| Tue 4 Aug 2009, 10:00 | | NEP - New Europe Property Investments Plc - Condensed consolidated unaudited |
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NEP
NEP
NEP - New Europe Property Investments Plc - Condensed consolidated unaudited
interim financial statements for the period from 1 January 2009 to 30 June 2009
and dividend announcement
New Europe Property Investments plc
(Incorporated and registered in the Isle of Man with registered number 001211V)
(Registered as an external company with limited liability under the laws of
South Africa, registration number 2009/000025/10)
AIM share code: NEPI
JSE share code: NEP
ISIN: IM00B23XCH02
("the Company", "NEPI" or "the Group")
CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD
FROM 1 JANUARY 2009 TO 30 JUNE 2009 AND DIVIDEND ANNOUNCEMENT
CHAIRMAN`S STATEMENT
New Europe Property Investments plc`s ("the Company", "NEPI" or "the Group"
where statements refer also to the Company`s subsidiaries) condensed
consolidated unaudited financial results for the six month period ended 30 June
2009 are included in this report. In general, the Group continued to perform
strongly in an environment where many other property companies have been
affected by a range of issues that are related to the reduced availability of
debt finance and a global economic recession. This positions the Group to take
advantage of exciting investment opportunities. Further details are available
in the Combined Directors` and Investment Advisor`s report.
NEPI`s secondary listing on the Alternative Exchange ("AltX") of the JSE Limited
("JSE") in South Africa was completed on 17 April 2009. This process took
significantly longer than originally anticipated due to regulatory obstacles.
The AltX listing is a step that was designed to bring the Group closer to a main
board listing on the JSE that is planned for early 2010.
The Group has achieved consolidated distributable earnings of 7.66 Euro cents
per share in respect of the six months period ended 30 June 2009, accordingly
the Board declared an interim dividend of 7.66 Euro cents per share (the interim
dividend was 7.48 Euro cents per share in respect of the six months period ended
30 June 2008). The salient dates relating to the distribution are presented in
the Combined Directors` and Investment Advisor`s Report.
Dan Pascariu
Chairman
COMBINED DIRECTORS` AND INVESTMENT ADVISOR`S REPORT
NEPI has continued to perform in accordance with expectations during the first
six months of the 2009 financial year ("the interim period"), despite the
downturn in the economic cycle. This is the result of a strategy biased in
favour of long term leases and conservative gearing. Simultaneously, the Group
has been positioned to take advantage of investment opportunities that have
arisen from the downturn in the economic cycle.
Operational Performance
The outstanding weighted average lease duration was approximately 5.46 years as
at 30 June 2009 and rental income has been in line with budgets for the first
half of the 2009 financial year.
Administrative expenses include costs incurred in exploring a transaction in
relation to Carpathian plc. Financial expenses include Euro 905,048 of costs
incurred in connection with the AltX listing. Receivables from tenants were Euro
361,134 on 30 June 2009, which is in line with receivables of Euro 301,343 as at
December 2008, illustrating continued performance of tenants in accordance with
their obligations, during the interim period.
A large casino group that is a tenant in the Raiffeisen portfolio, has vacated
its premises and terminated rent payments in February 2009 in breach of its
contractual obligations. The performance of the casino group, and the other
existing smaller tenants in this portfolio at the acquisition date, have been
guaranteed by the vendor up until 8 February 2012. Consequently, the Company
has limited exposure to these tenants.
Trade and other receivables have increased from Euro 1,771,356 at 31 December
2008 to Euro 2,313,505. This is due mainly to an increase in receivables by
Euro 481,683 from the vendor in relation to the Raiffeisen portfolio. The Group
is earning a high return on the overdue receivables from the vendor and has
secured these along with other vendor`s payment obligations that will become due
up until December 2010, with some Euro 1,600,000 of VAT receivables and
unencumbered land conservatively estimated at a value of Euro 900,000.
