aware of that information. The Directors are not aware of any relevant audit information which has not been disclosed to the auditor.

 

RSM UK Audit LLP has expressed their willingness to continue in office as auditor and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.

 

Viability Statement

The Directors have assessed the viability of the Group over a three-year period, which is significantly longer than the 12-month period from the date of approval of the financial statements that was previously considered for going concern purposes. The Directors have chosen three years because that is the period over which the Group has sufficiently robust forecasts as part of its business plan. The Viability Statement is based on a robust assessment of those risks that would threaten the business model, future performance, solvency or liquidity of the Group. For the purposes of the Viability Statement the Directors have considered, in particular, the impact of the following factors affecting the projections of cash flows for the three-year period ending 31 December 2020:

a) the potential operating cash flow requirement of the Group;

b) seasonal fluctuations in working capital requirements;

c) property vacancy rates;

d) rent arrears and bad debts;

e) capital and administration expenditure (excluding potential acquisitions as set out below) during the period; and

f) condominium sales proceeds.

 

The Directors recognise that the projections of cash flows do not include the impact of further potential property acquisitions over the three-year period, as these acquisitions are ad hoc and discretionary in nature. In this respect, the Directors complete a formal review of the working capital headroom of the Group for each potential acquisition.

 

On the basis of the above, and assuming the principal risks are managed or mitigated as expected, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year period of their assessment.

 

Registered office

 

13-14 Esplanade

St Helier

Jersey

JE1 1EE

Channel Islands

 

 

STATEMENT OF DIRECTORS RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the consolidated financial statements in accordance with applicable law and regulations.

 

Jersey company law requires the Directors to prepare financial statements for each financial year, in accordance with generally accepted accounting principles. The Directors are required under the Listing Rules of the Financial Conduct Authority to prepare the financial statements in accordance with International Financial Reporting Standards ('IFRS'), as adopted by the European Union ('EU').

 

The financial statements are required by law and IFRS as adopted by EU to present fairly the financial position of the Group.

 

Under Jersey company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period.

 

In preparing the financial statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and estimates that are reasonable and prudent;

·      state whether they have been prepared in accordance with IFRS as adopted by the EU;

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.

 

The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Group and to enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The Directors confirm that these financial statements comply with these requirements.

 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

Directors' Responsibility Statement

The Directors confirm that to the best of their knowledge:

·      the consolidated financial statements, prepared in accordance with the applicable set of accounting standards (as detailed above) and Company Law, give a true and fair view of the assets, liabilities, financial position and profit and loss of the issuer and the undertakings included in the consolidation taken as a whole;

·      the management report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face, as well as the business model and strategy of the Group; and

·      the Annual Report and consolidated financial statements, as a whole, are fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position, performance, business model and strategy.

 

 

Consolidated Statement of Comprehensive Income

 

 

 

 

 

 

 

 

For the year ended 31 December 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

Notes

 

 

 31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

 

 

 (restated - note 2.2)

 

 

 

 

 

 

 

 

 

€'000

 

€'000

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

6

 

 

 

  18,080

 

  15,934

Property expenses

 

 

 

 

7

 

 

 

(7,000)

 

(7,001)

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

 

 

 

 

 

 

  11,080

 

  8,933

 

 

 

 

 

 

 

 

 

 

 

 

Administrative expenses

 

 

 

 

8

 

 

 

(2,967)

 

(2,977)

Gain on disposal of investment property (including investment property held for sale)

10

 

 

 

  5,319

 

  799

Investment property fair value gain

 

 

 

11

 

 

 

  157,374

 

  55,226

Performance fee due to property advisor

 

26

 

 

 

(26,339)

 

(6,350)

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

 

 

  144,467

 

  55,631

 

 

 

 

 

 

 

 

 

 

 

 

Net finance charge

 

 

 

 

12

 

 

 

(5,995)

 

(6,756)

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

 

 

 

 

 

 

 

 

  138,472

 

  48,875

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

 

13

 

 

 

(26,150)

 

(10,913)

 

 

 

 

 

 

 

 

 

 

 

 

Profit after taxation

 

 

 

 

 

 

 

 

  112,322

 

  37,962

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

  -

 

  -

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

 

 

 

 

 

  112,322

 

  37,962

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income attributable to:

 

 

 

 

 

 

 

 

Owners of the parent

 

 

 

 

 

 

 

 

  111,538

 

  36,998

Non-controlling interests

 

 

 

 

 

 

 

 

  784

 

  964

 

 

 

 

 

 

 

 

 

  112,322

 

  37,962

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to the owners of the parent:

 

 

 

 

 

 

From continuing operations

 

 

 

 

 

 

 

 

 

 

 

Basic (€)

 

 

 

 

29

 

 

 

  1.21

 

  0.42

Diluted (€)

 

 

 

 

29

 

 

 

  1.11

 

  0.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Financial Position

 

 

 

 

 

 

 

 

At 31 December 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at

 

As at

 

 

 

 

 

Notes

 

 

 31 December 2017

31 December 2016

 

 

 

 

 

 

 

 

 

 €'000

 

 €'000

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

Investment properties

 

 

 

 

16

 

 

 

  502,360

 

  395,829

Property, plant and equipment

 

 

 

18

 

 

 

  92

 

  40

Deferred tax asset

 

 

 

 

13

 

 

 

  527

 

  770

Loans and receivables

 

 

 

 

19

 

 

 

  2,323

 

  2,253

 

 

 

 

 

 

 

 

 

  505,302

 

  398,892

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

Investment properties - held for sale

 

 

 

17

 

 

 

  106,897

 

  27,970

Trade and other receivables

 

 

 

20

 

 

 

  10,001

 

  7,503

Cash and cash equivalents

 

 

 

 

21

 

 

 

  27,182

 

  18,450

 

 

 

 

 

 

 

 

 

  144,080

 

  53,923

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

 

 

 

 

 

  649,382

 

  452,815

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

Borrowings

 

 

 

 

22

 

 

 

  2,646

 

  9,169

Trade and other payables

 

 

 

 

23

 

 

 

  2,119

 

  1,331

Derivative financial instruments

 

 

 

24

 

 

 

  -

 

  392

Current tax

 

 

 

 

13

 

 

 

  2,914

 

  24

 

 

 

 

 

 

 

 

 

  7,679

 

  10,916

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

Borrowings

 

 

 

 

22

 

 

 

  219,648

 

  176,423

Derivative financial instruments

 

 

 

24

 

 

 

  3,333

 

  4,477

Other financial liabilities

 

 

 

 

25

 

 

 

  5,663

 

  3,590

Deferred tax liability

 

 

 

 

13

 

 

 

  45,117

 

  22,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  273,761

 

  206,640

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

 

 

 

 

 

  281,440

 

  217,556

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

Stated capital

 

 

 

 

27

 

 

 

  162,630

 

  162,630

Share based payment reserve

 

 

 

26

 

 

 

  33,953

 

  7,614

Retained earnings

 

 

 

 

 

 

 

 

  169,634

 

  64,074

Equity attributable to owners of the parent

 

 

 

 

 

 

  366,217

 

  234,318

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

 

 

28

 

 

 

  1,725

 

  941

Total equity

 

 

 

 

 

 

 

 

  367,942

 

  235,259

 

 

 

 

 

 

 

 

 

 

 

 

Total equity and liabilities

 

 

 

 

 

 

 

 

  649,382

 

  452,815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Changes in Equity

 

 

 

 

 

 

 

 

For the year ended 31 December 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to the owners of the parent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stated capital

Share based payment reserve

 

Retained earnings

 

Total

Non-controlling interest

 

Total equity

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2016

  115,150

 

      1,264

 

  32,125

 

  148,539

 

     2,626

 

  151,165

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

  -

 

  -

 

  36,998

 

  36,998

 

964

 

  37,962

Other comprehensive income

  -

 

  -

 

  -

 

  -

 

  -

 

  -

Total comprehensive income for the year

  -

 

  -

 

  36,998

 

  36,998

 

  964

 

  37,962

 

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners -

 

 

 

 

 

 

 

 

 

 

 

recognised directly in equity:

 

 

 

 

 

 

 

 

 

 

 

Issue of share capital

  49,080

 

  -

 

  -

 

  49,080

 

  -

 

  49,080

Dividends paid

  -

 

  -

 

(5,049)

 

(5,049)

 

  -

 

(5,049)

Performance fee

  -

 

            6,350

 

  -

 

  6,350

 

  -

 

  6,350

Recognition of redemption

 

 

 

 

 

 

 

 

 

 

 

liability

  -

 

  -

 

  -

 

  -

 

(3,590)

 

(3,590)

Acquisition of subsidiaries

  -

 

  -

 

  -

 

  -

 

941

 

  941

Cost related to share placing

(1,600)

 

  -

 

  -

 

(1,600)

 

  -

 

(1,600)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2016

 

162,630

 

 

7,614

 

 

64,074

 

 

234,318

 

 

941

 

 

235,259

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

  -

 

  -

 

  111,538

 

  111,538

 

  784

 

  112,322

Other comprehensive income

  -

 

  -

 

  -

 

  -

 

  -

 

  -

Total comprehensive income for the year

  -

 

  -

 

  111,538

 

  111,538

 

  784

 

  112,322

 

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners -

 

 

 

 

 

 

 

 

 

 

 

recognised directly in equity:

 

 

 

 

 

 

 

 

 

 

 

Dividends paid

  -

 

  -

 

(5,978)

 

(5,978)

 

  -

 

(5,978)

Performance fee

  -

 

  26,339

 

  -

 

  26,339

 

  -

 

  26,339

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2017

  162,630

 

  33,953

 

  169,634

 

  366,217

 

  1,725

 

  367,942

 

 

 

 

 

 

 

 

 

 

 

 

The share based payment reserve has been established in relation to the issue of shares for the payment of the performance fee of the property advisor. Settlement to be made in May 18.

