Sdic Power. Regulatory News (SDIC)

31 Mar 2008 07:01

Speymill Deutsche Immobilien Co PLC31 March 2008 31 March 2008 Speymill Deutsche Immobilien Company plc ("SDIC" or "the Company") Interim Results for the Six Months to 31 December 2007 Speymill Deutsche Immobilien Company plc (AIM: SDIC; SDCC), the pan-German residential investment company, is pleased to announce its interim results for the six months to 31 December 2007. Highlights - Ordinary Share Portfolio • Interim dividend to be paid on 18 June 2008 of 7.62 Euro cents (equivalent to six pence per share) to shareholders on the register on 11 April 2008. • Successful investment of original placing proceeds: the Ordinary Share Portfolio is now fully invested. • Increase on purchase value of portfolio (excluding acquisition costs) of 5.86% (purchase cost: €925.5 million; current market value: €979.8 million). • Net operating profit of €1.649 million (31 December 2007: loss €0.517 million). • Current annualised net contracted rents of €63 million equates to a yield of 6.8% on purchase value. • €32 million refurbishment programme due to finish in June 2008 is expected to have further positive effect on rental income and valuations. Approximately 6.7% of units are presently unavailable as they are in the refurbishment programme. • 6% vacancy rate in available apartments. Highlights - C Share Portfolio • €373 million of properties notarised as at 31 December 2007. • Economic yield of notarisation of 7.2% on purchase price (including rental guarantees). • Initial yield of 6.7% with an estimated stabilised yield of 7.1% on purchase value. • Approximately €508 million of properties notarised as at the end of March 2008, including those acquired, with an approximate initial yield of 6.7% (or 7.2% including rental guarantees). • Well-positioned to take advantage of opportunities created by current market conditions. Raymond Apsey, Chairman of SDIC, said,"The prices of both the Ordinary and Cshares have not been immune to the current market conditions. Unlike many of itspeers however, the Company has financial resources at its disposal that enableit not only to adopt a defensive strategy in the current economic climate, butalso to take advantage of any opportunity that it might bring. The Manager andInvestment Adviser are confident that despite the reactions of the markettowards property stocks, the fundamentals of the German residential propertymarket are sound and accordingly, so is our investment strategy." For more information, please visit www.sdic.co.im or contact: Speymill Property Group Smith & Williamson Corporate Finance Tavistock(Manager) Limited (Nomad) Communications Floris van Dijkum, Azhic Basirov Jeremy CareyGlobal Chief Investment Joanne du Plessis Simon HudsonOfficer +44 20 7131 4000 Gemma Bradley+44 20 7659 0763 +44 20 7920 3150Paul Smith, CFO Funds +44 1624 640864 Fairfax I.S. PLC (Brokers)James King+44 20 7598 5368 Chairman's Statement It is my pleasure to present the interim results of the Company for the sixmonths ended 31 December 2007, a period during which the Company madesignificant further progress in accomplishing its stated investment strategy.Speymill Deutsche Immobilien Company plc ("SDIC") is a pan-German residentialinvestment company created to provide shareholders with an attractive level ofincome together with the prospect for long-term capital growth. Our results must be viewed in the context of a company that is still reachingmaturity and where the good work of the Manager and the Investment Adviser isnow only starting to translate into positive financial performance. Results As at 31 December 2007, the value of the Ordinary Share Portfolio stood at 5.6%above the market value of the underlying investment properties at notarisation.This reflects well upon the quality of the assets acquired. The full cost of theportfolio as reflected in the books of the Company includes acquisition costs,including legal and notary costs as well as transfer taxes, in the region of 8%of the purchase cost. As a result of such costs we are obliged to reflect arevaluation loss in our accounts even though their market value has in factincreased. The net asset value attributable to the Ordinary Share Portfolio decreased by5.9% during the 6 months to €228.907 million (30 June 2007: €243.139 million),giving net assets per share of €1.35 (30 June 2007: €1.43). The net assetsattributable to the C Share Portfolio decreased by 3.5% to €232.158 million (30June 2007: €240.591 million), giving net assets per share of €0.94 (30 June2007: €0.96). The latter must be viewed in the context of the share buybackdescribed below. During the 6 months ended 31 December 2007, the Company made a loss aftertaxation of €36.182 million (6 months ended 31 December 2006: profit €1.086million). A large part of this negative performance is attributable to anunrealised loss caused by a reduction in the value on our interest hedginginstruments of €20.963 million (now valued at €40.022 million) and to theabsorption of the acquisition costs, described earlier, that have created a losson revaluation of investment property of €9.529 million. The Ordinary SharePortfolio has also incurred certain fixed costs for the entire period, buthaving only finally completed its acquisitions programme in November 2007,received just a proportion of the full annual rental income that it may expectto receive in the future. Ordinary Share Portfolio Property acquisitions were completed in November 2007. The Ordinary SharePortfolio consists of 597 properties and 17,098 units. Annualised net rents asat notarisation were €67.3 million representing an initial yield of 7.1%. Promptaction was taken to implement value-enhancing portfolio management policies assoon as the properties were acquired. A refurbishment programme is underway that it is expected will have asubstantial