22nd Sep 2008 07:00
22 September 2008
Hansteen Holdings PLC
("Hansteen", "the Company")
Interim Results
Hansteen Holdings PLC (AIM: HSTN), the pan European property investment company, announces Interim Results for the six months to 30 June 2008.
Highlights
Net asset value increase of 5% over the six months to 145pence (FY07: 138pence)*
Normalised profit increased by 40% to £5.7million (HY07: £4.0million)**
Pre-tax loss £1.6million (HY07: Profit £13.6million)***
Property assets of £445.0million (FY07 £411.9million)
Annualised net rental income of £32.9million (HY07 £17.1million)
Strong finances, net debt to value 35% - interest rate hedging for 95% of debt with a minimum three year remaining term.
Sold £17.6million, Acquired £14.6million
Jamie Hambro, Chairman commented: "These are good results reported against a backdrop of significant difficulties in the property market. We have achieved continued growth whilst maintaining a strong balance sheet and low gearing.
We are cautious in our view of further acquisitions in Europe and are husbanding our resources to take advantage of significant opportunities from distressed sellers, particularly in the UK".
For further information:
|
Morgan Jones/Ian Watson Hansteen Holdings plc Tel: 020 7016 8820 |
David Davies/Matt Goode KBC Peel Hunt Tel: 020 7418 8900 |
Jeremy Carey/Gemma Bradley Tavistock Communications Tel: 020 7920 3150 |
*Diluted EPRA basis
**Pre-tax profit excluding gains and losses on investment properties, foreign currency and interest rate derivatives hedge valuations.
***A loss for the period arises under the IFRS accounting rules largely as a result of the requirement to include the fair value of our currency hedging contract (a loss of £16.1m) to be included in the profit and loss account whereas the equal and opposite gain which has been achieved on the currency movement is shown in the reserves in the balance sheet.
Chairman's Statement
I am pleased to report good results for the six months to 30 June 2008, despite a difficult property market. Continued growth in net asset value has been achieved with a strong balance sheet, low gearing and without reliance on the strengthening Euro which we have substantially hedged. Overall our properties showed a small increase in value at the half year although we do not necessarily expect this to be repeated for the second half of the year. At the same time we are looking forward to a return to investing in the UK market where we are starting to see good value opportunities.
Results
Normalised profits for the six months to 30 June 2008 amount to £5.7million compared with £4.0million in 2007. This measure of profit is the traditional measure of income exceeding costs, excluding gains and losses on investment property, currency hedging instruments and interest rate hedging instruments. However, under IFRS accounting rules, we show a £1.6million accounting loss. This does not reflect the true returns of the business as it includes a £16.1million charge reflecting the fair value of our currency hedge for which there is an equal and opposite gain shown in the reserves in the Balance Sheet. The currency hedge was taken out to remove the currency risk as part of the original strategy of the Company to eliminate currency fluctuations and this it has done.
The net asset value of the company has grown by approximately 5% in the six months to the 30 June to 145pence per share compared to 138pence per share at December 2007, measured on an EPRA basis. On an IFRS basis the NAV per share has increased from 129pence per share to 134pence per share.
The growth in net asset value did not benefit from the strength of the Euro because, as noted above, the currency fluctuations were substantially hedged. The gain was also achieved after deducting a full year's dividend payment. The key ingredients to the growth were the substantial income surplus of rental income over interest costs and a small property valuation gain of approximately 1%.
The valuation gains were largely achieved from properties recently acquired in Germany. In some cases these were acquisitions that we had been pursuing for many months or in one case much longer and have been acquired from German banks that had repossessed property as a result of defaulting loans. These properties at Wurmlingen, Leonberg, and Hanau were acquired at prices substantially below rebuilding cost and in most cases had been neglected on the asset management front for some time. Otherwise, although some of the properties in Germany, Belgium and Holland were valued at slightly higher yields than at December 2007, on average values remained similar due to growth in income. In France, however we saw a net outward shift in yields resulting in a devaluation of these properties.
