TIDMRTY
RNS Number : 6302Z
Rutley European Property Limited
24 September 2009
Rutley European Property Limited
Unaudited Interim Results for the period ended 30 June 2009
This announcement replaces the interim results that were released on 28 August
2009 at 12.47pm under RNS No. 2002Y to correct for the changes in current gross
yield as disclosed in the property portfolio summary table set out in the
Manager's Report in the announcement. These changes will be reflected in the
interim report for the six months ended 30 June 2009 that will be posted to
shareholders in due course.
A footnote has consequently been added by Ernst & Young LLP on 14 September 2009
to
their review report signed 28 August 2009.
*****
Rutley European Property Limited today announces its unaudited interim results
for the period ended 30 June 2009.
Highlights:
* During the period the Company received approaches from third parties which
resulted in a cash offer being made by Black Sea Global Properties ("BSGP").
BSGP's offer closed in August 2009. BSGP now owns 73.5% of the Company's shares.
* Net Asset Value 'NAV' per share down 53.3% to 23.9p compared to 51.2p as at 31
December 2008, based on 209,245,575 redeemable preference shares (The statutory
accounts for the year ended 31 December 2008 show an NAV per share of 45.3p
based on 236,661,750 redeemable preference shares). The decrease in NAV per
share is mainly driven by falling asset valuations, fair value losses on
interest rate swaps and the weakening of the Euro relative to sterling.
* The Company's real estate portfolio, which comprises 56 properties in 6
countries, was valued at GBP459.6 million as 30 June 2009, reflecting a
valuation fall of 7.6% in Euro terms since 31 December 2008. The valuation fall
was 19.3% in Sterling terms.
* The portfolio has over 680 tenants and occupancy remained high at 95%.
* Loss before tax for the period of GBP44.3 million primarily due to falls in
asset values and fair value losses on interest rate swaps. This compares to a
GBP0.9 million loss before tax for the six month period ended 30 June 2008.
* Increased cash inflow from operating activities of GBP14.8 million (30 June 2008
GBP12.8 million). Overall cash increased by EUR2.8 million, in Euro terms, during
the period compared to a decrease of EUR7.6 million, in Euro terms, for the six
months ended 30 June 2008.
* Rutley European Property Limited held cash and cash equivalents of approximately
EUR12.26 million and GBP1.09 million as at 30 June 2009 (FY 2008 EUR9.96 million and
GBP1.85 million). This excludes any cash balances held in the subsidiaries.
* Weighted average gross yield across the investment portfolio of 7.11% (FY 2008
7.38%) compared to a weighted average cost of debt of 5.32% which is unchanged
from last year and a weighted average loan to value ('LTV') of 86.9% (FY 2008
79%) across the investment portfolio .
Performance Summary:
+----------------------+----------------------+----------------------+----------------------+
| | Six months ended 30 | Six months ended 30 | Year ended 31 |
| | June 2009 | June 2008 | December 2008 |
+ +----------------------+----------------------+----------------------+
| | unaudited | unaudited | audited |
+----------------------+----------------------+----------------------+----------------------+
| NAV | GBP50.1 million | GBP166.6 million | GBP107.2 million |
+----------------------+----------------------+----------------------+----------------------+
| NAV per share | GBP0.239 | GBP0.704 | GBP0.453 |
+----------------------+----------------------+----------------------+----------------------+
| (Loss)/profit per | GBP(0.20) | GBP(0.01) | GBP(0.33) |
| share after tax | | | |
+----------------------+----------------------+----------------------+----------------------+
| Dividends paid in | - | 2.01p per share | 2.01p per share and |
| the period | | | 1.00p per share |
| | | | |
+----------------------+----------------------+----------------------+----------------------+
| LTV | 86.9% | 73.8% | 79.9% |
+----------------------+----------------------+----------------------+----------------------+
David Pinckney, Chairman of Rutley European Property Limited commented:
"I am pleased to report our unaudited interim results for the six months ended
30 June 2009.
During March this year, the Board announced that it had received approaches from
third parties which might or might not lead to an offer being made for the
Company. Following discussions between the Board of Directors and Black Sea
Global Properties ("BSGP") in July an increased offer of 7.25 pence was
announced with a full recommendation from the Board for shareholders to accept
the offer. The offer closed in August with BSGP ultimately securing a
controlling stake of 73.5% of the share capital of the Company. The Board of
Directors, the Manager and BSGP will be working together to determine an
appropriate strategy in order to stabilise the Company's financial position.
The company continues to face a number of challenges for 2009. Your Board is
working closely with the Manager to limit the falls in property valuation and
stabilise rental income. It continues to be a priority for the Directors to
agree revised terms with its lenders. Your Board will also be reviewing all ways
in which costs can be reduced to improve the efficiency of the Group."
All Enquiries:
Nick Burnell, Managing Partner / Marcus Davidson-Wright, Finance Partner
Rutley Capital Partners LLP 020 7861 1230 / 020 7861 1543
Tom Durie / Daniel Conti / Sapna Shah
Oriel Securities Limited 020 7710 7600
RUTLEY EUROPEAN PROPERTY LIMITED
UNAUDITED INTERIM REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
AS AT 30 JUNE 2009
TABLE OF CONTENTS
+-----------------------------------------------------------------------------------------+---------+
| Company Summary | 1 |
+-----------------------------------------------------------------------------------------+---------+
| Chairman's Statement | 2 |
+-----------------------------------------------------------------------------------------+---------+
| Manager's Report | 5 |
+-----------------------------------------------------------------------------------------+---------+
| Independent Review Report to Rutley European Property Limited | 9 |
+-----------------------------------------------------------------------------------------+---------+
| Unaudited Interim Consolidated Income Statement | 11 |
+-----------------------------------------------------------------------------------------+---------+
| Unaudited Interim Consolidated Statement of Comprehensive Income | 12 |
+-----------------------------------------------------------------------------------------+---------+
| Unaudited Interim Consolidated Balance Sheet | 13 |
+-----------------------------------------------------------------------------------------+---------+
| Unaudited Interim Consolidated Statement of Changes in Equity | 14 |
+-----------------------------------------------------------------------------------------+---------+
| Unaudited Interim Consolidated Cash Flow Statement | 15 |
+-----------------------------------------------------------------------------------------+---------+
| Notes to the Unaudited Interim Consolidated Financial Statements | 16 |
+-----------------------------------------------------------------------------------------+---------+
| Statement of Directors' Responsibilities | 25 |
+-----------------------------------------------------------------------------------------+---------+
| Management and Administration | 26 |
+-----------------------------------------------------------------------------------------+---------+
Company summary
Rutley European Property Limited ("the Company") and its subsidiaries ("the
Group") constitute a core-plus commercial real estate fund which was set up in
2005 with a primary geographical focus on Central and Western Europe and an
objective of generating for Shareholders a geared net IRR of not less than 12%
per annum on the issue price of its share capital from both capital growth and
dividend income. Prevailing economic conditions leading to falls in property
values have continued to create uncertainty over the capital growth achievable
from the Company's portfolio of European real estate assets. These economic
conditions may also impact on occupation rates and rental flows which may cause
income levels to decline.
Through the resources of its Manager, Rutley Capital Partners LLP, a member of
the Knight Frank Group, the Group focuses its activities across Germany,
Belgium, The Netherlands, France, Sweden and Poland in the office and retail
sectors. Notwithstanding the difficult economic conditions of 2009, the Company
believes that its Manager's platform of internationally experienced resources
enables it to manage proactively the Company's property portfolio using
efficient asset management techniques to identify opportunities to stabilise and
enhance rental flows, mitigation of risk through restructuring, maintenance of
low vacancy rates and close relationships with tenants.
During the period the Company received approaches from third parties which
resulted in an offer being made by Black Sea Global Properties ("BSGP"). In
August 2009 BSGP secured acceptances giving it a controlling stake.
Chairman's statement
Your Board of Directors is pleased to present the unaudited Interim Report and
Consolidated Financial Statements of Rutley European Property Limited for the
six months ended 30 June 2009.
On 30 March, your Board announced that it had received approaches from third
parties which might or might not lead to an offer being made for the entire
issued redeemable preference share capital of the Company. This led to
discussions between the Board of Directors and BSGP followed by an offer of 7.25
pence per share, which your Board recommended to shareholders. The result is
that, at the date of writing, BSGP owns 73.5% of the share capital of the
Company.
Over the period under review, the Company's Shares continued to suffer a
significant discount to NAV along with its peer group. Although the Directors
still consider that the quality of the assets and their underlying cash flows,
in association with a robust asset management plan, should help the Company
through these difficult times, the offer from BSGP, being entirely in cash,
offered shareholders liquidity, choice and certainty of return.