positive effect on both rental income and property values. Theprogramme, which will cost approximately €32 million, is due for completion byJune 2008. Such extensive work necessarily causes some pain in the short-term with aresultant increase in vacancies and decrease in rental income. Vacancies arecurrently in the region of 12.7%, made up of 6.7% that are unavailable becausethey are being refurbished and 6% that are available. As well as makingapartments unavailable to rent, refurbishments can also have the effect ofincreasing vacancy in available apartments as people may move out to avoid theworks. In this way, completion of the refurbishment programme will be very goodnews for the portfolio. Letting activity both now and after refurbishment is a key priority in meetingour strategic objectives. Considerable progress has been made in assimilatingthe properties acquired on behalf of the Ordinary Share Portfolio and theManager is confident that this will shortly become apparent in terms offinancial performance. C Share Portfolio During May 2007, the Company raised a further €250 million through the placingof C shares. At the time of writing the Company has notarised €508 million of properties withan initial yield of 6.8%, equal to an annualised net rent of €36 million,and a stabilised yield of 7.1% expected within 12 months of completion. Actualvacancy as at notarisation was 9.8% but the economic vacancy rate that takesinto account rental guarantees was approximately 4.4%. The global credit crunch has resulted in adverse consequences for leveragedproperty companies in terms of depressed share prices and a lack of availablefinance. Against this economic backdrop, we are adopting a prudent approach withregard to the overall size of the C Share Portfolio and therefore the amount ofleverage. The Company originally purchased interest rate hedging instruments to coverexpected borrowings of €800 million. As part of our defensive strategy, €150million of those instruments were disposed of and we will adjust our finalhedging position once we have completed acquisitions for this portfolio. We successfully negotiated a loan facility of up to €500 million with aconsortium of banks for drawdown before 30 April 2008. The effective interestrate on this facility, adjusted for hedging, is approximately 5%. Even on thebasis of a full draw down of the facility, the C Share Portfolio will still havesome cash resources at its disposal. Given current market conditions, and dependent upon the drawdown of the currentdebt facility, the Board will review the appropriate timing of the merger of theOrdinary and C Share classes. This is an attractive proposition in terms ofenhancing the Company's overall liquidity, reducing leverage and achievingbetter strategic positioning in order to take advantage of opportunities thatmay arise in the current market. A consequence of this reduced leverage howeverwill be a lower dividend yield from the combined entity. C Share Buy-Back On 9th October 2007 the Company received an Order from the High Court of Justiceof the Isle of Man to cancel its share premium account arising from the issue ofC shares and to credit the same amount to distributable reserves. Since thatdate the Company has bought back 7,701,000 C shares at an average price of €0.79per share. The average discount to NAV for the shares purchased wasapproximately 12%. Dividend The Board intends to pay an interim dividend of 7.62 Euro cents per share to existing holders of Ordinary Shares on 18 June 2008. The dividend per share is the equivalent of 6 pence, converted at the spot Euro-Sterling exchange ratepublished on Bloomberg at 5pm (GMT) on 27 March 2008 of £1=€1.2700. Market Outlook The prices of both the Ordinary and C shares have not been immune to the currentmarket conditions. Unlike many of its peers however, the Company has financialresources at its disposal that enable it not only to adopt a defensive strategyin the current economic climate, but also to take advantage of any opportunitythat it might bring. The Manager and Investment Adviser are confident thatdespite the reactions of the market towards property stocks, the fundamentals ofthe German residential property market are sound and accordingly, so is ourinvestment strategy. Raymond ApseyChairman28 March 2008 Report of the Manager and Investment Adviser Business Highlights Ordinary shares • Interim dividend to be paid on 18 June 2008 of 7.62 Euro cents per share (equivalent to 6 pence per share) • Successful investment of original placing proceeds: the Ordinary Share Portfolio is now fully invested. • Increase on purchase value of portfolio (excluding acquisition costs) of 5.86% (purchase cost: €925.5 million; current market value: €979.8 million). • Net operating profit of €1.649 million (31 December 2006: loss €0.517 million). • Current annualised net contracted rents of €63 million equates to a yield of 6.8% on purchase value. • €32 million refurbishment programme due to finish in June 2008 is expected to have further positive effect on rental income and valuations. Approximately 6.7% of units are presently unavailable as they are in the refurbishment programme. • 6% vacancy rate in available apartments. C shares • €373 million of properties notarised as at 31 December 2007. • Economic yield at notarisation of 7.2% on purchase price (including rental guarantees). • Initial yield of 6.7% with an estimated stabilised yield of 7.1% on purchase value. • Approximately €508 million of properties notarised as at the end of March 2008, including those acquired, with an approximate initial yield of 6.7% (or 7.2% including rental guarantees). • Well-positioned to take advantage of opportunities created by current market conditions. Financial Summary The key financial information for the Company is presented in the followingtables: Overall