International Real Estate Plc
31 August 2007
International Real Estate Plc / Epic: IRE / Index: AIM / Sector: Property
31st August 2007
International Real Estate Plc
('IRE' or the 'Group')
Interim Results
International Real Estate Plc, the AIM traded European property investment and
development company, announces its results for the six months ended 30 June
2007.
Overview
• Pre-tax profit increased to approximately €4.8 million (30 June 2006:
approximately €1.2 million)
• Total group assets increased to approximately €181.2 million (31 December
2006: approximately €129.0 million)
• Interim dividend increased to 5 pence per share or €0.07 per share (2006: 4
pence or €0.06 per share)
• High capital growth potential of property portfolio focused in Germany and
Belgium - refurbishment/redevelopment programmes underway
• German portfolio stands at circa 270,000 sq m
• Issued a €32 million two-tranche bond, finalised in May 2007
IRE CEO, Daniel Akselson, said, 'We continue to expand our property portfolio by
selected acquisition and continue to develop it through upgrading and
refurbishment programmes to enhance value. Our team has been successful in
utilising its technical knowledge and industry connections to structure and
finance deals quickly and cost effectively. I believe that opportunities remain
in the European property market and I am confident that we will continue to
develop our property portfolio.'
For further information please visit www.IREplc.com or contact:
Rolf L Nordstrom International Real Estate Plc Tel: +44 (0) 20 7495 1480
Daniel Akselson International Real Estate Plc Tel: +31 (0) 653 304 590
David Anderson KBC Peel Hunt Ltd Tel: +44 (0) 20 7418 8900
Oliver Stratton KBC Peel Hunt Ltd Tel: +44 (0) 20 7418 8900
Hugo de Salis St Brides Media & Finance Ltd Tel: +44 (0) 20 7242 4477
Chairman's Statement
As emphasised in the last set of results, the Group is focussing on expanding
its property portfolio by targeting properties that have strong potential for
improvement and provide IRE with the opportunity to gain value uplift through
the implementation of refurbishment programmes. In line with this, during the
six months to June 2007 the Group completed a number of transactions to increase
the size of its property portfolio.
Property Portfolio - Germany
Germany remains the primary area of activity for the Group, where the focus is
on investment in residential projects. IRE now holds circa 270,000 sq m of
property in the country primarily in central Berlin, Magdeburg, Halle and the
North Rhine-Westphalia area.
Deal flow remains positive and the Board continues to select opportunistic
property acquisitions in addition to substantially upgrading existing property
assets to further enhance and add value to the Group's German portfolio. As
reported in the results for the year ended 31 December 2006 the Group increased
its German portfolio during the period, with the purchase of both residential
and commercial properties. The Group remains particularly active in the
desirable Hegelstrabe area of Magdeburg.
Property Portfolio - Belgium
We continue to evaluate property opportunities in Belgium where we perceive
there to be value uplift potential. In line with this we recently announced that
we have entered into a contract to acquire a circa 88,000 sq m leasehold site
close to Brussels from Shell Research SA. This includes the circa 27,600 sq m
Monnet Centre International Laboratory building and outline permission for a
circa 50,000 sq m extension has been granted. Completion of the acquisition is
expected in May 2008.
Elsewhere, the development of a 5,166 sq m project consisting of 29 apartments
and parking on Rue du Gouvernement Provisoire, close to the Royal Palace in the
centre of Brussels, is progressing well with the construction phase on-going and
completion on schedule for mid-2008.
Results
In the six months to 30 June 2007 pre-tax profits increased to approximately
€4.8 million (30 June 2006: approximately €1.2 million). At 30 June 2007, total
Group assets had increased to approximately €181.2 million (31 December 2006:
approximately €129.0 million), and the net asset value per share was
approximately €5.64 per share (31 December 2006: approximately €4.98 per share).
Financial Position
As at 30 June 2007, properties held as investments were approximately €161.4
million (31 December 2006: approximately €112.0 million). The Group had cash as
at 30 June 2007 of approximately €6.5 million (31 December 2006: approximately
€12.2 million) and net borrowings as at 30 June 2007 of approximately €97.2
million (31 December 2006: approximately €60.0 million).
Dividend
The Board proposes to pay an interim dividend of 5 pence (€0.07) per share
(2006: 4 pence or €0.06 per share) payable on 19 October 2007, to shareholders
on the register on 21 September 2007.