The Company's diversified, continental European portfolio of real estate assets
was valued by independent external valuers at GBP459.6 million as at 30 June
2009. The portfolio has fallen in value by 7.6% in Euro terms which continues to
demonstrate resilience in a challenging market. The portfolio is generating
healthy operating cash flows and has not showed any signs of material falls in
income. The portfolio has no material tenant defaults and continues to
experience low vacancy rates.
The first half of 2009 has continued to see little buying and selling activity
in the property sector due to lack of credit and an absence of buyers. The Board
of Directors feels that the poor economic landscape, inconsistent levels of
credit and higher borrowing margins are likely to continue for the immediate
future resulting in the expectation of further falls in value in the latter half
of 2009.
Results
Financial highlights are as follows:
+--------------------------------------------------------+-----------------+--------------+---------------+
| | Six months | Six months | |
| | ended | ended | Year ended |
| | 30-06-2009 | 30-06-2008 | 31-12-2008 |
| | unaudited | unaudited | audited |
+--------------------------------------------------------+-----------------+--------------+---------------+
| | GBP | GBP | GBP |
+--------------------------------------------------------+-----------------+--------------+---------------+
| Loss before tax | (44,263,967) | (935,510) | (82,103,375) |
+--------------------------------------------------------+-----------------+--------------+---------------+
| Loss after tax | (45,166,017) | (1,770,705) | (77,382,592) |
+--------------------------------------------------------+-----------------+--------------+---------------+
| Foreign exchange (loss)/gains (in equity) | (11,088,375) | 10,963,025 | 29,511,725 |
+--------------------------------------------------------+-----------------+--------------+---------------+
| Total assets | 488,065,014 | 575,676,287 | 606,565,890 |
+--------------------------------------------------------+-----------------+--------------+---------------+
| Net assets | 50,098,840 | 166,624,273 | 107,194,468 |
+--------------------------------------------------------+-----------------+--------------+---------------+
| Number of Redeemable Preference Shares | 209,245,575 | 236,661,750 | 236,661,750 |
+--------------------------------------------------------+-----------------+--------------+---------------+
| Net asset value per share | 0.239 | 0.704 | 0.453 |
+--------------------------------------------------------+-----------------+--------------+---------------+
The loss for the period of GBP44,263,967 results primarily from falling asset
valuations and losses on interest rate swaps being recognised as losses through
fair value adjustments to the Consolidated Income Statement. Property operating
expenses are in line, proportionally, at 30% of rental income compared to 28%
for the six months ended 30 June 2008 and administrative expenses are lower
proportionally, at 17% of rental income compared to 20% for the six months ended
30 June 2008.
Group net assets have decreased by GBP57.1 million in the current financial
period. This primarily reflects the decrease in the valuation of the property
portfolio and in the fair value of interest rate swaps but also the strength of
the Euro relative to Sterling. The property portfolio fell in value by
approximately 7.6% in Euro terms during the six months to 30 June 2009 but by
19.3% in Sterling terms. Although the strength of the Euro relative to
Sterling has increased the impact of the fall in the valuation of the property
portfolio in Sterling terms it does have the counter impact of decreasing the
Sterling value of indebtedness.
Cash increased by EUR2.8 million, in Euro terms, during the period compared to a
decrease of EUR7.6 million, in Euro terms, for the six months ended 30 June 2008.
Chairman's statement (Continued)
Financing
The total value of the loans outstanding as at 30 June 2009 was EUR470.5 million
after taking into account a loan repayment of EUR5.7 million following the
disposal of a property in Bramsche.
The loan to value ("LTV") ratios on Group external loans of EUR405.4 million
exceed LTV covenant ratios in 8 out of 10 special purpose vehicle ("SPV")
facilities. The number of LTV's exceeding covenant values has remained the same
since 31 December 2008 despite the fact that 30 June 2009 valuations have
resulted in a further fall in the value of the Group's property portfolio. The
weighted average LTV is now 86.9% against a weighted average LTV covenant of
76.4%.
In the period since 31 December 2008 the Board of Directors has agreed various
cash sweep mechanisms and amendments to certain loan terms in return for
temporary waivers of LTV covenant testing on loans in relation to assets in
Germany, Sweden, France, Belgium and The Netherlands.All cash sweeps agreed with
the Group's lenders are calculated after provision for reasonable costs of the
relevant SPVs, capital expenditure to be agreed on a case by case basis and
reasonable asset management fees.
All the debt is limited recourse to the SPVs holding the relevant assets which
means that, in the event that lenders decide to enforce security where the LTVs
exceed covenant levels, lenders can only seek recourse to the assets and any
excess cash in the SPVs holding the relevant assets after costs as defined in
the loan agreements. As at 30 June 2009 the interest cover on all facilities was
in excess of the relevant interest cover covenants.
The limited recourse nature of the loans means that any cash and other assets of
the holding companies in the Group are unaffected and available to meet
commitments for the foreseeable future. The Directors, therefore, do not
consider that the risk of breaching LTV covenants will impact the ability of the
Group to continue as a going concern.
The Company actively hedges interest rate exposure by entering into interest
rate swap contracts in respect of all floating rate bank borrowings. Foreign
currency exposure is mitigated by entering into matched funding wherever
possible. The Group has not entered into any hedging instruments to hedge
foreign exchange exposure but this is constantly under review.
Portfolio Synopsis
The Manager is continuing its efforts to increase or stabilise rental income and
to improve lease terms, tenant composition and the quality of rented space.
These efforts have helped slow the fall in portfolio valuations. The portfolio
continues to enjoy a low vacancy rate of less than 5% with no material tenant
defaults and a stable rental flow.
The Manager continues to conduct a regular hold / sell analysis on the property
portfolio as part of the ongoing management and maintenance of the portfolio. As
a result of this the Company completed the sale of the property in Bramsche in
the first quarter of this year and on 1 July 2009 notarised on the sale of
another property in Germany at a price in excess of valuation.
Dividends
No dividends have been recommended for payment for the interim period. In light
of current market conditions the dividend policy remains under review.
Chairman's statement (Continued)
Summary and Prospects
Following BSGP's acquisition of a controlling stake in the Company, the Board of
Directors, the Manager and BSGP will be working together to determine an
appropriate strategy in order to stabilise the Company's financial position and
an appropriate future strategy. In particular, the Company will identify
any synergies with BSGP's management resources and re-evaluate its property
portfolio in light of the fact that its Articles of Association currently
envisage no new investment after 31 December 2009 and a wind up of the fund by
the end of 2013.
It is the intention of BSGP and the Board that the Company remains listed on the
London Stock Exchange and the Channel Islands Stock Exchange. The balance of the
share capital not owned by BSGP is well diversified being held by over 50
investors.
Should the strategy of the Company include enlarging the portfolio this will
require fundraising in the foreseeable future. It is the intention of your Board
that any recapitalisations of the Company will be structured, to the extent
practicable, in a manner allowing existing shareholders to participate in
proportion to their respective shareholdings at the time. Your Board, with
input from its advisers and principal shareholder, will be reviewing all ways in
which costs can be reduced to improve the efficiency of the Group.
The Board would like to draw your attention to the Company's website
www.rutleyeuropean.com where comprehensive information about the Company,
including the latest share price and public announcements, can be viewed.
The Board of Directors would like to take this opportunity to thank the Manager,
the Administrators and Advisers for their hard work and high quality of
professionalism demonstrated throughout the period.
David Pinckney
Chairman
28 August 2009
Manager's report
Manager
Rutley Capital Partners LLP has acted as Manager to the Company throughout the
period under review. The Manager's principal objective is to protect and enhance
income and value through active asset management including reducing vacancy,
increasing net lettable areas and increasing lease lengths and average rental
value. The Manager has an experienced international property team working
alongside a local property management network established by the Manager to
achieve the Company's objective.
Commercial Property Market Commentary
Prime office rents have been falling across the Eurozone and occupier demand for
office property remains uncertain. The market has become increasingly shaped by
the actions of companies seeking to reduce costs by rationalising staff
numbers resulting in reduced demand for office space. Landlords have been under
growing pressure to offer improved incentives to secure new tenancies or retain
existing tenants. The retail markets in Europe have also seen tenants cutting
back on their expansion plans. Retailers looking for accommodation are in a
strong position to negotiate attractive incentives and shorter lease lengths.
Investor interest is focused on a narrow band of prime assets in core markets
which provide secure income. Further negative yield movement is anticipated in
the second half of 2009 which combined with a weakening occupier market and
downwards pressure on rental levels, will see further erosion of capital values
before possible stabilisation of values in 2010. Any meaningful recovery will be
dependent on the easing of debt markets which have shown little improvement in
the first half of 2009.
