TIDMSMTG
RNS Number : 2013F
Summit Germany Limited
16 May 2017
Summit Germany Limited
2016 Full Year Results
We are pleased to present the audited results for the year ended
31 December 2016 of Summit Germany Limited and its subsidiaries
("the Group") with a net profit of EUR55.5 million.
FY 2016 Highlights:
Financial Results
Profits
-- Net profit of EUR55.5 million (FY 2015: EUR63.5 million)
-- Gross profit increased 15.1% to EUR52.7 million (FY 2015: EUR45.8 million)
-- Profit Before Tax (PBT) of EUR63.9 million (FY 2015: EUR70.9
million) of which Revaluation Profit is
EUR28.2 million (FY 2015: EUR55.3 million)
-- Earnings Per Share (EPS) of 10.5 cents (FY 2015: 13.3 cents)
NAV
-- EPRA NAV of EUR466.3 million increased by 9.1% compared to EUR427.5 million in 2015
-- EPRA NAV per share of 100.2 cents (FY 2015: 91.9 cents)
-- Group's NAV increased 7.0% to EUR437.9 million (FY 2015: EUR409.4 million)
Rent
-- Rental income increased by 15.3% to EUR57.2 million (FY 2015: EUR49.6 million)
-- Funds From Operations (FFO) up 21.2% to EUR34.9 million (FY 2015: EUR28.8 million)
Strong portfolio performance
-- EUR797.8 million portfolio of 100 properties (FY 2015: EUR735.3 million)
-- Net rent of EUR58.4 million p.a., equivalent to a rental yield of 7.3%.
-- EUR40.5 million of new property acquisitions. Further acquisitions are under process.
-- EUR18.6 million of disposals of non-strategic assets enhanced
average portfolio quality. Additional
disposal of EUR2.5 million post year end.
-- New leases and renewals for 83,000 sqm with total rental income of EUR7.9 million p.a.
-- New leases and renewals are 12% higher than last year's rent
rate (ave. EUR7.9 per sqm per month)
-- Stable occupancy of 91% for the portfolio's majority (87%
including properties for development)
-- New joint venture project for a 60 apartments development in
Berlin. Post year end, additional
two new projects in Berlin for 95 residential units.
EUR89 million new debt facilities - all for 10 years fixed at
low rates
-- EUR29 million of new ten-year debt secured at asset level
provided by German banks to finance the
new acquisitions, at attractive blended fixed interest rate of
2.09% p.a. and 2.68% annual
amortisation.
-- EUR44 million refinancing secured on property provided by two
German banks for a ten-year term at
a blended fixed interest rate of 2.24% p.a. and 4.09% annual
amortisation.
-- EUR16 million of new debt secured on a property in Potsdam, provided by a German bank for ten
years at a 1.76% p.a. fixed interest rate and 3% annual
amortisation.
Dividend
-- Total dividend distributions of EUR13.8 million were paid
during the reporting period, reflecting
2.97 cents per share.
-- Additional EUR4.8 million paid post reporting period, reflecting 1.02 cents per share.
-- Total annual dividend yield of 4.05% on EPRA NAV per share.
Harry Hyman, Chairman commented: "Summit took good advantage of
Germany's strong domestic real estate market in 2016, and we remain
confident regarding the prospects for the current year.
Acquisitions made an immediate positive contribution to earnings,
and have further attractive opportunities to unlock value through
hands-on asset management over the next few years. We believe our
revenue and earnings visibility, and strong portfolio outlook
justifies the dividend stability, and we remain committed to
attractive shareholder returns."
Zohar Levy, Managing Director commented: "Another very
successful year was reflected in the progress we made across all of
our strategic and financial targets. We increased the scale, and
upgraded the quality of our portfolio through acquisitions which
met our investment criteria, and disposed of non-strategic
holdings. Stable occupancy, lease renewals and debt refinance have
enhanced revenues, and underpinned earnings and cash flows. We are
well-positioned to continue to capitalise upon our strong position
within a dynamic real estate market of one of the world's leading
economies."
For further information please contact:
Summit Germany Limited Tel: +44 (0) 1481 700 300
Zohar Levy - Managing Director
Itay Barlev (Braun) - Finance
Director
Non-Executive Chairman Tel: +44 (0) 20 7451 7050
Harry Hyman
Carey Group, Company Secretary Tel: +44 (0) 1481 700 300
Sara Bourne
Liberum Capital Limited, Nominated Tel: +44 (0) 20 3100 2222
Adviser and Joint Broker
Chris Clarke / Jill Li
Cenkos Securities, Joint Broker Tel: +44 (0) 20 7397 8900
Ivonne Cantu
Russell Kerr / Selwyn Jones
(Broking)
Inside information
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regulation.
Chairman's and Managing Director's Report
We are pleased to report another successful year, during which
we made progress across all key strategic targets.
Acquisitions completed during the first half of 2016, of
fully--let and well located commercial properties, made an
immediate contribution to net operating income and Funds from
Operations (FFO). They also added new opportunities to enhance
returns and unlock value via intensive asset management of our
portfolio over the next few years. Further detail is provided in
the portfolio review.
We still have cash and headroom available to finance further
acquisitions and continue to appraise prospective purchases to
ascertain whether they fit our acquisition criteria. We seek assets
with strong income characteristics, ideally where there is
potential to unlock latent value by application of our asset
management skills.
Financial Review
EPRA NAV increased by 9.1% to EUR466.3 million as at 31 December
2016 (FY 2015: EUR427.5 million). This is mainly due to a EUR34.9
million FFO(1) contribution and EUR28.2 million revaluation profit
(net of capex), partly offset by EUR18.6 million dividends
distributed during the period. EPRA NAV per share was approximately
9% higher at 100.2 cents (FY 2015: 91.9 cents). The Group's NAV
increased 7.0% to EUR437.9 million (FY 2015: EUR409.5 million).
A more detailed breakdown of the year-end 2016 external
valuation reveals a EUR44.8 million increase in the fair value of
the portfolio, partly offset by two write-downs of EUR8.7 million
in respect of planned capex of several properties, and EUR7.9
million related to a single asset in Hamburg, where the sole tenant
vacated the property. That latter asset's value was consequently
adjusted during the first half of the year, and was sold in the
final quarter of 2016 at a price close to its carrying value.
As at the end of 2016 the portfolio consisted of 100 assets,
with a NMV of EUR797.8 million (FY 2015: 103 properties at EUR735.3
million), including EUR2.2 million in respect of a property held
for sale (FY 2015: EUR3.6 million). The 8.5% increase in portfolio
value mainly reflects EUR40.5m of recent acquisitions and the
EUR28.2 million uplift in the fair value of the existing
portfolio.