 

 

 

 

 

 

 

 

 

 

 

 

Retained earnings are the undistributed reserves to be either reinvested within the Group or distributed to shareholders as dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Cash Flows

 

 

 

 

 

 

 

 

For the year ended 31 December 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Year ended

 Year ended

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

 

 

 

 

 

 

 

 

  138,472

 

  48,875

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments for:

 

 

 

 

 

 

 

 

 

 

 

Net finance charge

 

 

 

 

 

 

 

 

  5,995

 

  6,756

Gain on disposal of investment property

 

 

 

 

 

 

 

(5,319)

 

(799)

Investment property revaluation gain

 

 

 

 

 

 

 

(157,374)

 

(55,226)

Depreciation

 

 

 

 

 

 

 

 

  23

 

  12

Performance fee charge

 

 

 

 

 

 

 

 

  26,339

 

  6,350

Operating cash flows before movements in working capital

 

 

 

  8,136

 

  5,968

 

 

 

 

 

 

 

 

 

 

 

 

Increase in receivables

 

 

 

 

 

 

 

 

(3,048)

 

(3,808)

Increase / (decrease) in payables

 

 

 

 

 

 

 

  788

 

(1,353)

Cash generated from operating activities

 

 

 

 

 

 

  5,876

 

  807

Income tax (paid)

 

 

 

 

 

 

 

 

(50)

 

  -

Net cash generated from operating activities

 

 

 

 

 

  5,826

 

  807

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

 

 

 

 

 

Proceeds on disposal of investment property

 

 

 

 

 

  60,436

 

  4,250

Interest received

 

 

 

 

 

 

 

 

  103

 

  168

Capital expenditure on investment property

 

 

 

 

 

(6,715)

 

(4,189)

Property additions

 

 

 

 

 

 

 

 

(76,486)

 

(72,808)

Additions to property, plant and equipment

 

 

 

 

 

 

(75)

 

(22)

Loans issued to minority shareholders

 

 

 

 

 

 

 

  -

 

(806)

Net cash used in investing activities

 

 

 

 

 

 

 

(22,737)

 

(73,407)

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

 

 

 

 

 

Interest paid on bank loans

 

 

 

 

 

 

 

 

(5,080)

 

(3,173)

Repayment of bank loans

 

 

 

 

 

 

 

 

(117,712)

 

(6,040)

Drawdown on bank loan facilities

 

 

 

 

 

 

 

  154,414

 

  45,394

Share issue

 

 

 

 

 

 

 

 

  -

 

  47,480

Dividends paid

 

 

 

 

 

 

 

 

(5,978)

 

(5,049)

Net cash generated from financing activities

 

 

 

 

 

  25,644

 

  78,612

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

 

 

 

  8,733

 

  6,012

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of year

 

 

 

 

 

  18,450

 

  12,757

Exchange gains / (losses) on cash and cash equivalents

 

 

 

(1)

 

(319)

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of year

 

 

 

 

 

27,182

 

18,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Cash Flow to Movement in Debt

 

 

 

 

 

 

For the year ended 31 December 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Year ended

 Year ended

 

 

 

 

 

 

 

 

 31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Cashflow from increase in debt financing

 

 

 

 

 

 

  36,702

 

  39,354

Change in net debt resulting from cash flows

 

 

 

 

 

  36,702

 

  39,354

Movement in debt in the year

 

 

 

 

 

 

 

  36,702

 

  39,354

Debt at the start of the year

 

 

 

 

 

 

 

 

  185,592

 

  146,238

Debt at the end of the year

 

 

 

 

 

 

 

 

  222,294

 

  185,592

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the Financial Statements

 

 

 

 

 

 

 

 

 

 

For the year ended 31 December 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 - General information

 

 

 

 

 

 

 

 

 

 

 

The Group consists of a Parent Company, Phoenix Spree Deutschland Limited ('the Company'), incorporated in Jersey, Channel Islands and all its subsidiaries ('the Group') which are incorporated and domiciled in and operate out of Jersey, Guernsey and Germany. Phoenix Spree Deutschland Limited is listed on the premium segment of the Main Market of the London Stock Exchange.

 

 

 

 

 

 

 

 

 

 

 

 

The Group invests in residential and commercial property in Germany.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The registered office is at 13-14 Esplanade, St Helier, Jersey, JE1 1EE, Channel Islands.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2 - Summary of significant accounting policies

 

 

 

 

 

 

 

 

The principal accounting policies adopted are set out below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.1 Basis of preparation

 

 

 

 

 

 

 

 

 

 

 

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and interpretations (collectively, 'IFRS'), International Financial Reporting Interpretation Committee ('IFRIC') interpretations, as adopted by the European Union ('IFRS as adopted by the EU').

 

 

 

 

 

 

 

 

 

 

 

 

In accordance with Section 105 of The Companies (Jersey) Law 1991, the Group confirms that the financial information for the year ended 31 December 2017 are derived from the Group's audited financial statements and that these are not statutory accounts and, as such, do not contain all information required to be disclosed in the financial statements prepared in accordance with International Financial Reporting Standards ("IFRS").

 

 

 

 

 

 

 

 

 

 

 

 

The statutory accounts for the year ended 31 December 2017 have been audited and approved, but have not yet been filed.

 

 

 

 

 

 

 

 

 

 

 

 

The Group's audited financial statements for the period ended 31 December 2017 received an unqualified audit opinion and the auditor's report contained no statement under section 113B (3) and (6) of The Companies (Jersey) Law 1991.

 

 

 

 

 

 

 

 

 

 

 

 

The financial information contained within this preliminary statement was approved and authorised for issue by the Board on 26 April 2018.

 

 

 

 

 

 

 

 

 

 

 

 

2.2 Change of accounting policy

 

 

 

 

 

 

 

 

 

 

The performance fee payable to the property manager had previously been disclosed in property expenses. Due to this fee being linked to the fair value increase, it is now presented separately in the consolidated statement of comprehensive income with a restatement of the prior year figures. This has resulted in a reduction of Property Expenses in 2016 by €6.35 million. The change of policy has no effect on reported profit.

 

 

 

 

 

 

 

 

 

 

 

 

2.3 Going concern

 

 

 

 

 

 

 

 

 

 

 

The Directors have prepared projections for the period to 31 December 2020. These projections have been prepared using assumptions which the Directors consider to be appropriate to the current financial position of the Group as regards to current expected revenues and its cost base and the Group's investments, borrowing and debt repayment plans and show that the Group should be able to operate within the level of its current resources and expects to comply with all covenants for the foreseeable future. The Group's business activities together with the factors likely to affect its future development and the Group's objectives, policies and processes from managing its capital and its risks are set out in the Annual Accounts.. After making enquiries the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

2.4 Basis of consolidation

 

 

 

 

 

 

 

 

 

 

 

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). The Company controls an entity when the Group is exposed to, or has rights to, variable returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

 

 

 

 

 

 

 

 

 

 

 

 

Profit or loss and each component of other comprehensive income are attributable to the owners of the Company and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributable to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

 

 

 

 

 

 

 

 

 

 

 

 

Accounting policies of subsidiaries which differ from Group accounting policies are adjusted on consolidation. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.

 

 

 

 

 

 

 

 

 

 

 

 

2.5 Business combinations

 

 

 

 

 

 

 

 

 

 

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred to the Group, the liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

 

 

 

 

 

 

 

 

 

 

 

 

The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets.

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-related costs are expensed in the profit or loss as incurred.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date; any gains or losses arising from such remeasurement are recognised in profit or loss.

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill is measured as the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in profit or loss as a bargain purchase gain.

 

 

 

 

 

 

 

 

 

 

 

 

2.6 Asset acquisition

 

 

 

 

 

 

 

 

 

 

 

The Group applies the acquisition method to account for asset acquisitions. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred to the Group, the liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in an asset acquisition are measured initially at their fair values at the acquisition date.

 

 

 

 

 

 

 

 

 

 

 

 

The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets.

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-related costs are expensed in profit or loss as incurred.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No goodwill is recognised on asset acquisitions where the nature of the acquisition on the subsidiary is to acquire the property held in the entity. The consideration for the asset acquisition is attributed to the property as fair value at the acquisition date.

 

 

 

 

 

 

 

 

 

 

 

 

2.7 Revenue recognition

 

 

 

 

 

 

 

 

 

 

 

Revenue includes rental income and excludes service charges and other amounts directly recoverable from tenants. Rental income from operating leases is recognised in income on a straight-line basis over the lease term. When the Group provides incentives to its tenants, the cost of incentives are recognised over the lease term, on a straight-line basis, as a reduction of rental income.

 

 

 

 

 

 

 

 

 

 

 

 

2.8 Foreign currencies

 

 

 

 

 

 

 

 

 

 

 

(a) Functional and presentation currency

 

 

 

 

 

 

 

 

The currency of the primary economic environment in which the Company operates ('the functional currency') is the Euro (€). The presentational currency of the consolidated financial statements is also the Euro (€).

 

 

 

 

 

 

 

 

 

 

 

 

(b) Transactions and balances.

 

 

 

 

 

 

 

 

 

 

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Foreign exchange gains and losses resulting from such transactions are recognised in the consolidated statement of comprehensive income.

 

 

 

 

 

 

 

 

 

 

 

 

Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

 

 

 

 

 

 

 

 

 

 

 

 

2.9 Segment reporting

 

 

 

 

 

 

 

 

 

 

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors.

 

 

 

 

 

 

 

 

 

 

 

 

2.10 Operating profit

 

 

 

 

 

 

 

 

 

 

 

Operating profit is stated before the Group's gain or loss on its financial assets and after the revaluation gains or losses for the year in respect of investment properties and after gains or losses on the disposal of investment properties.

 

 

 

 

 

 

 

 

 

 

 

 

2.11 Administrative and property expenses

 

 

 

 

 

 

 

 

All expenses are accounted for on an accruals basis and are charged to the consolidated statement of comprehensive income in the period in which they are incurred. Service charge costs, to the extent that they are not recoverable from tenants, are accounted for on an accruals basis and included in property expenses.

 

 

 

 

 

 

 

 

 

 

 

 

2.12 Exceptional items

 

 

 

 

 

 

 

 

 

 

 

Exceptional items are disclosed separately in the consolidated financial statements where this provides further understanding of the financial performance of the Group, due to their significance in terms of nature or amount.

 

 

 

 

 

 

 

 

 

 

 

 

2.13 Property Advisor fees

 

 

 

 

 

 

 

 

 

 

The element of Property Advisor fees for management services provided are accounted for on an accruals basis and are charged to the consolidated statement of comprehensive income within property expenses in the period in which they are incurred. These fees are detailed in note 7 and classified under 'Property advisors' fees and expenses'. The settlement of the Property Advisor performance fees is detailed in note 26. The performance fee is presented on the face of the consolidated statement of comprehensive income as a separate line item following restatement from 2016 as detailed in note 2.2. Due to the nature of the settlement of the performance fee, any movement in the amount payable at the year end is reflected within the share based payment reserve on the consolidated statement of financial position.

 

 

 

 

 

 

 

 

 

 

 

 

2.14 Investment property

 

 

 

 

 

 

 

 

 

 

 

Property that is held for long-term rental yields or for capital appreciation, or both, and that is not occupied by the Group, is classified as investment property.

 

 

 

 

 

 

 

 

 

 

 

 

Investment property is measured initially at cost, including related transaction costs. After initial recognition, investment property is carried at fair value, based on market value.

 

 

 

 

 

 

 

 

 

 

 

 

The change in fair values is recognised in profit or loss for the year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A valuation exercise is undertaken by the Group's independent valuer, Jones Lang LaSalle GmbH ('JLL'), at each reporting date in accordance with the methodology described in note 16 on a building-by-building basis. Such estimates are inherently subjective and actual values can only be determined in a sales transaction. The valuations have been prepared by JLL on a consistent basis at each reporting date.

 

 

 

 

 

 

 

 

 

 

 

 

Subsequent expenditure is added to the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance costs are charged to the consolidated statement of comprehensive income during the financial period in which they are incurred. Changes in fair values are recorded in profit or loss for the year.