Portfolio Activity
Over the last six months, the Manager has focused on maintaining occupancy
levels across the portfolio, and in so doing has improved the portfolio weighted
average unexpired lease term ("WAULT") and maintained the income profile. These
efforts have resulted in stabilising portfolio vacancy across the portfolio at
18,034 sq.m. as at 30 June 2009 against 18,840 sq.m. as at 31 December 2008 in a
weakening occupier market. The Group's portfolio currently has a weighted
average gross yield of 7.11% per annum (31 December 2008: 7.38%) and a weighted
average cost of debt of 5.32% (31 December 2008: 5.32%).
The portfolio has defensive characteristics in that it is favourably diversified
in terms of geography and sector and has an occupational base of approximately
680 tenants, of which the largest tenant represents less than 6% of total
income.The portfolio's sector weighting is still in favour of offices, which
make up 63% of the total by valuation (31 December 2008: 63%), with retail
assets representing 25% of the portfolio (31 December 2008: 24%) and mixed use
schemes making up 12% of the portfolio (31 December 2008: 13%).
The Company completed the sale of a property in Bramsche for EUR7.8 million in the
first quarter of this year and notarised the sale of an asset in Osnabruck in
Germany at EUR3.9 million which is anticipated to complete in September. The asset
was valued at EUR2.9 million as at 30 June 2009.
The Manager has successfully renegotiated a number of leases with key tenants in
the first half of 2009 and continues to seek opportunities to maximise value
where possible. Where tenants seek to negotiate incentives, either through rent
free periods or reduced rental levels, the Manager seeks to regain value in
lease length and capital value.
Manager's report (Continued)
Financing
In respect of financing on certain of the German properties, potential breaches
in LTV covenants have resulted in the bank triggering loan document cash sweep
provisions for a six month remedy / cure period and agreeing to the waiver of
LTV testing on the relevant German loans until 26 September 2009.
Similarly, the provider of finance to the Swedish portfolio has agreed to a
waiver of the LTV covenant for the Swedish Loan for the period to 1 September
2009, subject to cash sweep provisions after agreed costs and capital
expenditure.
In respect of the loans to property SPVs in France and The Netherlands, the
Company has recently agreed an LTV covenant waiver until 31 December 2009 in
return for an increase in applicable loan margins of 20 to 30 basis points, cash
sweep provisions on the relevant properties after reasonable costs and agreed
capital expenditure and cross default of the loans.
In respect to loans to the Belgian portfolio the Company has entered into an
agreement with the lender which will see the LTV covenant waiver extended to 30
June 2010, subject to the application of EUR0.8 million (GBP0.7 million) of the
Belgian Loan held in escrow against the loan principal whilst the Belgian SPV
LTV ratio is in excess of the LTV covenant.
The Company remains in compliance with the LTV covenants on the loans on its
Polish assets and on an asset in Germany.
Portfolio cost and valuation
+----------------------------------------------------------+-------------------+-------------------+
| | | |
+----------------------------------------------------------+-------------------+-------------------+
| | EUR millions | GBP millions |
+----------------------------------------------------------+-------------------+-------------------+
| | | |
+----------------------------------------------------------+-------------------+-------------------+
| Initial price at purchase* | 646.1 | 549.4 |
+----------------------------------------------------------+-------------------+-------------------+
| Acquisition costs | 36.2 | 30.8 |
+----------------------------------------------------------+-------------------+-------------------+
| Total acquisition cost | 682.3 | 580.2 |
+----------------------------------------------------------+-------------------+-------------------+
| | | |
+----------------------------------------------------------+-------------------+-------------------+
| Valuation as at 30 June 2009 | 540.5 | 459.6 |
+----------------------------------------------------------+-------------------+-------------------+
| | | |
+----------------------------------------------------------+-------------------+-------------------+
| Capital decline (initial price at purchase*) | (105.6) | (89.8) |
+----------------------------------------------------------+-------------------+-------------------+
| % | (16.3%) | (16.3%) |
+----------------------------------------------------------+-------------------+-------------------+
| Capital decline (total acquisition cost) | (141.8) | (120.6) |
+----------------------------------------------------------+-------------------+-------------------+
| % | (20.7%) | (20.7%) |
+----------------------------------------------------------+-------------------+-------------------+
* exclusive of acquisition costs
Note: for translation purposes all Euro amounts have been converted at the 30
June 2009 period end exchange rate.
Manager's report (Continued)
Property portfolio summary
+-------------+-----------+-----------+------------+-----------+-----------+-----------+
| Country | Sector | Lettable | ERV | Vacancy | Market | Current |
| | | area | | rate | value | gross |
| | | | | | June 2009 | yield |
+-------------+-----------+-----------+------------+-----------+-----------+-----------+
| | | square m | GBP per | % area | (GBP) | (EUR) % per |
| | | | annum | | million | annum |
+-------------+-----------+-----------+------------+-----------+-----------+-----------+
| Germany | Office | 92,126 | 9,344,112 | 8.41% | 125.6 | 7.90% |
| | | | | | | |
+-------------+-----------+-----------+------------+-----------+-----------+-----------+
| Germany | Retail | 107,256 | 10,312,053 | 3.37% | 113.3 | 8.41% |
| | | | | | | |
+-------------+-----------+-----------+------------+-----------+-----------+-----------+
| Germany | Mixed use | 52,974 | 4,555,516 | 9.69% | 51.0 | 7.80% |
| | | | | | | |
+-------------+-----------+-----------+------------+-----------+-----------+-----------+
| Poland | Office | 32,123 | 4,826,951 | 2.55% | 54.7 | 8.42% |
| | | | | | | |
+-------------+-----------+-----------+------------+-----------+-----------+-----------+
| Sweden | Office | 75,085 | 6,666,853 | 1.92% | 71.0 | 10.19% |
| | | | | | | |
+-------------+-----------+-----------+------------+-----------+-----------+-----------+
| Belgium | Office | 7,614 | 1,066,667 | 0.00% | 11.8 | 8.73% |
| | | | | | | |
+-------------+-----------+-----------+------------+-----------+-----------+-----------+
| Netherlands | Office | 13,954 | 2,253,781 | 0.53% | 23.0 | 8.68% |
| | | | | | | |
+-------------+-----------+-----------+------------+-----------+-----------+-----------+
| France | Office | 1,863 | 694,957 | 0.00% | 9.1 | 8.48% |
| | | | | | | |
+-------------+-----------+-----------+------------+-----------+-----------+-----------+
Asset Management
Some key asset management activities are listed below:
Germany
Mosse Zentrum, Berlin:an office building which was acquired in two separate
transactions, situated in a strong secondary location and comprising 37,000 sq.
m. In the first half of 2009 leases with two of the largest tenants have been
renegotiated, producing a WAULT of 3.27 years. In addition, several further
leases are being renegotiated and the active marketing of vacant space should
see vacancy rates fall below 10% in 2009. As the occupier market has weakened,
rental levels are showing signs of downward pressure although proving relatively
resilient to date. The property was initially valued at EUR85.6 million (GBP72.8
million) and achieved a valuation of EUR67.4 million (GBP57.3 million) as at 30
June 2009.
'Project Forest' Portfolio (office): predominantly an office portfolio
consisting of five properties in Nuremberg and comprising 31,000 sq m. The focus
in the second half of 2009 will be on agreeing several new leases. The Manager
is currently discussing lease extensions with tenants at Dresden and Gustav
Heinemann Strasse, which will secure further the income profile and improve the
WAULT. The portfolio was purchased for EUR43.5 million (GBP37.2 million) and as at
30 June 2009 was valued at EUR40.3 million (GBP34.3 million).
German Retail Portfolio: following the sale of the asset in Bramsche, the
portfolio consists of 23 properties purchased in six transactions. The portfolio
generates a secure income profile, underpinned by a WAULT of 7.21 years. The
Manager is in discussions with a number of tenants across the portfolio in
relation to the renegotiation of existing lease contracts with a view to
increasing WAULT and stabilising the income profile. The portfolio was initially
purchased for EUR170.9 million (GBP145.3 million) and achieved a valuation of
EUR147.2 million (GBP125.2 million) as at 30 June 2009. The current income yield
is 7.31%.
Manager's report (Continued)
Asset Management (Continued)
'G-PEC' Portfolio: this portfolio of 18 assets is located in Germany (14 assets,
70% by value), The Netherlands (three assets, 22% by value) and France (one
asset, 8% by value) and was acquired in October 2007. The properties comprise
office and mixed use accommodation across a total area of 76,726 sq m. The
Manager is in advanced negotiations with a potential tenant to lease the vacant
ground floor office area in Munich and the lease renewal with a tenant in
Amsterdam has successfully concluded. Lease renegotiations and marketing of
office accommodation is underway at one of the properties in The Hague. The
portfolio was initially valued at EUR163.2 million (GBP138.8 million) providing a
gross initial yield of 6.58% per annum. As at 30 June 2009 the portfolio was
valued at EUR123.9 million (GBP105.4 million). The current income yield is 5.93%.
