TIDMDLD
RNS Number : 3673Y
Deutsche Land Plc
02 September 2009
Deutsche Land Plc
("Deutsche Land" or the "Company")
Unaudited results for the 6 month period ended 30 June 2009
Deutsche Land Plc (AIM: DLD), the investor in German property, is pleased to
report its unaudited results for the 6 month period ended 30 June 2009.
Highlights from the first half
- Company raised EUR15.9 million, net of expenses in a placing in June 2009;
welcomes Black Sea Global Properties ("BSGP") to
its shareholder register with a 29.9% stake
- Internalisation of the Management Company now completed
- Gross rental income for the 6 month period to 30 June 2009 was EUR18.7 million
(6 months to 30 June 2008: EUR19.7 million which
included amounts in respect of surrender premiums). Tenant demand remains
strong - 8 new leases signed in the period
- After exceptional items, net profit after tax for the 6 months to 30 June
2009 was EUR0.2 million (30 June 2008: profit EUR3.5 million)
- Net loss attributable to equity holders of EUR43.1 million or 20.5 Euro cents
per share in the 6 months to 30 June 2009, compared
to a loss of EUR10.9 million or 5.5 Euro cents per share in the 6 months to 30
June 2008
- Write down of EUR38.5 million incurred on the property portfolio in the 6
months to 30 June 2009
- Operating cash flow remains stable, and Interest Cover on group
borrowings remains strong
- Basic net asset value ("NAV") as at 30 June 2009 is reduced by 58.8% at
22.6 pence (26.6 Euro cents) per share compared
to 54.8 pence (56.3 Euro cents) per share as at 31 December 2008
Stephen Dickinson, Chairman of Deutsche Land plc, commented today:
"While this has been a difficult half year for the property market, there are
grounds for optimism within this set of results from Deutsche Land. The
Company's income stream remains robust and we have cash on the balance sheet
following our placing in June.
With an internalised management company, a supportive major shareholder and
strong relationships with our creditors, I believe Deutsche Land is well-placed
to benefit from the expected recovery in the German real estate market."
For further details please contact:
+------------------------------------------+-----------------------------+
| Deutsche Land plc | |
+------------------------------------------+-----------------------------+
| Stephen Dickinson (Chairman) | +44 (0) 20 7647 9670 |
| David Maxwell (Chief Executive) | |
+------------------------------------------+-----------------------------+
| | |
+------------------------------------------+-----------------------------+
| SP Angel Corporate Finance LLP | |
+------------------------------------------+-----------------------------+
| John Mackay | +44 (0) 20 7646 9650 |
+------------------------------------------+-----------------------------+
| David Facey | |
+------------------------------------------+-----------------------------+
| | |
+------------------------------------------+-----------------------------+
| Matrix Corporate Capital LLP | |
+------------------------------------------+-----------------------------+
| Stephen Mischler | +44 (0) 20 3206 7203 |
+------------------------------------------+-----------------------------+
| | |
+------------------------------------------+-----------------------------+
| Citigate Dewe Rogerson | |
+------------------------------------------+-----------------------------+
| George Cazenove | +44 (0) 20 7638 9571 |
| Hannah Seward | |
+------------------------------------------+-----------------------------+
Chairman's and Chief Executive's statement
General review and strategic outlook
We are pleased to present the Interim Report for the six month period ended 30
June 2009 of Deutsche Land Plc ("the Company") and its subsidiaries (together
"the Group").
Although the first half of 2009 was a difficult one for global real estate
markets, Deutsche Land's performance has remained satisfactory and a number of
notable advances were made by the Company. As previously announced, the Company
placed 119.2 million shares at a price of 12 pence (a small premium to the share
price at the time of placing) raising EUR15.9 million, net of expenses, in June
2009.
Following the placing, the Company is very pleased to welcome Black Sea Global
Properties ("BSGP") to its shareholder register with a 29.9% stake. BSGP, in
purchasing this stake, has issued a vote of confidence in both the Company's
portfolio and its management. The Board is also pleased to welcome Mr Obie Moore
as a representative of BSGP and looks forward to availing itself of his
considerable experience.
Since the period end the Company completed the process of management
internalisation on substantially the terms set out in the Chairman's statement
for the year to 31 December 2008. This matter has always been considered to be
of long term strategic importance whereby the interests of the management team
are firmly aligned with the interests of the Group. As part of the
Internalisation process a long term incentive plan and senior management bonus
scheme have been adopted by the Group, overseen by a newly constituted
Remuneration Committee comprised of senior independent directors and chaired by
Christopher Pemberton. The long term incentive scheme consists of an award of
deferred shares and options which vest after three years based on achievement of
predefined total shareholder return hurdles. The Board is pleased that the
internalisation has now occurred as it is felt that this strengthens the Group
for the continued challenges ahead.
Tenant demand has remained at satisfactory levels and recent statistics indicate
that the German economy is emerging from recession. The financial crisis has led
to the delay of a number of construction projects which would have competed with
the Group's existing assets, a factor that has contributed to keeping tenant
demand positive. We would anticipate further single digit percentage falls in
the value of the portfolio between 30 June and the year end, but, we believe, a
recovery in values could occur, beginning in 2010.
The Company's rent roll remains robust. During the period the Company has signed
8 new leases and 6 lease extensions for a total of EUR0.35 million on an
annualised basis. Post period end a major tenant has agreed an extension to its
lease in respect of in excess of 5,000m2 at the Main Airport Center. The
existing rent roll has not come under pressure from tenant defaults and the
Company continues to monitor and, where possible, reduce operating costs. As a
result, the underlying operating cash flow remains stable, and Interest Cover on
the Group's borrowings remains strong.
However, this continues to be a challenging commercial environment in which to
operate. In this context, the Group has experienced a further deterioration in
the values of its property assets. This has continued to place pressure upon
banking covenants, and much effort is being expended to progress discussions
with the Group's lenders.
Results
Gross rental income for the six month period to 30 June 2009 was EUR18.7 million
(six months to 30 June 2008: EUR19.7 million, which included amounts received in
respect of lease surrenders). This is consistent with an annualised rent roll
which at the period end was EUR39.8 million (30 June 2008: EUR37.7 million).
In the six months to 30 June 2009, net service charge expenses of EUR3.5 million
were in line with Group budgets.