 

 

 

 

 

 

 

 

 

 

 

 

Purchases and sales of investment properties are recognised on legal completion.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset, where the carrying amount is the higher of cost or fair value) is included in profit or loss in the period in which the property is derecognised.

 

 

 

 

 

 

 

 

 

 

 

 

2.15 Current assets held for sale - investment property

 

 

 

 

 

 

 

Non-current assets (and disposal groups) classified as held for sale are measured at the most recent valuation.

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

 

 

 

 

 

 

 

 

 

 

 

 

The Group will recognise an asset in this category once the Board has committed the sale of an asset and marketing has commenced.

 

 

 

 

 

 

 

 

 

 

 

 

When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.

 

 

 

 

 

 

 

 

 

 

 

 

2.16 Property, plant and equipment

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment is stated at cost less accumulated depreciation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is charged so as to write off the costs of assets to their residual values over their estimated useful lives, on the following basis:

 

 

 

 

 

 

 

 

 

 

 

 

Equipment, fixtures and vehicles - 4.50% - 25% per annum, straight line.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

 

 

 

 

 

 

 

 

 

 

 

 

2.17 Borrowing costs

 

 

 

 

 

 

 

 

 

 

 

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

 

 

 

 

 

 

 

 

 

 

 

 

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

 

 

 

 

 

 

 

 

 

 

 

 

 

2.18 Tenants deposits

 

 

 

 

 

 

 

 

 

 

 

Tenants deposits are held off balance sheet in a separate bank account in accordance with German legal requirements, and the funds are not accessible to the Group. Accordingly, neither an asset nor a liability is recognised.

 

 

 

 

 

 

 

 

 

 

 

 

2.19 Financial instruments

 

 

 

 

 

 

 

 

 

 

Financial assets and financial liabilities are recognised in the Group's consolidated statement of financial position when the Group becomes party to the contractual provisions of the instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire or when the contractual rights to those assets are transferred. Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expired.

 

 

 

 

 

 

 

 

 

 

 

 

The Group classifies its financial assets as held at fair value through profit or loss, or loans and receivables. The classification depends on the purpose for which the financial assets were acquired, and is determined at initial recognition.

 

 

 

 

 

 

 

 

 

 

 

 

(a) Financial assets at fair value through profit or loss ('FVTPL')

 

 

 

 

 

 

Financial assets are classified as FVTPL when the financial asset is designated as FVTPL. A financial asset may be designated as FVTPL upon initial recognition if:

•   such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

•   the financial asset forms part of a group of financial assets or financial liabilities, or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management strategy, and information about the grouping is provided internally on that basis.

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. Fair value is determined in the manner described in note 31.

 

 

 

 

 

 

 

 

 

 

 

 

(b) Loans and receivables

 

 

 

 

 

 

 

 

 

 

 

The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents. Loans and receivables are recognised initially at fair value and subsequently at amortised cost using the effective interest method.

 

 

 

 

 

 

 

 

 

 

 

 

(i) Trade and other receivables

 

 

 

 

 

 

 

 

 

 

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less provision for impairment. Appropriate provisions for estimated irrecoverable amounts are recognised in the consolidated statement of comprehensive income when there is objective evidence that the assets are impaired. Interest income is recognised by applying the effective interest rate, except for short-term trade and other receivables when the recognition of interest would be immaterial.

 

 

 

 

 

 

 

 

 

 

 

 

Service charges receivable from tenants are presented net of amounts paid on account by tenants.

 

 

 

 

 

 

 

 

 

 

 

 

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due. For trade and other receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within property expenses in the consolidated statement of comprehensive income. On confirmation that the trade and other receivables will not be collectable, the gross carrying value of the asset is written off against the associated provision.

 

 

 

 

 

 

 

 

 

 

 

 

(ii) Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents comprise cash in hand, cash at agents, demand deposits, and other short-term highly liquid investments that have maturities of three months or less from inception, are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

 

 

 

 

 

 

 

 

 

 

 

 

(c) Equity instruments

 

 

 

 

 

 

 

 

 

 

 

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

 

 

 

 

 

 

 

 

 

 

 

 

(d) Trade and other payables

 

 

 

 

 

 

 

 

 

 

Trade payables are initially measured at their fair value and are subsequently measured at their amortised cost using the effective interest method; this method allocates interest expense over the relevant period by applying the 'effective interest rate' to the carrying amount of the liability.

 

 

 

 

 

 

 

 

 

 

 

 

(e) Borrowings

 

 

 

 

 

 

 

 

 

 

 

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of comprehensive income over the period of the borrowings using the effective interest method.

 

 

 

 

 

 

 

 

 

 

 

 

(f) Leases

 

 

 

 

 

 

 

 

 

 

 

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.

 

 

 

 

 

 

 

 

 

 

 

 

2.20 Current and deferred income tax

 

 

 

 

 

 

 

 

 

 

The tax expense for the period comprises current and deferred tax. Tax is recognised in the consolidated statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In that case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

(a) Current tax

 

 

 

 

 

 

 

 

 

 

 

The current tax charge is based on taxable profit for the year. Taxable profit differs from net profit reported in the consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the accounting date.

 

 

 

 

 

 

 

 

 

 

 

 

(b) Deferred tax

 

 

 

 

 

 

 

 

 

 

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax is charged or credited in the consolidated statement of comprehensive income except when it relates to items credited or charged directly in equity, in which case the deferred tax is also dealt with in equity.

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax is calculated at the tax rates and laws that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the accounting date.

 

 

 

 

 

 

 

 

 

 

 

 

The carrying amount of deferred tax assets is reviewed at each accounting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

 

 

 

 

 

 

 

 

 

 

 

 

2.21 New standards and interpretations

 

 

 

 

 

 

 

 

No new standards, amendments or interpretations effective for annual periods beginning on or after 1 January 2017 had an impact on the Group.

 

 

 

 

 

 

 

 

 

 

 

 

The following relevant new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning on 1 January 2017, as adopted by the European Union, and have not been early adopted:

 

 

 

 

 

 

 

 

 

 

 

 

Title

 

 

 

As issued by the IASB, mandatory for accounting periods starting on or after

 

 

 

 

 

 

 

 

 

 

 

 

IFRS 9 - Financial Instruments

 

 

Accounting periods beginning on or after 1 January 2018

IFRS 15 Revenue from Contracts with Customers

Accounting periods beginning on or after 1 January 2018

IFRS 16 Leases

 

 

 

Accounting periods beginning on or after 1 January 2019

IFRIC 22 - Foreign currency transactions and advance consideration

Accounting periods beginning on or after 1 January 2018

 

 

 

 

 

 

 

 

 

 

 

 

The Directors have considered that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group.  The Group has no income that is covered under IFRS 15 because its income deriving from rentals is covered under IAS 17. Furthermore, the impact of IFRS 16 removes the differentiation between financial and operational leases with regard to the Lessee party. As the Group is the lessor in their contractual arrangements IFRS 16's approach is substantially unchanged from its predecessor, IAS 17.

 

 

 

 

 

 

 

 

 

 

 

 

The following standards have been issued by the IASB but have not yet been adopted by the EU:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Title

 

 

 

As issued by the IASB, mandatory for accounting periods starting on or after

 

 

 

 

 

 

 

 

 

 

 

 

Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2)

Accounting periods beginning on or after 1 January 2018

Transfer of Investment Property (Amendments to IAS 40)

Accounting periods beginning on or after 1 January 2018

IFRIC 23 - Uncertainty over Income Tax Treatments

Accounting periods beginning on or after 1 January 2019 

 

 

 

 

 

 

 

 

 

 

 

 

 

While the above standards have not yet been adopted by the EU, the Group is currently assessing their impact.

 

 

 

 

 

 

 

 

 

 

 

 

3. Financial risk management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.1 Financial risk factors

 

 

 

 

 

 

 

 

 

 

 

The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

 

 

 

 

 

 

 

 

 

 

 

 

Risk management is carried out by the Risk Committee (previously the Audit and Risk Committee up to 17 April 2018) under policies approved by the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific areas, such as interest rate risk, credit risk and investment of excess liquidity.

 

 

 

 

 

 

 

 

 

 

 

 

3.2 Market risk

 

 

 

 

 

 

 

 

 

 

 

Market risk is the risk of loss that may arise from changes in market factors such as foreign exchange rates, interest rates and general property market risk.

 

 

 

 

 

 

 

 

 

 

 

 

(a) Foreign exchange risk

 

 

 

 

 

 

 

 

 

 

 

The Group operates in Germany and is exposed to foreign exchange risk arising from currency exposures, primarily with respect to Sterling against the Euro arising from the costs which are incurred in Sterling. Foreign exchange risk arises from future commercial transactions, and recognised monetary assets and liabilities denominated in currencies other than the Euro.

 

 

 

 

 

 

 

 

 

 

 

 

The Group's policy is not to enter into any currency hedging transactions.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) Interest rate risk

 

 

 

 

 

 

 

 

 

 

 

The Group has exposure to interest rate risk. It has external borrowings at a number of different variable interest rates. The Group is also exposed to interest rate risk on some of its financial assets, being its cash at bank balances. Details of actual interest rates paid or accrued during each period can be found in note 24 to the consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

The Group's policy is to manage its interest rate risk by entering into interest rate swaps in order to limit exposure to borrowings at variable rates.

 

 

 

 

 

 

 

 

 

 

 

 

(c) General property market risk

 

 

 

 

 

 

 

 

 

 

Through its investment in property, the Group is subject to other risks which can affect the value of property. The Group seeks to minimise the impact of these risks by review of economic trends and property markets in order to anticipate major changes affecting property values.

 

 

 

 

 

 

 

 

 

 

 

 

3.3 Credit risk

 

 

 

 

 

 

 

 

 

 

 

The risk of financial loss due to counterparty's failure to honour their obligations arises principally in connection with property leases and the investment of surplus cash.

 

 

 

 

 

 

 

 

 

 

 

 

The Group has policies in place to ensure that rental contracts are made with customers with an appropriate credit history. Tenant rent payments are monitored regularly and appropriate action taken to recover monies owed, or if necessary, to terminate the lease.

 

 

 

 

 

 

 

 

 

 

 

 

Cash transactions are limited to financial institutions with a high credit rating.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.4 Liquidity risk

 

 

 

 

 

 

 

 

 

 

 

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans secured on the Group's properties. The terms of the borrowings entitle the lender to require early repayment should the Group be in default with significant payments for more than one month.

 

 

 

 

 

 

 

 

 

 

 

 

3.5 Capital management

 

 

 

 

 

 

 

 

 

 

 

The prime objective of the Group's capital management is to ensure that it maintains the financial flexibility needed to allow for value-creating investments as well as healthy balance sheet ratios.

 

 

 

 

 

 

 

 

 

 

 

 

The capital structure of the Group consists of net debt (borrowings disclosed in note 22 after deducting cash and cash equivalents) and equity of the Group (comprising stated capital, reserves and retained earnings).