Sweden
Karolinen Portfolio, Karlstad:a portfolio of five properties located in the city
of Karlstad in Western Sweden. A significant proportion of income is secured
against government institutions. The portfolio also provides a number of
value-add asset management opportunities over the medium term and the
opportunity to increase rental income to market levels through renegotiation of
existing lease contracts and new leases. The local property management function
is currently being restructured with a view to achieving cost savings and
improvements in the delivery of services. Addici have been appointed to
undertake the facilities management of the portfolio in addition to managing the
conference facilities and flexible office space. The portfolio was initially
valued at SEK 999.0 million (GBP77.9 million) providing a gross initial yield of
5.52% per annum and achieved a valuation of SEK 910.4 million (GBP80.0 million)
as at 30 June 2009.
Poland
Prima Court, Warsaw: a very well located, purpose built, multi-occupied office
building. The market rent of the building has increased from EUR15 psm/month at
purchase to approximately EUR19 psm/month, although there are signs of downwards
pressure on rental levels as the occupier market weakens. The Manager is
therefore looking to secure the current income for longer lease lengths and is
in negotiations with several tenants to extend existing contracts. The property
was initially valued at EUR11.4 million (GBP9.7 million) providing a gross initial
yield of 6.86% per annum. The income yield has increased to 9.06%. The valuation
as at 30 June 2009 was EUR13.0 million (GBP11.1 million).
Buma Square, Krakow: a well located, large office and retail scheme. Occupier
demand remains, although the property is competing against an increasing supply
of purpose built office accommodation coming to the market over the next 24
months. The property is substantially fully let and income producing. In
addition to renegotiating a number of smaller leases the Manager is focusing on
understanding the requirements of some of the larger tenants with a view to
renegotiating their leases in 2010. The property was initially valued at EUR51.5
million (GBP43.8 million) providing a gross initial yield of 7.10% per annum.
The income yield has increased to 8.66%. The valuation as at 30 June 2009 was
EUR51.3 million (GBP43.7 million).
Belgium
Equinox Building, Wemmel: the property consists of two purpose built office
buildings comprising 7,614 sq. m. Following letting activity at the end of 2008
/ start 2009 the property is fully let with a WAULT of 4.51 years as at 30 June
2009. Following completion of the lease with Proximus for a mobile telephone
mast on the roof of Equinox North, a further operator has expressed interest in
a similar lease. The asset was purchased for EUR15.4 million (GBP13.1 million) and
the valuation as at 30 June 2009 was EUR13.9 million (GBP11.8 million) reflecting
an income yield of 7.86%.
Conclusion
Over the period, the Manager has, through the renegotiation of leases and other
asset management initiatives, endeavoured to slow the fall in the portfolio
valuation. Whilst the Manager expects a further deterioration in the occupier
market for the remaining months of 2009, it is cautiously optimistic that it can
continue to stabilise the income profile of the portfolio.
Independent Review Report to Rutley European Property Limited
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2009 which comprises the Consolidated Income Statement, the Consolidated Balance
Sheet, the Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Changes in Equity, the Consolidated Cash Flow Statement and the
related notes 1 to 9. We have read the other information contained in the half
yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
set of financial statements.
This report is made solely to the company in accordance with guidance contained
in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed
by the Independent Auditor of the Entity" issued by the Auditing Practices
Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our work, for this report,
or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with 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 set of 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 International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
Ernst & Young LLP
London
28 August 2009
Footnote added on 14th September 2009
This review report replaces our original review report signed on 28 August 2009.
It has been reissued following the Directors' correction of the calculation of
the Current gross yield disclosed in the unreviewed property portfolio summary
table set out in the Manager's Report in the original unaudited interim report
and consolidated financial statements.
Accordingly this review report does not take account of events which have taken
place after the date on which our original review report was signed on 28 August
2009.
Unaudited Interim Consolidated Income Statement
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | Six months ended | Six months | |
| | | | ended | Year ended |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | 30-06-2009 | 30-06-2008 | 31-12-2008 |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | unaudited | unaudited | audited |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | Notes | GBP | GBP | GBP |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Rental income | | 20,029,195 | 19,013,737 | 36,312,908 |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Service charge income | | 3,589,330 | 2,954,874 | 6,537,433 |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Property operating expenses | | (6,022,609) | (5,415,355) | (10,781,692) |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| NET RENTAL INCOME | | 17,595,916 | 16,553,256 | 32,068,649 |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Administrative and other expenses | | (3,318,782) | (3,796,538) | (6,641,059) |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Impairment of goodwill | | - | - | (6,927,480) |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Fair value decrease in investment properties | 6 | (41,105,829) | (12,033,527) | (56,744,414) |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Netprofit on disposal of investment properties | | - | - | 825,243 |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| OPERATING (LOSS)/PROFIT | | (26,828,695) | 723,191 | (37,419,061) |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Finance income | | 107,783 | 616,091 | 473,689 |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Finance costs | | (12,474,507) | (10,484,338) | (25,883,864) |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Fair value adjustment on derivative | | (5,068,548) | 8,209,546 | (19,274,139) |
| financial instruments | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| LOSS BEFORE TAX | | (44,263,967) | (935,510) | (82,103,375) |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Tax (charge)/credit on loss for the period | | (902,050) | (835,195) | 4,720,783 |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| LOSS AFTER TAX | | (45,166,017) | (1,770,705) | (77,382,592) |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Loss for the period attributable to: | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Redeemable Preference Shareholders | | (45,166,017) | (1,770,705) | (77,382,592) |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Basic and diluted loss per: | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| Redeemable Preference Share | | (0.20) | (0.01) | (0.33) |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
| | | | | |
+--------------------------------------------------+--------+------------------+--------------+--------------+
Unaudited Interim Consolidated Statement of Comprehensive Income
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | | | |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | Six months | Six months | |
| | | ended | ended | Year ended |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | 30-06-2009 | 30-06-2008 | 31-12-2008 |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | unaudited | unaudited | audited |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | GBP | GBP | GBP |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | | | |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| Loss for the period | | (45,166,017) | (1,770,705) | (77,382,592) |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | | | |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| Exchange differences on translation of foreign operations | | (11,088,375) | 10,963,025 | 29,511,725 |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | | | |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| Other comprehensive (loss)/income for the period | | (11,088,375) | 10,963,025 | 29,511,725 |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | | | |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| Total comprehensive loss for the period | | (56,254,392) | (9,192,320) | (47,870,867) |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | | | |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | | | |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| Total comprehensive loss for the period attributable to: | | | | |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| Redeemable Preference Shareholders | | (56,254,392) | (9,192,320) | (47,870,867) |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | | | |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
| | | | | |
+-----------------------------------------------------------+-----+--------------+--------------+--------------+
Unaudited Interim Consolidated Balance Sheet
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | As at | As at | As at |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | 30-06-2009 | 30-06-2008 | 31-12-2008 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | unaudited | unaudited | audited |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | Notes | GBP | GBP | GBP |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Non-current Assets | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Investment property | 6 | 457,151,342 | 527,844,383 | 569,273,444 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Intangible assets | | - | 8,040,851 | - |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Other non-current assets | | 1,352,404 | 593,354 | 772,986 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Deferred tax asset | | - | 5,033 | 175,901 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | 458,503,746 | 536,483,621 | 570,222,331 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Investment Property Held For Sale | 6 | 2,458,333 | - | - |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Current Assets | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Derivative financial instruments | | - | 9,625,316 | - |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Trade and other receivables | | 2,045,888 | 1,630,907 | 10,290,969 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Cash and cash equivalents | | 25,057,047 | 27,936,443 | 26,052,590 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | 27,102,935 | 39,192,666 | 36,343,559 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| TOTAL ASSETS | | 488,065,014 | 575,676,287 | 606,565,890 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Equity | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Share capital | | 1 | 1 | 1 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Share premium | | 1,353,867 | 1,353,867 | 1,353,867 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Retained earnings | | 15,804,383 | 139,790,141 | 61,811,636 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Translation reserves | | 32,940,589 | 25,480,264 | 44,028,964 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Total Equity | | 50,098,840 | 166,624,273 | 107,194,468 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Non-current Liabilities | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Deferred taxation | | - | 7,850,269 | 119,248 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Borrowings | 7 | 206,436,004 | 387,244,568 | 341,535,278 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | 206,436,004 | 395,094,837 | 341,654,526 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Current Liabilities | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Derivative financial instruments | | 24,071,492 | - | 22,039,925 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Trade and other payables | | 14,248,817 | 13,492,285 | 14,837,188 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Borrowings | 7 | 190,748,308 | - | 118,540,371 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Income tax | | 2,461,553 | 464,892 | 2,299,412 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | 231,530,170 | 13,957,177 | 157,716,896 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| TOTAL LIABILITIES | | 437,966,174 | 409,052,014 | 499,371,422 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| TOTAL EQUITY AND LIABILITIES | | 488,065,014 | 575,676,287 | 606,565,890 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Number of Redeemable Preference Shares | | 209,245,575 | 236,661,750 | 236,661,750 |