We are pleased to have sold our portfolio of residential property in Wiesbaden for just over €22million producing a profit over the December 2007 valuation and well above the original cost.
This year has also seen improvements in the generation of rental income. All countries experienced growth through indexation of leases and as a result of our marketing efforts. Net occupancy improved by 19,878 square metres during the period and further lettings have been achieved after the half year, again improving the rent roll. Whilst the macro economic situation in Europe is of concern going forward at present we are seeing no slow down in the appetite of occupiers for industrial warehouses in these countries.
We set out below a schedule of our property ownership on a country by country basis.
Finance
The Balance Sheet shows gross property assets of £445million with a running yield of approximately 7.3% at 30 June 2008. Net borrowings, at the same date, amount to £157million which is costing an average gross interest rate of 5.5%. These statistics demonstrate a low net gearing and high interest cover. Our current annualised interest cost on gross borrowings is around £11million compared to our current annualised rent roll of approximately £33million.
Total gross borrowings outstanding at 30 June, amount to £206million. The bulk of this lending is provided by HBOS (£86million drawn) with an outstanding term of an additional 3 years and FGH Bank (£103million) with an outstanding period of five years.
To insure against interest rate increase Hansteen has interest rate caps covering £119million at an average cap rate of 4.65% and interest rate swaps covering £79million at an average rate of 4.34%.
The low gearing and hedging provide us with substantial financial comfort as well as providing some fire power to take advantage of purchase opportunities in Europe and the UK.
Outlook
Although the occupancy market in Continental Europe remains robust and yields still far exceed the cost of money, given the shortage of bank finance worldwide there may well be outward pressure on yields in the second half of 2008. Our policy in Europe is to be cautious in new acquisitions as we husband our resources for a period where we feel there may be significant opportunities from distressed sellers.
Whilst continuing to maintain a prudently geared Balance Sheet we will nevertheless put aside some of our spare equity to acquire properties in the UK over the next 12 months. Potentially this will be carried out in joint ventures to enhance returns to Hansteen and to ensure that we participate fully in what we believe will be exciting opportunities as the UK market falls. Given the management team's track record, our high yielding portfolio and strong finances we look forward to benefiting from the forthcoming markets.
Jamie Hambro
Chairman
September 2008
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS TO 30 JUNE 2008
|
Year ended 31 December 2007 £'000 Audited |
Note |
Six months ended 30 June 2008 £'000 Unaudited |
Six months ended 30 June 2007 £'000 Unaudited |
|
|
Continuing operations |
||||
|
18,400 |
Revenue |
3 |
16,150 |
6,648 |
|
(1,751) |
Cost of sales |
(2,321) |
(668) |
|
|
16,649 |
Gross profit |
13,829 |
5,980 |
|
|
(4,159) |
Administrative expenses |
(3,080) |
(1,768) |
|
|
12,490 |
Operating profit before gains on investment properties |
