27th Jul 2006 07:02
Hansteen Holdings plc27 July 2006 27 July 2006 Hansteen Holdings PLC ("Hansteen", the Company") Interim Results Hansteen Holdings PLC (AIM: HSTN), the new pan European property investmentcompany, formed by Ian Watson and Morgan Jones, the founders and formerdirectors of Ashtenne Holdings, announce maiden interim results for the period27 October to 30 June 2006. Highlights * Admitted to AIM on 29 November 2005 - raised £123.6 million (net) * Approximately £100 million of properties, mainly in continental Europe, acquired to date * Pre tax profit for the period - £2.8 million * Annualised net rental income of £8.4 million * Net assets of £126.3 million - no borrowings * New €230 million revolving loan facility with Bank of Scotland James Hambro, Chairman, commented: "Operationally, the Hansteen team has grownfrom two to seven employees, and we have an established network of contacts,agents and professional staff throughout continental Europe which will providethe company with a solid foundation for building the portfolio further. As aresult, we are looking forward optimistically to the second half of 2006." For further information:Morgan Jones/Ian Watson Jeremy Carey/Rachel DrysdaleHansteen Holdings plc Tavistock CommunicationsTel: 020 7016 8820 Tel: 020 7920 3150 HANSTEEN HOLDINGS PLC Interim Statement We are pleased to present our first set of results since the incorporation ofthe Company in October 2005 and the subsequent admission to AIM of the Company'sshare capital, in November 2005, at which time we raised £123.6 million (net ofexpenses), through the placing of 125 million new ordinary shares at £1 each. We are delighted with the progress made in the seven months since the flotation.During this period the Company has acquired a portfolio of properties ofapproximately £100 million and achieved an interim profit of £2.8 million beforetax. Since incorporation, Hansteen has been transformed from a start up business withtwo employees and no properties to a company with a substantial and growingproperty portfolio, a strong management team and a growing network of contactsthroughout continental Europe to assist in the development of the business. Results Hansteen today announces a profit before tax of £2.8 million for the period to30 June 2006 and an annualised net rental income of £8.4 million. As at 30 Junethe Company had net assets of £126.3 million and no borrowings as the Board'spolicy has been to invest first the equity raised at flotation before utilisingany debt finance. As completion of the bulk of our property acquisitions has taken place in thelast three months the Board has decided not to have an interim propertyvaluation this year. From next year, however the Company's portfolio will bere-valued for both the interim and final full year accounts. Property Our core business is the acquisition of industrial and logistics properties incontinental Europe. Our focus to date has been on Germany, France and TheNetherlands. Compared with the UK market, these types of properties can beacquired at a higher yield and with lower financing costs. The core portfolio as at 30 June 2006 comprised 27 industrial properties at agross cost of approximately £82 million, of which £61 million is in theNetherlands, £14 million in Germany and £7 million in France. These propertiesare producing a current net annual rental income of £7.44 million, which, aftertaking account of different lease structures in each country, produces a currentnet yield of approximately 8%. The properties are largely logistics and production units. The purchase costsare generally lower than replacement cost which is an important factor inHansteen's buying criteria. The current portfolio has a vacancy rate of 7%. Prices are increasing in most western continental European markets and we expectto see continued yield compression. However, there are still opportunities topurchase properties on attractive terms. In addition to the properties acquiredup to the end of June, the Company has a good pipeline of new acquisitions inall three countries where we are currently invested and today we have announcednew purchases in Germany and The Netherlands at a total value of approximately €24 million. As the number of investments grow, we expect the balance between the three countries to even out to some extent. The Company will also start to look more actively for investments in other parts of continental Europe. A key part of Hansteen's strategy is to make investments in non-coreopportunistic purchases where we believe added value can be achieved. We havealready made two such investments which are expected to contribute positively tothe returns of the Company in the long term. The first is a portfolio of 390 apartments in Wiesbaden in Germany which weacquired from the local municipality at a total cost of €21million. Theseproperties provide a good income stream and potential for growth through the 18%of the apartments that are currently vacant. The second is a 90 acre greenfieldsite in Gilston, near Falkirk in Scotland which was previously owned by AshtenneHoldings plc. We believe increased value can be achieved through improvement inthe planning authorisation and investment in the infrastructure. Finance During the seven months since flotation the monies raised