Administrative costs of EUR3.6 million are higher than in previous periods due to
exceptional costs, amounting to EUR0.83 million, that the Group incurred in its
response to the approach made by Prostar, the subsequent strategic review
undertaken in the first half of 2009 and internalisation.
Excluding the loss on revaluation of investment properties of EUR38.5 million; a
decrease in the fair value of the Group's derivative financial instruments of
EUR10.0 million; the loss on changes in value of available for sale investments of
EUR0.6 million and the impairment charge in respect of other investments of EUR2.3m,
less net deferred tax credits of EUR5.7 million; net profit after tax for the 6
months to 30 June 2009 was EUR0.2 million (30 June 2008: profit EUR3.5 million).
The Group made a net loss attributable to equity holders of EUR43.1 million or
20.5 Euro cents per share in the six months to 30 June 2009, compared to a loss
of EUR10.9 million or 5.5 Euro cents per share in the six months to 30 June 2008.
The Board continues to hold the view that preservation of cash is of paramount
importance in the current conditions and is therefore not recommending the
payment of an interim dividend. The Board continues to keep the Group's dividend
policy under review.
Property revaluation
The Group has performed an internal valuation of its property portfolio as at 30
June 2009 which has been incorporated into these results. Current market
assumptions have been made in terms of capitalisation rates and rental levels,
based on data taken from independent external sources, discussions with
independent professional advisers with expertise in, and knowledge of, the
German real estate market or other available market information. Excluding the
Rücker portfolio of properties, which was valued at EUR11.4 million at 30 June
2009, the Group's property portfolio was valued at EUR513.3 million as at 30 June
2009 - a 6.3% fall compared to its value of EUR547.8 million at 31 December 2008.
The revaluation loss can be attributed to the negative impact of the further
softening in market yields and a decline in the estimated market rental values
for the portfolio since 31 December 2008. The weighted average capitalisation
rate applied to the portfolio has increased by 25 basis points to 6.75% and the
estimated market rental values for the portfolio have declined by 3.55%. This
rise in capitalisation rate and fall in market rental values has been partially
offset by other factors, such as the completion of redevelopment projects and
lease extensions that, for some properties within the portfolio, have stabilised
values. The Group anticipates that property values will, in general, fall again
in the second half of the year, but, through continued active management across
the portfolio, hopes to offset this trend by letting currently vacant areas, by
realising further development potential that exists in certain properties and
through other management initiatives.
Net asset value
Basic net asset value ("NAV") as at 30 June 2009, based on the 317.5
million shares in issue at the period end, is reduced by 58.8% at 22.6 pence
(26.6 Euro cents) per share compared to 54.8 pence (56.3 Euro cents) per share
as at 31 December 2008.
The reduction is attributable not only to the net loss per share for the period
to 30 June 2009 of 20.5 Euro cents but to the weakening of the Euro against
Sterling since 31 December 2008 and also the placing of 119.2m shares in June
2009 at a subscription price of less than NAV at that time.
Borrowings and liquidity
The Group has cash balances as at 30 June 2009 of EUR44.2 million, equating
to 13.9 Euro cents per share. EUR13.6 million of this balance is held as
collateral security thus the Group has cash balances of EUR30.6 million,
representing 9.6 Euro cents per share at the balance sheet date. Management of
the Group's cash resources has been and continues to be of paramount importance.
Capital expenditure is carefully monitored in terms of existing commitments and,
before undertaking new projects, the availability of finance is investigated and
where possible debt financing obtained to enable the Group to utilise its equity
efficiently. Although debt financing of capital projects has been scarce in
recent months, there are now a number of lenders willing to finance such
projects provided they represent the right risk and return profile.
Based on the internal valuation of the Group's portfolio at 30 June 2009, loans
that were outside their Loan to Value ("LTV") covenants as at 31 December 2008
(which did not include the ABN Amro loan discussed below) remain so and, as a
result of the further fall in property values, would now require EUR11.0 million
to bring them back within covenant (EUR4.5 million requirement at 31 December
2008). It remains the case that only one lender, with a loan to the Group of
EUR12.0 million, has formally instructed a valuation of the asset on which its
loan is secured. However, as active discussions are underway in respect of this
facility, this valuation exercise has, for the moment, been suspended.
The properties in the portfolio which are secured against the ABN Amro facility
of EUR326.7 million at 30 June 2009, which were within their LTV covenant at 31
December 2008, have been valued at the half year at EUR343.2 million. This implies
a LTV ratio of 95.2%. The LTV covenant on this loan is 90.0%, and, therefore, on
the basis of the valuation at 30 June 2009 this loan would be outside its LTV
covenant. This loan is non-recourse to the rest of the Group and, whilst the
Group at the date of this report has received no formal notification of a breach
of covenant, it is possible that a process could be initiated by the
lender. This would lead to a valuation of these properties in accordance with
the loan agreement, which would likely result in a breach of the LTV covenant in
this facility. Were this chain of events to occur, and the Group was unable to
come to an agreement with the lender which resulted in the lender waiving or the
Group remedying such breach, then the lender could enforce its security over the
assets on which its loan is secured. This action would result in the Group
losing control of this significant proportion of its operations.
Other borrowings within the Group, amounting to EUR86.8 million, either remain
within or are not subject to LTV covenants.
Going Concern
Given the continuing difficulties in the global financial markets the Board
continues to review the solvency forecasts of the Group for the purposes of
satisfying itself that it is appropriate to prepare the financial information on
a going concern basis.
The Board has considered the cash flow of the Group as forecast for the next 18
months under a number of scenarios which include the sequence of events,
highlighted earlier, that might lead to the loss of control of a significant
proportion of the Group's property assets.
As none of the loans in the Group are cross collateralised and no guarantees
have been given by the ultimate parent company, if any of the loans in the Group
are the subject of a breach which is either not waived or remedied then
enforcement of the lender's security in respect of that loan will give the
lender no rights against other assets of the Group. With the majority of the
available cash of the Group being held within the ultimate parent company and
the individual lenders having no specific right to the assets of the ultimate
parent, the Board is satisfied that the Group can and will operate as a going
concern for the 18 month review period and therefore it is appropriate to
prepare the financial information on that basis.