 

 

 

 

 

 

 

 

 

 

 

 

When reviewing the capital structure the Group considers the cost of capital and the risks associated with each class of capital. The Group reviews the gearing ratio which is determined as the proportion of net debt to equity. In comparison with comparable companies operating within the property sector the Board considers the gearing ratios to be reasonable.

 

 

 

 

 

 

 

 

 

 

 

 

The gearing ratios for the reporting periods are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at

 

As at

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings

 

 

 

 

 

 

 

 

(222,294)

 

(185,592)

Cash and cash equivalents

 

 

 

 

 

 

 

 

  27,182

 

  18,450

Net debt

 

 

 

 

 

 

 

 

(195,112)

 

(167,142)

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

  367,942

 

  235,259

Net debt to equity ratio

 

 

 

 

 

 

 

 

53%

 

71%

 

 

 

 

 

 

 

 

 

 

 

 

4. Critical accounting estimates and judgements

 

 

 

 

 

 

 

 

The preparation of consolidated financial statements in conformity with IFRS requires the Group to make certain critical accounting estimates and judgements. In the process of applying the Group's accounting policies, management has decided the following estimates and assumptions have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the financial year;

 

 

 

 

 

 

 

 

 

 

 

 

i) Estimate of fair value of investment properties

 

 

 

 

 

 

 

 

The best evidence of fair value is current prices in an active market of investment properties with similar leases and other contracts. In the absence of such information, the Group determines the amount within a range of reasonable fair value estimates. In making its judgement, the Group considers information from a variety of sources, including:

 

 

 

 

 

 

 

 

 

 

 

 

a) Current prices in an active market, and its third party independent experts, for properties of different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect those differences.

 

 

 

 

 

 

 

 

 

 

 

 

b) Recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices.

 

 

 

 

 

 

 

 

 

 

 

 

c) Discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of any existing lease and other contracts, and (where possible) from external evidence such as current market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.

 

 

 

 

 

 

 

 

 

 

 

 

The Directors remain ultimately responsible for ensuring that the valuers are adequately qualified, competent and base their results on reasonable and realistic assumptions. The Directors have appointed JLL as the real estate valuation experts who determine the fair value of investment properties using recognised valuation techniques and the principles of IFRS 13. Further information on the valuation process can be found in note 16.

 

 

 

 

 

 

 

 

 

 

 

 

ii) Judgment in relation to the recognition of assets held for sale

 

 

 

 

 

 

Management has assumed the likelihood of investment properties - held for sale, being sold within 12 months, in accordance with the requirement of IFRS 5. Management considers that based on historical and current experience that the properties can be reasonably expected to sell within 12 months.

 

 

 

 

 

 

 

 

 

 

 

 

5.   Segmental information

 

 

 

 

 

 

 

 

 

Information reported to the Board of Directors, which is the chief operating decision maker, for the purposes of resource allocation and assessment of segment performance is focussed on the different revenue streams that exist within the Group. The Group's principal reportable segments under IFRS 8 are therefore as follows:

 

 

 

 

 

 

 

 

 

 

 

 

- Residential

 

 

 

 

 

 

 

 

 

 

 

- Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All revenues are earned in Germany with property and administrative expenses incurred in Jersey and Germany.    

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2016

 

 

 

 

 

 

 

 

 

 

 

 

Residential

Commercial

Unallocated

 

Total

 

 

 

 

 

€'000

 

€'000

 

€'000

 

€'000

Investment property

 

 

 

 

  332,496

 

  63,333

 

  -

 

  395,829

Loans and receivables

 

 

 

 

  -

 

  -

 

  2,253

 

  2,253

Investment properties - held for sale

 

 

 

  23,495

 

  4,475

 

  -

 

  27,970

Other assets

 

 

 

 

  22,447

 

  4,276

 

  40

 

  26,763

Liabilities

 

 

 

 

(179,711)

 

(34,231)

 

(3,614)

 

(217,556)

Net assets

 

 

 

 

  198,727

 

  37,853

 

(1,321)

 

  235,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

Commercial

Unallocated

 

Total

 

 

 

 

 

€'000

 

€'000

 

€'000

 

€'000

Revenue

 

 

 

 

  13,385

 

  2,549

 

  -

 

  15,934

Property expenses (restated - see note 2.2)

 

(11,215)

 

(2,136)

 

  -

 

(7,001)

Administrative expenses

 

 

 

 

  -

 

  -

 

(2,977)

 

(2,977)

Gain on disposal of investment property

 

 

  799

 

  -

 

  -

 

  799

Investment property fair value gain

 

 

 

  46,390

 

  8,836

 

  -

 

  55,226

Performance fee

 

 

 

 

  -

 

  -

 

(6,350)

 

(6,350)

Operating profit

 

 

 

 

  49,359

 

  9,249

 

(9,327)

 

  55,631

Net finance charge

 

 

 

 

 

 

 

 

 

 

(6,756)

Income tax expense

 

 

 

 

 

 

 

 

 

 

(10,913)

Profit for the year

 

 

 

 

 

 

 

 

 

 

  37,962

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

Commercial

Unallocated

 

Total

 

 

 

 

 

€'000

 

€'000

 

€'000

 

€'000

Investment properties

 

 

 

 

  444,488

 

  57,872

 

  -

 

  502,360

Loans and receivables

 

 

 

 

  -

 

  -

 

  2,323

 

  2,323

Investment properties - held for sale

 

 

 

  94,582

 

  12,315

 

  -

 

  106,897

Other assets

 

 

 

 

  33,366

 

  4,344

 

  92

 

  37,802

Liabilities

 

 

 

 

(265,020)

 

(7,843)

 

(8,577)

 

(281,440)

Net assets

 

 

 

 

  307,416

 

  66,688

 

(6,162)

 

  367,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

Commercial

Unallocated

 

Total

 

 

 

 

 

€'000

 

€'000

 

€'000

 

€'000

Revenue

 

 

 

 

  15,997

 

  2,083

 

  -

 

  18,080

Property expenses

 

 

 

 

(6,194)

 

(806)

 

  -

 

(7,000)

Administrative expenses

 

 

 

 

  -

 

  -

 

(2,967)

 

(2,967)

Gain on disposal of investment property

 

 

  5,319

 

  -

 

  -

 

  5,319

Investment property fair value gain

 

 

 

  139,245

 

  18,129

 

  -

 

  157,374

Performance fee

 

 

 

 

  -

 

  -

 

(26,339)

 

(26,339)

Operating profit

 

 

 

 

  154,367

 

  19,406

 

(29,306)

 

  144,467

Net finance charge

 

 

 

 

 

 

 

 

 

 

(5,995)

Income tax expense

 

 

 

 

 

 

 

 

 

 

(26,150)

Profit for the year

 

 

 

 

 

 

 

 

 

 

  112,322

 

 

 

 

 

 

 

 

 

 

 

 

6.   Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

 

 

 

 

 

 

 

  18,080

 

  15,934

 

 

 

 

 

 

 

 

 

 

 

 

The total future aggregated minimum rentals receivable under non-cancellable operating leases are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Not later than one year

 

 

 

 

 

 

 

 

  904

 

  309

Later than one year but not later than five years

 

 

 

 

 

  3,364

 

  3,171

Later than five years

 

 

 

 

 

 

 

 

  1,398

 

  2,605

 

 

 

 

 

 

 

 

 

  5,666

 

  6,085

 

 

 

 

 

 

 

 

 

 

 

 

Revenue comprises rental income earned from residential and commercial property in Germany. There are no individual tenants that account for greater than 10% of revenue during any of the reporting periods.

 

 

 

 

 

 

 

 

 

 

 

 

The leasing arrangements for residential property are with individual tenants, with one month notice for cancellation of the lease in most cases.

 

 

 

 

 

 

 

 

 

 

 

 

The commercial leases are non-cancellable, with an average lease period of 3 years.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.   Property expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Property management expenses

 

 

 

 

 

 

 

  1,079

 

  1,100

Repairs and maintenance

 

 

 

 

 

 

 

 

  1,433

 

  1,102

Impairment charge - trade receivables

 

 

 

 

 

 

 

  41

 

  88

Other property expenses

 

 

 

 

 

 

 

 

  238

 

  1,324

Property advisors' fees and expenses

 

 

 

 

 

 

 

  4,209

 

  3,387

 

 

 

 

 

 

 

 

 

  7,000

 

  7,001

 

 

 

 

 

 

 

 

 

 

 

 

8.   Administrative expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Secretarial & administration fees

 

 

 

 

 

 

 

  901

 

  658

Legal & professional fees

 

 

 

 

 

 

 

 

  1,045

 

  1,494

Directors' fees

 

 

 

 

 

 

 

 

  148

 

  150

Audit and accountancy fees

 

 

 

 

 

 

 

 

  894

 

  586

Bank charges

 

 

 

 

 

 

 

 

  56

 

  32

Loss on foreign exchange

 

 

 

 

 

 

 

 

  20

 

  319

Depreciation

 

 

 

 

 

 

 

 

  23

 

  12

Other income

 

 

 

 

 

 

 

 

(120)

 

(274)

 

 

 

 

 

 

 

 

 

  2,967

 

  2,977

 

 

 

 

 

 

 

 

 

 

 

 

Key management compensation - the functions of management are undertaken by external providers of professional services, as set out in note 32.

 

 

 

 

 

 

 

 

 

 

 

 

Further details of the Directors' fees are set out in the Directors' Remuneration Report on page 38.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9.  Auditor's remuneration

 

 

 

 

 

 

 

 

 

An analysis of the fees charged by the auditor and its associates is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Fees payable to the Group's auditor and its associates for the audit of the consolidated financial statements:

  176

 

  141

 

 

 

 

 

 

 

 

 

 

 

 

Fees payable to the Group's auditor and its associates for other services:

 

 

 

 

- Corporate finance

 

 

 

 

 

 

 

 

  26

 

  150

- Audit-related assurance services

 

 

 

 

 

 

 

  24

 

  25

 

 

 

 

 

 

 

 

 

  226

 

  316

 

 

 

 

 

 

 

 

 

 

 

 

10.  Gains on disposal of investment property (including investment property held for sale)

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Net proceeds

 

 

 

 

 

 

 

 

  61,652

 

  4,250

Book value of disposals

 

 

 

 

 

 

 

 

(55,117)

 

(3,405)

Disposal costs

 

 

 

 

 

 

 

 

(1,216)

 

(46)

 

 

 

 

 

 

 

 

 

  5,319

 

  799

 

 

 

 

 

 

 

 

 

 

 

 

Where there has been a partial disposal of a property, the net book value of the asset sold is calculated on a per square metre rate, based on the prior period or interim valuation.