+---------------------------------------------+------------+--------------+-------------+-------------+
| | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Net asset value: | | | | |
+---------------------------------------------+------------+--------------+-------------+-------------+
| Per Redeemable Preference Share | | 0.239 | 0.704 | 0.453 |
+---------------------------------------------+------------+--------------+-------------+-------------+
Unaudited Interim Consolidated Statement of Changes in Equity
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | | Share | Share | Retained | Translation | Total |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | | Capital | Premium | Earnings | Reserve | |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | Notes | GBP | GBP | GBP | GBP | GBP |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | | | | | | |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| EQUITY AT 1 JANUARY 2008 (audited) | | 1 | 1,353,867 | 146,317,747 | 14,517,239 | 162,188,854 |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | | | | | | |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| Loss for the period | | - | - | (1,770,705) | - | (1,770,705) |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| Other comprehensive income | | - | - | - | 10,963,025 | 10,963,025 |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| Total comprehensive income | | - | - | (1,770,705) | 10,963,025 | 9,192,320 |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | | | | | | |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| Interim dividend | 4 | - | - | (4,756,901) | - | (4,756,901) |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | | | | | | |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| EQUITY AT 30 JUNE 2008 (unaudited) | | 1 | 1,353,867 | 139,790,141 | 25,480,264 | 166,624,273 |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | | | | | | |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| Loss for the period | | - | - | (75,611,887) | - | (75,611,887) |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| Other comprehensive income | | - | - | - | 18,548,700 | 18,548,700 |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| Total comprehensive income | | - | - | (75,611,887) | 18,548,700 | (57,063,187) |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | | | | | | |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| Interim dividend | 4 | - | - | (2,366,618) | - | (2,366,618) |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | | | | | | |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| EQUITY AT 31 DECEMBER 2008 (audited) | | 1 | 1,353,867 | 61,811,636 | 44,028,964 | 107,194,468 |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | | | | | | |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| Loss for the period | | - | - | (45,166,017) | - | (45,166,017) |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| Other comprehensive loss | | - | - | - | (11,088,375) | (11,088,375) |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| Total comprehensive loss | | - | - | (45,166,017) | (11,088,375) | (56,254,392) |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | | | | | | |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| Purchase of own shares | 5 | - | - | (841,236) | - | (841,236) |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| | | | | | | |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
| EQUITY AT 30 JUNE 2009 (unaudited) | | 1 | 1,353,867 | 15,804,383 | 32,940,589 | 50,098,840 |
+---------------------------------------------------+--------+-----------+--------------+--------------+--------------+--------------+
Unaudited Interim Consolidated Cash flow Statement
+-------------------------------------------------------+--------------+--------------+--------------+
| | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| | Six months | Six months | |
| | ended | ended | Year ended |
+-------------------------------------------------------+--------------+--------------+--------------+
| | 30-06-2009 | 30-06-2008 | 31-12-2008 |
+-------------------------------------------------------+--------------+--------------+--------------+
| | unaudited | unaudited | audited |
+-------------------------------------------------------+--------------+--------------+--------------+
| | GBP | GBP | GBP |
+-------------------------------------------------------+--------------+--------------+--------------+
| | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| Cash flows from operating activities | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| Loss before tax for the period | (44,263,967) | (935,510) | (82,103,375) |
+-------------------------------------------------------+--------------+--------------+--------------+
| Adjustments: | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| Net finance costs | 11,954,080 | 10,149,614 | 21,191,137 |
+-------------------------------------------------------+--------------+--------------+--------------+
| Income tax paid | (148,564) | (105,969) | (274,834) |
+-------------------------------------------------------+--------------+--------------+--------------+
| Movement in working capital | 1,035,813 | (174,657) | (219,274) |
+-------------------------------------------------------+--------------+--------------+--------------+
| Non-cash items: | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| Fair value decrease in investment properties | 41,105,829 | 12,033,527 | 56,744,414 |
+-------------------------------------------------------+--------------+--------------+--------------+
| Net profit on disposal of investment properties | - | - | (825,243) |
+-------------------------------------------------------+--------------+--------------+--------------+
| Fair value adjustments on interest rate swaps | 5,068,548 | (8,209,546) | 19,274,139 |
+-------------------------------------------------------+--------------+--------------+--------------+
| Bad debt provision | 21,451 | - | 62,076 |
+-------------------------------------------------------+--------------+--------------+--------------+
| Impairment of goodwill | - | - | 6,927,480 |
+-------------------------------------------------------+--------------+--------------+--------------+
| NET CASH INFLOW FROM OPERATING ACTIVITIES | 14,773,190 | 12,757,459 | |
| | | | 20,776,520 |
+-------------------------------------------------------+--------------+--------------+--------------+
| | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| Cash flows from investing activities | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| Acquisition of investment property | (1,100,091) | (3,712,807) | (7,407,038) |
+-------------------------------------------------------+--------------+--------------+--------------+
| Proceeds from the disposal of investment property | 7,288,275 | - | 2,778,963 |
+-------------------------------------------------------+--------------+--------------+--------------+
| | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES | 6,188,184 | (3,712,807) | (4,628,075) |
+-------------------------------------------------------+--------------+--------------+--------------+
| | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| Cash flows from financing activities | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| Finance income | 395,368 | 321,156 | 300,309 |
+-------------------------------------------------------+--------------+--------------+--------------+
| Finance costs | (12,776,356) | (9,850,031) | (19,995,573) |
+-------------------------------------------------------+--------------+--------------+--------------+
| Drawdown of bank loans | - | (666,930) | 820,678 |
+-------------------------------------------------------+--------------+--------------+--------------+
| Purchase of own shares | (841,236) | - | - |
+-------------------------------------------------------+--------------+--------------+--------------+
| Security deposits paid | (1,352,404) | - | - |
+-------------------------------------------------------+--------------+--------------+--------------+
| Repayment of borrowings | (5,332,551) | - | (4,420,999) |
+-------------------------------------------------------+--------------+--------------+--------------+
| Dividends paid | - | (4,756,901) | (7,123,519) |
+-------------------------------------------------------+--------------+--------------+--------------+
| | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| NET CASH OUTFLOW FROM FINANCING ACTIVITIES | (19,907,179) | (14,952,706) | (30,419,104) |
+-------------------------------------------------------+--------------+--------------+--------------+
| | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 1,054,195 | (5,908,054) | (14,270,659) |
+-------------------------------------------------------+--------------+--------------+--------------+
| | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| Cash and Cash Equivalents at the start of the period | 26,052,590 | 31,649,398 | 31,649,398 |
+-------------------------------------------------------+--------------+--------------+--------------+
| | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| Effect of exchange rates on Cash and Cash | (2,049,738) | 2,195,099 | 8,673,851 |
| Equivalents* | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 25,057,047 | | |
| | | 27,936,443 | 26,052,590 |
+-------------------------------------------------------+--------------+--------------+--------------+
| | | | |
+-------------------------------------------------------+--------------+--------------+--------------+
* The effect of exchange rates is presented as a part of the reconciliation of
opening and closing cash and cash equivalents. In the six months ended 30 June
2008, this amount was presented in the reconciliation of operating cash flows.
The Directors consider the revised presentation to be more appropriate.
Notes to the Unaudited Interim Consolidated Financial Statements
1. GENERAL INFORMATION
Rutley European Property Limited ('the Company") and its subsidiaries (together,
"the Group") is principally involved in investment in commercial property in
Europe.
The Company is a limited liability, closed-ended investment company incorporated
in Guernsey on 17 November 2005, registration number 43943. The address of its
registered office is Trafalgar Court, Les Banques, St. Peter Port, Guernsey. The
Company is listed on the London Stock Exchange and the Channel Islands Stock
Exchange.
These Interim Consolidated Financial Statements were authorised for issue by the
Board of Directors on 28 August 2009.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The information in these Interim Consolidated Financial Statements is unaudited
and does not constitute statutory accounts. The statutory accounts as at 31
December 2008 have been reported on by the Company's auditors. The report of the
auditors was unqualified.
The Interim Consolidated Financial Statements set out the results for the six
months to 30 June 2009 and, unless otherwise stated, comparisons are for the six
months to 30 June 2008.
Basis of preparation
The Interim Consolidated Financial Statements for the six months ended 30 June
2009 have been prepared in accordance with IAS 34 Interim Financial
Reporting, applicable Guernsey Law and the Listing Rules of the UK Listing
Authority.