Note 2 to these financial results contains further disclosure regarding the
Board's conclusion that it is reasonable to use the going concern basis of
preparation.
Portfolio Analysis
The Group, with the exception of Rücker Immobilien Portfolio, made no
acquisitions or disposals during the 6 month period, meaning that the commercial
portfolio comprises 54 properties located throughout the former West Germany.
This represents 98% of the Group's portfolio, and the entire portfolio, analysed
by value, comprises 60% office, 32% retail, 6% hotel and 2% residential. The
occupancy rate of the commercial portfolio is 91% and has a weighted average
lease length of 5.3 years. Specific highlights in respect of properties within
the portfolio are noted below:
Business Premises - Wolfsburg
The refurbishment works undertaken in respect of the securing of the new
anchor tenant in the second half of 2008 have now been completed and the new
tenant has taken occupation of its space. This has also led to an existing
tenant in these premises extending its lease for a further five years. These
factors have led to the value of this property remaining stable at 30 June 2009.
Widumer Platz - Castrop-Rauxel
Redevelopment of this property has now been completed with the major new
tenant taking occupation of its space on 15 July 2009. This has led to an
increase in average rental levels evidenced by a new tenant entering into a
lease with an effective rent of EUR19.00 per m2 per month compared with EUR13.50 per
m2 per month previously, and another tenant has extended its lease for a further
ten years.
Main Airport Center (MAC) - Frankfurt
During the period Mastercard and VNG took occupation of their space
subsequent to the successful completion of fitting out works. Whilst this asset
has shown a substantial reduction in value as at 30 June 2009, mainly due to an
increase in capitalisation rates, new letting enquiries continue to be received.
Mainz Data Centre - Mainz
Work has commenced on the construction of a 3,000m2 data centre and office
building, The data centre of 1,200m2 is prelet to a government tenant for a
lease term of 12 years. The planned duration of the construction programme is 10
months. The site is particularly suited to data centres due to the demand in the
region, favourable zoning and the existence of high voltage electricity
infrastructure.
Plans continue to be drawn up in respect of redevelopment of other assets in the
portfolio where the Board believes that value can be added.
Outlook
The Group continues to operate in an extremely challenging environment. However,
the placing of new equity in June 2009 and internalisation of the management
should position the Group well in order to benefit from the expected recovery in
the German real estate market.
Deutsche Land Plc - Interim Consolidated financial statements 30 June 2009
Unaudited Consolidated statement of comprehensive income
+--------------------------------------+--------+---------------+---------------+----------------+
| | Notes | For the 6 | For the 6 | For the |
| | | month period | month period | year ended |
| | | ended | ended | 31 December |
| | | 30 June 2009 | 30 June 2008 | 2008 |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | EUR 000 | EUR 000 | EUR 000 |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | (Unaudited) | (Unaudited) | (Audited) |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Gross rental income | | 18,694 | 19,727 | 40,100 |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Service charge income | | 4,028 | 3,327 | 7,884 |
+--------------------------------------+--------+---------------+---------------+----------------+
| Service charge expenses | | (7,488) | (6,048) | (12,882) |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Net rental income | | 15,234 | 17,006 | 35,102 |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Loss on revaluation of investment | 6 | (38,478) | (21,807) | (58,442) |
| properties | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Loss on changes in fair value of | 7 | (569) | - | (6,645) |
| available-for-sale investments | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Administrative expenses | | (3,596) | (3,204) | (9,259) |
+--------------------------------------+--------+---------------+---------------+----------------+
| Impairment of other investments | | (2,291) | - | - |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Operating loss | | (29,700) | (8,005) | (39,244) |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Finance income | 3 | 379 | 388 | 758 |
+--------------------------------------+--------+---------------+---------------+----------------+
| Finance expense | 3 | (11,798) | (11,993) | (24,926) |
+--------------------------------------+--------+---------------+---------------+----------------+
| Net change in fair value of | 8 | (9,984) | 6,614 | (19,097) |
| derivative financial liabilities | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Loss before tax | | (51,103) | (12,996) | (82,509) |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Tax credit | | 5,690 | 1,867 | 13,523 |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Loss for the period | | (45,413) | (11,129) | (68,986) |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Other comprehensive income: | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Loss on available-for-sale | | - | (3,029) | (3,029) |
| investments | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Reclassification adjustment | | - | - | 6,645 |
+--------------------------------------+--------+---------------+---------------+----------------+
| Deferred tax relating to components | | - | 479 | (2,096) |
| of other comprehensive income | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Other comprehensive income (net of | | - | (2,550) | 1,520 |
| tax): | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Total comprehensive income for the | | (45,413) | (13,679) | (67,466) |
| year | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Loss attributable to: | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Equity holders of the Company | | (43,087) | (10,861) | (68,715) |
+--------------------------------------+--------+---------------+---------------+----------------+
| Minority Interest | | (2,326) | (268) | (271) |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | (45,413) | (11,129) | (68,986) |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Total comprehensive income | | | | |
| attributable to: | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Equity holders of the Company | | (43,087) | (13,411) | (67,195) |
+--------------------------------------+--------+---------------+---------------+----------------+
| Minority Interest | | (2,326) | (268) | (271) |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | (45,413) | (13,679) | (67,466) |
+--------------------------------------+--------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
| Basic and diluted loss per share | 4 | (20.5) | (5.5) | (34.7) |
| (Euro cents) | | | | |
+--------------------------------------+--------+---------------+---------------+----------------+
Deutsche Land Plc - Interim Consolidated financial statements 30 June 2009
Unaudited Consolidated Statement of Financial Position
+--------------------------------------+-------+---------------+---------------+----------------+
| |Notes | As at | As at | As at |
| | | 30 June 2009 | 30 June 2008 | 31 December |
| | | | | 2008 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | EUR 000 | EUR 000 | EUR 000 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | (Unaudited) | (Unaudited) | (Audited) |
+--------------------------------------+-------+---------------+---------------+----------------+
| ASSETS | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| Non-current assets | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| Investment properties | 6 | 524,717 | 593,250 | 560,110 |
+--------------------------------------+-------+---------------+---------------+----------------+