Financial results
Three non-cash items affected the Group`s consolidated income statement
negatively by Euro 804,180. These items include deferred tax, changes in the
fair values of financial instruments put in place for interest rate hedging
purposes and the amortisation of the share incentive scheme fair value. These
items were discussed in the 2008 annual report and the explanations provided
therein remain relevant for the 2009 interim period. The exchange gain of Euro
1,723,780 recorded in the consolidated Group income statement results from the
weakening of the Romanian Leu compared to the Euro. As discussed in the 2008
annual report, the Romanian subsidiaries are accounted for in Leu with the
result that a movement of the currency gives rise to movements in the recorded
Leu value of assets and liabilities of the Group subsidiaries that are
consolidated. In substance, however, the Group`s income, assets and liabilities
are Euro denominated.
The combination of the above mentioned items led to a net accounting profit of
Euro 2,129,574 in relation to the interim period. Distributable earnings in
relation to the interim period amounted to Euro 2,156,596. This figure was
calculated by adjusting the accounting profit by reversing the exchange gain,
the deferred tax expense and the AltX listing expenses. Further adjustments
were made to eliminate the financial instrument fair value adjustments and to
amortise costs incurred in relation thereto, as well as adjustments required in
relation to the accounting treatment applied to the share incentive scheme.
Adjusted NAV per share is Euro 1.93 (31 December 2008 Euro 1.98) due to JSE
listing expenses, changes in the fair value of the financial instruments and the
difference between the currency translation reserve in the balance sheet
(resulting from the translation of equity recorded by the Company`s Romanian
subsidiaries in Leu) and the foreign exchange gain in the income statement.
Debt position and cash resources
NEPI has drawn down most of its debt facilities and had Euro 9,684,271 of cash
resources at the end of the interim period (of which Euro 8,205,687 was
unencumbered). The Group is meeting all of its debt covenants. NEPI`s loan-to-
value ratio at 30 June 2009 was 37% when adjusted for cash on hand (36% as at 31
December 2008). The first substantial debt repayment of Euro 6,824,800 is due
in April 2011, which we expect to re-finance given the relative low loan to
value ratio in relation to the property financed by this loan. The Group has
exercised the option to dispose of the Constanta property at a price of Euro
5,782,210, in line with the book value on 31 December 2008. Raiffeisen bank and
the lender to the Group in relation to the Raiffeisen portfolio approved the
transaction, but the spin off process in relation to the property is still
underway at the date of this report. The Constanta disposal should add a net
Euro 3,750,000 (after a partial repayment of debt agreed with the lender) to the
Group`s available cash resources, when completed.
DIVIDEND
The Board has declared a dividend per share of 7.66 Euro cents in respect of the
six months ended 30 June 2009. This represents a slight increase as compared to
the distribution in relation to the same period in 2008. The Company has
adequate accumulated profits to sustain the dividend payment.
The salient dates for the dividend are set out below.
Last day to trade (JSE Limited) Friday, 21 August 2009
Ex-dividend date (JSE Limited) Monday, 24 August 2009
Ex-dividend date (AIM) Wednesday, 26 August 2009
Record date Friday, 28 August 2009
Payment date Wednesday, 2 September 2009
No dematerialisation or rematerialisation of share certificates, nor transfer of
shares between registers in the Isle of Man and South Africa will take place
between Monday, 24 August 2009 and Friday, 28 August 2009, both dates inclusive.
Shareholders on the South African sub-register will receive dividends in South
African Rand, based on the exchange rate to be obtained by the Company on 13
August 2009. A further announcement in this respect will be made on or about 14
August 2009.
Market overview and prospects
The Romanian economy is in recession and has been subject to an acute shortage
of liquidity during the half year period. As a result, the Group was able to
negotiate deposit rates in excess of 7% on call facilities denominated in Euro.
The liquidity position seemed to have eased somewhat towards the end of the
interim period, in that deposit rates have decreased significantly.
There is a reduction in tenant demand and downward pressure on rental levels in
Romania. A number of landlords with shorter term lease agreements have had to
agree to rent reductions. The German market seemed to have been affected to a
lesser extent.