Portfolio performance - asset management and acquisitions
Building and maintaining a strong platform is crucial to the
Group's success. Our asset management and marketing teams invested
enormous efforts throughout the year to enhance our portfolio.
The earnings accretive property additions completed during the
second half of 2015 and first half of 2016, expanded the existing
stable portfolio and have created an even more solid platform to
underpin future cash flow growth. These acquisitions were the main
driver behind the 15.3% growth in rental income to EUR57.2 million
(FY 2015: EUR49.6 million). The assets acquired during the
reporting period alone, contributed EUR2.6 million of that
total.
(1) As presented on page 5
Underlying rental income, ignoring contributions from
acquisitions, also benefited from new lettings and lease extensions
during the reporting period. Our excellent landlord and tenant
relationships enabled us to maintain a stable rental income on a
like-for-like basis. The underlying portfolio remains robust,
enhanced we believe by selected asset disposals during the
financial year.
Net Operating Income ("NOI") was EUR52.7 million for the year
ended 31 December 2016, reflecting a 15.1% increase on EUR45.8
million reported for the prior year. Contributions were from all
the portfolio sectors.
Rental growth is reflected in a 21.2% increase in FFO to EUR34.9
million (FY 2015: EUR28.8 million). FFO per share was 17.2% ahead
at 7.5 cents per share (FY 2015: 6.4 cents). The difference in
relative growth rates is due to the share placing in February 2015;
as a result of which the average number of shares in issue for 2016
was above the figure applicable for the previous year.
FFO EUR'mm
------------------------ ------------------------
Gross profit 52.7
G&A expenses -7.4
Interest expenses,
net -10.4
------------------------ ------------------------
FFO 34.9
Weighted ave. amount
of shares (million) 465
FFO per share (cents) 7.5
The increase in FFO contributed to the Profit Before Tax (PBT)
amounting to EUR63.9 million for the reporting period (FY 2015:
EUR70.9 million).
PBT EUR'mm
---------------------------- ------------------------
Gross profit 52.7
G&A expenses -7.4
Fair value adjustments
of investment properties 28.2
Financial expenses
(net) -10.0
Other 0.5
---------------------------- ------------------------
Profit Before Taxes 63.9
The approximate 10% decrease in PBT reflects the variance in
fair value movements, reflected in the external revaluation of the
investment portfolio at the reported and prior year-ends. A cleaner
measure of the portfolio's underlying operational performance, can
be achieved by stripping out fair value movements. Excluding
revaluation profit, PBT more than doubled to EUR35.7 (FY 2015:
EUR15.6 excluding revaluation profit). This indicates clear
increases in operational and profit margins, attributable growth in
net rent and lower expense ratios post successful refinance of
existing debt.
The variance in fair value movements has also affected the Net
profit which amounted to EUR55.5 million (FY 2015: EUR63.5
million), resulting in Earnings Per Share (EPS) of 10.5 cents (FY
2015: 13.3 cents).
EPS EUR'mm
---------------------------- -----------------------
Profit attributable
to ordinary shareholders 49.0
No. of shares 465
---------------------------- -----------------------
Earnings Per Share
(cents) 10.5
Margins benefitted from refinancing of existing debt on improved
terms
In total, we secured EUR89 million of new ten--year credit
facilities during the reporting period, all at attractive interest
rates fixed for the long term. These will help underpin the
portfolio's stable cash flow characteristics.
Within the first quarter of the reporting period EUR29 million
of new debt was provided by two German banks to finance
acquisitions in Munich, Duisburg and Frankfurt. Both facilities
were at attractive fixed rates: EUR10.5 million for ten years at
1.8% fixed interest rate and 3% annual amortisation and EUR18.5
million for ten years at 2.26% fixed interest rate and 2.5% annual
amortisation.
In May 2016 we refinanced EUR24 million debt secured on the
Stuttgart property complex acquired in August 2015. That loan,
which was previously part of the acquisition of the complex, was
replaced by a new EUR40 million facility provided by two German
lenders at a fixed interest rate of 2.25% p.a. for a ten-year term
and an annual amortisation rate of 4.15%. Three months later, we
raised another EUR3.85 million of new debt, secured on this
complex. This has a fixed 2.1% interest rate p.a. for the ten-year
term, and 3.5% annual amortisation.
In December 2016, we raised finance secured on an office
building in Potsdam, previously funded from the Group's own
resources. A German lender provided a EUR16 million debt facility,
for a 10-year term at a fixed interest rate of 1.76% and 3.0%
annual amortisation rate.
These financing activities and the Group's strong relationships
with its German lenders have reduced the average interest rate on
the aggregate debt portfolio to 2.7% p.a. The full benefit of these
should be reflected in the FY 2017 profit margin and earnings.
These new loans also extended the weighted average unexpired term
of the group's aggregate debt portfolio to 5.8 years (FY 2015: 5.6
years), which further underpins the Group's stable cash flow
characteristics and earnings outlook.
The table below sets out the main details of the Group debt
facilities at 31 December 2016. Further detail is provided in Note
7 of the Group's financial statements.
Loan Market
Financing Amount Interest Amort' Value Loan to DSCR
Date (EURmn) Rate Rate (EURmn) Value Ratio
--------- ------------------------- -------- ------------- ---------- ------------------ ---------------------- ----------------------
Credit
Facility Start Maturity Cov' Actual Cov' Actual
--------- ---------- ----------- ---------- ---------------- ----------------- -------- -------- ---------- --------- -----------
1 12.2014 12.2021 62 3.14% 2.00% 161.0 70% 38% NR NR
2 12.2014 12.2021 146 3.14% 2.00% 298.6 75% 49% NR NR
3 03.2015 3.2022 32 2.00% 3.00% 66.1 65% 48% 125% 270%
5 11.2013 11.2018 22 2.66% 2.00% 38.0 75% 58% 145% 169%
6 10.2012 12.2021 5 e+1.75% 3.00% 11.8 NR NR 125% 289%
7 10.2012 2.2019 11 e+1.75% 2.65% 17.8 NR NR 125% 233%
8 1.2016 1.2026 10 1.80% 3.00% 16.7 NR NR NR NR
9 3.2016 3.2026 18 2.26% 2.50% 27.5 NR NR NR NR
10 4.2016 3.2026 39 2.25% 4.15% 59.7 NR NR NR NR
11 9.2016 8.2026 4 2.10% 3.50% NR NR NR NR
12 12.2016 12.2026 16 1.76% 3.00% 21.4 NR NR NR NR
Other 1 0.0 NR NR NR NR
Unpledged Properties 79.2
365.7 797.8 46%
=========== ========== =========== ========== =========== ========== ================== ======== ============ ========= ===========
In February this year, the Group's credit rating was reaffirmed
by Midroog, a Moody's Israeli subsidiary, at Aa3 (stable outlook).