| Plant and equipment | | 446 | 391 | 387 |
+--------------------------------------+-------+---------------+---------------+----------------+
| Goodwill | | - | 652 | - |
+--------------------------------------+-------+---------------+---------------+----------------+
| Deferred tax assets | | 19,674 | 12,064 | 15,733 |
+--------------------------------------+-------+---------------+---------------+----------------+
| Available-for-sale investments | 7 | 1,644 | 3,531 | 1,729 |
+--------------------------------------+-------+---------------+---------------+----------------+
| Derivative financial instruments | 8 | - | 15,764 | - |
+--------------------------------------+-------+---------------+---------------+----------------+
| Other investments | | 382 | 2,214 | 2,247 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | 546,863 | 627,866 | 580,206 |
+--------------------------------------+-------+---------------+---------------+----------------+
| Current assets | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| Trade and other receivables | | 9,023 | 9,031 | 9,972 |
+--------------------------------------+-------+---------------+---------------+----------------+
| Cash and cash equivalents | 9 | 44,198 | 38,139 | 35,826 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | 53,221 | 47,170 | 45,798 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| TOTAL ASSETS | | 600,084 | 675,036 | 626,004 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| LIABILITIES | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| Non-current liabilities | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| Loans and borrowings | 10 | 463,260 | 472,099 | 465,665 |
+--------------------------------------+-------+---------------+---------------+----------------+
| Derivative financial instruments | | 19,520 | - | 9,536 |
+--------------------------------------+-------+---------------+---------------+----------------+
| Deferred tax liabilities | | 1,119 | 11,813 | 2,935 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | 483,899 | 483,912 | 478,136 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| Current liabilities | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| Loans and borrowings-current | 10 | 15,735 | 508 | 13,812 |
| maturities | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| Trade and other payables | | 14,220 | 17,342 | 18,398 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | 29,955 | 17,850 | 32,210 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| TOTAL LIABILITIES | | 513,854 | 501,762 | 510,346 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| NET ASSETS | | 86,230 | 173,274 | 115,658 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| EQUITY | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| Capital and reserves | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| Share capital | | 3,175 | 1,982 | 1,982 |
+--------------------------------------+-------+---------------+---------------+----------------+
| Share premium reserve | | 113,189 | 98,397 | 98,397 |
+--------------------------------------+-------+---------------+---------------+----------------+
| Available-for-sale investments | | - | (4,070) | - |
| reserve | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| Distributable reserve | | 85,778 | 89,742 | 85,778 |
+--------------------------------------+-------+---------------+---------------+----------------+
| Retained earnings | | (117,639) | (16,698) | (74,552) |
+--------------------------------------+-------+---------------+---------------+----------------+
| Shareholders' equity | | 84,503 | 169,353 | 111,605 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| Minority interest | | 1,727 | 3,921 | 4,053 |
+--------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+--------------------------------------+-------+---------------+---------------+----------------+
| TOTAL EQUITY | | 86,230 | 173,274 | 115,658 |
+--------------------------------------+-------+---------------+---------------+----------------+
Deutsche Land Plc - Interim Consolidated Financial Statements 30 June 2009
Unaudited Consolidated Statement of Changes in Equity
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| | | Share | Share |Available-for-sale |Distributable | Retained | Total |Minority | Total |
| | | capital |premium | investments | reserve | earnings | |interest | equity |
| | | |reserve | | | | | | |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| | | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| Balance at 1 | | 1,982 | 98,397 | (1,520) | 89,742 | (5,837) | 182,764 | 2,609 | 185,373 |
| January 2008 | | | | | | | | | |
| (audited) | | | | | | | | | |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| Total comprehensive | | - | - | (2,550) | - | (10,861) | (13,411) | (268) | (13,679) |
| income for the six | | | | | | | | | |
| months ended 30 | | | | | | | | | |
| June 2008 | | | | | | | | | |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| Minority interests | | - | - | - | - | - | - | 1,580 | 1,580 |
| in | | | | | | | | | |
| companies acquired | | | | | | | | | |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| Balance at 30 June | | 1,982 | 98,397 | (4,070) | 89,742 | (16,698) | 169,353 | 3,921 | 173,274 |
| 2008 (unaudited) | | | | | | | | | |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| Total comprehensive | | - | - | 4,070 | - | (57,854) | (53,784) | (3) | (53,787) |
| income for the six | | | | | | | | | |
| month period ended | | | | | | | | | |
| 31 December 2008 | | | | | | | | | |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| Minority interests | | - | - | - | - | - | - | 135 | 135 |
| in | | | | | | | | | |
| companies acquired | | | | | | | | | |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| Dividends | | - | - | - | (3,964) | - | (3,964) | - | (3,964) |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| Balance at 31 | | 1,982 | 98,397 | - | 85,778 | (74,552) | 111,605 | 4,053 | 115,658 |
| December 2008 | | | | | | | | | |
| (audited) | | | | | | | | | |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| Total comprehensive | | - | - | - | - | (43,087) | (43,087) | (2,326) | (45,413) |
| income for the six | | | | | | | | | |
| months period ended | | | | | | | | | |
| 30 June 2009 | | | | | | | | | |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| Issue of share | | 1,193 | 15,591 | - | - | - | 16,784 | - | 16,784 |
| capital | | | | | | | | | |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| Issue costs | | - | (799) | - | - | - | (799) | - | (799) |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
| Balance at 30 June | | 3,175 | 113,189 | - | 85,778 | (117,639) | 84,503 | 1,727 | 86,230 |
| 2009 (unaudited) | | | | | | | | | |
+---------------------+--+------------+---------+--------------------+---------------+-----------+----------+----------+----------+
Deutsche Land Plc - Interim Consolidated Financial Statements 30 June 2009
Unaudited Consolidated Statement of Cash Flows
+------------------------------------------+---+------------------+------------------+-----------------+
| | | For the 6 month | For the 6 month | For the |
| | | period ended | period ended | year ended |
| | | 30 June 2009 | 30 June 2008 | 31 December |
| | | | | 2008 |
+------------------------------------------+---+------------------+------------------+-----------------+
| | | EUR 000 | EUR 000 | EUR 000 |
+------------------------------------------+---+------------------+------------------+-----------------+
| | | (Unaudited) | (Unaudited) | (Audited) |
+------------------------------------------+---+------------------+------------------+-----------------+
| | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Cash flows from operating activities | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Loss for the period | | (45,413) | (11,129) | (68,986) |
+------------------------------------------+---+------------------+------------------+-----------------+