The economic downturn has created unique investment opportunities. A number of
property holding companies and developers are under financial pressure, due to a
number of reasons including over gearing and consequent breaches of loan to
value covenants, rent reductions where short term rent strategies were
implemented, a lack of finance sources in relation to continued development and
overdue loans held in relation to non-income producing assets with little
foreseeable development potential. Although few bank loans in relation to
properties have been accelerated, cash sweeps are generally implemented by banks
where the opportunities arise.
The Group has been exploring a number of acquisition opportunities, including a
transaction in relation to Carpathian plc (a company holding commercial
properties in Central and Eastern Europe) that was abandoned. In management`s
view, the most appropriate and attractive of the opportunities explored seem to
be direct acquisitions of commercial assets in Romania. Due to Romania`s retail
environment being the most underdeveloped in the European Union, dominant or
potentially dominant operating commercial assets anchored by international and
national retailers with long term lease agreements could present significant
value. NEPI is in advanced negotiations in respect of a number of these
opportunities and plans to acquire a number of operating commercial centres
Romania in a phased manner over the course of the next few months. The
potential vendors are selected developers with which NEPI wishes to form
mutually beneficial long term relationships. The potential acquisitions are
being pursued on the basis that the equity portions of the purchase prices will
be settled mostly through the issue of NEPI shares to the vendors. A
substantial portion of the vendor shares issued will be locked up for agreed
periods to align interests between NEPI and the developers. An investment in
relation to a fully pre-leased commercial centre under development is also under
discussion.
If completed, the acquisitions are expected to have a material enhancing effect
on NEPI`s future earnings per share. Further announcements are expected to be
made in due course.
Martin Slabbert
Director
BALANCE SHEET
Group Group Group
Unaudited Reviewed Audited
30 June 2009 30 June 2008 31 December
2008
Euro Euro Euro
ASSETS
Non-current assets 87,794,134 87,796,648 87,533,635
Investment property 5 85,280,283 81,848,110 85,142,170
Investment property at fair 78,676,715 78,954,078 78,627,504
value
Investment property under 6,603,568 2,894,032 6,514,666
development
Goodwill 6 2,386,463 5,736,305 2,386,463
Land concession 29,864 -
Tenant installation 4,372 -
Guarantee deposits 49,429 -
Investments in subsidiaries - - -
Loans to subsidiaries - - -
Financial assets at fair 8 127,388 128,568 5,002
value through profit or loss
Current assets 11,997,776 4,813,788 6,190,203
Trade and other receivables 2,313,505 1,621,547 1,771,356
Cash and cash equivalents 9,684,271 3,192,241 4,418,847
Total assets 99,791,910 92,610,436 93,723,838
EQUITY AND LIABILITIES
Total equity attributable to 49,815,481 54,682,210 51,397,909
equity holders
Share capital 267,950 267,950 267,950
Share premium 52,487,190 52,487,190 52,487,190
Share based payment reserve 7 152,665 6,712 81,841
Currency translation reserve (2,591,223) (34,132) (757,686)
Accumulated (loss)/ profit (501,101) 1,954,490 (681,386)
Non-current liabilities 45,281,792 32,426,370 37,195,489
Loans and borrowings 8 40,283,172 30,125,890 32,750,804
Financial liabilities at fair 8 934,866 - 575,303
value through profit or loss
Deferred tax liabilities 4,063,754 2,300,480 3,869,382
Current liabilities 4,694,637 5,501,856 5,130,440
Trade and other payables 3,057,850 4,315,018 3,268,082
Loans and borrowings 8 1,636,787 1,186,838 1,862,358
Total equity and liabilities 99,791,910 92,610,436 93,723,838
NAV per share 11 1.86 - 1.92