 

 

 

 

 

 

 

 

 

 

 

 

11.  Investment property fair value gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Investment property fair value gain

 

 

 

 

 

 

 

  157,374

 

  55,226

 

 

 

 

 

 

 

 

 

 

 

 

Further information on investment properties is shown in note 16.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12.  Net finance charge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

 

 

(116)

 

(113)

Interest from partners' loans

 

 

 

 

 

 

 

 

(57)

 

(55)

(Gain) / loss on interest rate swap

 

 

 

 

 

 

 

(1,535)

 

  3,000

Interest payable on bank borrowings

 

 

 

 

 

 

 

  5,080

 

  2,753

Finance arrangement fee amortisation

 

 

 

 

 

 

 

  550

 

  217

Finance charge on redemption liability

 

 

 

 

 

 

 

  2,073

 

  954

 

 

 

 

 

 

 

 

 

  5,995

 

  6,756

 

 

 

 

 

 

 

 

 

 

 

 

13.  Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

The tax charge for the period is as follows:

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Current tax charge

 

 

 

 

 

 

 

 

  2,940

 

  24

Adjustment in respect of prior year

 

 

 

 

 

 

 

  -

 

(1)

Deferred tax charge - origination and reversal of temporary differences

 

  23,210

 

  10,890

 

 

 

 

 

 

 

 

 

  26,150

 

  10,913

 

 

 

 

 

 

 

 

 

 

 

 

The tax charge for the year can be reconciled to the theoretical tax charge on the profit in the income statement as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Profit before tax on continuing operations

 

 

 

 

 

  138,472

 

  48,875

 

 

 

 

 

 

 

 

 

 

 

 

Tax at German income tax rate of 15.8% (2016: 15.8%)

 

 

 

 

  21,879

 

  7,722

Income not taxable

 

 

 

 

 

 

 

 

(840)

 

(126)

Recognition of timing differences on acquisition

 

 

 

 

 

  -

 

  1,686

Tax effect of expenses that are not deductible in determining taxable profit

 

  5,111

 

  1,631

Total tax charge for the year

 

 

 

 

 

 

  26,150

 

  10,913

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of current tax liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of year

 

 

 

 

 

 

 

 

  24

 

  -

Tax paid during the year

 

 

 

 

 

 

 

 

(50)

 

  -

Current tax charge

 

 

 

 

 

 

 

 

  2,940

 

  24

Balance at end of year

 

 

 

 

 

 

 

 

  2,914

 

  24

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of deferred tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital gains on properties

 

Interest rate swaps

 

Total

 

 

 

 

 

 

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

(Liabilities)

 

Asset

(Net liabilities)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2016

 

 

 

 

 

 

(10,786)

 

  296

 

(10,490)

 

 

 

 

 

 

 

 

 

 

 

 

Charged to the statement of comprehensive income

 

 

 

(11,364)

 

  474

 

(10,890)

Deferred tax (liability) / asset at 31 December 2016

 

 

 

(22,150)

 

  770

 

(21,380)

 

 

 

 

 

 

 

 

 

 

 

 

Charged to the statement of comprehensive income

 

 

 

(22,967)

 

(243)

 

(23,210)

Deferred tax (liability) / asset at 31 December 2017

 

 

 

(45,117)

 

  527

 

(44,590)

 

 

 

 

 

 

 

 

 

 

 

 

Jersey income tax

 

 

 

 

 

 

 

 

 

 

 

The Group is liable to Jersey income tax at 0%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guernsey income tax

 

 

 

 

 

 

 

 

 

 

 

The Group is liable to Guernsey income tax at 0%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

German tax

 

 

 

 

 

 

 

 

 

 

 

As a result of the Group's operations in Germany, the Group is subject to German Corporate Income Tax ('CIT') - the effective rate for Phoenix Spree Deutschland Limited for 2017 was 15.8% (2016: 15.8%).

 

 

 

 

 

 

 

 

 

 

 

 

Factors affecting future tax charges

 

 

 

 

 

 

 

 

 

 

The Group has accumulated tax losses of approximately €18.1 million (2016: €23.6 million) in Germany, which will be available to set against suitable future profits should they arise, subject to the criteria for relief. No deferred tax asset is recognised in respect of losses of €0.3 million (2016: €2.2 million) as there is insufficient certainty the losses can be utilised by Group entities.

 

 

 

 

 

 

 

 

 

 

 

 

14.  Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Amounts recognised as distributions to equity holders in the period:

 

 

 

 

 

Interim dividend for the year ended 31 December 2017 of €1.9 cents (1.6p) (2016: €1.9 cents (1.6p)) per share

  2,079

 

  1,635

Proposed final dividend for the year ended 31 December 2017 of €5.0 cents (4.4p) (2016: €4.3 cents (3.7p)) per share

  5,038

 

  3,977

 

 

 

 

 

 

 

 

 

 

 

 

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these consolidated financial statements. The proposed dividend is payable to all shareholders on the Register of Members on 8 June 2018. The total estimated dividend to be paid is 4.4p per share. The payment of this dividend will not have any tax consequences for the Group.

 

 

 

 

 

 

 

 

 

 

 

 

15.  Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group consists of a Parent Company, Phoenix Spree Deutschland Limited, incorporated in Jersey, Channel Islands and a number of subsidiaries held directly by Phoenix Spree Deutschland Limited, which are incorporated in and operated out of Jersey, Guernsey and Germany.

 

 

 

 

 

 

 

 

 

 

 

 

Further details are given below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Country of incorporation

% holding

 

Nature of business

Phoenix Spree Deutschland I Limited

 

 

 

Jersey

 

100

 

Investment property

Phoenix Spree Deutschland II Limited

 

 

 

Jersey

 

100

 

Investment property

Phoenix Spree Deutschland III Limited

 

 

 

Jersey

 

100

 

Investment property

Phoenix Spree Deutschland IV Limited

 

 

 

Jersey

 

100

 

Investment property

Phoenix Spree Deutschland V Limited

 

 

 

Jersey

 

100

 

Investment property

Phoenix Spree Deutschland VII Limited

 

 

 

Jersey

 

100

 

Investment property

Phoenix Spree Deutschland IX Limited

 

 

 

Jersey

 

100

 

Investment property

Phoenix Spree Deutschland X Limited

 

 

 

Jersey

 

100

 

Finance vehicle

Phoenix Spree Deutschland XI Limited

 

 

 

Jersey

 

100

 

Investment property

Phoenix Spree Deutschland XII Limited

 

 

 

Jersey

 

100

 

Investment property

Phoenix Property Holding GmbH & Co.KG

 

 

Germany

 

100

 

Holding Company

Laxpan Mueller GmbH

 

 

 

 

Germany

 

94.9

 

Investment property

Invador Grundbesitz GmbH

 

 

 

 

Germany

 

94.9

 

Investment property

PSPF Holdings GmbH

 

 

 

 

Germany

 

100

 

Holding Company

PSPF General Manager GmbH (in liquidation)

 

Germany

 

100

 

Management of PSPF

PSPF Acquisition Vehicle GmbH (in liquidation)

 

Germany

 

99.64

 

Acquisition vehicle

PSPF Property GmbH & Co. KG (in liquidation)

 

Germany

 

94

 

Investment property

Phoenix Spree Property Fund Ltd & Co. KG

 

Germany

 

94.8

 

Investment property

PSPF General Partner (Guernsey) Limited

 

 

Guernsey

 

100

 

Management of PSPF

 

 

 

 

 

 

 

 

 

 

 

 

The investments in PSPF General Manager GmbH and PSPF Acquisition Vehicle GmbH & Co. KG are all held via the investment is PSPF Holdings GmbH, which was acquired on 7 September 2007. The other subsidiaries are held directly.

 

 

 

 

 

 

 

 

 

 

 

 

16.  Investment properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

2016

Fair Value

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January

 

 

 

 

 

 

 

 

  423,799

 

  283,554

Capital expenditure

 

 

 

 

 

 

 

 

  6,715

 

  4,189

Property additions

 

 

 

 

 

 

 

 

  76,486

 

  84,235

Disposals

 

 

 

 

 

 

 

 

(55,117)

 

(3,405)

Fair value gain

 

 

 

 

 

 

 

 

  157,374

 

  55,226

Investment properties at fair value - as set out in the report by JLL

 

  609,257

 

  423,799

Assets considered as "Held for Sale" (Note 17)

 

 

 

 

 

(106,897)

 

(27,970)

At 31 December

 

 

 

 

 

 

 

 

  502,360

 

  395,829

 

 

 

 

 

 

 

 

 

 

 

 

The property portfolio was valued at 31 December 2017 by the Group's independent valuers, Jones Lang LaSalle GmbH ('JLL'), in accordance with the methodology described below. The valuations were performed in accordance with the current Appraisal and Valuation Standards, 8th edition (the 'Red Book') published by the Royal Institution of Chartered Surveyors (RICS).

 

 

 

 

 

 

 

 

 

 

 

 

The valuation is performed on a building-by-building basis and the source information on the properties including current rent levels, void rates and non-recoverable costs was provided to JLL by the Property Advisors PMM Partners (UK) Limited. Assumptions with respect to rental growth, adjustments to non-recoverable costs and the future valuation of these are those of JLL. Such estimates are inherently subjective and actual values can only be determined in a sales transaction.

 

 

 

 

 

 

 

 

 

 

 

 

Having reviewed the JLL report, the Directors are of the opinion that this represents a fair and reasonable valuation of the properties and have consequently adopted this valuation in the preparation of the consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

The valuations have been prepared by JLL on a consistent basis at each reporting date and the methodology is consistent and in accordance with IFRS which requires that the 'highest and best use' value is taken into account where that use is physically possible, legally permissible and financially feasible for the property concerned, and irrespective of the current or intended use.

 

 

 

 

 

 

 

 

 

 

 

 

All properties are valued as Level 3 measurements under the fair value hierarchy (see note 31) as the inputs to the discounted cash flow methodology which have a significant effect on the recorded fair value are not observable.

 

 

 

 

 

 

 

 

 

 

 

 

The unrealised fair value gain in respect of investment property is disclosed in the Consolidated Statement of Comprehensive Income as 'Investment property fair value gain'.

 

 

 

 

 

 

 

 

 

 

 

 

Valuations are undertaken using the discounted cash flow valuation technique as described below and with the inputs set out below.

 

 

 

 

 

 

 

 

 

 

 

 

Discounted cash flow methodology (DCF)

 

 

 

 

 

 

 

The fair value of investment properties is determined using discounted cash flows.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Under the DCF method, a property's fair value is estimated using explicit assumptions regarding the benefits and liabilities of ownership over the asset's life including an exit or terminal value. As an accepted method within the income approach to valuation the DCF method involves the projection of a series of cash flows on a real property interest. To this projected cash flow series, an appropriate, market-derived discount rate is applied to establish the present value of the income stream associated with the real property.

 

 

 

 

 

 

 

 

 

 

 

 

The duration of the cash flow and the specific timing of inflows and outflows are determined by events such as rent reviews, lease renewal and related lease up periods, re-letting, redevelopment, or refurbishment. The appropriate duration is typically driven by market behaviour that is a characteristic of the class of real property.

 

 

 

 

 

 

 

 

 

 

 

 

Periodic cash flow is typically estimated as gross income less vacancy, non-recoverable expenses, collection losses, lease incentives, maintenance cost, agent and commission costs and other operating and management expenses. The series of periodic net operating incomes, along with an estimate of the terminal value anticipated at the end of the projection period, is then discounted.