The Interim Consolidated Financial Statements are condensed financial statements
and do not include all the information and disclosures required in the Annual
Financial Statements, and should be read in conjunction with the Consolidated
Financial Statements as at 31 December 2008.
The Interim Consolidated Financial Statements are presented in Sterling. The
preparation of Interim Consolidated Financial Statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's
accounting policies. Although these estimates are based on the Directors' best
knowledge of the amounts, events or actions, actual results ultimately may
differ from those estimates. The basis of the valuation of the Investment
Property is set out in note 6.
Going Concern
The Interim Consolidated Financial Statements have been prepared on a going
concern basis as it is the view of the Directors that this is the most
appropriate basis of preparation to adopt having considered the issues
identified below.
As reported in the Consolidated Financial Statements as at 31 December 2008, the
Group's property portfolios are partly funded by debt facilities which sit in
SPVs. Under the terms of the debt arrangements the lenders have recourse only to
the assets of those SPVs as security for their loans, and have no recourse to
the parent or other Group companies for payment.
The 30 June 2009 portfolio valuation indicates the LTV ratio on 8 out of 10 of
the loans would, if tested by the finance providers, be outside LTV covenant
levels. The Manager continues to be in discussions with all lenders where the
LTV, as indicated by the 30 June 2009 valuation, is close to or exceeds LTV
covenant ratios. All these discussions continue to be focused on cash sweep
provisions.
Notes to the Unaudited Interim Consolidated Financial Statements (Continued)
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (Continued)
Going Concern (continued)
In assessing the implications of potential covenant breaches, the Directors have
also considered that:
* the lenders to each property company have the ability to waive any breaches of
covenant where they have not commissioned or requested the valuation of the
property themselves;
* the property holding companies retain a strong interest cover. The typical
interest cover is between 1.42% and 2.25% against covenant levels ranging from
1.10% to 1.50%; and
* ongoing constructive discussions are taking place with the Group's lenders,
which the Directors believe will result in a satisfactory outcome for the Group.
Given the non recourse nature of the debt facilities described above, the
Directors do not consider that the risk of breaching LTV covenants will impact
the ability of the Group to continue as a going concern.
Accounting Policies
The accounting policies adopted in the preparation of the Interim Consolidated
Financial Statements are consistent with those followed in the preparation of
the Consolidated Financial Statements for the year ended 31 December 2008,
except for the adoption of the following new standards for the financial year
beginning 1 January 2009, noted below:
IFRS 8 Operating Segments
IFRS 8 Operating Segments requires disclosure of information about the Group's
operating segments and replaces the requirement to determine primary (business)
and secondary (geographical) reporting segments of the Group. Adoption of IFRS 8
Operating Segments did not have any effect on the financial position or
performance of the Group. The Group determined that the operating segments were
the same as the business segments previously identified under IAS 14 Segmental
Reporting. Additional disclosures about each of these segments are shown in note
3, including revised comparative information.
IAS 1 Revised Presentation of Financial Statements
The revised Standard separates owner and non-owner changes in equity. The
Statement of Changes in Equity includes only details of transactions with
owners, with non-owner changes in equity presented as a single line. In addition
IAS 1 Revised Presentation of Financial Statements introduces the Statement of
Comprehensive Income: it presents all items of recognised income and expense,
either in one single statement, or in two linked statements. The Group has
elected to present two statements.
Notes to the Unaudited Interim Consolidated Financial Statements (Continued)
3. SEGMENTAL INFORMATION
For management purposes, financial information is presented on a property and
portfolio basis. However, it is considered appropriate to combine each of the
properties into a reportable segment on a geographical basis, as this reflects
the way in which the business is managed and their similar economic
characteristics.
Management monitors and reviews rental income, property valuations and external
debt levels for the purpose of making decisions and performance assessment.
The four reportable operating segments are as follows:
1. Sweden
2. France, Belgium and The Netherlands
3. Germany
4.
Poland
The following table presents the profit/(loss) before tax of the Group's
segments as at 30 June 2009 and 2008, and 31 December 2008:
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| | Sweden | France , Belgium | Germany | Poland | Total |
| | | and The Netherlands | | | |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| At 30 June 2009 (unaudited) | GBP | GBP | GBP | GBP | GBP |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| | | | | | |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Rental income | 3,049,795 | 1,953,575 | 12,592,648 | 2,433,177 | 20,029,195 |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Fair value decrease in | (43,268) | (5,805,557) | (30,083,881) | (5,173,123) | (41,105,829) |
| investment properties | | | | | |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Segment profit/(loss) before | 3,006,527 | (3,851,982) | (17,491,233) | (2,739,946) | (21,076,634) |
| tax | | | | | |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Service charge income | | | | | 3,589,330 |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Property operating expenses | | | | | (6,022,609) |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Administrative and other | | | | | (3,318,782) |
| expenses | | | | | |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Net finance costs (including | | | | | (17,435,272) |
| fair value adjustment on | | | | | |
| derivative financial | | | | | |
| instruments) | | | | | |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Loss before tax | | | | | (44,263,967) |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| | Sweden | France , Belgium | Germany | Poland | Total |
| | | and The Netherlands | | | |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| At 30 June 2008 (unaudited) | GBP | GBP | GBP | GBP | GBP |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| | | | | | |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Rental income | 3,211,108 | 1,820,310 | 11,890,003 | 2,092,316 | 19,013,737 |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Fair value | (1,857,327) | (2,145,791) | (10,499,753) | 2,469,344 | (12,033,527) |
| (decrease)/increase in | | | | | |
| investment properties | | | | | |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Segment profit/(loss) before | 1,353,781 | (325,481) | 1,390,250 | 4,561,660 | 6,980,210 |
| tax | | | | | |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Service charge income | | | | | 2,954,874 |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Property operating expenses | | | | | (5,415,355) |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Administrative and other | | | | | (3,796,538) |
| expenses | | | | | |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Net finance costs (including | | | | | (1,658,701) |
| fair value adjustment on | | | | | |
| derivative financial | | | | | |
| instruments) | | | | | |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
| Loss before tax | | | | | (935,510) |
+------------------------------+-------------+---------------------+----------------+--------------+--------------+
Notes to the Unaudited Interim Consolidated Financial Statements (Continued)
3. SEGMENTAL INFORMATION (Continued)
+------------------------------+-------------+----------------+--------------+------------+--------------+
| | Sweden | France , | Germany | Poland | Total |
| | | Belgium and | | | |
| | | The | | | |
| | | Netherlands | | | |
+------------------------------+-------------+----------------+--------------+------------+--------------+
| At 31 December 2008 | GBP | GBP | GBP | GBP | GBP |
| (audited) | | | | | |
+------------------------------+-------------+----------------+--------------+------------+--------------+
| | | | | | |
+------------------------------+-------------+----------------+--------------+------------+--------------+
| Rental income | 6,008,619 | 3,728,315 | 23,183,899 | 3,392,075 | 36,312,908 |
+------------------------------+-------------+----------------+--------------+------------+--------------+
| Fair value | (7,884,110) | (10,476,489) | (42,731,068) | 4,347,253 | (56,744,414) |
| (decrease)/increase in | | | | | |
| investment properties | | | | | |
+------------------------------+-------------+----------------+--------------+------------+--------------+
| Segment (loss)/profit before | (1,875,491) | (6,748,174) | (19,547,169) | 7,739,328 | (20,431,506) |
| tax | | | | | |
+------------------------------+-------------+----------------+--------------+------------+--------------+
| Service charge income | | | | | 6,537,433 |
+------------------------------+-------------+----------------+--------------+------------+--------------+
| Property operating expenses | | | | | (10,781,692) |
+------------------------------+-------------+----------------+--------------+------------+--------------+
| Administrative and other | | | | | (6,641,059) |
| expenses | | | | | |
+------------------------------+-------------+----------------+--------------+------------+--------------+
| Impairment of goodwill | | | | | (6,927,480) |
+------------------------------+-------------+----------------+--------------+------------+--------------+
| Net profit on disposal of | | | | | 825,243 |
| investment properties | | | | | |
+------------------------------+-------------+----------------+--------------+------------+--------------+
| Net finance costs (including | | | | | (44,684,314) |
| fair value adjustment on | | | | | |
| derivative financial | | | | | |
| instruments) | | | | | |
+------------------------------+-------------+----------------+--------------+------------+--------------+
| Loss before tax | | | | | (82,103,375) |
+------------------------------+-------------+----------------+--------------+------------+--------------+
*Note: Segment profit/(loss) does not include finance costs from borrowings,
whilst segment liabilities include borrowings.
Notes to the Unaudited Interim Consolidated Financial Statements (Continued)
3. SEGMENTAL INFORMATION (Continued)
The following table presents segment assets of the Group's segments as at 30
June 2009 and 2008, and 31 December 2008. The segment assets are Investment
Property.