Adjusted NAV per share 11 1.93 - 1.98
(28,150,000 shares)
INCOME STATEMENT
Group
Unaudited Group Group
Reviewed Audited
30 June 30 June 31 December
2009 2008 2008
Euro Euro Euro
Net rental and related income 3,520,962 2,844,649 6,315,183
Contractual rental income and 4,323,488 3,475,127 7,713,486
expense recoveries
Property operating expenses (802,526) (630,478) (1,398,303)
Share based payments 8 (70,824) (6,712) (81,841)
Investment advisory fees (275,574) (300,618) (571,137)
Administrative expenses (274,508) (215,459) (498,656)
Foreign exchange gain 1,723,780 - 1,144,227
Fair value adjustment on - - (1,671,077)
investment property
Profit before net finance 4,623,836 2,321,860 4,636,699
expense
Finance income 134,523 245,908 275,930
Finance expense (2,286,056) (556,606) (2,239,250)
Net finance (expense) (2,151,533) (310,698) (1,963,320)
Earnings before tax 2,472,303 2,011,162 2,673,379
Tax (342,729) - (1,204,029)
Earnings after tax 2,129,574 2,011,162 1,469,350
Basic weighted average 9 7.95 7.51 5.48
earnings per share (Euro
cents)
Diluted weighted average 9 7.57 7.46 5.33
earnings per share (Euro
cents)
Distributable earnings per 9 7.66 7.48 14.72
share (Euro cents)
Headline earnings per share 10 1.78 - 7.76
(Euro cents)
10 1.69 - 7.54
Diluted headline earnings per
share (Euro cents)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Group Group Group
Unaudited Unaudited Unaudited
30 June 2009 30 June 31 December
2008 2008
Euro Euro Euro
Profit for the period 2,129,574 2,011,162 1,469,350
Other comprehensive income
- currency translation reserve (1,833,537) (56,765) (780,319)
Other comprehensive income for (1,833,537) (56,765) (780,319)
the period, net of income tax
Total comprehensive income for 296,037 1,954,397 689,031
the period
STATEMENT OF CHANGES IN EQUITY - GROUP -
Share Share Share Currency Retained Total
capital premium Based translat earnings
payme ion
nts reserves
reser
ve
Euro Euro Euro Euro Euro Euro
Opening 267,950 52,487,190 - 22,633 275,746 53,053,519
balance 1
January 2008
Transaction - - 6,712 - (332,418) (325,706)
with owners
- share based - - 6,712 - - 6,712
payments
reserve
- dividend - - - - (332,418) (332,418)
distribution
Total - - - (56,765) 2,011,162 1,954,397
comprehensive
income
- currency - - - (56,765) - (56,765)
translation
reserve
- profit for - - - - 2,011,162 2,011,162
the period
Closing 267,950 52,487,190 6,712 (34,132) 1,954,490 54,682,210
balance 30
June 2008
Opening 267,950 52,487,190 - 22,633 275,746 53,053,519
balance 1
January 2008
Transaction - - 81,841 - (2,416,682) (2,344,641)
with owners
- share - - 81,841 - - 81,841
based
payments
reserve
- dividend - - - - (2,426,482) (2,426,482)
distribution
Total - - - (780,319) 1,469,350 689,031
comprehensiv
e income
- currency - - - (780,319) - (780,319)
translation
reserve
- profit - - - - 1,469,350 1,469,350
for the year
Closing 267,950 52,487,190 81,841 (757,686) (681,386) 51,397,909
balance 31
December
2008
Opening 267,950 52,487,190 81,841 (757,686) (681,386) 51,397,909
balance 1
January
2009
Transacti - - 70,824 - (1,949,289) (1,878,465)
on with
owners
- share - - 70,824 - - 70,824
based
payments
reserve
- - - - - (1,949,289) (1,949,289)
dividend
distribut
ion
Total - - - (1,833,537) 2,129,574 296,037
comprehen
sive
income
- - - - (1,833,537) - (1,833,537)
currency
translati
on
reserve
- profit - - - - 2,129,574 2,129,574
for the
period
Closing 267,950 52,487,190 152,665 (2,591,223) (501,101) 49,815,481
balance
30 June
2009
CASH FLOW STATEMENT
Group Group Group
Unaudited Reviewed Audited
30 June 2009 30 June 2008 31 December
2008
Euro Euro Euro
OPERATING ACTIVITIES
Earnings after tax 2,129,574 2,011,162 1,469,350
Adjustments for:
Fair value of derivative 392,176 (128,568) 570,301
instruments
Fair value adjustments on - - 1,671,077
investment property
Share based payments 70,824 6,712 81,841
Net finance expense 1,759,357 310,698 1,963,320