Financial position 31 December 2007 30 June 2007 •'000 •'000 Portfolio value 1,125,454 861,805Purchase value of completed acquisitions(excluding acquisition costs) 1,063,816 841,200Borrowings (843,380) (681,139)Net assets 461,065 483,731Adjusted net assets (NAV excluding provisionfor deferred taxation) 463,106 485,648Loan to value 74.9% 79% Financial performance 6 months ended 6 months ended Year ended 31 December 2007 31 December 2006 30 June 2007 •'000 •'000 •'000Gross rents received 51,573 6,179 35,613Valuation losses on (9,529) - (3,799)property portfolio Net operating profit 1,649 (517) 456(Loss)/ profit before tax (35,926) 1,293 28,765Funds from operations (1) (3,464) (972) (5,762)(Loss)/ profit after tax (36,182) 1,086 26,698 (1) Funds from operations ("FFO") is calculated on the basis of profit after tax, adjusted for unrealised movements on hedging instruments and investmentproperties, movements in the deferred tax provisions and any profits or losseson disposal, and is a measure of the Company's profitability from recurringincome streams. During the 6 months ended 31 December 2007, the net operating profit of theCompany was €1.649 million (31 December 2006: loss €0.517 million). It made aloss before taxation of €35.926 million (31 December 2006: profit €1.293million) and a loss after taxation of €36.182 million (31 December 2006: profit€1.086 million). A large part of the losses before and after taxation are attributable to a fallin the value of the interest hedging instruments used by the Company, that it isobliged to revalue under International Financial Reporting Standards ("IFRS"),as well as unrealised losses on property investments caused by the absorption ofacquisition costs. Based on a Funds from operations ("FFO") measure that isachieved by removing unrealised losses on hedging instruments and movements inthe valuation of the investment properties, any profits or losses on disposal ofassets and movements in the deferred tax provision from the loss after tax, theCompany returned a loss of €3.464 million from its rental activities (6 monthsended 31 December 2006: loss €0.972 million). The overall net assets of the Company decreased by 4.7% on the 6 month period to€461.065 million (30 June 07: €483.731 million). Ordinary share portfolio Financial position 31 December 2007 30 June 2007 •'000 •'000 Portfolio value 979,780 861,805Purchase value of completed acquisitions(excluding acquisition costs) 925,500 841,200Borrowings (811,689) (681,139)Loan to value 82.8% 79.0%Net assets 228,907 243,139Net assets per share (cents) 134.65 143.03Adjusted net assets per share (cents) 136.00 144.15 Financial performance 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2007 2007 2006 •'000 •'000 •'000Gross rents received 48,587 6,179 35,613Valuation losses onproperty portfolio (3,920) - (3,798)Net operating profit/(loss) 7,560 (517) 916(Loss)/ profit before tax (21,612) 1,293 19,233Funds from operations (6,638) (972) (6,339)(Loss)/ profit after tax (22,051) 1,086 17,167Basic (loss)/ earningsper share (cents) (12.97) 0.64 10.10 The net operating profit for the period ended 31 December 2007 was €7.560million (31 December 2006: loss €0.517 million). The loss before taxationattributable to the ordinary shareholders was €21.612 million (31 December 2006:profit €1.293 million) and the loss after taxation was €22.051 million (31December 2006: profit €1.086 million). On an FFO basis the portfolio returned a loss of €6.638 million (31 December2006: loss €0.972 million). The main reason for this is that the portfolio hashad to absorb certain fixed costs for the entire period but, having completedits acquisitions in November 2007, received only a proportion of its annualisedrental income. The net asset value attributable to the Ordinary Share Portfolio decreased by5.9% during the 6 months to €228.907 million (30 June 2007: €243.139 million),giving net assets per share of €1.35 (30 June 2007: €1.43). Compared to purchaseprice, the market value of the Ordinary Share Portfolio as at 31 December 2007has remained stable compared with the valuation carried out on the propertiesnotarised as at 30 June 2007. C share portfolio Financial position 31 December 2007 30 June 2007 •'000 •'000 Portfolio value 145,674 -Purchase value of completed acquisitions(excluding acquisition costs) 138,316 -Borrowings (31,693) -Loan to value 21.8% N/ANet assets 232,158 240,591Net assets per share (cents) 94.45 96.23Adjusted net assets per share (cents) 94.34 96.23 Financial performance 6 months ended For the period 31 December 2007 from 10 May 2007 (date of placing) to 30 June 2007 •'000 •'000Gross rents received 2,986 - Valuation losses on property (5,608) -portfolio Net operating (loss) (5,909) (460) (Loss)/profit before tax (14,312) 9,532 Funds from operations 3,174 577(Loss)/ profit after tax (14,129) 9,532Basic (loss)/ earnings per (5.66) 3.81share (cents) The net operating loss for the 6 months ended 31 December 2007 was €5.909million. The loss before taxation attributable to the C shareholders was €14.312million. The loss after taxation was €14.129 million. On an FFO basis theportfolio returned a positive €3.174 million. Overall the net assets attributable to the C shares decreased by 3.5% to€232.158 million (30 June 2007: €240.591 million) giving a net asset value pershare of €0.94 (30 June 2007: €0.96). Ordinary Share Portfolio Update With the acquisition of the final properties completed during November 2007, wehave lost no time in working to extract maximum value from the portfolio. We are currently engaged in a major refurbishment programme that it is expectedwill have a further positive impact on both rental income and property values.The refurbishment programme is due for completion during June 2008. It must be appreciated however that the programme has had a short-term adverseeffect on vacancies