This represents a valuable independent verification of our revenue
and portfolio outlook and will improve further our ability to
access new debt sources.
Property portfolio overview
At the end of December 2016, our aggregate portfolio comprised
100 assets, ca. 864,000 sqm of net lettable space, located on
approximately 1,407,000 sqm of land.
The net annualised income of the aggregate portfolio at end FY
2016 was EUR58.4m. That is equivalent to a 7.3% p.a. net yield,
receivable from ca. 650 tenants. Rents uplifts are either linked to
CPI, or subject to agreed fixed annual increases.
No. Land Net Capital
of Size Lettable Vacant Rent Value
Type Assets (sqm'000) (sqm'000) (sqm'000) (EURmn) Rent/sqm/month (EUR/sqm) Yield
---------- -------- ----------- ----------- ----------- --------- --------------- ----------- ------
Office 49 616 501 63 41 7.9 1,165 7.1%
Retail 33 223 89 18 7 8.0 934 8.2%
Logistic 18 569 273 35 10 3.6 478 7.8%
Total 100 1,407 864 117 58 6.5 924 7.3%
========== ======== =========== =========== =========== ========= =============== =========== ======
Aggregate portfolio occupancy is currently approximately 87%.
The vacancy rate reflects, among others, assets held for
redevelopment at a future date. Assuming the portfolio was fully
occupied, annualised net rent would be approximately EUR66m p.a.,
equivalent to an 8.3% p.a. yield on current book value.
Portfolio occupancy and income, adjusted for acquisitions and
disposals, have both been stable in recent years. Net of disposals
during the reporting period lettings were steady, and occupancy was
maintained at around 91% for the majority of the portfolio.
That reflects our strong landlord and tenant relationships, as
well as the success of our asset management team and direct
approaches made by our marketing unit. During the reporting period,
we signed new leases for approximately 28,000 sqm, and renewals of
existing lease agreements for another 55,000 sqm, worth a total of
approximately EUR7.9 million per annum and reflecting a rent rate
of EUR7.9 per square meter per month, 12% higher than last year's
rate.
The majority of the current portfolio was acquired in 2006-7 and
80% of the income derives from strong tenants. It is multi-let with
no dependency on key tenants and is also well diversified from
sector and geographical perspectives, as illustrated overleaf.
Offices represented by far the largest component of the year-end
portfolio and comprised 73.2% of the NMV and 70.7% of Net Rent (FY
2015: 72.5% and 70.2% respectively). That is fully in line with our
long-term strategy to focus on this segment, where we see
interesting and attractive prospects. It is an area in which we can
capitalise upon management depth of experience and one where we
have a proven competitive advantage.
Total
Offices Logistic Retail NMV
-------- --------- ------- ------
583.8 130.7 83.3 797.8
-------- --------- ------- ------
73.2% 16.4% 10.4% 100%
======== ========= ======= ======
The average rent/sqm per month for the year-end portfolio is set
out in the table below, with comparison between distinct commercial
sectors.
Offices Logistic Retail
------------------------ ---------------------- ------------------------
12.2016 12.2015 12.2016 12.2015 12.2016 12.2015
----------- ----------- ---------- ---------- ----------- -----------
EUR/sqm/month 7.9 7.9 3.6 3.4 8.0 7.9
Range
in EUR (4.7-20.5) (4.1-20.1) (2.3-5.9) (2.3-5.2) (4.0-25.7) (3.5-25.7)
----------- ----------- ---------- ---------- ----------- -----------
Over 50% of group rent is generated from assets located in
Germany's four main cities, Berlin (20%), Frankfurt (15%),
Stuttgart (10%) and Hamburg (9%). Another 30% is derived from
Cologne, Dusseldorf, Munich and other major cities combined
resulting with more than 85% in Germany's major cities. The largest
ten properties account for 37% of portfolio income, and 81% of the
lettable area is in the former West Germany.
We remain confident regarding the prospects for German
commercial property, which we believe are characterised by steady
demand and a positive economic outlook.
Acquisitions: EUR40.5 million completed during 2016, new
opportunities under review
We continue to seek acquisition opportunities which fit our
strict core investment criteria. Cash is available to finance
further growth, and our recent discussions with existing and
potential new lenders confirm that they remain willing to support
investment in commercial real estate.
We focus primarily on the resilient operational characteristics
of the asset under consideration, its existing leases and tenant
covenants, supported by its competitive positioning within its
underlying local markets.
We also prefer to acquire assets where we can identify
opportunities to apply our asset management expertise to increase
net rent and unlock capital value. These may include using own
resources over the short to medium term for refurbishment and
redevelopment purposes, as well as for debt refinance to further
strengthen cash flow.
During the reporting period, we acquired three fully-let
properties which provided an immediate, positive contribution to
the Group's rental income and cash flow. The properties are located
in Munich, Duisburg and Frankfurt (Oberursel) and were purchased
for a total of EUR40.5 million (including acquisition costs). These
assets have a combined 30,000 square metre lettable area and
generate an aggregate net rent of approximately EUR3 million p.a.
with a similar NOI.
The assets are a good fit with our strategy to acquire
well-located, attractively priced properties let to stable tenants.
They were financed from existing cash, plus ten-year EUR29 million
debt facilities provided by German banks. The average interest on
the new debt is fixed at 2.1% for the entire term, with 2.7%
average annual amortisation.
Further details on the properties acquired during the reporting
period are included in the Notes to the Group's financial
statements.
New residential projects in Berlin
To benefit from the growing demand for residential properties in
Berlin, we have been engaged over the last few years in several
projects, all of which have been carried out by joint ventures
(JVs) with an experienced specialist developer. These engagements
provide an opportunity to use surplus land within existing sites,
and convert commercial assets for residential use. The JVs may also
finance land purchases for this purpose.
The Group's engagement is typically in the provision of
additional funding required, above that expected to be covered by
construction loans.
In May 2016, we agreed a new joint-venture (JV) for the
development of a residential project in Berlin. This JV has
acquired an existing building which it intends to convert into 60
apartments. The anticipated investment for this entire project is
EUR18 million and apartment sales are expected to generate project
revenues of EUR23 million. The JV plans to finance the project with
a construction loan and another EUR4 million loan from the
Group.