| Finance income | | (226) | (388) | (758) |
+------------------------------------------+---+------------------+------------------+-----------------+
| Finance expense | | 11,798 | 11,993 | 26,107 |
+------------------------------------------+---+------------------+------------------+-----------------+
| | | (33,841) | 476 | (43,637) |
+------------------------------------------+---+------------------+------------------+-----------------+
| Adjustments for: | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Depreciation on plant and equipment | | 26 | 25 | 54 |
+------------------------------------------+---+------------------+------------------+-----------------+
| Capital gains on sales of investment | | - | - | (227) |
| properties | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Amortisation of deferred finance costs | | 554 | 496 | 1,084 |
+------------------------------------------+---+------------------+------------------+-----------------+
| Change in value of derivative financial | | 9,984 | (6,614) | 17,916 |
| instruments | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Change in value of available-for-sale | | 569 | - | 6,645 |
| investments | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Change in value of investment properties | | 38,478 | 21,807 | 58,442 |
+------------------------------------------+---+------------------+------------------+-----------------+
| Impairment of goodwill | | - | - | 1,368 |
+------------------------------------------+---+------------------+------------------+-----------------+
| Impairment of other investments | | 2,291 | - | - |
+------------------------------------------+---+------------------+------------------+-----------------+
| Deferred tax (credit) / expense | | (5,757) | (2,096) | (13,523) |
+------------------------------------------+---+------------------+------------------+-----------------+
| Other changes in deferred taxes | | - | (479) | - |
+------------------------------------------+---+------------------+------------------+-----------------+
| Cash flows from operating activities | | 12,304 | 13,615 | 28,122 |
| before changes in working capital and | | | | |
| finance costs | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Change in trade and other receivables | | 949 | 263 | (1,700) |
+------------------------------------------+---+------------------+------------------+-----------------+
| Change in trade and other payables | | (2,551) | (6,625) | 231 |
+------------------------------------------+---+------------------+------------------+-----------------+
| Cash generated from operations | | 10,702 | 7,253 | 26,653 |
+------------------------------------------+---+------------------+------------------+-----------------+
| Interest paid | | (11,951) | (11,880) | (24,730) |
+------------------------------------------+---+------------------+------------------+-----------------+
| Net cash flows (used in) / from | | (1,249) | (4,627) | 1,923 |
| operating activities | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Cash flows from investing activities | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Purchase of investment properties | | (3,968) | (3,325) | (13,291) |
+------------------------------------------+---+------------------+------------------+-----------------+
| Proceeds from sale of investment | | 883 | - | 1,145 |
| properties | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Acquisition of subsidiary, net of cash | | - | (1,734) | (2,780) |
| acquired | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Purchase of plant and equipment | | (85) | (34) | (59) |
+------------------------------------------+---+------------------+------------------+-----------------+
| Purchase of available-for-sale | | (2,111) | - | - |
| investments | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Purchase of other investments | | (426) | - | - |
+------------------------------------------+---+------------------+------------------+-----------------+
| Interest received | | 226 | 356 | 693 |
+------------------------------------------+---+------------------+------------------+-----------------+
| Net cash used in investing activities | | (5,481) | (4,737) | (14,292) |
+------------------------------------------+---+------------------+------------------+-----------------+
| | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Cash flows from financing activities | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Issue of ordinary shares | | 16,784 | - | - |
+------------------------------------------+---+------------------+------------------+-----------------+
| Issue costs | | (799) | - | - |
+------------------------------------------+---+------------------+------------------+-----------------+
| Net proceeds from bank borrowings | | 1,600 | 12,630 | 17,917 |
+------------------------------------------+---+------------------+------------------+-----------------+
| Repayment of bank borrowings | | (2,636) | - | (508) |
+------------------------------------------+---+------------------+------------------+-----------------+
| Dividend paid to the equity holders of | | - | - | (3,964) |
| the Company | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Net cash flows from financing activities | | 14,949 | 12,630 | 13,445 |
+------------------------------------------+---+------------------+------------------+-----------------+
| | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Net increase in cash and cash | | 8,219 | 3,266 | 1,076 |
| equivalents | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
| Cash balances at beginning of period | | 35,826 | 34,946 | 34,946 |
+------------------------------------------+---+------------------+------------------+-----------------+
| | | 44,045 | 38,212 | 36,022 |
+------------------------------------------+---+------------------+------------------+-----------------+
| Exchange gains/(losses) on cash balances | | 153 | (73) | (196) |
+------------------------------------------+---+------------------+------------------+-----------------+
| Cash and cash equivalents balances at | | 44,198 | 38,139 | 35,826 |
| end of period | | | | |
+------------------------------------------+---+------------------+------------------+-----------------+
Deutsche Land Plc - Interim Consolidated Financial Statements 30 June 2009
Notes to the unaudited interim consolidated financial statements
1. BASIS OF PREPARATION
Deutsche Land Plc (the "Company") was incorporated in the Isle of Man on 21
February 2006 and was admitted to AIM on 20 April 2006. Its principal activity
is the investment in properties in Germany to achieve income and capital
growth.
The financial information in this interim report does not constitute the Group's
statutory accounts. The comparative financial information for the year ended 31
December 2008 does not constitute the Group or Company's statutory accounts. The
statutory accounts of Deutsche Land Plc for the year ended 31 December 2008 have
been reported on by the Company's auditors. The auditors' report was unqualified
with an emphasis of matter drawing attention to the material risks identified by
the Directors relating to the ability of a significant proportion of the Group's
operations to continue as a going concern.
The interim report has been prepared in accordance with the recognition and
measurement principles of International Financial Reporting Standards (IFRSs) as
endorsed by the European Union using accounting policies that are expected to be
applied for the financial year ended 31 December 2009.
The interim accounts are presented in Euro's being the Group's functional
currency.
2. GOING CONCERN
These Interim Financial Statements have been prepared on the basis that the
Group is a going concern. To enable the Board to establish that this is an
appropriate basis of preparation, the cash flow solvency of the Group has been
forecast and stress tested in accordance with circumstances which exist at the
current time or might reasonably be expected occur.