and therefore on rental income and valuations. Vacancies arecurrently running at approximately of 12.7% of total units, 6.7% of which are the subject of refurbishment and are therefore not available to let, with the other 6% being true vacancies. In addition to reducing the number of units available for letting, therefurbishment programme is also increasing vacancy in available apartments astenants may move out to avoid the nuisance created by the work. Consequently,completion of the refurbishment programme will be very good news for theportfolio. The adverse economic effect caused by un-let units has been mitigatedbecause of rental guarantees that have been negotiated for some properties. Following a valuation of the Ordinary Share Portfolio as at 31 December 2007,its market value was calculated as €979.780 million representing an uplift of5.86% on purchase cost. Valuations have therefore remained stable by comparisonwith those carried out at 30 June 2007. A major driver of the valuation methodology employed by our independent valuersis the net present value of future expected rental income. To some extent thecurrent stabilisation in value of the Ordinary Share Portfolio reflects the factthat we are engaged in a major refurbishment programme that has caused anincrease in vacancies in the near-term and has had a negative effect on rental income as a consequence. We continue to takeover full management of units and to work with oursub-contractors in order to reconcile and book funds with previous owners. Bythe end of March 2008, it is expected that substantially all 597 properties(17,098 units) will have been booked. Letting activity continues to be the keypriority for SDIC over the next months. We are confident that the effects of our active property management policies andthe refurbishment will soon start to become apparent in terms of financialperformance. C Share Acquisition Update As at 31 December 2007, residential properties located in various German citiesof an approximate value of €373 million had been notarised (i.e. committed to bepurchased). The purchase value of properties actually acquired by 31 December2007 was €138.3 million. The blended net yield at notarisation, includingestimated refurbishment costs, was 6.6% (or 7.2% including rental guarantees).The stabilised yield is expected to be 7.1%. Of the 7,248 units notarised as at the end of December 2007, 11.6% of units werevacant. However, taking into account rental guarantees, the economic effect isequivalent to a vacancy rate of approximately 4.7%. Refurbishment costs of approximately €17.3 million are to be borne by theselling entities for approximately €132.3 million of the current notarisedproperties. In addition, refurbishment costs of over €15.4 million are to beborne by the fund entities. This expenditure is expected to be both income andvalue enhancing to the Company. As at 28 March 2008, residential properties located in various German cities ofan approximate value of €508 million had been notarised. The blended yield atnotarisation, including estimated refurbishment costs, was 6.8% (or 7.2%including rental guarantees). The stabilised yield is expected to be 7.1%. Thestabilised (normalised) rent represents a target income level based on 95% ofthe rental value at the time of purchase. It is envisaged that, if not achievedalready, the stabilised level will be reached in the second year followingtakeover. Taxation The total charge to tax is €0.256 million made up of a current tax charge of€0.132 million and movement in the deferred tax provision of €0.124 million. Thedeferred tax provision as at the period end was €2.041 million. The deferred tax provision, that relates to property revaluation gains, isrequired under International Financial Reporting Standards as German capitalgains taxes would be payable in the event that the actual properties were sold.No capital gains tax liability should arise if the Company disposed of itsshareholdings in its SPVs. Financing As at 31 December 2007, €811.689 million of finance had been arranged and drawndown in respect of the Ordinary Share Portfolio. These borrowings have beenfully hedged against interest rate risk for the full terms of the loans (thatexpire in 2013 and 2014), giving a maximum overall fixed borrowing cost ofapproximately 4.6%. For the C Share Portfolio a financing facility of up to €500 million has beenput in place. This facility has also been fully hedged for its full term (until31 December 2014), giving an overall fixed borrowing cost of approximately 5%.€203.405 million has been drawn down to date on this facility with further drawdowns anticipated on properties notarised thus far. Resources The Manager and the Investment Adviser have significant resources at theirdisposal. The adviser employs over 200 staff in Berlin, working on acquisitions,finance, property management and operations, as well as a small office inMunich. The acquisitions team in Berlin is made up of 25 people who arededicated to sourcing, analysing and purchasing property as well as carrying outdue diligence and negotiations. All financing arrangements are undertaken by aspecialist team and all valuations for the purposes of arranging finance areconducted by independent specialists, DTZ Zadelhoff Tie Leung GmbH. Market Update and Outlook It is our firm view that the recent turmoil involving real estate stocks is notreflective of the stable nature of the underlying market. The fundamentals ofthe German residential property market are sound and it remains an attractiveinvestment proposition, underpinned by: • Relatively strong and stable German economic activity within Europe,benefitting from a period of improved productivity and wage growth • The possibility of buying below the cost of new construction • The potential for German residential prices to move towards theirreplacement