Foreign exchange gain (1,723,780) - (1,144,227)
Corporate tax charge and deferred 341,180 - 1,204,029
tax
Operating profit before changes 2,969,331 2,200,004 5,815,691
in working capital
(Increase) in trade and other (534,924) (1,139,591) (1,219,480)
receivables
(Decrease) in trade and other (217,457) (172,427) (430,680)
payables
Interest paid (1,014,619) (446,048) (839,299)
Interest received 134,523 234,097 275,930
Cash flows from operating 1,336,854 676,035 3,602,162
activities
INVESTING ACTIVITIES
Acquisition of investment (138,113) (19,813,740) (22,465,661)
property
Payments for acquisition of - (27,209,412) (27,198,062)
subsidiaries less cash acquired
Cash flows from investing (138,113) (47,023,152) (49,663,723)
activities
FINANCING ACTIVITIES
Listing expenses on JSE (905,048) - -
Proceeds from bank borrowings 8,911,596 16,659,802 20,348,000
Repayment of borrowings (1,579,012) (382,368) (1,177,853)
Acquisition of interest hedging (155,000) - -
instruments
Payment of dividends (1,949,289) (332,418) (2,426,482)
Cash flows from financing 4,323,247 15,945,016 16,743,665
activities
Net increase/(decrease) in cash 5,522,248 (30,402,101) (29,317,896)
and cash equivalents
Cash and cash equivalents brought 4,418,847 33,651,107 33,651,107
forward
Translation effect on cash and (256,564) (56,765) 85,636
cash equivalents
Cash and cash equivalents carried 9,684,271 3,192,241 4,418,847
forward
NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS
1 General
New Europe Property Investments plc is a company incorporated in the Isle of Man
on 23 July 2007. The Company has a primary listing on the AIM market of the
London Stock Exchange and a secondary listing on the AltX of the JSE Limited.
The Group includes the Company and its subsidiaries.
2 Basis of preparation
The condensed consolidated unaudited interim financial statements have been
prepared in accordance with applicable Isle of Man law and International
Financial Reporting Standards (IFRS) IAS 34 Interim Financial Reporting. The
interim financial statements do not include all of the information required for
full annual financial statements, and should be read in conjunction with the
consolidated financial statements of the Group for the year ended 31 December
2008.
The condensed consolidated unaudited interim financial statements have not been
reviewed or reported on by the Company`s auditor.
3 Significant accounting policies
Except as described below, the accounting policies applied by the Group in the
condensed consolidated unaudited interim financial statements are the same as
those applied by the Group in its consolidated financial statements of the Group
for the period ended 31 December 2008.
(a) Changes in accounting policies
i) Determination and presentation of operating segments
As of 1 January 2009 the Group determines and presents operating segments based
on information that is internally produced. This change in accounting policy is
due to the adoption of IFRS 8 Operating Segments. Previously operating segments
were determined and presented in accordance with IAS 14 Segment Reporting. The
new accounting policy in respect of segment operating disclosure is presented as
follows.
Comparative segment information has been re-presented in conformity with the
transitional requirements of IFRS 8. Since the change in accounting policy only
impacts presentation and disclosure, there is no impact on earnings per share.
An operating segment is a component of the Group that engages in business
activities from which it may earn revenue and incur expenses, including revenue
and expenses that relate to transactions with any of the Group`s other
components.
An operating segment`s operating results are reviewed regularly by the
management to make decisions about resources to be allocated to the segment and
assess its performance, and for which discrete financial information is
available.