After the end of the reporting period we agreed two new
residential projects in Berlin. The first proposes to develop 50
apartments on a plot acquired by the JV for EUR4.2 million.
Expected investment in the entire project is approximately EUR23
million and expected revenue from sales of apartments ca. EUR27
million. The second JV project has acquired a plot for EUR2.6
million and intends to develop 45 townhouses and terraced houses.
The anticipated total investment is ca. EUR13 million, projected
revenue from sales of apartments approximately EUR16 million.
As in previous projects, the JVs intend to use construction
loans to finance both developments. The additional required funds
of ca. EUR7 million will be provided as loan from the Group, on
terms and conditions similar to previous residential development
engagements. The loan and accrued interest is repayable from the
project revenues by the second half of 2020.
These are the latest in a series of JVs which seek to benefit
from ongoing demand for residential property in Berlin. The
projects are all located in high demand residential neighbourhoods.
More detail on this is set out in Note 6 of these accounts.
Ongoing disposals of non-strategic assets
We aim to progressively upgrade the average quality of the Group
portfolio by disposing of non-strategic assets. The proceeds are
used either to reduce associated debt or to finance the acquisition
of new properties with better growth potential.
While we continued to improve our portfolio during the last
year, we sold ca. EUR18.6 million of non-strategic assets. In the
first six months of last year, we disposed of three small retail
properties at close to carrying value, which raised EUR2.4 million
in total. In the second half, we sold a property in Hamburg for
EUR14 million and another asset in Bremen for EUR1.3 million. These
were all either non-strategic holdings or, in the case of Hamburg,
represented an opportunity to achieve what we regarded as the full
value of an asset which had limited potential for further upgrade
over the short to medium term.
Post the year-end we sold a small retail property in Worms for a
total consideration of EUR2.5 million, which was close to last
carrying value.
Dividend
The increase in the Group's rental income and cash flows has
enabled us to maintain progressive distributions of dividends since
AIM admission in 2014. The most recent quarterly dividend of 1.02
cents per share paid in February 2017 in respect of the third
quarter of the 2016 reflects an annualised dividend yield of 5.83%
on the 2015 placing share price of 70 cents.
We are confident in the outlook for the Group's assets and
underlying markets to continue and distribute dividends, which are
well-covered by recurring, rental based earnings.
Outlook
While we remain committed to investment portfolio growth, and
continually seek ways to enhance its operational performance, our
strategy is focused upon resilient, visible cash flows. It is
therefore reassuring to report another strong period, as that
underpins our strategic objectives.
Earnings accretive additions to the portfolio secured during H2
2015 and 2016 enlarged our existing, stable investment portfolio
and created an even more solid platform to anchor future enhanced
cash flows.
The effort made by our asset management and marketing teams is
reflected in portfolio performance and its net financial impact has
benefited from improved, lower rate debt facilities. Portfolio
occupancy and rental income from existing properties was maintained
across the portfolio, despite lease expirations. This reflects
success in securing new lettings, reviews, and identifying
opportunities for refurbishments, extensions and other asset
improvements.
We plan to maintain steady portfolio performance
characteristics, and continue to achieve year-on-year portfolio
growth where we identify income-producing properties with asset
management opportunities. We have access to cash and low cost debt
to finance further value enhancing acquisitions, as well as
refurbishment or redevelopment where we see attractive
opportunities. We will not however, compromise our criteria and
indeed, rejected asset purchases where the opportunities presented
were, in our view, overpriced.
This reflects a current 'hot' commercial property investment
market, but we regard this as a normal part of the investment
cycle. As a longer-term investor, our experience suggests that
there will be periods when we will benefit holding until better
opportunities appear. For Summit Group, these generally relate to
assets which would not suit mainstream investors. In such assets,
most of the underlying value will only be unlocked via the kind of
intensive, hands-on asset management which is our core competency,
and a genuine source of competitive advantage.
We are confident with our focus on the EU's leading economy and
a portfolio, more than 85% of which, is located in Germany's major
cities. Current interest service and dividend cover is comfortable,
and prospects for growth in net rents, FFO/PBT and net asset value
are projected to be derived from ongoing management of our existing
portfolio, independent of any assistance from the underlying
market. We look forward to reporting further progress in 2017.
Harry Hyman Zohar Levy
Chairman Managing Director
15 May 2017
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF SUMMIT GERMANY
LIMITED
We have audited the consolidated financial statements of Summit
Germany Limited for the year ended 31 December 2016 which comprise
the consolidated statements of financial position, the consolidated
statements of comprehensive income, the consolidated statements of
changes in equity, the consolidated statement of cash flows, and
the related notes 1 to 20. The financial reporting framework that
has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the EU.
This report is made solely to the company's members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work has been undertaken so that we might state to
the company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities
Statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we read all
the financial and non-financial information in the annual report to
identify material inconsistencies with the audited financial
statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the audit. If
we become aware of any apparent material misstatements or
inconsistencies, we consider the implications for our report.
Opinion on financial statements
In our opinion the consolidated financial statements:
-- give a true and fair view of the state of the group's affairs
as at 31 December 2016 and of its profit for the year then
ended;
-- have been properly prepared in accordance with IFRS as adopted by the EU; and
-- have been prepared in accordance with the requirements of the
Companies (Guernsey) Law, 2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to report to
you if, in our opinion:
-- proper accounting records have not been kept; or
-- the consolidated financial statements are not in agreement with the accounting records; or
-- we have not received all the information and explanations we require for our audit.