 

 

 

 

 

 

 

 

 

 

 

 

The principal inputs to the valuation are as follows:

 

 

 

 

 

Year ended

 

Year ended

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

Range

 

Range

 

 

 

 

 

 

 

 

 

 

 

 

Residential Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Rent

 

 

 

 

 

 

 

 

 

 

 

Rental Value (€ per sq. p.m.)

 

 

 

 

 

 

 

 

5 - 13

 

5- 13

Stabilised residency vacancy (% per year)

 

 

 

 

 

2

 

2

Tenancy vacancy fluctuation (% per year)

 

 

 

 

 

8 - 10

 

10

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Rent

 

 

 

 

 

 

 

 

 

 

 

Rental Value (€ per sq. p.m.)

 

 

 

 

 

2 - 28

 

1 - 29

Stabilised commercial vacancy (% per year)

 

 

 

 

 

0 - 26

 

0 - 4

Tenancy vacancy fluctuation (% per year)

 

 

 

 

 

10

 

10

 

 

 

 

 

 

 

 

 

 

 

 

Estimated Rental Value (ERV)

 

 

 

 

 

 

 

 

 

 

ERV per year (€'000)

 

 

 

 

 

 

 

 

48 - 1,200

 

25 - 1,014

ERV (€ per sq.)

 

 

 

 

 

 

 

 

5 - 14

 

5 - 13

 

 

 

 

 

 

 

 

 

 

 

 

Financial Rates

 

 

 

 

 

 

 

 

 

 

 

Discount rate (%)

 

 

 

 

 

 

 

 

3 - 9

 

4 - 8

Portfolio yield (%)

 

 

 

 

 

 

 

 

2 - 8

 

3 - 8

 

 

 

 

 

 

 

 

 

 

 

 

Sensitivity

 

 

 

 

 

 

 

 

 

 

 

Changes in the key assumptions and inputs to the valuation models used would impact the valuations as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Vacancy: A change in vacancy by 1% would not materially affect the investment property fair value assessment.

 

 

 

 

 

 

 

 

 

 

 

 

Rental value: All other factors remaining equal an increase in rental income would increase valuations. Correspondingly, a decrease in rental values would decrease valuations.

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate: An increase of 0.5% in the discount rate would reduce the investment property fair value by €85.9m, and a decrease in the discount rate would increase the investment property fair value by €129.9m.

 

 

 

 

 

 

 

 

 

 

 

 

There are, however, inter-relationships between unobservable inputs as they are determined by market conditions. The existence of an increase of more than one unobservable input could amplify the impact on the valuation. Conversely, changes on unobservable inputs moving in opposite directions could cancel each other out, or lessen the overall effect.

 

 

 

 

 

 

 

 

 

 

 

 

The Group categorises all investment properties in the following three ways;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Scenario

 

 

 

 

 

 

 

 

 

 

 

Where properties have been valued under the "Discounted Cashflow Methodology" and are intended to be held by the Group for the foreseeable future, they are considered valued under the "Rental Scenario" This will equal the "Investment Properties" line in the Non-Current Assets section of the Consolidated Statement of Financial Position.

 

 

 

 

 

 

 

 

 

 

 

 

Condominium scenario

 

 

 

 

 

 

 

 

 

 

 

Where properties have the potential or the benefit of all relevant permissions required to sell apartments individually (condominiums) then we refer to this as a 'condominium scenario'. These assets are considered held for sale under IFRS 5 and can be seen in note 17. The additional value is reflected by using a lower discount rate under the DCF Methodology. Properties which do not have the benefit of all relevant permissions are described as valued using a standard 'rental scenario'.

 

 

 

 

 

 

 

 

 

 

 

 

Disposal Scenario

 

 

 

 

 

 

 

 

 

 

 

Where properties have been notarised for sale prior to the balance sheet date, but have not completed; they are held at their notarised disposals value. These assets are considered held for sale under IFRS 5 and can be seen in note 17.

 

 

 

 

 

 

 

 

 

 

 

 

The table below sets out the assets valued using these 3 scenarios:

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

Rental scenario

 

 

 

 

 

 

 

 

  502,360

 

388,509

Condominium scenario

 

 

 

 

 

 

 

 

  29,847

 

35,290

Disposal scenario

 

 

 

 

 

 

 

 

  77,050

 

  -

Total

 

 

 

 

 

 

 

 

  609,257

 

423,799

 

 

 

 

 

 

 

 

 

 

 

 

The 2016 condominium scenario does not equal the 2016 assets held for sale due to an asset being valued under a condominium scenario methodology but did not meet the requirement of IFRS 5 to be treated as an asset held for sale.

 

 

 

 

 

 

 

 

 

 

 

 

The movement in the fair value of investment properties is included in the Consolidated Statement of Comprehensive Income as 'gain on disposal of investment property' and comprises:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

Investment properties

 

 

 

 

 

 

 

 

  155,787

 

55,226

Properties held for sale (see note 17)

 

 

 

 

 

 

 

  1,587

 

  -

 

 

 

 

 

 

 

 

 

157,374

 

55,226

 

 

 

 

 

 

 

 

 

 

 

 

17.  Investment properties - held for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

Fair value - held for sale investment properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January

 

 

 

 

 

 

 

 

27,970

 

-

Transferred from investment properties

 

 

 

 

 

 

 

88,990

 

 27,970

Apartments sold

 

 

 

 

 

 

 

 

(11,650)

 

               -

Valuation gain on apartments held for sale

 

 

 

 

 

1,587

 

                -

At 31 December

 

 

 

 

 

 

 

 

106,897

 

27,970

 

 

 

 

 

 

 

 

 

 

 

 

Investment properties are re-classified as current assets and described as 'held for sale' in three different situations: Properties notarised for sale at the reporting date, Properties where at the reporting date the group has obtained and implemented all relevant permissions required to sell individual apartment units, and efforts are being made to dispose of the assets (condominium); and Properties which are being marketed for sale but have currently not been notarised.

 

 

 

 

 

 

 

 

 

 

 

 

Properties notarised for sale by the reporting date are valued at their disposal price (disposal scenario), and other properties are valued using the condominium or rental scenarios (see note 16) as appropriate. The table below sets out the respective categories:

 

 

 

 

 

 

 

 

2017

 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Condominium scenario

 

 

 

 

 

 

 

 

  29,847

 

  -

Disposal scenario

 

 

 

 

 

 

 

 

  77,050

 

  -

 

 

 

 

 

 

 

 

 

  106,897

 

  27,970

 

 

 

 

 

 

 

 

 

 

 

 

Investment properties held for sale are all expected to be sold within 12 months of the reporting date based on Management knowledge of current and historic market conditions.

 

 

 

 

 

 

 

 

 

 

 

 

There were liabilities secured on the investment properties held for sale of €56.9m (2016: €11.7m)

 

 

 

 

 

 

 

 

 

 

 

 

18.  Property, plant and equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment

 

 

 

 

 

 

 

 

 

 

 

€'000

Cost or valuation

 

 

 

 

 

 

 

 

 

 

 

As at 1 January 2016

 

 

 

 

 

 

 

 

 

 

36

Additions

 

 

 

 

 

 

 

 

 

 

22

As at 31 December 2016

 

 

 

 

 

 

 

 

 

 

58

Additions

 

 

 

 

 

 

 

 

 

 

75

As at 31 December 2017

 

 

 

 

 

 

 

 

 

 

133

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation and impairment

 

 

 

 

 

 

 

 

As at 1 January 2016

 

 

 

 

 

 

 

 

 

 

6

Charge for the year

 

 

 

 

 

 

 

 

 

 

12

As at 31 December 2016

 

 

 

 

 

 

 

 

 

 

18

Charge for the year

 

 

 

 

 

 

 

 

 

 

23

As at 31 December 2017

 

 

 

 

 

 

 

 

 

 

41

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amount

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2016

 

 

 

 

 

 

 

 

 

 

40

As at 31 December 2017

 

 

 

 

 

 

 

 

 

 

92

 

 

 

 

 

 

 

 

 

 

 

 

19.  Loans and receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January

 

 

 

 

 

 

 

 

2,253

 

1,382

Loans issued to minority interest - initial recognition at fair value

 

 

 

-

 

806

Accrued interest

 

 

 

 

 

 

 

 

70

 

65

At 31 December

 

 

 

 

 

 

 

 

2,323

 

2,253

 

 

 

 

 

 

 

 

 

 

 

 

The Group entered into loan agreements with Mike Hilton and Paul Ruddle in connection with the acquisition of PSPF. The loans bear interest at 4% per annum, and have a maturity of less than five years.

 

 

 

 

 

 

 

 

 

 

 

 

The Group also entered into a loan agreement with the minority interest of Accentero Real Estate AG (formerly Blitz B16 - 210 GmbH) in relation to the acquisition of the assets as share deals. This loan bears interest at 3% per annum.

 

 

 

 

 

 

 

 

 

 

 

 

20.  Trade and other receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

Current

 

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

 

 

 

 

 

 

 

691

 

1,344

Less: impairment provision

 

 

 

 

 

 

 

 

(342)

 

(383)

Net receivables

 

 

 

 

 

 

 

 

369

 

961

Prepayments and accrued income

 

 

 

 

 

 

 

6,521

 

6,050

Investment property disposal proceeds receivable

 

 

 

 

 

2,232

 

21

Sundry receivables

 

 

 

 

 

 

 

 

899

 

471

 

 

 

 

 

 

 

 

 

10,001

 

7,503

 

 

 

 

 

 

 

 

 

 

 

 

Aging analysis of trade receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Up to 12 months

 

 

 

 

 

 

 

 

2,576

 

902

Between 1 year and 2 years

 

 

 

 

 

 

 

 

5

 

40

Over 3 years

 

 

 

 

 

 

 

 

-

 

19

 

 

 

 

 

 

 

 

 

2,581

 

961

 

 

 

 

 

 

 

 

 

 

 

 

Movements in the impairment provision against trade receivables are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Balance at the beginning of the year

 

 

 

 

 

 

 

383

 

295

Impairment losses recognised

 

 

 

 

 

 

 

180

 

319

Amounts written off as uncollectable

 

 

 

 

 

 

 

(221)

 

(231)

Balance at the end of the year

 

 

 

 

 

 

 

342

 

383

 

 

 

 

 

 

 

 

 

 

 

 

21.  Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Cash at bank

 

 

 

 

 

 

 

 

25,518

 

17,107

Cash at agents

 

 

 

 

 

 

 

 

1,664

 

1,343

Cash and cash equivalents

 

 

 

 

 

 

 

 

27,182

 

18,450

 

 

 

 

 

 

 

 

 

 

 

 

22.  Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

Bank loans  -  Kreissparkasse Boblingen District Savings Bank

 

 

 

-

 

2,869

Bank loans  -  Deutsche Genossenschafts-Hypothekenbank AG

 

 

 

2,020

 

-

Bank loans  -  Berliner Sparkasse

 

 

 

 

 

 

 

626

 

-

Bank loans - Sparkasse Langenfeld

 

 

 

 

 

 

 

-

 

6,300

 

 

 

 

 

 

 

 

 

2,646

 

9,169

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

Bank loans  -  Deutsche Genossenschafts-Hypothekenbank AG

 

 

 

167,656

 

171,418

Bank loans  -  Berliner Sparkasse

 

 

 

 

 

 

 

51,992

 

-

Bank loans - HypoVereinsbank

 

 

 

 

 

 

 

-

 

5,005

 

 

 

 

 

 

 

 

 

219,648

 

176,423

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

222,294

 

185,592

 

 

 

 

 

 

 

 

 

 

 

 

All borrowings are secured against the investment properties of the Group. As at 31 December 2017, the Company had €0.6m of undrawn debt facilities (2016: €13.6 million was available to be drawn down, from three separate loan facilities. €2.0 million from a €81.5 million facility with interest rate 1.4%, €1 million from a €9.3 million facility with interest rate 1.34%, and €10.6 million undrawn, from a €10.6 million facility with interest rate 1.75%).