have largely beeninvested and will be fully invested when we complete the acquisition of theproperties currently in the pipeline. As a result we have recently negotiated anew €230 million revolving loan facility with Bank of Scotland for the expansionof our core business. This facility should enable us to continue with thestrategy set out at the commencement of our business and to benefit from thearbitrage between rental yields in continental Europe and interest costs. As Hansteen Holdings PLC is a UK company reporting in sterling the Group has acurrency exposure as the majority of its investments are in the Euro zone. Allborrowing will be in Euros (or the relevant local currency), thus partiallyhedging the currency exposure. However, Hansteen intends to substantiallyprotect the sterling value of its foreign currency assets represented by theequity portion of investments by taking out a three year forward contract. Thiscover will be adjusted from time to time taking into account, inter alia, thelevel of capital gain in the underlying property portfolio Outlook The market outlook in the last seven months has been consistent with ourexpectations at the time of flotation, although prices in parts of Europe havebeen increasing faster than expected, particularly in The Netherlands and theParis region of France. Nevertheless, the Board remains confident that Hansteenwill continue to build an attractive, high yielding portfolio of properties. Inaddition to falling yields, we have also seen evidence of premium prices beingpaid for larger portfolios as substantial funds seek to invest quickly. Again wehope this will work to the Company's advantage. Operationally, the Hansteen team has grown from two to seven employees, and wehave an established network of contacts, agents and professional staffthroughout continental Europe which will provide the company with a solidfoundation for building the portfolio further. As a result we are lookingforward optimistically to the second half of 2006. James HambroChairmanHansteen Holdings plc. 27 July 2006 HANSTEEN HOLDINGS PLC Consolidated income statementfor the period from 27 October 2005 to 30 June 2006 Period from 27 October 2005 to 30 June 2006 £'000 Note UnauditedContinuing operations Revenue 3 4,410 Cost of sales (1,714) ------------------Gross profit 2,696 Administrative expenses (1,496) ------------------Operating profit 4 1,200 Net financing income - financing income 1,713 - financing expenses (91) ------------------ 1,622 ------------------ Profit before tax 2,822 Tax 6 (903) ------------------Profit for the period 1,919 ==================Earnings per share Basic 1.8p ==================Diluted 1.8p ================== HANSTEEN HOLDINGS PLC Consolidated balance sheetAt 30 June 2006 30 June 2006 £'000 UnauditedNon-current assets Property, plant and equipment 25Investment property 95,668 ------------------ 95,693 ------------------Current assets Trading properties 5,355Trade and other receivables 2,324Cash and cash equivalents 26,864 ------------------ 34,543 ------------------Total assets 130,236 ==================Current Liabilities Trade and other payables (2,742)Current tax liabilities (763) ------------------ (3,505) ------------------Net current assets 31,038 ------------------Non-current liabilities Deferred tax liabilities (457) ------------------ (457) ------------------Total liabilities (3,962) ==================Net assets 126,274 ==================Equity Share capital 12,500Share premium account 111,133Translation reserves 701Retained earnings 1,940 ------------------Total equity 126,274 ================== HANSTEEN HOLDINGS PLC Consolidated statement of changes in equityfor the period from 27 October 2005 to 30 June 2006 Share Share Translation Retained capital premium reserves earnings Total £'000 £'000 £'000 £'000 £'000 Unaudited Unaudited Unaudited Unaudited Unaudited Exchange differences arising on translation of overseas operations - - 1,018 - 1,018 Tax on items taken directly to equity - - (317) - (317) ---------- ---------- ---------- ---------- ----------Net income recognised directly in equity - - 701 - 701 Share based payments - - - 21 21 Profit for the period - - - 1,919 1,919 Ordinary shares issued at a premium 12,500 112,500 - - 125,000 Costs of issue of shares at a premium - (1,367) - - (1,367) ---------- ---------- ---------- ---------- ----------Balance at 30 June 2006 12,500 111,133 701 1,940 126,274 ========== ========== ========== ========== ========== HANSTEEN HOLDINGS PLC Consolidated cash flow statementfor the period from 27 October 2005 to 30 June 2006 Period from 27 October 2005 to 30 June 2006 £'000 Note Unaudited Net cash used in operating activities 5 (3,718) ------------------Interest received 1,711Additions to property, plant and equipment (29)Additions to investment properties (94,644) ------------------Net cash used in investing activities (92,962) ------------------ Proceeds from issue of shares at a premium 125,000Costs of issue of shares at a premium (1,367)Finance costs (91) ------------------Net cash from financing activities 123,542 ------------------Net increase in cash and cash equivalents 26,862 Effect of foreign exchange rate changes 2 ------------------Cash and cash equivalents at end of period 26,864 ================== HANSTEEN HOLDINGS