The main cash flow sensitivities arise from the groups loan facility covenants.
As disclosed in the financial statements of the Group to 31 December 2008, most
of the Groups loan facilities contain Loan to Value (LTV) covenants which range
from 60% to 92.5%. These LTV covenants have been put under considerable pressure
over the past 6 months.
Using the valuation of investment properties as at 30 June 2009, which has been
internally prepared, the Group is outside of its LTV covenants in respect of
four out of its six loans (excluding loans within Rücker portfolio of
properties). These four loans account for 82% of the Groups borrowings as at 30
June 2009, in respect of which the Group are in discussions with each of the
respective lenders, and whilst no agreements have been concluded yet, the Board
believe that satisfactory agreements will be reached in the coming months.
Of the four loans referred to above, three (amounting to EUR68.2 million) contain
a right to reduce the amount of the debt to a level which would bring it back to
within covenant, should the individual lenders formally request a valuation
(which only one has to date accounting for EUR12m) and require the Group to do so
in accordance with their individual loan agreements. For the Group to put these
three loans back within covenant, based on valuations as at 30 June 2009, would
require prepayment of EUR11.0 million.
The fourth loan has an amount outstanding at 30 June 2009 of EUR326.7 million;
this loan has an LTV covenant which must not exceed 90%. Using the 30 June 2009
valuations of the investment properties on which this loan is secured the LTV
ratio is 95.2%. If this Lender called for a valuation in accordance with the
facility agreement and if the Group had not repaid a necessary amount of this
loan, that valuation would be expected to demonstrate that an LTV breach had
occurred which, if not waived by or remedied by other agreement with, the Lender
would require repayment of the loan in full. In these circumstances and where
the Group were unable to repay the loan the Lender could enforce its security
over the assets on which their loan is secured, which would result in the Group
losing control of a significant proportion of its operations. Such a sequence of
events represents a material uncertainty that may cast significant doubt over
the ability of that proportion of the Group's operations to continue as a going
concern.
The financial information presented in these results does not include the
adjustments that would be necessary should such a series of events occur which
resulted in such a curtailment of operations. These adjustments might include a
further writing down of assets to their then recoverable amount which might be
lower than their carrying value in these Interim Financial Statements.
The Directors still believe that it is unlikely that the sequence of events
described above, that would result in the material curtailment in the Groups
operations, will occur.
None of the loans in the Group are cross collateralised and no guarantees have
been given by the ultimate parent company therefore no lender has recourse to
the assets of the wider group. As such where a formal un-remedied LTV breach
occurred, repayment of the loan was requested but the loan was not repaid and
the Lender enforced their security, the Lender would be unable to claim the
assets of the wider group. Most importantly the majority of the Groups available
cash resources are held by the ultimate parent to which no lender has direct
recourse.
In addition to the sensitivities applied to the Groups cash flow forecasts in
relation to LTV covenants, consideration was also given to the effect on the
Group cash flow of:
* A further fall in property values between 30 June 2009 and 31 December 2009 and
their impact on the Groups LTV covenants;
* A reduction in rental income assuming a level of tenant default; and
* Other variables including capital expenditure programmes which have both a
positive and negative impact on cash flow.
The conclusion of the Directors, after consideration of the existing cash
resources and forecast cash solvency of the Group and sensitivities applied
thereto, is that it is appropriate to prepare the Interim Financial Statements
of the Group as a whole to 30 June 2009 on a going concern basis.
3. FINANCE INCOME AND EXPENSE
+----------------------------------------+----------------+----------------+-------------------+
| | For the 6 | For the 6 | For the year |
| | month period | month period | ended |
| | ended | ended | 31 December 2008 |
| | 30 June 2009 | 30 June 2008 | (audited) |
| | (unaudited) | (unaudited) | |
+----------------------------------------+----------------+----------------+-------------------+
| | EUR 000 | EUR 000 | EUR 000 |
+----------------------------------------+----------------+----------------+-------------------+
| Finance income | | | |
+----------------------------------------+----------------+----------------+-------------------+
| Interest received on bank deposits | 226 | 388 | 758 |
+----------------------------------------+----------------+----------------+-------------------+
| Net foreign exchange gain | 153 | - | - |
+----------------------------------------+----------------+----------------+-------------------+
| | 379 | 388 | 758 |
+----------------------------------------+----------------+----------------+-------------------+
| | | | |
+----------------------------------------+----------------+----------------+-------------------+
| Finance expense | | | |
+----------------------------------------+----------------+----------------+-------------------+
| Interest expense on financial | (11,798) | (11,920) | (24,730) |
| liabilities measured at amortised cost | | | |
+----------------------------------------+----------------+----------------+-------------------+
| Net foreign exchange loss | - | (73) | (196) |
+----------------------------------------+----------------+----------------+-------------------+
| | (11,798) | (11,993) | (24,926) |
+----------------------------------------+----------------+----------------+-------------------+
4. LOSS PER SHARE
Basic and diluted loss per share for the period ended 30 June 2009 is based on
the loss attributable to equity holders of the Company and the weighted average
number of ordinary shares outstanding during the period.
+----------------------------------------------------+--------------+--------------+---------------+
| | For the 6 | For the 6 | For the year |
| | month period | month period | ended |
| | ended | ended | 31 December |
| | 30 June 2009 | 30 June 2008 | 2008 |
| | (unaudited) | (unaudited) | (audited) |
+----------------------------------------------------+--------------+--------------+---------------+
| | EUR 000 | EUR 000 | EUR 000 |
+----------------------------------------------------+--------------+--------------+---------------+
| | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Loss attributable to equity holders of the Company | (43,087) | (10,861) | (68,715) |
+----------------------------------------------------+--------------+--------------+---------------+
| | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Weighted average number of ordinary shares | 210,078,696 | 198,215,502 | 198,215,502 |
+----------------------------------------------------+--------------+--------------+---------------+
| Basic and diluted loss per share: | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Euro cents per share | (20.5)c | (5.5)c | (34.7)c |
+----------------------------------------------------+--------------+--------------+---------------+
| UK pence per share (calculated at period end | (17.4)p | (4.3)p | (33.8)p |
| exchange rates: | | | |
| 30 June 2009-0.851GBP/EUR ; 30 June 2008-0.792GBP/EUR | | | |
| ; 31 December 2008-0.974GBP/EUR) | | | |
+----------------------------------------------------+--------------+--------------+---------------+
5.NET ASSET VALUE PER SHARE
Net asset value per share is calculated by dividing the net assets attributable
to the equity holders of the Company by the number of ordinary shares in issue
as at balance sheet date.