cost over the next 5 to 7 years • The recent liberalisation of the German mortgage market. Following the successful acquisition programme for the Ordinary Share Portfolio,we are applying the same acquisition methodology to the C Share Portfolio. Wetake a local, research-based approach and aim to target smaller portfolios andindividual assets in off-market transactions. We aim to acquire assets wherethere is a gap between wholesale purchase prices and retail prices in order tomaximise the upside potential that exists in values compared to current purchaseprices. As a result of the resources available to it, the C share class iswell-positioned to take full advantage of the current market and continues tobuild an attractive and value-enhancing portfolio. SDIC has made good progress in assimilating the properties acquired on behalf ofthe Ordinary Share Portfolio. During the next 6 - 9 months we expect that theresults of our active portfolio management policies and refurbishment programmewill start to become apparent. Alistair Curry Florian LanzFor the Manager For the Investment AdvisorSpeymill Property Group Limited Goal Service GmbH 28 March 2008 Consolidated Income Statement (unaudited) For the period For the period 1 July 2007 to 1 July 2006 to 31 December 2007 31 December 2006 (Restated) •'000 •'000 Rent and related income 51,573 6,179Direct costs (33,508) (4,760) -------------- ---------------Gross profit 18,065 1,419 -------------- ---------------Change in fair value of investment (9,529) -property -------------- ---------------Manager's fees (5,087) (1,523)Professional fees (1,254) -Audit fees (120) (10)Other expenses (426) (403) -------------- ---------------Administrative expenses (6,887) (1,936) -------------- --------------- Net operating profit/(loss) before net 1,649 (517)financing (expenses)/income -------------- ---------------Financial income 6,543 3,538Financial expenses (44,118) (1,728) -------------- ---------------Net financing (expenses)/income (37,575) 1,810 -------------- --------------- (Loss)/profit before taxation (35,926) 1,293 Income tax expense:Current (132) (83)Deferred (124) (124) -------------- ---------------Retained (loss)/profit for the period (36,182) 1,086 -------------- --------------- Basic and diluted (loss)/earnings per (12.97) 0.64ordinary share (cents) Basic and diluted (loss) per C share (5.66) -(cents) The Directors consider that all results derive from continuing activities Consolidated Balance Sheet (Unaudited) (Audited) At 31 December 2007 At 30 June 2007 (Restated) •'000 •'000 Investment property 1,125,454 861,805 -------------- ---------------Total non-current assets 1,125,454 861,805 -------------- --------------- Derivative financial instruments 40,022 61,541Trade and other receivables 56,932 33,439Cash and cash equivalents 132,707 244,239 -------------- ---------------Total current assets 229,661 339,219 -------------- ---------------Total assets 1,355,115 1,201,024 -------------- --------------- Issued share capital 69,949 203,774Share premium 132,774 54,248Retained earnings 256,265 224,683Other reserves 2,077 1,026 -------------- ---------------Total equity 461,065 483,731 -------------- --------------- Trade and other payables 48,338 34,121Interest bearing loans - 2,524Income tax payable 291 115 -------------- ---------------Total current liabilities 48,629 36,760 -------------- ---------------Interest bearing loans 843,380 678,616Deferred tax liability 2,041 1,917 -------------- ---------------Total non-current liabilities 845,421 680,533 -------------- ---------------Total liabilities 894,050 717,293 -------------- ---------------Total equity & liabilities 1,355,115 1,201,024 -------------- --------------- Net asset value per ordinary share 134.65 143.03(cents) Net asset value per C share (cents) 94.45 96.23 Consolidated Statement of Changes in Equity (unaudited) Share Share Retained Other 31 December 31 December capital premium earnings reserves 2007 2006 (Restated) •'000 €000 €000 •'000 •'000 •'000 ------- ------- ------- ------- -------- --------Balance at 1 203,774 54,248 224,683 1,026 483,731 232,255July 2007 Shares issued 71,000 (71,000) - - - -in the year Shares (203,774) 203,774 - - - -cancelledin year Shares (1,051) - (3,429) 1,051 (3,429) -cancelledfollowingmarketpurchases/transfer tocapitalredemptionreserve Foreign exchange - - 18,135 - 18,135 (5,872)translationdifferences Cancellation - (54,248) 54,248 - - -of share premium Dividend paid - - (1,190) - (1,190) -Revaluation of - - - - - 1,409SWAPs Retained (loss)/ - - (36,182) - (36,182) 1,086profit for theyear ------- -------- --------- ------- -------- --------Balance at 31December 2007 69,949 132,774 256,265 2,077 461,065 228,878 ------- -------- --------- ------- -------- -------- Analysis by shareOrdinary shares 8,500 15,895 203,486 1,026 228,907 228,878C shares 61,449 116,879 52,779 1,051 232,158 - ------- -------- --------- ------- -------- --------Balance at 31 69,949 132,774 256,265 2,077 461,065 228,878December 2007 ------- -------- --------- ------- -------- -------- On 9 October 2007 the Company was granted an order from the High Court ofJustice of the Isle of Man giving approval to cancel its share premium accountarising on the issue of its C Shares and for such amount to be credited as adistributable reserve. The Company was granted a further order from the High Court of Justice of theIsle of Man on 9 October 2007 confirming that it may cancel its entire sharecapital by extinguishing and cancelling all of the issued and unissued ordinaryshares of 10 pence each and C shares of 50 pence each in the Company for thepurposes of redenominating the shares of the Company from Sterling into Euros.In the place of ordinary shares of 10 pence each the Company allotted and issuedpaid up new ordinary shares with a nominal value of 5 Euro cents and in