PLC Notes to the Accounts for the period from 27 October 2005 to 30 June 2006 1. General information. Hansteen Holdings plc was incorporated in the United Kingdom under the CompaniesAct 1985 on 27 October 2005. The address of the registered office is 1 BerkeleyStreet, London W1J 8DJ. The Company was listed on AIM on 29 November 2005 and these financial statementscover the period from its date of incorporation on 27 October 2005 to 30 June2006. As these are the Company's maiden interim results there are no comparativefigures. The Group's principal activities are those of a property group investing mainlyin industrial properties in continental Europe. These financial statements are presented in pounds sterling because that is thecurrency of the primary economic environment in which the group operates.Foreign operations are included in accordance with the policies set out in Note2. The interim report was approved by the Board on 26 July 2006.The financialinformation contained in this report does not constitute statutory accountswithin the meaning of Section 240 of the Companies Act 1985. The unauditedfinancial information contained in this report has been prepared on the basis ofaccounting policies set out below. 2. Accounting policies The financial information presented in this document is unaudited and has beenprepared in accordance with International Financial Reporting Standards('IFRSs'). Accounting convention. The financial statements have been prepared under thehistorical cost convention. The first revaluation of the investment propertiesof the Group will be undertaken at 31 December 2006. Basis of consolidation. The consolidated financial statements incorporate thefinancial statements of the Company and entities controlled by the Company (itssubsidiaries). Control is achieved where the Company has the power to govern thefinancial and operating policies of the investee entity so as to obtain benefitsfrom its activities. The results of subsidiaries which commenced trading or which were acquiredduring the period have been included from the date on which trading commenced orthe date from which they were acquired. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. Property, plant and equipment. This comprises computer and office equipment.Computers and office equipment are stated at cost less accumulated depreciationand any recognised impairment loss. Depreciation is charged so as to write off the cost or valuation of computersand office equipment, over their estimated useful lives, using the straight linemethod, on the following bases: Computers 3 yearsOffice equipment 3 years Investment properties. Investment property, which is property held to earnrentals and/or for capital appreciation are included in these first interimfinancial statements at cost and will be independently valued on an open marketbasis on 31 December 2006. Any surplus or deficit arising on revaluinginvestment properties is recognised in the income statement. Profits and losses on sales of investment properties are recognised in theincome statement on unconditional exchange of contracts. The profit on disposalis determined as the difference between the sales proceeds and the carryingamount of the asset at the commencement of the accounting period plus additionsin the period. Leasing. Leases are classified as finance leases whenever the terms of the leasetransfer substantially all the risks and rewards of ownership to the lessee. Allother leases are classified as operating leases. Where a property is held undera head lease it is initially recognised as an asset as the sum of the premiumpaid on acquisition and the present value of minimum ground rent payments. Thecorresponding rent liability to the head leaseholder is included in the balancesheet as a finance lease obligation. Trading Properties. Trading properties are included in the balance sheet at thelower of cost and net realisable value. Cost includes development costsspecifically attributable to properties in the course of development. Netrealisable value represents the estimated selling price less further costsexpected to be incurred to completion and disposal. Financial Instruments. Trade receivables and payables. Trade receivables and payables are stated attheir nominal value. Trade receivables are reduced by appropriate allowances forestimated irrecoverable amounts. Financial obligations. Debt instruments are stated at their net proceeds onissue. Finance charges including premiums payable on settlement or redemptionand direct issue costs are spread over the period to redemption using theeffective interest method. Cash and cash equivalents. Cash and cash equivalents comprise cash on hand anddemand deposits and other short-term highly liquid investments that are readilyconvertible to a known amount of cash and are subject to an insignificant riskof changes in value. Revenue recognition. Revenue is measured at the fair value of the considerationreceived or receivable and represents amounts receivable for goods and servicesprovided in the normal course of business, net of discounts, VAT and other salesrelated taxes. Rental income is recognised on an accruals basis. Sales of trading properties and surrender premiums are recognised onunconditional exchange of contracts. Interest income is accrued on a