 

 

 

 

 

 

 

 

 

 

 

 

23.  Trade and other payables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Trade payables

 

 

 

 

 

 

 

 

1,489

 

791

Accrued liabilities

 

 

 

 

 

 

 

 

622

 

533

Deferred income

 

 

 

 

 

 

 

 

8

 

7

 

 

 

 

 

 

 

 

 

2,119

 

1,331

 

 

 

 

 

 

 

 

 

 

 

 

24.  Derivative financial instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

Interest rate swaps - carried at fair value through profit or loss

 

 

 

 

 

 

Balance at 1 January

 

 

 

 

 

 

 

 

4,869

 

1,869

Additions on acquisition

 

 

 

 

 

 

 

 

-

 

392

(Gain) / loss in movement in fair value through profit or loss.

 

 

 

(1,536)

 

2,608

Balance at 31 December

 

 

 

 

 

 

 

 

3,333

 

4,869

 

 

 

 

 

 

 

 

 

 

 

 

The notional principal amounts of the outstanding interest rate swap contracts at 31 December 2017 were €188,165,000 (2016: €175,932,000). At 31 December 2017 the fixed interest rates vary from 0.402% to 0.775% (2016: 0.040% to 0.705%) above the main factoring Euribor rate.

 

 

 

 

 

 

 

 

 

 

 

 

Maturity analysis of interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Less than 1 year

 

 

 

 

 

 

 

 

             -

 

392

Between 1 and 2 years

 

 

 

 

 

 

 

 

             -

 

                 -

Between 2 and 5 years

 

 

 

 

 

 

 

 

               -

 

                  -

More than 5 years

 

 

 

 

 

 

 

 

      3,333

 

4,477

 

 

 

 

 

 

 

 

 

3,333

 

4,869

 

 

 

 

 

 

 

 

 

 

 

 

25.  Other financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January

 

 

 

 

 

 

 

 

      3,590

 

                  -

Recognition of redemption liability

 

 

 

 

 

 

 

               -

 

         2,626

Profit share attributable to NCI in PSPF

 

 

 

 

 

 

 

      2,073

 

            964

Balance at 31 December

 

 

 

 

 

 

 

 

      5,663

 

         3,590

 

 

 

 

 

 

 

 

 

 

 

 

The redemption liability relates to the put option held by the minority shareholders of PSPF for the purchase of the minority interest in PSPF. The option period starts on 6 June 2020. The amount of the purchase price will be based on the EPRA NAV on the balance sheet date as well as the movement in the EPRA NAV during the year and the proportion of EPRA NAV attributable to the non-controlling interest in PSPF.

 

 

 

 

 

 

 

 

 

 

 

 

A portion of the liability (€795k, 2016: (€378k)) is recognised to cover the tax charge of the minority in PSPF on the proceeds received if they choose to exercise their put option.

 

 

 

 

 

 

 

 

 

 

 

 

The recognition of the redemption liability has been accounted for as a reduction in the Non-Controlling Interest with the remainder of the recognition against the Group's retained earnings. Also see the Consolidated Statement of Changes in Equity for the recognition accounting.

 

 

 

 

 

 

 

 

 

 

 

 

26.  Share based payment reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance fee

 

 

 

 

 

 

 

 

 

 

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2016

 

 

 

 

 

 

 

 

 

 

       1,264

 

 

 

 

 

 

 

 

 

 

 

 

Fee charge for the period

 

 

 

 

 

 

 

 

 

 

       6,350

Balance at 31 December 2016

 

 

 

 

 

 

 

 

 

       7,614

 

 

 

 

 

 

 

 

 

 

 

 

Fee charge for the period

 

 

 

 

 

 

 

 

 

 

    26,339

Balance at 31 December 2017

 

 

 

 

 

 

 

 

 

    33,953

 

 

 

 

 

 

 

 

 

 

 

 

Property Advisor Fees

 

 

 

 

 

 

 

 

 

 

 

The Property Advisor is entitled to an asset and estate management performance fee, measured over consecutive three year periods, equal to 20% of the excess by which the annual EPRA NAV total return of the Group exceeds 8% per annum, compounding (the 'Performance Fee'). The Performance Fee is subject to a high watermark, being the higher of:

 

 

 

 

 

 

 

 

 

 

 

 

(i) the most recently published EPRA NAV on 4 March 2015; and

 

 

 

 

 

 

(ii) the highest previously recorded EPRA NAV total return at the end of a performance period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company's EPRA NAV performance for the three year's ending 31 December 2017 has resulted in a performance fee liability under the Property Advisory Agreement to the Property Advisor of circa €34 million. The parties have agreed that this performance fee (but not any further performance fees that may become due) shall be settled through the issuance by the Company to the Property Advisor of 8,260,065 new shares in the Company at EPRA NAV per share. 50% of the shares issued in settlement of this fee are subject to a 12-month restriction on disposal. Application will be made for the new shares, once issued, to be admitted to trading on the premium segment of the Official List and to trading on the Main Market of the London Stock Exchange.

 

 

 

 

 

 

 

 

 

 

 

 

Under the Property Advisory Agreement for providing property advisory services, the Property Advisor is also entitled to a Portfolio and Asset Management Fee as follows:

 

 

 

 

 

 

 

 

 

 

 

 

(i) 1.50% of the EPRA NAV of the Group where the EPRA NAV of the Group is equal to or less than €250 million; and

(ii) 1.25% of the EPRA NAV of the Group between €250 million and €500 million; and

 

 

(iii) 1% of the EPRA NAV of the Group greater than €500 million.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Property Advisor is entitled to a capex monitoring fee equal to 7% of any capital expenditure incurred by any Subsidiary which the Property Advisor is responsible for managing (the 'Capex Monitoring Fee').

 

 

 

 

 

 

 

 

 

 

 

 

The Property Advisor is entitled to receive a finance fee equal to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(i) 0.1% of the value of any borrowing arrangement which the Property Advisor has negotiated and/or supervised; and

(ii) a fixed fee of £1,000 in respect of any borrowing arrangement which the Property Advisor has renegotiated or varied.

 

 

 

 

 

 

 

 

 

 

 

 

The Property Advisor is entitled to receive a transaction fee fixed at £1,000 in respect of any acquisition or disposal of property by any Subsidiary.

 

 

 

 

 

 

 

 

 

 

 

 

Details of the fees paid to the Property Advisor are set out in note 32.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27.  Stated capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

Issued and fully paid:

 

 

 

 

 

 

 

 

 

 

 

40,522,364 participating shares of no par value, issued at a consideration of GBP1 each

      60,027

 

        60,027

5,896,369 participating shares of no par value, issued at a consideration of GBP1.11 each

        7,681

 

          7,681

19,237,484 participating shares of no par value, issued at a consideration of GBP1.46 each

     39,052

 

       39,052

4,216,080 participating shares of no par value, issued at a consideration of GBP1.44 each

       8,390

 

          8,390

22,619,047 participating shares of no par value, issued at a consideration of GBP1.68 each on 4 March 2016, less costs of €1.6 million associated with placing.

     47,480

 

       47,480

 

 

 

 

 

 

 

 

 

   162,630

 

     162,630

 

 

 

 

 

 

 

 

 

 

 

 

The number of shares in issue at 31 December 2017 was 92,491,344 (31 December 2016: 92,491,344).

 

 

 

 

 

 

 

 

 

 

 

 

28.  Non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest %

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Invador Grundbesitz GmbH

 

 

 

 

 

 

5.1

 

           915

 

             467

Laxpan Mueller GmbH

 

 

 

 

 

 

5.1

 

           810

 

             474

 

 

 

 

 

 

 

 

 

       1,725

 

             941

 

 

 

 

 

 

 

 

 

 

 

 

The non-controlling interest relates to the subsidiaries Invador Grundbesitz GmbH and Laxpan Mueller GmbH.

 

 

 

 

 

 

 

 

 

 

 

 

29.  Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

 

 

 

Earnings for the purposes of basic earnings per share being net profit attributable to owners of the parent (€'000)

          111,538

 

              36,998

Weighted average number of ordinary shares for the purposes of basic earnings per share (Number)

    92,491,344

 

      88,587,235

Effect of dilutive potential ordinary shares (Number)

 

 

 

 

 

      7,677,250

 

         2,829,885

Weighted average number of ordinary shares for the purposes of diluted earnings per share (Number)

  100,168,594

 

      91,417,120

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (€)

 

 

 

 

 

 

 

 

          1.21

 

0.42

Diluted earnings per share (€)

 

 

 

 

 

 

 

          1.11

 

0.40

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

 

 

 

Net assets (€'000)

 

 

 

 

 

 

 

 

  366,217

 

  234,318

Number of participating ordinary shares

 

 

 

 

 

 

 

92,491,344

 

92,491,344

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value per share (€)

 

 

 

 

 

 

 

3.96

 

2.53

 

 

 

 

 

 

 

 

 

 

 

 

EPRA net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

 

 

 

Net assets (€'000)

 

 

 

 

 

 

 

 

  366,217

 

  234,318

Add back deferred tax assets and liabilities, derivative financial instruments, goodwill and share based payment reserves (€'000)

            13,970

 

              18,635

 

 

 

 

 

 

 

 

 

 

 

 

EPRA net asset value (€'000)

 

 

 

 

 

 

 

  380,187

 

  252,953

EPRA net asset value per share (€)

 

 

 

 

 

 

 

  4.11

 

  2.73

 

 

 

 

 

 

 

 

 

 

 

 

31.  Financial instruments

 

 

 

 

 

 

 

 

 

 

 

The Group is exposed to the risks that arise from its use of financial instruments. This note describes the objectives, policies and processes of the Group for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout the financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

Principal financial instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

• Financial assets

 

 

 

 

 

 

 

 

 

 

 

• Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

• Trade and other receivables

 

 

 

 

 

 

 

 