4 |
10,749 |
4,212 |
|
19,614 |
Gains on investment properties |
5,094 |
9,215 |
|
|
32,104 |
Operating profit |
15,843 |
13,427 |
|
|
(11,014) |
(Losses)/gains on forward currency contracts |
(16,165) |
551 |
|
|
1,649 |
Finance income |
750 |
1,115 |
|
|
(4,549) |
Finance costs |
(5,809) |
(1,281) |
|
|
238 |
Changes in fair value of interest rate derivatives |
2,863 |
260 |
|
|
1,946 |
Foreign exchange gains/(losses) |
936 |
(412) |
|
|
20,374 |
Profit/(loss) before tax |
(1,582) |
13,660 |
|
|
(6,799) |
Tax |
5 |
(1,602) |
(4,386) |
|
13,575 |
Profit/(loss) for the period |
(3,184) |
9,274 |
|
|
Attributable to: |
||||
|
13,472 |
Equity shareholders |
(3,256) |
9,274 |
|
|
103 |
Minority interests |
72 |
- |
|
|
13,575 |
Profit for the period |
(3,184) |
9,274 |
|
|
Earnings per share |
||||
|
8.1p |
Basic |
(1.8)p |
6.0p |
|
|
8.1p |
Diluted |
(1.8)p |
6.0p |
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2008
|
31 December 2007 £'000 Audited |
30 June 2008 £'000 Unaudited |
30 June 2007 £'000 Unaudited |
||
|
Non-current assets |
||||
|
2,252 |
Goodwill |
2,252 |
- |
|
|
31 |
Property, plant and equipment |
38 |
32 |
|
|
391,242 |
Investment property |
439,695 |
223,783 |
|
|
15,417 |
Investment property held for sale |
- |
- |
|
|
2,885 |
Deferred tax asset |
- |
- |
|
|
379 |
Derivative financial instruments |
3,718 |
2,261 |
|
|
412,206 |
445,703 |
226,076 |
||
|
Current assets |
||||
|
5,260 |
Trading properties |
5,353 |
5,223 |
|
|
3,781 |
Trade and other receivables |
4,032 |
2,464 |
|
|
19,562 |
Cash and cash equivalents |
49,025 |
47,191 |
|
|
28,603 |
58,410 |
54,878 |
||
|
440,809 |
Total assets |
504,113 |
280,954 |
|
|
Current Liabilities |
||||
|
(6,916) |
Trade and other payables |
(7,534) |
(4,748) |
|
|
(2,563) |
Current tax liabilities |
(5,129) |
(2,772) |
|
|
(2,579) |
Borrowings |
(781) |
(9,384) |
|
|
(279) |
Obligations under finance leases |
(348) |
- |
|
|
(12,337) |
(13,792) |
(16,904) |
||
|
Non-current liabilities |
||||
|
(166,957) |
Borrowings |
(205,263) |
(44,640) |
|
|
(3,218) |
Obligations under finance leases |
(4,290) |
- |
|
|
(9,710) |
Derivative financial instruments |
(25,874) |
- |
|
|
(17,194) |
Deferred tax liabilities |
(15,411) |
(7,515) |
|
|
(197,079) |
(250,838) |
(52,155) |
||
|
(209,416) |
Total liabilities |
(264,630) |
(69,059) |
|
|
231,393 |
Net assets |
239,483 |
211,895 |
|
|
Equity |
||||
|
17,843 |
Share capital |
17,843 |
17,843 |
|
|
174,312 |
Share premium account |
114,312 |
174,312 |
|
|
13,287 |
Translation reserves |
29,708 |
(1,209) |
|
|
25,772 |
Retained earnings |
76,957 |
20,932 |
|
|
231,214 |
Equity shareholders' funds |
238,820 |
211,878 |
|
|
179 |
Equity minority interests |
663 |
17 |
|
|
231,393 |
Total equity |
239,843 |
211,895 |
|
|
129.5p |
Diluted net asset value per share |
133.8p |
118.7p |
|
|
138.3p |
Diluted EPRA net asset value per share |
144.8p |
123.3p |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS TO 30 JUNE 2008
|
Share capital £'000 Unaudited |
Share premium £'000 Unaudited |
Translation reserves £'000 Unaudited |
Retained earnings £'000 Unaudited |
Minority interest £'000 Unaudited |
Total £'000 Unaudited |
|
|
Balance at 1 January 2008 |
17,843 |
174,312 |
13,287 |
25,772 |
179 |
231,393 |
|
Exchange differences arising on translation of overseas operations |
- |
- |
17,268 |
- |
- |
17,268 |
|