+----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| | Sweden | France , Belgium | Germany | Poland | *Non segment | Total |
| | | and The | | | assets | assets |
| | | Netherlands | | | | |
+----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| Segment assets | GBP | GBP | GBP | GBP | GBP | GBP |
+----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| | | | | | | |
+----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| At 30 June 2009 | 70,985,526 | 43,928,571 | 289,959,183 | 54,736,395 | 28,455,339 | 488,065,014 |
| (unaudited) | | | | | | |
+----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| At 30 June 2008 | 84,191,693 | 54,655,854 | 331,757,912 | 57,238,924 | 47,831,904 | 575,676,287 |
| (unaudited) | | | | | | |
+----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| At 31 December 2008 | 80,088,281 | 56,561,526 | 364,389,603 | 68,234,034 | 37,292,446 | 606,565,890 |
| (audited) | | | | | | |
+----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| | | | | | | |
+----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
*Non segment assets:
At 30 June 2009 (unaudited)
Segment assets do not include other non-current assets (GBP1,352,404), trade and
other receivables (GBP2,045,888) and cash and cash equivalents (GBP25,057,047).
At 30 June 2008 (unaudited)
Segment assets do not include intangible assets (GBP8,040,851), other
non-current assets (GBP593,354), deferred tax asset (GBP5,033), derivative
financial instruments (GBP9,625,316), trade and other receivables (GBP1,630,907)
and cash and cash equivalents (GBP27,936,443).
At 31 December 2008 (audited)
Segment assets do not include other non-current assets (GBP772,986), deferred
tax asset (GBP175,901), trade and other receivables (GBP10,290,969) and cash and
cash equivalents (GBP26,052,590).
The following table presents segment liabilities of the Group's segments as at
30 June 2009 and 2008, and 31 December 2008. The segment liabilities are
Borrowings.
+-----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| | Sweden | France , Belgium | Germany | Poland | *Non segment | Total |
| | | and The | | | liabilities | |
| | | Netherlands | | | | |
+-----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| Segment liabilities | GBP | GBP | GBP | GBP | GBP | GBP |
+-----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| | | | | | | |
+-----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| At 30 June 2009 (unaudited) | 62,378,810 | 41,858,598 | 255,486,884 | 39,644,983 | 38,596,899 | 437,966,174 |
+-----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| At 30 June 2008 (unaudited) | 67,010,915 | 41,271,756 | 244,139,241 | 36,884,889 | 19,745,213 | 409,052,014 |
+-----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| At 31 December 2008 | 70,891,053 | 48,701,567 | 298,084,112 | 45,387,948 | 36,306,742 | 499,371,422 |
| (audited) | | | | | | |
+-----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
| | | | | | | |
+-----------------------------+------------+--------------------+-------------+-------------+------------------+-------------+
*Non segment liabilities:
At 30 June 2009 (unaudited)
Segment liabilities do not include derivative financial instruments
(GBP24,071,492), trade and other payables (GBP14,248,817), income tax
(GBP2,461,553) and unamortised loan arrangement fees (GBP2,184,963).
At 30 June 2008 (unaudited)
Segment liabilities do not include deferred taxation (GBP7,850,269), trade and
other payables (GBP13,492,285), income tax (GBP464,892) and unamortised loan
arrangement fees (GBP2,062,233).
At 31 December 2008 (audited)
Segment liabilities do not include deferred taxation (GBP119,248), derivative
financial instruments (GBP22,039,925), trade and other payables (GBP14,837,188),
income tax (GBP2,299,412) and unamortised loan arrangement fees (GBP2,989,031).
Notes to the Unaudited Interim Consolidated Financial Statements (Continued)
4. DIVIDENDS
+--------------------------------------------------------------+-----+-------------+------------+------------+
| | | Six months | Six months | |
| | | ended | ended | Year ended |
+--------------------------------------------------------------+-----+-------------+------------+------------+
| | | 30-06-2009 | 30-06-2008 | 31-12-2008 |
+--------------------------------------------------------------+-----+-------------+------------+------------+
| | | unaudited | unaudited | audited |
+--------------------------------------------------------------+-----+-------------+------------+------------+
| | | GBP | GBP | GBP |
+--------------------------------------------------------------+-----+-------------+------------+------------+
| | | | | |
+--------------------------------------------------------------+-----+-------------+------------+------------+
| Declared and paid during the period: | | | | |
+--------------------------------------------------------------+-----+-------------+------------+------------+
| Equity dividends on Redeemable Preference Shares: | | | | |
+--------------------------------------------------------------+-----+-------------+------------+------------+
| Interim dividend for 2008: 2.01 pence per share | | - | 4,756,901 | 4,756,901 |
+--------------------------------------------------------------+-----+-------------+------------+------------+
| Interim dividend for 2008: 1.00 pence per share | | - | - | 2,366,618 |
+--------------------------------------------------------------+-----+-------------+------------+------------+
| | | | | |
+--------------------------------------------------------------+-----+-------------+------------+------------+
| | | - | 4,756,901 | 7,123,519 |
+--------------------------------------------------------------+-----+-------------+------------+------------+
5. SHARE CAPITAL
During the period, the Company purchased 23,666,175 of its own Redeemable
Preference Shares at a price of 3 pence each through a Tender Offer. Settlement
of the valid tenders in respect to Tendered Shares purchased was effected on 27
February.
Also, on 24 February 2009, the Company purchased 3,750,000 of its own Redeemable
Preference Shares of nil par value, at a price of 3.5 pence per share all of
which were purchased for cancellation.
As a result of both the Tender Offer and Buy Back the total number of Redeemable
Preference Shares in the Company at 30 June 2009 was 209,245,575.
6. INVESTMENT PROPERTY
+----------------------------------------------------+---+----------------+-----------------+----------------+
| | | Long Leasehold | Freehold | Total |
| | | GBP | GBP | GBP |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| At 31 December 2007 (audited) | | 58,952,914 | 442,008,833 | 500,961,747 |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Movement arising from exchange rate variances | | 4,356,904 | 31,753,987 | 36,110,891 |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Acquisitions - capital expenditure | | 149,896 | 2,655,376 | 2,805,272 |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Valuation gains/(losses) | | 668,451 | (12,701,978) | (12,033,527) |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| At 30 June 2008 (unaudited) | | 64,128,165 | 463,716,218 | 527,844,383 |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Movement arising from exchange rate variances | | 10,665,800 | 81,063,802 | 91,729,602 |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Acquisitions - capital expenditure | | 76,546 | 3,480,023 | 3,556,569 |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Disposals | | (3,115,265) | (6,030,958) | (9,146,223) |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Valuation losses | | (584,101) | (44,126,786) | (44,710,887) |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| At 31 December 2008 (audited) | | 71,171,145 | 498,102,299 | 569,273,444 |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Movement arising from exchange rate variances | | (8,751,764) | (60,689,911) | (69,441,675) |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Acquisitions - capital expenditure | | 47,534 | 836,201 | 883,735 |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Valuation losses | | (5,176,949) | (35,928,880) | (41,105,829) |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| At 30 June 2009 (unaudited) | | 57,289,966 | 402,319,709 | 459,609,675 |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| | | | | |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| The balance is presented as follows: | | | | |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| | | | | |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Non-current Assets - Investment property | | 54,831,633 | 402,319,709 | 457,151,342 |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Investment Property Held For Sale | | 2,458,333 | - | 2,458,333 |
+----------------------------------------------------+---+----------------+-----------------+----------------+
| Total | | 57,289,966 | 402,319,709 | 459,609,675 |
+----------------------------------------------------+---+----------------+-----------------+----------------+
Notes to the Unaudited Interim Consolidated Financial Statements (Continued)
6. INVESTMENT PROPERTY (Continued)
The investment properties were valued at 30 June 2009 (and in previous periods)
at their open market value using an income capitalisation method in accordance
with the Royal Institution of Chartered Surveyors Valuation Standards. The
property valuations were carried out by CBRE and King Sturge, who are
independent, professionally qualified valuers who have recent experience in the
location and category of the investment properties being valued. Valuation of
property is based on a number of factors including existing lease terms,
estimates of market rents and estimates of capitalisation rates using comparable
market evidence where available. Due to a reduction in transaction volumes and
therefore market evidence the valuers have increasingly used their market
knowledge and professional judgement and not only relied on historic
transactional comparables.