 

 

• Trade and other payables

 

 

 

 

 

 

 

 

 

 

 

• Borrowings

 

 

 

 

 

 

 

 

 

 

 

• Derivative financial instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group held the following financial assets at each reporting date:

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Loans and receivables

 

 

 

 

 

 

 

 

 

 

 

Trade and other receivables - current

 

 

 

 

 

 

 

  3,480

 

1,453

Cash and cash equivalents

 

 

 

 

 

 

 

 

  27,182

 

18,450

Loans and receivables

 

 

 

 

 

 

 

 

  2,323

 

2,253

 

 

 

 

 

 

 

 

 

32,985

 

22,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group held the following financial liabilities at each reporting date:

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

Held at amortised cost

 

 

 

 

 

 

 

 

 

 

 

Borrowings payable: current

 

 

 

 

 

 

 

  2,646

 

9,169

Borrowings payable: non-current

 

 

 

 

 

 

 

  219,648

 

176,423

Other financial liabilities

 

 

 

 

 

 

 

 

  5,663

 

3,590

Trade and other payables

 

 

 

 

 

 

 

 

  2,119

 

1,331

 

 

 

 

 

 

 

 

 

  230,076

 

190,513

 

 

 

 

 

 

 

 

 

 

 

 

Fair value through profit or loss

 

 

 

 

 

 

 

 

 

 

Derivative financial liability - interest rate swaps

 

 

 

 

 

  3,333

 

4,869

 

 

 

 

 

 

 

 

 

  3,333

 

4,869

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  233,409

 

195,382

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of financial instruments

 

 

 

 

 

 

 

 

 

 

With the exception of the variable rate borrowings, the fair values of the financial assets and liabilities are not materially different to their carrying values due to the short term nature of the current assets and liabilities or due to the commercial variable rates applied to the long term liabilities.

 

 

 

 

 

 

 

 

 

 

 

 

The interest rate swap was valued externally by the respective counterparty banks by comparison with the market price for the relevant date.

 

 

 

 

 

 

 

 

 

 

 

 

The interest rate swaps are expected to mature between January 2022 and February 2027.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

 

 

 

 

 

 

 

 

 

 

 

 

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

 

 

 

 

 

 

 

 

 

 

 

 

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

 

 

 

 

 

 

 

 

 

 

 

 

During each of the reporting periods, there were no transfers between valuation levels.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group Fair Values

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps - Level 2

 

 

 

 

 

 

 

(3,333)

 

(4,869)

 

 

 

 

 

 

 

 

 

 

 

 

The valuation basis for the investment properties is disclosed in note 16.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial risk management

 

 

 

 

 

 

 

 

 

 

The Group is exposed through its operations to the following financial risks:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

• Interest rate risk

 

 

 

 

 

 

 

 

 

 

 

• Foreign exchange risk

 

 

 

 

 

 

 

 

 

 

 

• Credit risk

 

 

 

 

 

 

 

 

 

 

 

• Liquidity risk

 

 

 

 

 

 

 

 

 

 

 

The Group's policies for financial risk management are outlined below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate risk

 

 

 

 

 

 

 

 

 

 

 

The Group's interest rate risk arises from certain of its borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group is also exposed to interest rate risk on cash and cash equivalents.

 

 

 

 

 

 

 

 

 

 

 

 

Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rates on the cash flow exposures on the issued variable rate debt held.

 

 

 

 

 

 

 

 

 

 

 

 

Sensitivity analysis has not been performed as all variable rate borrowings have been swapped to fixed interest rates, and potential movements on cash at bank balances are immaterial.

 

 

 

 

 

 

 

 

 

 

 

 

The Group gives careful consideration to interest rates when considering its borrowing requirements and where to hold its excess cash. The Directors believe that the interest rate risk is at an acceptable level.

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange risk

 

 

 

 

 

 

 

 

 

 

 

The Group is exposed to foreign exchange risk on sales, purchases, and translation of assets and liabilities that are in a currency other than the functional currency (Euros).

 

 

 

 

 

 

 

 

 

 

 

 

The Group does not enter into any currency hedging transactions and the Directors believe that the foreign exchange rate risk is at an acceptable level.

 

 

 

 

 

 

 

 

 

 

 

 

The carrying amount of the Group's foreign currency (non Euro) denominated monetary assets and liabilities are shown below, all the amounts are for Sterling balance only:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 31 December 2016

 

 

 

 

 

 

 

 

 

€'000

 

€'000

Financial assets

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

598

 

553

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

 

 

 

 

 

 

(216)

 

(204)

Net position

 

 

 

 

 

 

 

 

382

 

349

 

 

 

 

 

 

 

 

 

 

 

 

At each reporting date, if the Euro had strengthened or weakened by 10% against GBP with all other variables held constant, post-tax loss for the year would have increased/(decreased) by:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weakened by 10% Increase/(decrease) in post-tax loss and impact on equity

Strengthened by 10% Increase/(decrease) in post-tax loss and impact on equity

 

 

 

 

 

 

 

€'000

 

 

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2017

 

 

 

 

 

 

38

 

 

 

(38)

31 December 2016

 

 

 

 

 

 

35

 

 

 

(35)

 

 

 

 

 

 

 

 

 

 

 

 

Credit risk management

 

 

 

 

 

 

 

 

 

 

 

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit risk arises principally from the Group's trade and other receivables and its cash balances. The Group gives careful consideration to which organisations it uses for its banking services in order to minimise credit risk. The Group has an established credit policy under which each new tenant is analysed for creditworthiness and each tenant is required to pay a two month deposit.

 

 

 

 

 

 

 

 

 

 

 

 

At each reporting date the Group had no tenants with outstanding balances over 10% of the total trade receivables balance.

 

 

 

 

 

 

 

 

 

 

 

 

The Group uses the following banks: Barclays Private Clients International Jersey Ltd, Barclays Bank Plc Frankfurt and Deutsche Bank. The split of cash held at each of the banks respectively at 31 December 2017 was 61%/30%/9% (31 December 2016: 19%/63%/16%) Barclays and Deutsche Bank have credit ratings of A and A- respectively.

 

 

 

 

 

 

 

 

 

 

 

 

The Group holds no collateral as security against any financial asset. The carrying amount of financial assets recorded in the financial information, net of any allowances for losses, represents the Group's maximum exposure to credit risk.

 

 

 

 

 

 

 

 

 

 

 

 

Details of receivables from tenants in arrears at each reporting date can be found in note 20 as can details of the receivables that were impaired during each period.

 

 

 

 

 

 

 

 

 

 

 

 

An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. Management considers the above measures to be sufficient to control the credit risk exposure.

 

 

 

 

 

 

 

 

 

 

 

 

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

 

 

 

 

 

 

 

 

 

 

 

 

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group's maximum exposure to credit risk as no collateral or other credit enhancements are held.

 

 

 

 

 

 

 

 

 

 

 

 

Liquidity risk management

 

 

 

 

 

 

 

 

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity risk is to ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or damage to the Group's reputation.

 

 

 

 

 

 

 

 

 

 

 

 

The Directors manage liquidity risk by regularly reviewing cash requirements by reference to short term cash flow forecasts and medium term working capital projections prepared by management.

 

 

 

 

 

 

 

 

 

 

 

 

The Group maintains good relationships with its banks, which have high credit ratings.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table details the Group's remaining contractual maturity for its non-derivative financial liabilities with agreed maturity periods. The table has been drawn based on the undiscounted cash flows of the financial liabilities based on the earliest date on which the Group can be required to pay. The tables include both interest payable and principal cash flows.

 

 

 

 

 

 

 

 

 

 

 

 

Maturity analysis for financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than 1 year

Between 1 - 2 years

Between 2 - 5 years

 

More than 5 years

 

Total

 

 

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

At 31 December 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings payable: current

 

  2,646

 

  -

 

  -

 

  -

 

  2,646

Borrowings payable: non-current

 

  -

 

  -

 

  -

 

  219,648

 

  219,648

Other financial liabilities

 

 

  -

 

  -

 

  5,663

 

  -

 

  5,663

Trade and other payables

 

 

  2,119

 

  -

 

  -

 

  -

 

  2,119

 

 

 

  4,765

 

  -

 

  5,663

 

  219,648

 

  230,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than 1 year

Between 1 - 2 years

Between 2 - 5 years

 

More than 5 years

 

Total

 

 

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

At 31 December 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings payable: current

 

  9,169

 

  -

 

  -

 

  -

 

  9,169

Borrowings payable: non-current

 

  -

 

  -

 

  -

 

  176,423

 

  176,423

Other financial liabilities

 

 

  -

 

  -

 

  3,590

 

  -

 

  3,590

Trade and other payables

 

 

  1,331

 

  -

 

  -

 

  -

 

  1,331

 

 

 

  10,500

 

  -

 

  3,590

 

  176,423

 

  190,513

 

 

 

 

 

 

 

 

 

 

 

 

The analysis of the market risk review and sensitivity analysis is detailed in note 16.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32.  Related party transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Related party transactions not disclosed elsewhere are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R Prosser is a director of Estera Fund Administrators (Jersey) Limited and Estera Trust (Guernsey) Limited, both of which provide administration services to the Group.

 

 

 

 

 

 

 

 

 

 

 

 

A Weaver is a partner of the Jersey law firm, Appleby which provides legal services to the Group and a member of Appleby group.

 

 

 

 

 

 

 

 

 

 

 

 

During the year ended 31 December 2017, an amount of €690,165 (2016: €657,751) was payable to Estera Fund Administrators (Jersey) Limited and Estera Trust (Guernsey) Limited for accounting, administration and secretarial services. At 31 December 2017, €215,625 (2016: €187,515 Estera Fund Administrators (Jersey) Limited only) was outstanding.

 

 

 

 

 

 

 

 

 

 

 

 

During the year ended 31 December 2017, an amount of €40,044 (2016: €60,337) was payable to Appleby, law firm for legal and professional services. At 31 December 2017 €nil (2016: €9,495) was outstanding.

 

 

 

 

 

 

 

 

 

 

 

 

M Northover was a Director during 2017 and shareholder of PMM Partners (UK) Limited, the Group's appointed Property Advisor. During the year ended 31 December 2017, an amount of €4,209,000 (€4,110,000 Management Fees and €99,000 Other expenses and fees) (2016: €3,387,000 (€3,331,000 Management fees and €56,000 Other expenses and fees)) was payable to PMM Partners (UK) Limited. At 31 December 2017 €nil (2016: €Nil) was outstanding.

 

 

 

 

 

 

 

 

 

 

 

 

The Property Advisor is also entitled to an asset and estate management performance fee. The charge for the period in respect of the performance fee was €26,339,000 (2016: €6,350,000). Please refer to note 26 for more details.

 

 

 

 

 

 

 

 

 

 

 

 

The Property Advisor has a controlling stake in IWA Real Estate Gmbh & Co. KG who are contracted to dispose of condominuims in Berlin on behalf of the Company . IWA does not receive a fee from the Company in providing this service.