place ofthe C shares of 50 pence each the Company allotted and issued new C Shares witha nominal value of 25 Euro cents each. During the period the Company purchased a total of 4,201,000 C Shares of 25 Eurocents each for a total consideration of €3,429,000 and cancelled these shares. Consolidated Cash Flow Statement (unaudited) For the period For the period 1 July 2007 to 1 July 2006 to 31 December 2007 31 December 2006 (Restated) •'000 •'000 --------------- ---------------Operating activitiesGroup (loss)/profit for the period (36,182) 1,293 Adjustments for:Financial income (6,543) (3,538)Financial expenses 44,118 1,728Change in fair value of 9,529 -investment property --------------- ---------------Operating profit/(loss) before changes 10,922 (517)in working capital and provisions Increase in trade and other receivables (16,572) (2,876) Increase in trade and other payables 12,435 12,508 --------------- ---------------Cash flow from operations 6,785 9,115 Interest paid (21,109) (1,728)Interest received 6,543 1,480Income tax received/(paid) 55 (4) --------------- ---------------Cash flow from operating activities (7,726) 8,863 --------------- ---------------Investing activitiesAcquisition of investment property (211,936) (420,486) Deposits relating to property acquisitions (24,403) (40,765) Disposals/ (acquisitions) of investments 1,589 (10,255) --------------- ---------------Cash flow from investing activities (234,750) (471,506) --------------- --------------- Financing activitiesPurchase of C Shares (3,429) -Dividend paid (1,190) -New interest bearing loans 126,684 317,173 --------------- ---------------Cash flow from financing activities 122,065 317,173 --------------- --------------- Net decrease in cash and cash equivalents (120,411) (145,470) Effect of exchange rate fluctuations 8,967 -to date of redenomination Effect of exchange rate fluctuations (88) (5,070)on cash held Cash and cash equivalents at beginning of 244,239 200,753period --------------- ---------------Cash and cash equivalents at 132,707 50,213end of period --------------- --------------- Notes 1 The Company Speymill Deutsche Immobilien Company plc (the "Company") was incorporated andregistered in the Isle of Man under the Isle of Man Companies Act 1931-2004 on 1March 2006 as a public company with registered number 115746C. Pursuant to an admission document dated 13 March 2006 there was a placing of 170million Ordinary Shares which were admitted to trading on AIM following theclose of the placing on 17 March 2006. Pursuant to an admission document dated 17 April 2007 there was a placing of 250million C Shares which were admitted to trading on AIM following the close of the placing on 10 May 2007. The Company was granted an Order from the High Court of Justice of the Isle ofMan on 9 October 2007 confirming that it may cancel its entire share capital byextinguishing and cancelling all of the issued and unissued Ordinary shares of10 pence each and C shares of 50 pence each in the Company for the purposes ofredenominating the shares of the Company from Sterling into Euro. Following thegranting of this Order, with effect from close of trading on Tuesday 16 October2007, the Company cancelled all of the Ordinary shares of 10 pence each and Cshares of 50 pence each and in the place of the Ordinary 10 pence shares socancelled, allotted and issued new paid up Euro ordinary shares with a nominalvalue of 5 Euro cents each and in the place of the 50 pence C shares socancelled, allotted and issued new paid up Euro C shares with a nominal value of25 Euro cents each; the effective date of redenomination of all shares intoEuros was 16 October 2007. 2 The Subsidiaries During the period the Company established 20 Isle of Man companies to holdGerman investment property. The percentage of shares held in all thesesubsidiaries is 100%. At the end of the period the Company owns 100% of theshares in 100 Isle of Man incorporated property owning companies and 1 Caymanincorporated intermediate holding company. 3 Segment reporting The Group has one segment focusing on achieving capital growth investing in theresidential property market in Germany. No additional disclosure is included inrelation to segment reporting, as the Group's activities are limited to onebusiness and geographic segment. 4 Net financing income Unaudited Unaudited For the period ended For the period ended 31 December 2007 31 December 2006 (Restated) •'000 •'000Interest income 6,543 1,480Unrealised gain on derivative - 2,058financial instruments --------------- ---------------Financial income 6,543 3,538 --------------- ---------------Interest charges (21,107) (1,728)Realised loss on derivative (2,046) -financial instruments Unrealised loss on derivative (20,963) -financial instruments Bank charges (2) - --------------- ---------------Financial expenses (44,118) (1,728) --------------- ---------------Net financing (costs)/income (37,575) 1,810 --------------- --------------- 5 Investment property Unaudited Audited 31 December 2007 30 June 2007 (Restated) •'000 •'000Brought forward 861,805 -Effect of exchange rate fluctuations to date 43,009 -of redenomination Additions 230,169 865,604Net revaluation deficit (9,529) (3,799) ---------------- ---------------Value of investment property at end of year 1,125,454 861,805 ---------------- --------------- The fair value of the Group's investment property at 31 December 2007 has beenarrived at on the basis of a valuation carried out at that date by DTZ ZadelhoffTie Leung GmbH ("DTZ"), independent valuers that are not related to the Group.DTZ have appropriate qualifications and recent experience in the valuation ofproperties in the relevant locations. The valuation, which conforms toInternational Valuation Standards, was arrived at by primarily assessing thecurrent rental income as well as an estimate of the future potential net incomegenerated by use of the properties supported by comparable recent portfoliotransactions on arm's length terms. Security At 31 December 2007, there was a first rank mortgage on the above propertiessecuring the bank loan of €843,380,468 (30 June 2007: €681,138,898). 