The primary judgements made in arriving at the open market values are the
yields. The table below sets out the weighted average yields for the initial and
equivalent yields applied on a country basis:
+--------------------------------------------------+------------+-----------+---+------------+----------+
| | 30-06-2009 | | 31-12-2008 |
+--------------------------------------------------+------------------------+---+-----------------------+
| | Equivalent | Initial | | Equivalent | Initial |
| | Yield (%) | Yield (%) | | Yield (%) | Yield |
| | | | | | (%) |
+--------------------------------------------------+------------+-----------+---+------------+----------+
| | | | | | |
+--------------------------------------------------+------------+-----------+---+------------+----------+
| Belgium | 7.75 | 7.87 | | 7.21 | *0.95 |
+--------------------------------------------------+------------+-----------+---+------------+----------+
| Germany | 6.80 | 6.93 | | 6.30 | 6.44 |
+--------------------------------------------------+------------+-----------+---+------------+----------+
| The Netherlands | 7.41 | 7.02 | | 6.70 | 7.92 |
+--------------------------------------------------+------------+-----------+---+------------+----------+
| France | 6.25 | 7.42 | | 5.75 | 6.12 |
+--------------------------------------------------+------------+-----------+---+------------+----------+
| Poland | 8.31 | 8.31 | | 6.75 | 6.19 |
+--------------------------------------------------+------------+-----------+---+------------+----------+
| Sweden | 7.24 | 6.93 | | 6.90 | 6.46 |
+--------------------------------------------------+------------+-----------+---+------------+----------+
*As at 31 December 2008 the weighted average initial yield for Belgium was very
low as a result of rent free periods at the calculation date.
As a result of the level of judgement used in the valuations, the amounts
ultimately realised in respect of any given property may differ from the
valuations included within the Group's Balance Sheet.
As at 30 June 2009, 30 June 2008 and 31 December 2008 all of the investment
properties were charged as security against Group borrowings. For details on
borrowings see note 7.
Notes to the Unaudited Interim Consolidated Financial Statements (Continued)
7. BORROWINGS
Borrowings are repayable as follows:
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| | | As at | As at | As at |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| | | 30-06-2009 | 30-06-2008 | 31-12-2008 |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| | | unaudited | unaudited | audited |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| | | GBP | GBP | GBP |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| | | | | |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| Secured bank loans | | 192,529,745 | - | 119,592,621 |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| Unamortised loan arrangement fees | | (1,100,706) | - | (1,052,250) |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| Security deposits paid | | (680,731) | - | - |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| Current liabilities | | 190,748,308 | - | 118,540,371 |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| | | | | |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| Secured bank loans | | 207,520,259 | 389,306,801 | 343,472,060 |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| Unamortised loan arrangement fees | | (1,084,255) | (2,062,233) | (1,936,782) |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| Non-current liabilities - due between two years and five years | | 206,436,004 | 387,244,568 | 341,535,278 |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| | | | | |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
| Total borrowings | | 397,184,312 | 387,244,568 | 460,075,649 |
+-------------------------------------------------------------------+---+-------------+-------------+-------------+
Each loan is secured on the properties held by the relevant SPV borrower that
has title to the properties concerned. No loans are subject to cross default
with the exception of the loans to the SPVs in The Netherlands and France.
All interest on bank loans is charged at floating rates of LIBOR or EURIBOR plus
margins, with the exception of a fixed rate loan at 5.7055% in Zattara BVBA in
Belgium. Floating rate margins range between 0.70% and 1.35%. Interest is paid
on a quarterly basis in arrears. Protection from interest rate movement is
provided by interest rate swaps hedging any variable interest rate exposure, and
results in effective interest rates ranging from 4.70% to 5.74%. The weighted
average interest rate as at 30 June 2009 was 5.32% (30 June 2008: 5.32%, 31
December 2008: 5.32%).
The majority of the Company's borrowings of EUR470.5 million will expire during
2012. In respect of 6 out of 8 of the loans where LTV ratios exceed covenants
levels, the Group no longer has an unconditional right to defer settlement of
the loans for more than 12 months from the balance sheet date, if covenants were
to be tested by finance providers. Consequently, an amount of GBP190.8 million
(EUR224.3 million) has been represented as a current liability. Although each of
these six loans is shown as a short term liability the corresponding asset is
shown in the usual way under "Investment Property" in non current assets.
Notes to the Unaudited Interim Consolidated Financial Statements (Continued)
8. RELATED PARTY TRANSACTIONS
During the period, the Group entered into transactions, in the normal course of
business, with related parties. Transactions entered into and balances
outstanding with related parties are set out below:
+-------------------------------------+---------------+---+------------------+----+--------------------+
| | | | Purchases from | | Amounts owed to |
| | | | related parties | | related parties |
+-------------------------------------+---------------+---+------------------+----+--------------------+
| | | | GBP | | GBP |
+-------------------------------------+---------------+---+------------------+----+--------------------+
| | | | | | |
+-------------------------------------+---------------+---+------------------+----+--------------------+
| The Manager | | | | | |
+-------------------------------------+---------------+---+------------------+----+--------------------+
| 30 June 2009 (unaudited) | | | 1,654,702 | | 830,624 |
+-------------------------------------+---------------+---+------------------+----+--------------------+
| 30 June 2008 (unaudited) | | | 1,834,337 | | 865,395 |
+-------------------------------------+---------------+---+------------------+----+--------------------+
| 31 December 2008 (audited) | | | 3,701,319 | | 6,655 |
+-------------------------------------+---------------+---+------------------+----+--------------------+
| | | | | | |
+-------------------------------------+---------------+---+------------------+----+--------------------+
| Affiliates of the Manager | | | | | |
+-------------------------------------+---------------+---+------------------+----+--------------------+
| 30 June 2009 (unaudited) | | | 152,356 | | 47,268 |
+-------------------------------------+---------------+---+------------------+----+--------------------+
| 30 June 2008 (unaudited) | | | 57,986 | | 7,723 |
+-------------------------------------+---------------+---+------------------+----+--------------------+
| 31 December 2008(audited) | | | 221,762 | | 18,763 |
+-------------------------------------+---------------+---+------------------+----+--------------------+
| | | | | | |
+-------------------------------------+---------------+---+------------------+----+--------------------+
The key management personnel of the Group are considered to be the Directors of
the Company and the Manager.
Manager
The Manager, Rutley Capital Partners LLP, is entitled to receive a fee paid in
accordance with the Management Agreement.
Affiliates of the Manager
Affiliates of the Manager include other entities within the Knight Frank LLP
Group.
9. POST BALANCE SHEET EVENTS
On 30 March, the Board announced that it had received approaches from third
parties which might or might not lead to an offer being made for the entire
issued redeemable preference share capital of the Company. In June 2009, Black
Sea Global Properties ("BSGP") announced that it would make an offer for the
entire share capital at 6 pence per share. Following discussions between the
Board of Directors and BSGP in July 2009 an increased offer of 7.25 pence was
announced with a full recommendation from the Board for shareholders to accept
the offer. On 7 August the offer closed with BSGP ultimately securing a
controlling stake of 73.5% of the share capital of the Company.
Statement of Directors' Responsibilities
The Directors confirm that this set of unaudited Interim Consolidated Financial
Statements has been prepared in accordance with IAS 34 as adopted by the
European Union, and that the Interim Consolidated Financial Statements include a
fair review of information required by DTR 4.2.7 and DTR4.2.8.
The Directors of Rutley European Property Limited are listed on page 26.
By order of the Board
David PinckneyNicholas Moss
Chairman Director
28 August 2009
Management and administration
_______________________________________________________________________________
___________________________
Directors
David Pinckney (Chairman)
David Allison
Nicholas Moss
Christopher Sherwell
Obie Moore (appointed 25 August 2009)
_______________________________________________________________________________
___________________________
Registered Office
Trafalgar Court
Les Banques
St. Peter Port
Guernsey
_______________________________________________________________________________
___________________________
Manager
Rutley Capital Partners LLP
55 Baker Street
London
W1U 8AN
_______________________________________________________________________________
___________________________
Administrator, Secretary and Registrar
Northern Trust International Fund Administration Services (Guernsey)
Limited
P.O. Box 255
Trafalgar Court
Les Banques
St. Peter Port
Guernsey
GY1 3QL
_______________________________________________________________________________
___________________________
Auditor
Ernst & Young LLP
1 More London Place
London
SE1 2AF
_______________________________________________________________________________
___________________________
Legal Advisers
As to Guernsey Law
As to UK Law
Ozannes
Nabarro LLP
P.O. Box 186
Lacon House
1 Le Marchant Street
84 Theobalds Road
St. Peter Port
London
Guernsey
WC1X 8RW
GY1 4HP
_______________________________________________________________________________
___________________________
Independent valuation agents
CB Richard Ellis Limited ("CBRE")
King Sturge LLP
Kingsley House
30 Warwick Street
Wimpole Street
London
London
W1B 5NH
W1G 0RE
_______________________________________________________________________________
___________________________
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR CKQKBQBKDNCB
Rutley (See LSE:DPE) (LSE:RTY)
Historical Stock Chart
From Apr 2024 to May 2024
Rutley (See LSE:DPE) (LSE:RTY)
Historical Stock Chart
From May 2023 to May 2024