Outlook
IRE is a property investment and development Group. With a structured and proven
investment process in place, an established office and staff in Berlin, the
Group believes it is well positioned to continue to perform and build its
property portfolio in Europe with a focus on Germany. By utilising its regional
knowledge and local relationships, it can target and acquire property with
strong potential and add value through refurbishment programmes as previously
demonstrated. The Board sees opportunity in its areas of operation and believes
that IRE will continue to grow.
Rolf L Nordstrom, Chairman
31 August 2007
Independent review report to International Real Estate Plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2007 set out on pages 4 to 9. We have read the
other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
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.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim report 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.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2007.
BDO Stoy Hayward LLP
Chartered Accountants
Epsom
31 August 2007
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2007
Six month Six month
period ended period ended Year ended
30.06.2007 30.06.2006 31.12.2006
Note €'000 €'000 €'000
Unaudited Unaudited Audited
Revenue 9,175 2,331 5,365
Cost of Sales 2 (1,303) 914 (4,793)
Gross Profit 7,872 3,245 572
Gain on revaluation of investment properties 963 - 20,695
Administration expenses (1,598) (1,392) (3,052)
Other operating expenses (34) (18) (1,932)
Operating Profit 7,203 1,835 16,283
Finance income 162 245 292
Profit on sale of subsidiaries - - 2,656
Finance costs (2,567) (875) (2,445)
Profit Before Tax 4,798 1,205 16,786
Tax charge (242) (129) (5,785)
Profit for Period 4,556 1,076 11,001
Attributable to:
Equity holders of the parent 4,605 1,102 10,500
Minority interest (49) (26) 501
4,556 1,076 11,001
Earnings per Share
From continuing operations
Basic 3 €0.66 €0.16 €1.59
Diluted 3 €0.66 €0.16 €1.59
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE PERIOD ENDED 30 JUNE 2007
There is no difference between the profit for the periods shown in the
Consolidated Income Statement and total recognised income and expenses for the
respective periods.
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2007
30.06.2007 30.06.2006 31.12.2006
Note Unaudited Unaudited Audited
€'000 €'000 €'000
Non-Current Assets
Investment properties 5 161,370 67,921 112,036
Available for sale investments - 2 2
161,370 67,923 112,038
Current Assets
Inventories 2,565 1,963 1,962
Trade and other receivables 10,775 6,321 2,884
Cash and cash equivalents 6,464 8,937 12,168
19,804 17,221 17,014
Total Assets 181,174 85,144 129,052
Current Liabilities
Other payables (29,718) (6,875) (6,692)
Current tax liabilities (37) (36) (37)
Bank loans (8,474) (808) (8,474)
Provisions (2,346) (404) (9,011)
Finance leases - - (37)
(40,575) (8,123) (24,251)
Non-Current Liabilities
Bank loans (64,339) (45,143) (63,688)
Bond (30,892) - -
Deferred tax liabilities (6,316) (341) (6,056)
Long term provisions - (6,000) -
Finance leases - (563) (561)
(101,547) (52,047) (70,305)
Total Liabilities (141,122) (60,170) (94,556)
Net Assets 39,052 24,974 34,496
Equity
Share capital 4,408 4,408 4,408
Share premium account 7,957 7,957 7,957
Capital redemption reserve 566 566 566
Retained earnings 25,669 12,069 21,064
Equity Attributable to Equity Holders of the
Parent
38,600 25,000 33,995
Minority Interest 452 (26) 501
Total Equity 39,052 24,974 34,496
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2007
Six month Six month
period ended period ended Year ended
30.06.2007 30.06.2006 31.12.2006
Unaudited Unaudited Audited
Note €'000 €'000 €'000
Net cash inflow/(outflow) from operating
activities 6 14,108 (3,016) (3,075)
Investing activities
Interest received 162 106 273
Acquisition of investment properties (54,030) (16,187) (39,627)
Sale of investment property 5,420 - -
Sale of subsidiary undertaking - - 4,687
Purchase of subsidiary undertaking - - (2,031)
Net cash used in investing activities (48,448) (16,081) (36,698)
Financing activities
Dividends paid - - (805)
Interest paid (2,567) (875) (2,374)
Repayments of borrowings (340) (306) (21)
New bank loans raised 651 12,100 38,026
Issue of listed bond net of issue costs 30,892 - -
Net cash generated by financing activities 28,636 10,919 34,826
Net decrease in cash and cash equivalents (5,704) (8,178) (4,947)
Cash and cash equivalents at beginning of year 12,168 17,115 17,115
Cash and cash equivalents at end of period 6,464 8,937 12,168
NOTES TO THE ACCOUNTS
FOR THE PERIOD ENDED 30 JUNE 2007
1. Accounting Policies
Basis of accounting
The interim financial information for the six months ended 30 June 2007 and that
for the equivalent period in 2006 is unaudited. The comparatives for the full
year ended 31 December 2006 are not the Company's full statutory accounts for
that year. A copy of the statutory accounts for that year has been delivered to
the Registrar of Companies. The auditors' report on those accounts was
unqualified, did not include references to any matters to which the auditors
drew attention by way of emphasis without qualifying their report and did not
contain a statement under section 237(2)-(3) of the CompaniesAct1985.