+----------------------------------------------------+--------------+--------------+---------------+
| | 30 June 2009 | 30 June 2008 | 31 December |
| | (unaudited) | (unaudited) | 2008 |
| | | | (audited) |
+----------------------------------------------------+--------------+--------------+---------------+
| | EUR 000 | EUR 000 | EUR 000 |
+----------------------------------------------------+--------------+--------------+---------------+
| Net assets for the purposes of net asset value per | | | |
| share: | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Basic net assets attributable to equity holders of | 84,503 | 169,353 | 111,605 |
| the Company | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Adjustments for the purposes of adjusted net asset | | | |
| value per share: | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Deferred tax arising on revaluation of investment | (12,505) | 2,362 | (5,072) |
| properties | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Fair value adjustment on interest rate swaps (net | 15,128 | (12,346) | 7,350 |
| of deferred tax) | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Adjusted net assets attributable to equity holders | 87,126 | 159,369 | 113,883 |
| of the Company | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Number of ordinary shares at balance sheet date | 317,506,511 | 198,215,502 | 198,215,502 |
+----------------------------------------------------+--------------+--------------+---------------+
| | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Basic net asset value per share | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Euro cents per share | 26.6c | 85.4c | 56.3c |
+----------------------------------------------------+--------------+--------------+---------------+
| UK pence per share (calculated at period end | 22.6p | 67.6p | 54.8p |
| exchange rates: | | | |
| 30 June 2009-0.851GBP/EUR ; 30 June 2008-0.792GBP/EUR | | | |
| ; 31 December 2008-0.974GBP/EUR) | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Adjusted net asset value per share | | | |
+----------------------------------------------------+--------------+--------------+---------------+
| Euro cents per share | 27.4c | 80.4c | 57.4c |
+----------------------------------------------------+--------------+--------------+---------------+
| UK pence per share (calculated at period end | 23.3p | 63.7p | 55.9p |
| exchange rates: | | | |
| 30 June 2009-0.851GBP/EUR ; 30 June 2008-0.792GBP/EUR | | | |
| ; 31 December 2008-0.974GBP/EUR) | | | |
+----------------------------------------------------+--------------+--------------+---------------+
6.INVESTMENT PROPERTIES
+-----------------------------------------------+--------------+-----------------+---------------+
| | 30 June 2009 | 30 June 2008 | 31 December |
| | (unaudited) | (unaudited) | 2008 |
| | | | (audited) |
+-----------------------------------------------+--------------+-----------------+---------------+
| | EUR 000 | EUR 000 | EUR 000 |
+-----------------------------------------------+--------------+-----------------+---------------+
| Balance at beginning of period | 560,110 | 601,601 | 601,601 |
+-----------------------------------------------+--------------+-----------------+---------------+
| Investment properties of subsidiary acquired | - | 10,131 | 11,680 |
+-----------------------------------------------+--------------+-----------------+---------------+
| Additions | 3,968 | 3,325 | 6,131 |
+-----------------------------------------------+--------------+-----------------+---------------+
| Disposals | (883) | - | (860) |
+-----------------------------------------------+--------------+-----------------+---------------+
| Deficit on revaluation | (38,478) | (21,807) | (58,442) |
+-----------------------------------------------+--------------+-----------------+---------------+
| Balance at end of period | 524,717 | 593,250 | 560,110 |
+-----------------------------------------------+--------------+-----------------+---------------+
An internal valuation has been performed by the Directors for the properties
owned by the Group as at 30 June 2009, using the professional knowledge and
experience within the group regarding both the valuation approach and commercial
real estate market. This valuation has been undertaken on the same standards and
procedures which were used by the independent Chartered Surveyors in the
financial statements for the year ended 31 December 2008, with external market
factors that are used in obtaining this valuation, such as capitalisation rates
applied to each of the individual properties and estimated rental values applied
to each of the individual tenancies, being obtained from sources who have
detailed experience of valuing similar types of properties in similar locations.
The fair value of the Group's investment properties at 30 June 2008 and 31
December 2008 represents a market value on the basis of a valuation carried out
at these dates by Cushman & Wakefield LLP, an independent firm of Chartered
Surveyors which is a member of the Royal Institution of Chartered Surveyors and
have detailed experience in valuing similar types of properties in similar
locations to the properties owned by the Group. The values of each of the
properties assessed have been made in accordance with the Appraisal Valuation
Standards of the Royal Institution of Chartered Surveyors on the basis of market
value. The definition of market value is the estimated amount for which an asset
should exchange on the date of valuation between a willing buyer and a willing
seller in an arm's length transaction after proper marketing wherein parties
have each acted knowledgeably, prudently and without compulsion. The basis of
information for deriving market value has been based upon market evidence of
estimated rental values and transactions for similar properties.
All the properties within the portfolio, except for one which is a Heritable
Building Right (which is the equivalent of a long leasehold), are freehold.
7.AVAILABLE-FOR-SALE INVESTMENTS
In March 2007, the Group entered into a put option exercisable in October 2008
giving certain shareholders of GWB the right to sell to the Group 160,000 shares
in GWB at EUR12.50 per share. This put option was exercised and in February 2009
the Group acquired 160,000 shares for a total cost including expenses of
EUR2,111,000, bringing its shareholding in GWB to 15.72%. As at 31 December 2008
the Group had already provided an amount of EUR1,627,000 against this transaction.
An amount of EUR569,000 has been recorded in the statement of comprehensive income
as a loss on changes in fair value of available-for-sale investments for the
reporting period.
8. DERIVATIVE FINANCIAL INSTRUMENTS
The group manages its cash flow interest rate risk by using floating-to-fixed
interest rate swaps and caps. The swaps and caps are shown at their
marked-to-market fair values as at the balance sheet date based on confirmations
received from the banks which form the other party to the contracts. Changes in
the fair values of the contracts are recorded in the income statement.