Deloitte LLP
Chartered Accountants
St Peter Port, Guernsey
15 May 2017
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of 31 December 2016 2015
--------------------------------------- ---- ---------- ---------
Note Euro (in thousands)
--------------------------------------- ---- ---------------------
ASSETS
NON-CURRENT ASSETS:
Investment properties 5 795,579 731,748
Other long-term assets 6 12,093 13,191
Deferred tax assets 17 655 485
---------- ---------
Total non-current assets 808,327 745,424
---------- ---------
CURRENT ASSETS:
Cash and cash equivalents 10 54,158 33,583
Trade receivables, net 8 1,297 1,584
Prepaid expenses and other current
assets 9 16,133 7,249
Receivables from related parties 13 169 243
Investment property held for
sale 5 2,242 3,582
---------- ---------
Total current assets 73,999 46,241
---------- ---------
Total assets 882,326 791,665
========== =========
The accompanying notes are an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of 31 December 2016 2015
----------------------------------------- ---- -------------- ----------
Note Euro (in thousands)
----------------------------------------- ---- ------------------------------
EQUITY AND LIABILITIES
EQUITY: 11
Share capital (*) - (*) -
Distributable reserve 379,416 397,981
Reserves due to transactions
with principal shareholder 2,216 2,216
Net unrealised loss reserve (4,254) (2,190)
Retained gain 60,514 11,477
-------------- ----------
Equity attributable to the owners
of the Company 437,892 409,484
Non-controlling interests 21,787 15,218
-------------- ----------
Total equity 459,679 424,702
-------------- ----------
NON-CURRENT LIABILITIES:
Interest-bearing loans and borrowings 7 349,526 316,765
Other long-term financial liabilities 6 1,972 2,052
Derivative financial liabilities 18 6,248 3,614
Deferred tax liability 17 21,127 13,377
-------------- ----------
Total non-current liabilities 378,873 335,808
-------------- ----------
CURRENT LIABILITIES:
Interest-bearing loans and borrowings 7 11,804 7,075
Derivative financial liabilities 18 1,675 1,478
Payables to related parties 13 5,507 2,350
Current tax liabilities 65 89
Trade and other payables 14 24,723 20,163
-------------- ----------
Total current liabilities 43,774 31,155
-------------- ----------
Total liabilities 422,647 366,963
-------------- ----------
Total equity and liabilities 882,326 791,665
============== ==========
NAV/Share (cent) 11 94.09 87.99
============== ==========
EPRA NAV/Share (cent) 11 100.19 91.85
============== ==========
(*) No par value.
The accompanying notes are an integral part of the consolidated
financial statements.
15 May 2017
--------------------- ------------------ -----------------
Date of approval Zohar Levy Itay Barlev
of the
financial statements Managing Director Finance Director
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For The Year ended 31 December 2016 2015
------------------------------ ---- ---------- ---------
Note Euro (in thousands)
------------------------------ ---- -----------------------
Rental income 57,168 49,578
Operating expenses (4,485) (3,824)
----------- -----------
Gross profit 52,683 45,754
General and administrative expenses 15 (7,436) (6,784)
Fair value adjustments of investment
properties 5 28,203 55,293
Other income (expenses) 486 (1,588)
----------- -----------
Operating profit 73,936 92,675
----------- -----------
Financial income 16 1,779 1,314
Financial expenses 16 (11,815) (23,060)
----------- -----------
Total financial expenses (10,036) (21,746)
----------- -----------
Profit before taxes on income 63,900 70,929
Tax expenses 17 (8,353) (7,462)
----------- -----------
Profit for the year 55,547 63,467
----------- -----------
Other comprehensive income and expenses:
Items that may be reclassified subsequently
to profit or loss:
Net gain (loss) arising on revaluation
of available-for-sale financial
assets 123 (46)
Reclassification to profit and loss
of ineffective hedging reserve,
net - 3,596
Net loss on hedging instruments
entered into for cash flow hedges (2,472) (181)
----------- -----------
Other comprehensive (loss) income
for the year, net of tax (2,349) 3,369
----------- -----------
Total comprehensive income for the
year 53,198 66,836
=========== ===========
Profit for the year attributable
to:
Owners of the Company 49,037 60,071
Non-controlling interests 6,510 3,396
----------- -----------
55,547 63,467
=========== ===========
Total comprehensive income attributable
to:
Owners of the Company 46,973 63,443
Non-controlling interests 6,225 3,393
----------- -----------
53,198 66,836
=========== ===========
Earnings Per Share:
Basic (Euro per share) 12 0.105 0.133
=========== ===========
Diluted (Euro per share) 0.105 0.133
=========== ===========
The accompanying notes are an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Total
equity
attributable
Issued Other to owners
capital Reserves Retained of the
(Note (Note Earnings parent Non-Controlling Total
11) 11) (Deficit) Company interests equity
---------- ---------- ----------- -------------- ---------------- ---------
Euro in thousands
---------------------------------------------------------------------
Balance at 1 January 2015 - (*) 293,297 (48,594) 244,703 10,326 255,029
Profit for the year - - 60,071 60,071 3,396 63,467
Other comprehensive income for
the year, net of income tax (**) - 3,372 - 3,372 (3) 3,369
---------- ---------- ----------- -------------- ---------------- ---------
Total comprehensive profit - 3,372 60,071 63,443 3,393 66,836
Dividend distribution (Note 11e) - (14,886) - (14,886) - (14,886)
Issue of shares, net of expenses
(Note 11c) - 116,224 - 116,224 - 116,224
Additional non-controlling
interest
on acquisition of subsidiary - - - - 1,499 1,499
---------- ---------- ----------- -------------- ---------------- ---------
Balance at 31 December 2015 - (*) 398,007 11,477 409,484 15,218 424,702
Profit for the year - - 49,037 49,037 6,510 55,547
Other comprehensive loss for the
year, net of income tax - (2,064) - (2,064) (285) (2,349)
---------- ---------- ----------- -------------- ---------------- ---------
Total comprehensive profit (loss) - (2,064) 49,037 46,973 6,225 53,198
Dividend distribution (Note 11d) - (18,565) - (18,565) - (18,565)
Additional non-controlling
interest
on acquisition of subsidiary - - - - 344 344
---------- ---------- ----------- -------------- ---------------- ---------
(*)
Balance at 31 December 2016 - 377,378 60,514 437,892 21,787 459,679
========== ========== =========== ============== ================ =========
(*) No par value.
(**) Mainly other comprehensive profit results from the
ineffectiveness of certain derivatives for more information see
Note 16.