6 Derivative financial instruments Group Unaudited Audited 31 December 2007 30 June 2007 (Restated) •'000 •'000 Fair value of interest rate swap contracts 40,022 61,541 --------------- --------------- 7 Interest-bearing loans Group Unaudited Audited 31 December 2007 30 June 2007 (Restated - note 13) •'000 •'000The interest bearing loans are repayable asfollows:On demand or within one year - 2,524In the second year 6,904 6,531In the third to fifth years inclusive 35,712 35,873After five years 800,764 636,212 ---------------- ---------------- 843,380 681,140 ---------------- ----------------Less: amount due for settlement within 12 - 2,524months (shown under current liabilities) ---------------- ----------------Amount due for settlement over the remaining 843,380 678,616period of the loans ---------------- ---------------- The Group has pledged properties and the rental income of the properties tosecure related interest bearing facilities granted to the Group for the purchaseof such properties. The average effective rate is 4.6%. 8 Net Asset Value per Share Ordinary shares Unaudited Audited 31 December 2007 30 June 2007 Net assets attributable to ordinary 228,907 243,140shareholders (•'000) (Restated - note 13) Ordinary shares in issue (thousands) 170,000 170,000 --------------- ---------------Net asset value per ordinary share (in 134.65 143.03cents) --------------- --------------- C SharesNet assets attributable to C shareholders 232,158 240,591(•'000) (Restated - note 13) C shares in issue (thousand) 245,799 250,000 --------------- ---------------Net asset value per ordinary share (in 94.45 96.23cents) --------------- --------------- The net proceeds received from the Company's Ordinary Share issue and C Shareissue are accounted for as two separate pools of funds. The C Shares willconvert into Ordinary Shares on such date as the Directors may decide on thebasis of the conversion ratio set out in the C Share admission document, whichwill reflect the proportion of the Group's net asset value attributable to eachC Share compared with the fully diluted net asset value attributable to eachOrdinary Share at the calculation date. 9 Basic and Diluted (Loss)/Earnings per Share Basic and diluted loss/earnings per Ordinary Share and C Share are calculated bydividing the loss/earnings attributable to the ordinary shareholders and theloss/earnings attributable to the C shareholders by the number of OrdinaryShares and the number of C Shares respectively in issue during the period. Basic and diluted (loss)/earnings per Share 31 December 2007 31 December 2006 (Restated)Ordinary shares(Loss)/earnings attributable to ordinary (22,051) 1,086shareholders (•'000) Weighted average ordinary shares in 170,000 170,000issue for the period to 31 December 2007(thousands) --------------- ---------------Basic (loss)/earnings per ordinary share (12.97) 0.64(cents per share) --------------- --------------- Basic and diluted loss per share 31 December 31 December 2007 2006C SharesLoss attributable to C shareholders (•'000) (14,129) - Weighted average C shares in issue for 249,756 -the period to 31 December 2007 (thousands) --------------- ---------------Basic and fully diluted loss per C share (5.66) -(cents per share) --------------- --------------- The average share price of the Ordinary Shares during the period 1 July 2007 to31 December 2007 was €1.0749 which is below the option price (€1.4350) and hencethe share options are not dilutive at 31 December 2007. The conversion of Cshares in to Ordinary shares is not considered to be dilutive. 10 Dividends A dividend in respect of the year ended 30 June 2007 of 0.47 pence (0.70 Eurocents) per share to the holders of the Ordinary Shares, amounting to a totaldividend of £800,161 (€1,190,000), was approved at the Annual General Meeting on30 November 2007 and paid on 11 December 2007. 11 Currency redenomination On 15 October 2007, the Company cancelled all the existing Ordinary Shares and existing C Shares and issued new Euro Ordinary and C Shares for the purposes of redenominating the shares of the Company from Sterling to Euro. The new Ordinary Shares have a nominal value of 5 Euro cents each and the new C Shares have a nominal value of 25 Euro cents each. As at that date the presentational currency of the Company was converted into Euro from Sterling using the Sterling/Euro exchange rate of €1 = £0.69685. The comparative figures within these consolidated financial statements have been converted into Euro at the rate stated at the date of the conversion. 12 Commitments As at 31 December 2007, property purchases of €373.5 million were notarised(committed to be purchased). 13 Post balance sheet events In the period between 9 January 2008 and 28 January 2008 the Company purchased atotal of 3 million C Shares for cancellation at a total cost of €2,280,000. On 28 March 2008 the Board resolved to pay an interim dividend of 7.62 Euro cents per share to existing holders of Ordinary Shares on 18 June 2008. The dividend per share is the equivalent of 6 pence, converted at the spotEuro-Sterling conversion rate published on Bloomberg at 5pm (GMT) on 27 March2008 of £1=€1.2700. 14 Related party transactions Parties are considered to be related if one party has the ability to control theother party or to exercise significant influence over the other party in makingfinancial or operational decisions. The Manager is considered a related party. Management fees paid to the Managerduring the period amounted to €4,381,642. GOAL Service GmbH (the Investment Advisor) is related to the Manager andperforms property management services. Management Fees payable to GOAL ServiceGmbH for the period amounted to €705,354 in addition property management feespayable to Goal Services GmbH for the period amounted to €2,741,304. 