9. CASH AND CASH EQUIVALENTS
+---------------------------------------------+-------------+-----------------+----------------+
| | 30 June | 30 June 2008 | 31 December |
| | 2009 | (unaudited) | 2008 (audited) |
| | (unaudited) | | |
+---------------------------------------------+-------------+-----------------+----------------+
| | EUR 000 | EUR 000 | EUR 000 |
+---------------------------------------------+-------------+-----------------+----------------+
| | | | |
+---------------------------------------------+-------------+-----------------+----------------+
| Cash at bank and on hand | 8,564 | 14,855 | 13,285 |
+---------------------------------------------+-------------+-----------------+----------------+
| Short-term bank deposits | 22,064 | 7,700 | 7,534 |
+---------------------------------------------+-------------+-----------------+----------------+
| | 30,628 | 22,555 | 20,819 |
+---------------------------------------------+-------------+-----------------+----------------+
| Restricted cash held as collateral security | 13,570 | 15,584 | 15,007 |
+---------------------------------------------+-------------+-----------------+----------------+
| | 44,198 | 38,139 | 35,826 |
+---------------------------------------------+-------------+-----------------+----------------+
Cash and short-term deposits comprise cash at bank and on-call deposits with
original maturities of three months or less.
The restricted cash was held as collateral security in respect of the Group's
banking arrangements, interest rate swaps arrangements and to secure fulfilment
of the Group's contractual obligations under certain purchase agreements.
10. LOANS AND BORROWINGS
+-----------------------------------+--------------------+-------------+-------------+---------------+
| | | 30 June | 30 June | 31 December |
| | | 2009 | 2008 | 2008 |
| | | (unaudited) | (unaudited) | (audited) |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| Bank loans - current and | Maturity | EUR 000 | EUR 000 | EUR 000 |
| non-current | | | | |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| | | | | |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| ABN Amro - loan 1 | July 2011 | 326,688 | 326,688 | 326,688 |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| ABN Amro - loan 2 | July 2012 | 71,895 | 71,895 | 71,895 |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| HBOS | December 2010 | 50,290 | 50,798 | 50,290 |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| Westdeutschen Immobilien Bank - | May 2009 | 12,000 | 12,000 | 12,000 |
| loan 1 | | | | |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| Westdeutschen Immobilien Bank - | January 2011 | 6,000 | 6,000 | 6,000 |
| loan 2 | | | | |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| WL Bank | December 2013 | 7,000 | - | 7,000 |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| Other | March 2015 - | 7,897 | 8,077 | 8,933 |
| | October 2026 | | | |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| Total bank loans | | 481,770 | 475,458 | 482,806 |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| Less - deferred finance costs | | (2,775) | (2,851) | (3,329) |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| | | 478,995 | 472,607 | 479,477 |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| Less - current maturities | | (15,735) | (508) | (13,812) |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| | | 463,260 | 472,099 | 465,665 |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| | | | | |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| The bank loans are all denominated in Euros and are secured by fixed charges over certain of |
| the Group's freehold properties. Loans with a value of EUR448,873,000 (30 June 2008: |
| EUR449,381,000; 31 December 2008: 448,873,000) bear interest at floating rates with the others |
| at fixed rates. |
| The bank loans are repayable as follows: |
+----------------------------------------------------------------------------------------------------+
| | | EUR000 | EUR000 | EUR000 |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| In less than one year - current | | 15,735 | 508 | 13,812 |
| maturities | | | | |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| | | | | |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| In more than one year but no more | | 60,564 | 2,569 | 53,392 |
| than two years | | | | |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| In more than two years but no | | 320,522 | 80,841 | 329,523 |
| more than three years | | | | |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| In more than three years but no | | 70,929 | 321,442 | 71,127 |
| more than four years | | | | |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| In more than four years but no | | 6,904 | 70,098 | 6,991 |
| more than five years | | | | |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| In more than five years | | 7,116 | - | 7,961 |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| Total bank loans - non-current | | 466,035 | 474,950 | 468,994 |
+-----------------------------------+--------------------+-------------+-------------+---------------+
| | | 481,770 | 475,458 | 482,806 |
+-----------------------------------+--------------------+-------------+-------------+---------------+
Independent review report to Deutsche Land Plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements for the six months ended 30 June 2009 which comprises the unaudited
consolidated statement of comprehensive income, unaudited consolidated statement
of financial position, unaudited consolidated statement of changes in equity,
unaudited consolidated statement of cash flows and the related notes.
We have read the other information contained in the Interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed financial statements.
Directors' Responsibilities
The condensed financial statements, including the financial information
contained therein, are the responsibility of and have been approved by the
Directors. The Directors are responsible for preparing the condensed financial
statements in accordance with the rules of the London Stock Exchange for
companies trading securities on the Alternative Investment Market which require
that the half-yearly report be presented and prepared in a form consistent with
that which will be adopted in the Company's annual accounts having regard to the
accounting standards applicable to such annual accounts.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
financial statements in the half yearly financial report based on our review.
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the rules of the London Stock
Exchange for companies trading securities on the Alternative Investment Market
and for no other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by virtue of and for
the purpose of our terms of engagement, or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
Scope of Review
We conducted our review in accordance with guidance contained in International
Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity" issued
by the Auditing Practices Board for use in the United Kingdom. A review of
interim financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed financial statements in the half-yearly financial report for
the six months ended 30 June 2009 is not prepared, in all material respects, in
accordance with the rules of the London Stock Exchange for companies trading
securities on the Alternative Investment Market.
Emphasis of matter - going concern
In arriving at our review conclusion, which is not qualified, we have considered
the adequacy of the disclosures made by the Directors in note 2 of the condensed
financial statements concerning the group's loan facility of EUR326.7m. This note
sets out the consequences of that lender calling for a valuation in accordance
with the facility agreement which may cause a sequence of events resulting in
the potential loss of control of a significant part of the Group's portfolio of
investment properties. Should such events occur and the lender enforce its
security and take control of the property assets on which the loan is secured,
this would result in material curtailment of the Group's operations. This
represents a material uncertainty that may cast significant doubt over the
ability of that proportion of the group's operations to continue as a going
concern.
BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
Douglas, Isle of Man
1 September 2009
This information is provided by RNS
The company news service from the London Stock Exchange
END
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