Tax on items taken directly to equity |
- |
- |
(847) |
- |
- |
(847) |
|
Net income recognised directly in equity |
- |
- |
16,421 |
- |
- |
16,421 |
|
(Loss)/profit for the period |
- |
- |
- |
(3,256) |
72 |
(3,184) |
|
Share based payments |
- |
- |
- |
173 |
- |
173 |
|
Dividends paid |
- |
- |
- |
(5,710) |
- |
(5,710) |
|
Reduction of share premium account |
- |
(60,000) |
- |
60,000 |
- |
- |
|
Costs of reduction of share premium account |
- |
- |
- |
(22) |
- |
(22) |
|
Capital invested by minority interests |
- |
- |
- |
412 |
412 |
|
|
Balance at 30 June 2008 |
17,843 |
114,312 |
29,708 |
76,957 |
663 |
239,483 |
|
Balance at 1 January 2007 |
12,500 |
111,133 |
(1,142) |
15,381 |
- |
137,872 |
|
Exchange differences arising on translation of overseas operations |
- |
- |
152 |
- |
- |
152 |
|
Tax on items taken directly to equity |
- |
- |
(219) |
- |
- |
(219) |
|
Net income recognised directly in equity |
- |
- |
(67) |
- |
- |
(67) |
|
Profit for the period |
- |
- |
- |
9,274 |
- |
9,274 |
|
Share based payments |
- |
- |
- |
27 |
- |
27 |
|
Dividends paid |
- |
- |
- |
(3,750) |
- |
(3,750) |
|
Ordinary shares issued at a premium |
5,343 |
64,657 |
- |
- |
- |
70,000 |
|
Costs of issue of shares at a premium |
- |
(1,478) |
- |
- |
- |
(1,478) |
|
Capital invested by minority interests |
- |
- |
- |
- |
17 |
17 |
|
Balance at 30 June 2007 |
17,843 |
174,312 |
(1,209) |
20,932 |
17 |
211,895 |
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS TO 30 JUNE 2008
|
Year ended 31 December 2007 £'000 Audited |
Note |
Six months ended 30 June 2008 £'000 Unaudited |
Six months ended 30 June 2007 £'000 Unaudited |
|
|
8,475 |
Net cash inflow from operating activities |
6 |
6,050 |
3,811 |
|
1,649 |
Interest received |
749 |
1,114 |
|
|
(19) |
Additions to property, plant and equipment |
(19) |
(11) |
|
|
(193,367) |
Additions to investment properties |
(14,483) |
(75,770) |
|
|
460 |
Proceeds from sale of investment properties |
18,344 |
453 |
|
|
(71) |
Additions to derivative financial instruments |
(444) |
(15) |
|
|
(12,339) |
Acquisition of subsidiaries |
- |
- |
|
|
(203,687) |
Net cash used in investing activities |
4,147 |
(74,229) |
|
|
(3,750) |
Dividends paid |
(5,710) |
(3,750) |
|
|
70,000 |
Proceeds from issue of shares at a premium |
- |
70,000 |
|
|
(1,478) |
Costs of issue of shares at a premium |
- |
(1,478) |
|
|
- |
Costs of reduction of share premium account |
(22) |
- |
|
|
(30) |
Repayments of obligations under finance leases |
(64) |
- |
|
|
132,800 |
New bank loans raised (net of expenses) |
130,476 |
38,429 |
|
|
- |
Bank loans repaid |
(105,432) |
- |
|
|
1,826 |
Increase/(decrease) in bank overdrafts |
(1,925) |
- |
|
|
69 |
Capital contribution from minority shareholders |
387 |
17 |
|
|
199,437 |
Net cash from financing activities |
17,710 |
103,218 |
|
|
4,225 |
Net increase in cash and cash equivalents |
27,907 |
32,800 |
|
|
14,395 |
Cash and cash equivalents at beginning of period |
19,562 |
14,395 |
|
|
942 |
Effect of foreign exchange rate changes |
1,556 |
(4) |
|
|
19,562 |
Cash and cash equivalents at end of period |
49,025 |
47,191 |
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2008
1. General information
Hansteen Holdings plc is incorporated in the United Kingdom under the Companies Act 1985. The address of the registered office is 1 Berkeley Street, London W1J 8DJ.