Segment results that are reported include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly corporate assets (primarily the Company`s
headquarters), head office expenses, and income tax assets and liabilities.
ii) Presentation of financial statements
The Group applies revised IAS 1 Presentation of Financial Statements (2007),
which became effective as of 1 January 2009. As a result, the Group presents in
the consolidated statement of changes in equity all owner changes in equity,
whereas all non-owner changes in equity are presented in the consolidated
statement of comprehensive income. This presentation has been applied in the
condensed consolidated unaudited interim financial statements for the six months
period ended 30 June 2009.
Comparative information has been re-presented so that it also is in conformity
with the revised standard. Since the change in accounting policy only impacts
presentation aspects, there is no impact on earnings per share.
4 Financial risk management
During the six months ended 30 June 2009 the Group has not changed its
objectives and policies in respect of credit risk, liquidity risk, market risk,
currency risk and interest rate risk.
5 Investment property
Group Group Group
30 June 2009 30 June 2008 31 December
2008
Euro Euro Euro
Movement in investment property is
as follows:
Carrying value at beginning of 85,142,170 21,718,366 21,718,364
period
Additions from business combination - 36,473,582 36,473,582
Assets under development acquired - 6,514,666 6,514,666
through business combination
Additions 138,113 17,141,496 22,106,635
Fair value adjustment - - (1,671,077)
Carrying value at period end 85,280,283 81,848,110 85,142,170
Except for Euro 118,113 representing the value of works in relation to the
Brasov building under construction no investment property was acquired or
disposed of during the period. Further information on investment property is
available in the Group`s 2008 annual report.
6 Goodwill
Detailed information about recognition and measurement of goodwill is disclosed
in the Group`s 2008 annual report.
7 Share based payments
The features of the share incentive scheme and its measurement on recognition
are disclosed in the audited financial statements for the year ended 31 December
2008.
The amount of Euro 152,665 represents the pro-rata amount of the fair value of
the options at grant date, in relation to the period over which the share scheme
shares were in issue.
8 Loans and borrowings
The Group contracted bank loan facility agreements with Nord LB Bank and Alpha
Bank Romania S.A. for an aggregate amount of Euro 28,119,800. Of that amount,
Euro 600,000 was available for draw-down as at 30 June 2009. A loan from
EuroHypo AG for an amount of Euro 15,000,000 has been taken over as a result of
the acquisition of General Investment S.R.L. and General Building Management
S.R.L.
The facility agreements concluded with Nord LB bear interest at a fixed rate of
5.17% as a result of an interest rate swap concluded with the Nord LB Bank
fixing the reference rate of the loan. As at 30 June 2009 the fair value of the
interest rate swap amounted to (Euro 934,866).
The facility agreements concluded with Alpha Bank Romania S.A. bear interest at
a floating rate of one month Euribor plus 1.9% p.a. and 4.5%, respectively. The
Group has capped its Euribor interest rate risk at 4.7% for the amount of Euro
7.6m and at 3% for the amount of Euro 7.3m by purchasing two derivative
financial instruments. As at 30 June 2009 the fair value of the derivative
financial instruments amounted to Euro 127,388.
The loan from EuroHypo AG bears interest at a fixed rate of 6.20% per annum.
In addition to the bank loans, the Group also obtained financing from the
vendors of the German portfolio amounting to Euro 853,281 for a period of five
years. Of this amount Euro 250,000 bears interest at a fixed interest rate of
6% p.a. while the balance does not attract interest.
The repayment profile of the group`s outstanding loans is set out in the table
below.
Loans and borrowings Due within Due within Due after
one year two to five five years
Euro years Euro
Euro
Alpha Bank Romania S.A. revolving - 13,524,800 -
credit facilities
Nord LB bank loan 137,754 1,224,972 12,581,640
EuroHypo AG 898,864 4,514,275 7,584,204
Vendor finance - 853,281 -
Accrued interest on Alpha Bank - - -
Romania S.A.