The accompanying notes are an integral part of the consolidated
financial statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Year ended 31 December 2016 2015
------------------------------------------------------- ---------- ---------
Euro (in thousands)
------------------------------------------------------- ---------------------
Cash flows from operating activities:
Profit for the year 55,547 63,467
---------- ---------
Adjustments for:
Deferred taxes 8,155 7,308
Sale of subsidiaries - (169)
Financial expenses, net 10,036 21,915
Fair value adjustment of investment properties (28,203) (55,293)
Depreciation of property, plant and equipment 44 32
Amortisation and impairment of intangible
assets 54 (1,621)
---------- ---------
(9,914) (27,828)
---------- ---------
Changes in operating assets and liabilities:
Increase in trade receivables 348 805
Decrease in trade and other payables (3,225) (3,188)
Increase in payables to related parties
and shareholders 858 3,807
Decrease (Increase) in prepaid expenses
and other current assets 727 (58)
Increase in other non-current liabilities 20 1,027
---------- ---------
(1,272) 2,393
---------- ---------
Net cash flows from operating activities 44,361 38,032
Cash flows from investing activities:
Payments for property, plant and equipment (31) (19)
Net cash outflow on acquisition of asset
companies (38,506) (24,999)
Proceeds from the sale of financial participations - 330
Change in deposits (1,591) (2,194)
Increase in loan to third party (5,009) (1,029)
Payments for acquisitions of investment
properties (10,917) (44,581)
Proceeds from sale of investment property 18,597 2,003
Interest income received 1,528 6
---------- ---------
Net cash flows from investing activities (35,929) (70,483)
---------- ---------
Cash flows from financing activities:
Proceeds from borrowings from banks 90,652 30,981
Net (repayments) proceeds from borrowings
from related parties - (61,296)
Repayment of borrowings (54,101) (8,031)
Interest expense paid (10,590) (9,176)
IPO expenses paid - (290)
Net proceeds from issue of shares - 116,224
Dividend distribution (13,818) (12,114)
---------- ---------
Net cash flows from financing activities 12,143 56,298
---------- ---------
Increase in cash and cash equivalents 20,575 23,847
Cash and cash equivalents at beginning
of the year 33,583 9,736
---------- ---------
Cash and cash equivalents at end of the
year 54,158 33,583
========== =========
The accompanying notes are an integral part of the consolidated
financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 1: GENERAL
Summit Germany Limited (the "Company") and its subsidiaries
(together: the "Group") is a German property specialist company.
The Company was incorporated and registered in Guernsey on 19
April, 2006. The parent company of the Group is Summit Real Estate
Holdings Ltd (hereinafter: "SHL"), a company registered in
Israel.
The Group owns, enhances and operates commercial real estate
assets in Germany including office buildings, logistic centers and
others, which are leased to numerous commercial and industrial
tenants. The Group invests primarily in such properties that
provide substantial income flows and potential for value increase
through asset management. The Group does not acquire properties for
speculative purposes.
The Company was a closed ended authorised investment scheme
registered under The Protection of Investors Law (Bailiwick of
Guernsey) 1987. In December 2013, the Company and its shareholders
approved to apply to the Guernsey Financial Services Commission
(the "GFSC") for consent to deregister as a closed ended authorised
investment scheme under The Protection of Investors Law (Bailiwick
of Guernsey) 1987. This request was approved by the GFSC on 21
January 2014.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
These Consolidated Financial Statements have been prepared under
Going Concern basis after management and Board of Directors
carefully considered relevant factors underlying Group's financial
position.
The consolidated financial statements have been prepared on the
historical cost basis except for investment properties and
financial instruments that are measured at revalued amounts or fair
values at the end of each reporting period, as explained in the
accounting policies below.
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Basis of preparation (Cont.):
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or a
liability, the Group takes into account the characteristics of the
asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at
the measurement date. Fair value for measurement and/or disclosure
purposes in these consolidated financial statements is determined
on such a basis, expect for share-based payment transactions that
are within the scope of IFRS 2, leasing transactions that are
within the scope of IAS 17, and measurements that have some
similarities to fair value but are not fair value, such as net
realisable value in IAS 2 or value in use in IAS 36.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
-- Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
-- Level 2 inputs are inputs, other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
-- Level 3 inputs are unobservable inputs for the asset or liability.
Reportable segments - The Group operates in one segment, being a
commercial real estate in Germany. Therefore, no further segments
information is presented.
Statement of compliance:
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the EU ("IFRS") and The Companies (Guernsey) Law,
2008.
Basis of consolidation:
The consolidated financial statements comprise the financial
statements of the Company and entities controlled by the Company
(and its subsidiaries). Control is achieved where the Company has
the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities.
Consolidation of a subsidiary begins when the Company obtains
control over the subsidiary and ceases when the Company loses
control of the subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated statement of profit or loss and other
comprehensive income from the date the Company gains control until
the date when the Company ceases to control the subsidiary.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Basis of consolidation (Cont.):
Profit or loss and each component of other comprehensive income
are attributed to the owners of the Company and to the
non-controlling interests. Total comprehensive income of
subsidiaries is attributed to the owners of the Company and to the
non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
The results of subsidiaries are included in the consolidated
statements of comprehensive income from the effective date of
acquisition and up to the effective date of disposal, as
appropriate.
All intra-group balances and transactions are eliminated in full
on consolidation.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into
line with those used by other members of the Group.
Business combinations and goodwill:
If, after reassessment, the Group's interest in the fair value
of the acquirer's identifiable net assets exceeds the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value of the acquirer's
previously held equity interest in the acquiree (if any), the
excess is recognised immediately in profit or loss as a bargain
purchase gain.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's
previously held equity interest in the acquire (if any) over the
net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed.
Revenue recognition:
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the
consideration received or receivable, excluding discounts, rebates,
and similar allowances. The following specific recognition criteria
must also be met before revenue is recognised:
Rental income:
Rental income from operating leases is recognised on a
straight-line basis over the term of the relevant lease. Initial
direct costs incurred in negotiating and arranging an operating
lease are added to the carrying amount of the leased asset and
recognised on a straight-line basis over the lease term.
Interest income:
Interest revenue is recognised when it is probable that the
economic benefits will flow to the Group and the amount of revenue
can be measured reliably. Interest revenue is accrued on a time
basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount on
initial recognition.
Interest income is presented in finance revenue in the statement
of comprehensive income.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Foreign currencies:
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency, which is Euro, are recognised at the rates of
exchange prevailing at the dates of the transactions. At the end of
each reporting period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date.
Non-monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing at the
date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are
not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise.
Taxes:
Income tax expense represents the sum of tax currently payable
and deferred tax.
Current Taxes:
Current tax is provided at amounts expected to be paid (or
recovered) using the applicable tax rates and laws that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax:
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred tax
assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary
differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the Group
is able to control the reversal of the temporary difference and it
is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with such investments and
interests are only recognised to the extent that it is probable
that there will be sufficient taxable profits against which to
utilise the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates (and
tax laws) that have been enacted or substantively enacted by the
end of the reporting period. The measurement of deferred tax
liabilities and assets reflects the tax consequences that would
follow from the manner in which the Group expects, at the end of
the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Taxes (Cont.):
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Financial assets
Initial recognition:
Financial assets are classified as financial assets at fair
value through profit or loss, loans and receivables and
available-for-sale financial assets. The Company determines the
classification of its financial assets at initial recognition.
Purchases or sales of financial assets that require delivery of
assets within a time frame established by regulation or convention
in the marketplace (regular way purchases) are recognised on the
trade date, i.e., the date that the Company commits to purchase or
sell the asset.