The Group's principal activities are those of a property group investing mainly in industrial properties in Continental Europe.
The financial information for the year ended 31 December 2007 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. This information was derived from the statutory accounts for the year ended 31 December 2007, a copy of which has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis of matter and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985.
2. Basis of preparation
The condensed set of financial statements is for the six months ended 30 June 2008 and have been prepared in accordance with IFRS adopted for use by the European Union. The condensed set of financial statements do not include all of the information required for a full annual financial report and are to be read in conjunction with the Group's financial statements for the year ended 31 December 2007.
The condensed set of financial statements has been prepared under the historical cost convention as modified by the recording of revaluation of investment properties and certain financial instruments. The accounting policies applied are consistent with those adopted and disclosed in the Group's financial statements for the year ended 31 December 2007.
The condensed set of financial statements is presented in pounds sterling because that is the currency of the primary economic environment in which the Company operates.
The interim report was approved by the Board on 19 September 2008.
3. Revenue includes the following:
|
Year ended 31 December 2007 £'000 Audited |
Six months ended 30 June 2008 £'000 Unaudited |
Six months ended 30 June 2007 £'000 Unaudited |
||
|
18,400 |
Property rental income |
16,150 |
6,648 |
|
|
1,599 |
Interest receivable on bank deposits |
742 |
1,076 |
|
|
50 |
Other interest receivable |
8 |
39 |
|
|
1,649 |
750 |
1,115 |
||
|
20,049 |
Total revenue in the period |
16,900 |
7,763 |
4. The Group's primary reporting segments are the classification of its properties based on whether
they are held for investment or trading. Operating profit includes £nil from the sale of trading properties (Six months ended 30 June 2007: £nil. Year ended 31 December 2007: £nil).
5. Tax on profit on ordinary activities
|
Year ended 31 December 2007 £'000 Audited |
Six months ended 30 June 2008 £'000 Unaudited |
Six months ended 30 June 2007 £'000 Unaudited |
||
|
1,024 |
UK current tax |
871 |
988 |
|
|
1,242 |
Foreign current tax |
996 |
395 |
|
|
2,266 |
Total current tax |
1,867 |
1,383 |
|
|
4,533 |
Deferred tax |
(265) |
3,003 |
|
|
6,799 |
1,602 |
4,386 |
6. Notes to the cash flow statement
|
Year ended 31 December 2007 £'000 Audited |
Six months ended 30 June 2008 £'000 Unaudited |
Six months ended 30 June 2007 £'000 Unaudited |
||
|
13,575 |
Profit/(loss) for the period |
(3,184) |
9,274 |
|
|
Adjustments for: |
||||
|
669 |
Share-based employee remuneration |
173 |
27 |
|
|
16 |
Depreciation of property, plant and equipment |
11 |
7 |
|
|
(19,614) |
Gains on investment properties |
(5,094) |
(9,215) |
|
|
11,014 |
Losses/(gains) on forward currency contracts |
16,165 |
(551) |
|
|
1,720 |
Net finance costs |
1,769 |
318 |
|
|
6,799 |
Tax |
1,602 |
4,386 |
|
|
14,179 |
Operating cash flows before movements in working capital |
11,442 |
4,246 |
|
|
(109) |
Increase in trading properties |
(93) |
(72) |
|
|
(1,107) |
(Increase)/decrease in receivables |
(61) |
16 |
|
|
2,908 |
Increase in payables |
154 |
1,420 |
|
|
15,871 |
Cash generated by/(used in) operations |
11,442 |
5,610 |
|
|
(3,559) |
Income taxes paid |
(83) |
(506) |
|
|
(3,837) |
Interest paid |
(5,309) |
(1,293) |
|
|
8,475 |
Net cash inflow from operating activities |
6,050 |
3,811 |
7. The Interim Report and condensed set of financial statements will be posted to shareholders and will
be available from the Company's Registered Office at 1 Berkeley Street, London W1J 8DJ.
Related Shares:
HSTN.L