Accrued interest on Nord LB loan 384,420 - -
Accrued interest on Eurohypo AG loan 204,531 - -
Accrued interest on vendor finance 11,218 - -
TOTAL 1,636,787 20,117,328 20,165,844
As a result of the loan contract concluded with EuroHypo AG, first ranking
security interests were created over the real estate properties of General
Investment S.R.L. in favour of Eurohypo AG together with a prohibition to sell,
encumber or lease the real estate properties, through mortgage agreements
concluded for each individual property. In addition the following security
agreements have been concluded in relation to the loan:
Pledge agreement over the bank accounts of General Investment S.R.L.;
- General security agreement over the assets owned by General Investment
S.R.L.;
- Assignment of rental receivable to EuroHypo AG; and
Personal guarantee agreement between EuroHypo AG (as lender) and the Company (as
first guarantor).
Covenants:
Debt service ratio min 120%; and
Loan to value ratio max 70%.
The Alpha Bank Romania S.A. loans have been secured as follows:
- Mortgage over the land and building located in Rasnov and the land and
buildings in the Flanco portfolio;
- Pledge agreement over the bank accounts of NEPI Bucharest One S.R.L. and
NEPI Bucharest Two S.R.L opened with Alpha Bank Romania S.A.;
- Real movable security over the shares of NEPI Bucharest One S.R.L. and NEPI
Bucharest Two S.R.L; and
- Corporate guarantee issued by the Company.
Covenants:
Loan to value ratio max 60% in case of Nepi Bucharest Two S.R.L; and
Loan to value ratio max 65% in case of Nepi Bucharest One S.R.L.
9 Earnings per share
The calculation of basic earnings per share for the period ended 30 June 2009
was based on the profit attributable to ordinary equity holders of Euro
2,129,574 (30 June 2008: Euro 2,011,162) and the weighted average number of
26,795,000 (30 June 2008: 26,795,000) ordinary shares in issue during the period
(excluding the share incentive scheme shares).
The calculation of diluted earnings per share for the period ended 30 June 2009
was based on the profit attributable to ordinary equity holders of Euro
2,129,574 (30 June 2008: Euro 2,011,162) and the weighted average number of
28,150,000 (30 June 2008: 26,974,669) ordinary shares in issue during the period
(including the share incentive scheme shares).
The calculation of distributable earnings per share was based on earnings after
tax adjusted as shown in the table below to arrive at the distributable earnings
of Euro 2,156,596 (30 June 2008: Euro 2,104,386) and the number of shares in
issue at 30 June 2009.
Group Group
30 June 30 June 2008
2009 Euro
Euro
Distributable earnings 2,156,596 2,104,386
Earnings after tax 2,129,574 2,011,162
Unrealised foreign exchange gains (1,723,780) -
Share based payment fair value 70,824 6,712
JSE Listing expenses 905,048
Interest receivable from key employees 81,351 -
Fair value adjustments on investment - -
property
Net change in fair value of financial 392,176 432
assets and liabilities
Amortisation of the premium paid for (39,777) (1,648)
derivative instrument
Share issue cum distribution - 87,728
Deferred tax expense 341,180 -
Number of shares in issue at end of 28,150,000 28,150,000
period
Distributable earnings per share (Euro 7.66 7.48
cents)
1,355,000 shares were issued as part of the share option scheme and are
accounted for as treasury shares.
10 Headline earnings per share
The calculation of headline earnings per share for the period ended 30 June 2009
was based on headline earnings of Euro 476,618 and 26,795,000 ordinary shares in
issue during the period (excluding the share incentive scheme shares).
The calculation of diluted headline earnings per share for the period ended 30
June 2009 was based on headline earnings of Euro 476,618 and the weighted
average of 28,150,000 ordinary shares in issue during the period (including the
share incentive scheme shares).