The interim financial information has been prepared in accordance with the
accounting policies and presentation required by International Financial
Reporting Standards, incorporating International Accounting Standards and
Interpretations (collectively 'IFRS') as endorsed by the European Union.
The interim report is presented and prepared in a form consistent with that
which has been adopted in the Company's annual accounts having regard to the
accounting standards applicable to such accounts.
2. Cost of Sales
Included in costs of sales is a provision release of €6.0m (30 June 2006 €3.7m,
31 December 2006 €nil) representing the utilisation of provisions charged to
cost of sales in previous periods in connection with property disposals.
3.Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings Six month Six month
period ended period ended Year ended
30.06.2007 30.06.2006 31.12.2006
Earnings for the purpose of basic and diluted earnings
per share being net profit attributable to equity
holders of the parent €4,556,106 €1,075,769 €11,000,746
Number of shares Six month Six month
period ended period ended Year ended
30.06.2007 30.06.2006 31.12.2006
Weighted average number of Ordinary Shares for the
purposes of basic and diluted earnings per share 6,927,446 6,927,446 6,927,446
Basic and diluted earnings per share € 0.66 €0.16 € 1.59
4. Dividends
Six month Six month
period ended period ended Year ended
30.06.2007 30.06.2006 31.12.2006
€'000 €'000 €'000
Amounts recognised as distributions
to equity holders in the period
Final dividend for the year ended 31
December 2005 of €0.06 (4.0p) (2004
- €0.04 (3.0p)) per share - 402 403
Interim dividend for the year ended
31 December 2006 of €0.06 (4.0p)
(2005 - €0.04 (3.0p)) per share - - 402
- 402 805
Proposed interim dividend for the
year ending 31 December 2007 of €
0.07 (5.0p) (2006 - €0.06 (4.0p))
per share 485 404 402
Final dividend for the year ended 31 December 2006 of €0.07 (5.0p) (2005 - €0.06
(4.0p)) per share was paid on 10 August 2007
5. Investment Property
Six month Six month
period ended period ended Year ended
Fair value 30.06.2007 30.06.2006 31.12.2006
€'000 €'000 €'000
At 1 January 112,036 51,734 51,734
Additions during the period 53,791 16,187 36,033
Additions resulting from business combinations - - 3,574
Disposals during the period (5,420) - -
Increase in fair value during the period 963 - 20,695
At end of period 161,370 67,921 112,036
6. Notes to the Cash Flow Statement
Six month Six month
period ended period ended Year ended
30.06.2007 30.06.2006 31.12.2006
€'000 €'000 €'000
Operating profit 7,203 1,835 16,283
Adjustments for:
Increase in fair value of investments (963) - (20,695)
Decrease in provisions (6,665) (3,742) (1,135)
Operating cash flows before movements in working (425) (1,907) (5,547)
capital
Increase in inventories (603) (1) -
(Increase)/decrease in receivables (7,891) (3,324) 113
Increase in payables 23,027 2,216 2,359
Cash generated/(used) from operations 14,108 (3,016) (3,075)
Income taxes paid - - -
Net cash inflow/(outflow) from operating activities 14,108 (3,016) (3,075)
7. Issue of Listed Bonds
During the period IRE German Property Holding BV, a subsidiary company, in a
private placement issued bonds, in the amount of €32 million with the purpose of
refinancing shareholder loans from IRE plc and a bridge loan from a bank. The
bonds are secured on the related properties and the bondholders do not have
legal recourse against IRE plc.
On 23 May 2007 the bonds were dual listed on the OMX Stockholmborsen AB and on
the Copenhagen Stock Exchange.
The senior bond carries a fixed interest rate of 7.7326% and the junior bond
carries a fixed interest rate of 8.5%. Interest on both tranches is payable
annually in arrears.
The bonds are scheduled to be repaid in full at maturity on 1 March 2015,
subject to the Company not exercising its right to early repayment.
8. Post Balance Sheet Events
Details of post balance sheet events are given in the Chairman's Statement.
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