time basis, by reference to the principaloutstanding and at the effective interest rate applicable. Foreign Currencies. The individual financial statements of each group companyare presented in the currency of the primary economic environment in which itoperates (its functional currency). For the purpose of the consolidatedfinancial statements, the results and financial position of each group companyare expressed in pounds sterling, which is the functional currency of theCompany, and the presentation currency for the consolidated financialstatements. In preparing the financial statement of the individual companies, transactionsin currencies other than the entity's functional currency (foreign currencies)are recorded at the rates of exchange prevailing on the dates of thetransactions. At each balance sheet date, monetary assets and liabilities thatare denominated in foreign currencies are retranslated at the rates prevailingon the balance sheet date. Non-monetary items carried at fair value that aredenominated in foreign currencies are translated at the rates prevailing at thedate when the fair value was determined. Non-monetary items that are measured interms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on theretranslation of monetary items, are included in profit or loss for the period.Exchange differences arising on the retranslation of non-monetary items carriedat fair value are included in profit or loss for the period except fordifferences arising on the retranslation of non-monetary items in respect ofwhich gains and losses are recognised directly in equity. For such non-monetaryitems, any exchange component of that gain or loss is also recognised directlyin equity. For the purpose of presenting consolidated financial statements, the assets andliabilities of the Company's foreign operations are translated at exchange ratesprevailing on the balance sheet date. Income and expense items are translated atthe average exchange rates for the period, unless exchange rates fluctuatesignificantly during that period, in which case the exchange rates at the dateof transactions are used. Exchange differences arising, if any, are classifiedas equity and transferred to the Company's translation reserve. Such translationdifferences are recognised as income or as expenses in the period in which theoperation is disposed of. Operating leases. Rentals payable under operating leases are charged to incomeon a straight-line basis over the term of the relevant lease. Taxation. The tax expense represents the sum of the tax currently payable anddeferred tax. The tax currently payable is based on taxable profit for the year. Taxableprofit differs from net profit as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. TheCompany's liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Deferred tax is measured on a non-discounted basis. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity. Deferred tax assets and liabilities are offset when thereis a legally enforceable right to set off current tax assets against current taxliabilities and when they relate to income taxes levied by the same taxationauthority and the Company intends to settle its current tax assets and liabilities on a net basis. Share-based payments. The fair value of equity-settled share-based payments toemployees is determined at the date of grant and is expensed on a straight linebasis over the vesting period based on the Company's estimate of options that will eventually vest. Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. 3. Revenue includes the following: Period from 27 October 2005 to 30 June 2006 £'000 Unaudited Rental and property management activities 2,857Sale of trading properties 1,553 ------------------ 4,410 ================== 4. Operating profit includes £104,000 from the sale of trading properties. 5. Reconciliation of Operating Profit to Net Cash used in Operating Activities Period from 27 October 2005 to 30 June 2006 £'000 Unaudited Operating profit 1,200 Adjustments for: Depreciation of property, plant and equipment 4Share based payment expense 21 ------------------Operating cash flows before movements in working capital 1,225 Increase in stocks (5,355)Increase in debtors (2,318)Increase in creditors 2,730 ------------------Net cash used in operating activities (3,718) ================== 6. Tax on profit on ordinary activities Period from 27 October 2005 to 30 June 2006 £'000 Unaudited UK corporation tax 480Overseas Taxation 283 ------------------Current tax 763Deferred tax: 140 ------------------ 903 ================== 7. Post Balance Sheet Events On 25 July 2006 the Company arranged a €230 million revolving loan facility withBank of Scotland to fund the expansion of the core industrial propertybusiness in continental Europe. The bank loan is guaranteed by Hansteen Holdingsplc and is secured against the overseas industrial properties owned by theCompany. On 25 July 2006 the Company entered into a 3 year forward contract to sell €155.2 million to acquire £110 million at a rate of €1.41. 8. The Interim Report and Accounts will be posted to shareholders and will beavailable from the Company's Registered Office at 1 Berkeley Street, LondonW1J 8DJ. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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