Group
30 June 2009
Euro
Gross Net
Profit after tax 2,129,574 2,129,574
Unrealised foreign exchange gain (1723,780) (1723,780)
Share base payment fair value 70,824 70,824
Headline earnings 476,618 476,618
As of 30 June 2008 headline earnings per share has not been computed as the
Company was not listed on AltX of the JSE.
Net asset value per share
Group Group
30 June 31 December
2009 2008
Euro Euro
Adjusted net asset value 54,446,673 55,834,728
Net asset value in balance sheet 49,815,481 51,397,909
Value of shares issued in the share 2,953,900 2,953,900
incentive scheme
Deferred tax 4,063,754 3,869,382
Goodwill (2,386,462) (2,386,462)
Number of shares in issue at end of 28,150,000 28,150,000
period
Net asset value per share (based on 1.86 1.92
26,795,000 shares in issue)
Adjusted net asset value per share 1.93 1.98
12 Segment reporting
The Group operates only one business segment, which is the rental of investment
property.
On a primary basis, the Group operates in the following geographical areas of
Europe:
- Romania
- Germany
The Group`s primary format for segmental reporting is based on geographic
segments.
The above geographic areas represent separate geographic segments.
From 15 April 2008, the Group commenced operations in a second geographic
segment as a result of its joint acquisition of six properties in Germany. The
Group`s segmental revenue and results for the period are presented below.
Romania Germany Consolidate
d
30 June 30 June 2009 30 June
2009 Euro 2009
Euro Euro
External revenues 3,572,907 750,581 4,323,488
Inter-segment revenue - - -
Reportable segment profit 3,798,312 (142,784) 3,655,528
before income tax
Segment assets 69,513,236 18,385,331 87,898,567
Romania Germany Consolidate
d
30 June 30 June 2008 30 June
2008 Euro 2008
Euro Euro
External revenues 3,266,879 208,249 3,475,128
Inter-segment revenue - - -
Reportable segment profit 2,221,434 89,716 2,311,150
before income tax
Segment assets 71,566,421 19,450,098 91,016,519
Group Group
30 June 30 June
2009 2008
Euro Euro
Total profit for reportable 3,655,528 2,311,150
segments
Share based payments (70,824) (6,712)
Investment advisor management fee (275,574) (300,618)
Administrative expenses (274,508) (215,459)
JSE listing costs (905,048) -
Interest income - 222,801
Consolidated profit before income 2,129,574 2,011,162
tax
13 Contingent assets and liabilities
Guarantees
The Group`s policy is to provide financial guarantees to subsidiaries to the
extent required in the normal course of business.
The Company issued two corporate letters of guarantee to Nepi Bucharest One
S.R.L. and Nepi Bucharest Two S.R.L. in relation to the Alpha Bank Romania S.A.
credit facilities (see note 8).
14 Related party transactions
Identity of related parties with whom material transactions have occurred
The subsidiaries and Directors are related parties. The subsidiaries of the
Company are presented on page 1 and 2 of the interim financial statements. The
Directors are set out on page 1 of the interim financial statements.
Material related party transactions
Pursuant to the investment advisory agreement, the Investment Advisor is paid a
monthly advisory fee of one percent per annum of the daily average market
capitalisation of NEPI, in consideration for performing investment advisory
services for the Group, whether itself or through sub-contractors. The
Investment Advisor is also entitled to an annual performance fee from the Group
of an amount equal to 20 percent of the declarable dividend arising from
investment income in respect of the financial year under consideration to the
extent that this exceeds an annual 10 percent return on the aggregate capital
invested in the company as at the relevant date.
15 Subsequent events
There are no significant transactions between the reporting period and the
release date of the interim financial statements.
4 August 2009
For further information please contact:
New Europe Property Investments plc +40 74 432 8882
Martin Slabbert
Smith & Williamson Corporate Finance Limited +44 20 7131 4000
Azhic Basirov/Joanne Royden-Turner
South African Sponsor +27 11 283 0042
Java Capital (Proprietary) Limited
Date: 04/08/2009 10:00:01 Produced by the JSE SENS Department.
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