The Company's financial assets include cash and short-term
deposits, trade and other receivables, unquoted financial
instruments, and derivative financial instruments.
Subsequent measurement:
The subsequent measurement of financial assets depends on their
classification as follows:
Loans and receivables:
Loans and receivables are non--derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Such financial assets are carried at amortised cost using
the effective interest rate method. Gains and losses are recognised
in the consolidated income statement when the loans and receivables
are derecognised or impaired, as well as through the amortisation
process.
Available-for-sale financial assets:
Available-for-sale financial assets are non-derivative financial
assets that are designated as available-for-sale or are not
classified in any of the three other categories of financial assets
(Fair Value through profit or loss, held to maturity or loans and
receivables). After initial measurement, available-for-sale
financial assets are measured at fair value with unrealised gains
or losses recognised directly in equity until the investment is
derecognised, at which time the cumulative gain or loss recorded in
equity is recognised in the income statement, or determined to be
impaired, at which time the cumulative loss recorded in equity is
recognised in the consolidated statement of comprehensive
income.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Financial assets (Cont.)
Financial Assets at Fair Value through Profit or Loss
("FVTPL"):
Financial assets are classified as at FVTPL when the financial
asset is either held for trading or it is designated as at
FVTPL.
A financial asset is classified as held for trading if:
-- it has been acquired principally for the purpose of selling it in the near term; or
-- on initial recognition it is part of a portfolio of
identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or
-- it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading
may be designated as at FVTPL upon initial recognition if:
-- such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise
arise; or
-- the financial asset forms part of a group of financial assets
or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with
the Group's documented risk management or investment strategy, and
information about the grouping is provided internally on that
basis; or
-- It forms part of a contract containing one or more embedded
derivatives, and IAS 39 Financial Instruments: Recognition and
Measurement permits the entire combined contract (asset or
liability) to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any
gains or losses arising on re-measurement recognised in the
consolidate statement of comprehensive income. Fair value is
determined in the manner described in Note 18.
Derecognition of financial assets
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party. If the Group
neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the
Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds received.
On derecognition of a financial asset in its entirety, the
difference between the asset's carrying amount and the sum of the
consideration received and receivable and the cumulative gain or
loss that had been recognised in other comprehensive income and
accumulated in equity is recognised in profit or loss.
On derecognition of a financial asset other than in its entirety
(e.g. when the Group retains an option to repurchase part of a
transferred asset), the Group allocates the previous carrying
amount of the financial asset between the part it continues to
recognise under continuing involvement, and the part it no longer
recognises on the basis of the relative fair values of those parts
on the date of the transfer.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Financial assets (Cont.)
Derecognition of financial assets (Cont.)
The difference between the carrying amount allocated to the part
that is no longer recognised and the sum of the consideration
received for the part no longer recognised and any cumulative gain
or loss allocated to it that had been recognised in other
comprehensive income is recognised in profit or loss. A cumulative
gain or loss that had been recognised in other comprehensive income
is allocated between the part that continues to be recognised and
the part that is no longer recognised on the basis of the relative
fair values of those parts.
Financial liabilities
Initial recognition:
Financial liabilities within the scope of IAS 39 are classified
as financial liabilities at fair value through profit or loss,
loans and borrowings, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. The Group
determines the classification of its financial liabilities at
initial recognition.
Financial liabilities are recognised initially at fair value and
in the case of loans and borrowings, net of directly attributable
transaction costs.
The Group's financial liabilities include trade and other
payables, bank overdrafts, loans and borrowings and derivative
financial instruments.
Subsequent measurement:
The measurement of financial liabilities depends on their
classification as follows:
Loans and borrowings:
After initial recognition, interest bearing loans and borrowings
are subsequently measured at amortised cost using the effective
interest rate method.
Gains and losses are recognised in the statement of
comprehensive income when the liabilities are derecognised as well
as through the amortisation process.
Offsetting of financial instruments:
Financial assets and financial liabilities are offset and the
net amount reported in the consolidated statement of financial
position if, and only if, there is a currently enforceable legal
right to offset the recognised amounts and there is either an
intention to settle on a net basis, or to realise the assets and
settle the liabilities simultaneously.
Derecognition of financial liabilities:
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire. The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable is
recognised in profit or loss.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Fair value of financial instruments:
The fair value of financial instruments that are actively traded
in organised financial markets is determined by reference to quoted
market bid prices at the close of business on the statement of
financial position date. For financial instruments where there is
no active market, fair value is determined using valuation
techniques. Such techniques may include using recent arm's length
market transactions; reference to the current fair value of another
instrument that is substantially the same; discounted cash flow
analysis or other valuation models.
Amortised cost of financial instruments:
Amortised cost is computed using the effective interest method
less any allowance for impairment and principal repayment or
reduction. The calculation takes into account any premium or
discount on acquisition and includes transaction costs and fees
that are an integral part of the effective interest rate.
Impairment of financial assets:
The Group assesses at each reporting date whether there is any
objective evidence that a financial asset or a group of financial
assets is impaired. A financial asset or a group of financial
assets is deemed to be impaired if, and only if, there is objective
evidence of impairment as a result of one or more events that has
occurred after the initial recognition of the asset (an incurred
'loss event') and that loss event has an impact on the estimated
future cash flows of the financial asset or the group of financial
assets that can be reliably estimated. Evidence of impairment may
include indications that the debtors or a group of debtors is
experiencing significant financial difficulty, default or
delinquency in interest or principal payments, the probability that
they will enter bankruptcy or other financial reorganisation and
where observable data indicate that there is a measurable decrease
in the estimated future cash flows, such as changes in arrears or
economic conditions that correlate with defaults.
Due from loans and receivables:
For amounts due from loans and receivables carried at amortised
cost, the Group first assesses individually whether objective
evidence of impairment exists individually for financial assets
that are individually significant, or collectively for financial
assets that are not individually significant. If the Group
determines that no objective evidence of impairment exists for an
individually assessed financial asset, whether significant or not,
it includes the asset in a group of financial assets with similar
credit risk characteristics and collectively assesses them for
impairment. Assets that are individually assessed for impairment
and for which an impairment loss is, or continues to be, recognised
are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss has been
incurred, the amount of the loss is measured as the difference
between the asset's carrying amount and the present value of
estimated future cash flows (excluding future expected credit
losses that have not yet been incurred). The carrying amount of the
asset is reduced through the use of an allowance account and the
amount of the loss is recognised in the consolidated statement of
comprehensive income.