15 Pro-forma data for the Ordinary Shares and the C Shares Consolidated Income Statement for the Ordinary Shares (unaudited) For the period For the period For the year 1 July 2007 to 1 July 2006 to ended 30 June 31 December 2007 31 December 2006 2007 (Restated - note 13) •'000 •'000 •'000 -------------- ------------- -------------Rent and related income 48,587 6,179 35,613Direct costs (31,515) (4,760) (21,110) -------------- ------------- -------------Gross profit 17,072 1,419 14,503 -------------- ------------- ------------- Change in fair value of (3,920) - (3,798)investment property -------------- ------------- ------------- Manager's fees (4,188) (1,523) (5,467)Professional fees (1,221) - (3,279)Audit fees (70) (10) (179)Other expenses (113) (403) (864) -------------- ------------- -------------Administrative expenses (5,592) (1,936) (9,789) -------------- ------------- ------------- Net operating profit/(loss) 7,560 (517) 916before net financing(expenses)/profit -------------- ------------- ------------- Financial income 2,985 3,538 31,398Financial expenses (32,157) (1,728) (13,081) -------------- ------------- -------------Net financing(expenses)/income (29,172) 1,810 18,317 -------------- ------------- ------------- (Loss)/Profit before (21,612) 1,293 19,233taxation Income tax expense:Current (49) (83) (123)Deferred (390) (124) (1,943) -------------- ------------- -------------Retained (loss)/profit (22,051) 1,086 17,167for the period -------------- ------------- ------------- Basic earnings per ordinary (12.97) 0.64 10.10share (cents) 15 Pro-forma data for the Ordinary Shares and the C Shares (continued) Consolidated Balance Sheet for the Ordinary Shares (Unaudited) At 30 June 2007 At 31 December 2007 (Restated - note 13) •'000 •'000 -------------- ---------------Investment property 979,780 861,805 -------------- ---------------Total non-current assets 979,780 861,805 -------------- --------------- Derivative financial instruments 30,151 40,210Trade and other receivables 41,426 22,504Cash and cash equivalents 25,073 32,040 -------------- ---------------Total current assets 96,650 94,754 -------------- ---------------Total assets 1,076,430 956,559 -------------- --------------- Issued share capital 8,500 24,395Share premium 15,895 -Retained earnings 203,486 217,718Other reserves 1,026 1,026 -------------- ---------------Total equity 228,907 243,139 -------------- --------------- Trade and other payables 33,318 30,248Interest bearing loans - 2,524Income tax payable 208 115 -------------- ---------------Total current liabilities 33,526 32,887 -------------- ---------------Interest bearing loans 811,689 678,615Deferred tax liability 2,308 1,918 -------------- ---------------Total non-current liabilities 813,997 680,533 -------------- ---------------Total liabilities 847,523 713,420 -------------- ---------------Total equity & liabilities 1,076,430 956,559 -------------- --------------- Net asset value per ordinaryshare (cents) 134.65 143.03 15 Pro-forma data for the Ordinary Shares and the C Shares (continued) Consolidated Income Statement for the C Shares (unaudited) For the period For the period 1 July 2007 to 10 May 2007 (date of 31 December 2007 placing) to 30 June 2007 (Restated - note 13) •'000 •'000 -------------- -------------- Rent and related income 2,986 -Direct costs (1,993) - -------------- --------------Gross profit 993 - -------------- -------------- Change in fair value of (5,608) -investment property -------------- -------------- Manager's fees (899) -Professional fees (32) (244)Audit fees (50) (27)Other expenses (313) (189) -------------- --------------Administrative expenses (1,294) (460) -------------- -------------- Net operating profit/(loss) (5,909) (460)before net financing (expenses)/profit -------------- -------------- Financial income 3,559 10,001Financial expenses (11,962) (9) -------------- --------------Net financing (expenses)/income (8,403) 9,992 -------------- -------------- (Loss)/Profit before taxation (14,312) 9,532 Income tax expense:Current (83) -Deferred 266 - -------------- --------------Retained (loss)/profit for the period (14,129) 9,532 -------------- -------------- Basic (loss)/earning s per C share (5.66) 3.81(cents) 15 Pro-forma data for the Ordinary Shares and the C Shares (continued) Consolidated Balance Sheet for the C Shares At 31 December At 30 June 2007 2007 (Restated - note 13) •'000 •'000 -------------- ---------------Investment property 145,674 -Deferred tax asset 267 - -------------- ---------------Total non-current assets 145,941 -------------- --------------- Derivative financial instruments 9,871 21,331Trade and other receivables 15,506 10,934Cash and cash equivalents 107,635 212,199 -------------- ---------------Total current assets 133,012 244,464 -------------- ---------------Total assets 278,953 244,464 -------------- --------------- Issued share capital 61,449 179,379Share premium 116,879 54,248Retained earnings 52,779 6,964Other reserves 1,051 - -------------- ---------------Total equity 232,158 240,591 -------------- --------------- Trade and other payables 15,020 3,873Income tax payable 82 - -------------- ---------------Total current liabilities 15,102 3,873 -------------- ---------------Interest bearing loans 31,693 - -------------- ---------------Total non-current liabilities 31,693 - -------------- ---------------Total liabilities 46,795 3,873 -------------- ---------------Total equity & liabilities 278,953 244,464 -------------- ---------------Net asset value per C share (cents) 94.45 96.23 This information is provided by RNS The company news service from the London Stock Exchange