Interest income continues to be accrued on the reduced carrying
amount based on the original effective interest rate of the
asset.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Due from loans and receivables (Cont.):
Loans together with the associated allowance are written off
when there is no realistic prospect of future recovery and all
collateral has been realised or has been transferred to the Group.
If, in a subsequent year, the amount of the estimated impairment
loss increases or decreases because of an event occurring after the
impairment was recognised, the previously recognised impairment
loss is increased or reduced by adjusting the allowance account. If
a future write-off is later recovered, the recovery is recognised
in the consolidated statement of comprehensive income.
The present value of the estimated future cash flows is
discounted at the financial asset's original effective interest
rate. If a loan has a variable interest rate, the discount rate for
measuring any impairment loss is the current effective interest
rate.
Available-for-sale financial investments:
For available-for-sale financial investments, the Group assesses
at each reporting date whether there is objective evidence that an
investment or a group of investments is impaired.
In the case of equity investments classified as
available-for-sale, objective evidence would include a significant
or prolonged decline in the fair value of the investment below its
cost. Where there is evidence of impairment, the cumulative loss -
measured as the difference between the acquisition cost and the
current fair value, less any impairment loss on that investment
previously recognised in the consolidated statement of
comprehensive income - is removed from equity and recognised in the
consolidated statement of comprehensive income. Impairment losses
on equity investments are not reversed through the consolidated
statement of comprehensive income; increases in their fair value
after impairment are recognised directly in equity.
Derivative financial instruments
Initial recognition and subsequent measurement:
The Group uses derivative financial instruments such as interest
rate swaps to hedge its risks associated with interest rate, and
foreign currency exchange hedge of the shareholder loan. Such
derivative financial instruments are initially recognised at fair
value on the date on which a derivative contract is entered into
and are subsequently re-measured at fair value.
Any gains or losses arising from changes in fair value on
derivatives during the year that are qualified for hedge accounting
are recognised in Other Comprehensive Income. Any gain or loss
which is not qualified for hedge accounting is recognised in profit
and loss.
At the inception of a hedge relationship, the Group formally
designates and documents the hedge relationship to which the Group
wishes to apply hedge accounting and the risk management objective
and strategy for undertaking the hedge. The documentation includes
identification of the hedging instrument, the hedged item or
transaction, the nature of the risk being hedged and how the entity
will assess the hedging instrument's effectiveness in offsetting
the exposure to changes in the hedged item's fair value or cash
flows attributable to the hedged risk. Such hedges are expected to
be highly effective in achieving offsetting changes in fair value
or cash flows and are assessed on an ongoing basis to determine
that they actually have been highly effective throughout the
financial reporting periods for which they were designated.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Hedges which meet the criteria for hedge accounting are
accounted for as follows:
Cash flow hedges
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow hedges is
recognised in other comprehensive income. The gain or loss relating
to the ineffective portion is recognised immediately in profit or
loss, and is included in the 'other gains and losses' line
item.
Amounts previously recognised in other comprehensive income and
accumulated in equity are reclassified to profit or loss in the
periods when the hedged item is recognised in profit or loss, in
the same line of the consolidated statement of comprehensive income
as the recognised hedged item. However, when the forecast
transaction that is hedged results in the recognition of a
non-financial asset or a non-financial liability, the gains and
losses previously accumulated in equity are transferred from equity
and included in the initial measurement of the cost of the
non-financial asset or non-financial liability.
Hedge accounting is discontinued when the Group revokes the
hedging relationship, when the hedging instrument expires or is
sold, terminated, or exercised, or when it no longer qualifies for
hedge accounting. Any gain or loss accumulated in equity at that
time remains in equity and is recognised when the forecast
transaction is ultimately recognised in profit or loss. When a
forecast transaction is no longer expected to occur, the gain or
loss accumulated in equity is recognised immediately in profit or
loss.
Investment properties
Investment properties are measured initially at cost, including
transaction costs. The carrying amount includes the cost of
replacing part of an existing investment property at the time that
cost is incurred if the recognition criteria are met; and excludes
the costs of day to day servicing of an investment property.
Subsequent to initial recognition, investment properties are stated
at fair value, which reflects market conditions at the statement of
financial position date. Gains or losses arising from changes in
the fair values of investment properties are included in the profit
or loss in the year in which they arise.
Investment properties are derecognised when either they have
been disposed of or when the investment property is permanently
withdrawn from use and no future economic benefit is expected from
its disposal. The difference between the net disposal proceeds and
the carrying amount of the asset is recognised in the consolidated
statement of comprehensive income in the period of
derecognition.
Transfers are made to or from investment property only when
there is a change in use. For a transfer from investment property
to owner occupied property, the deemed cost for subsequent
accounting is the fair value at the date of change in use. If owner
occupied property becomes an investment property, the Group
accounts for such property in accordance with the policy stated
under property, plant and equipment up to the date of change in
use.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Impairment of assets:
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the
Group estimates the asset's recoverable amount.
Cash and short-term deposits:
Cash and short-term deposits in the balance sheet comprise cash
at banks and on hand and short-term deposits with an original
maturity of three months or less.
Trade and other receivables:
Trade receivables, which generally have 30-90 days' terms, are
recognised and carried at original invoice amount less an allowance
for any uncollectible amounts. Provision is made when there is
objective evidence that the Group will not be able to collect the
debts. Bad debts are written off when identified.
Provisions:
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Where the
Group expects some or all of a provision to be reimbursed, for
example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision is
presented in the consolidated statement of comprehensive income net
of any reimbursement. If the effect of the time value of money is
material, provisions are discounted using a current pre-tax rate
that reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision
due to the passage of time is recognised as a finance cost.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 3: CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of Group's accounting policies which are
described in Note 2 above, management is required to make
judgments, estimates and assumptions that affect the reported
amounts of assets and liabilities that are not readily apparent
from other sources. However, uncertainty about these assumptions
and estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability
affected in future periods.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
Key sources of estimation uncertainty:
The key assumptions concerning the future and other key sources
of estimation uncertainty at the consolidated statement of
financial position date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Revaluation of investment properties:
The Group carries its investment properties at fair value, with
changes in fair values being recognised in the profit or loss. The
Group engages independent valuation specialists to determine fair
value of investment properties on an annual basis. The valuation
technique used to determine fair value of investment properties is
based on a discounted cash flow model as well as comparable market
data.
The determined fair value of the investment properties is
sensitive to the estimated yield as well as the long term vacancy
rate. The key assumptions used to determine the fair value of the
investment properties, are further explained in Note 5.
Taxation
Uncertainties might exist with respect to the interpretation of
complex tax regulations, changes in tax laws, and the amount and
timing of future taxable income. Given the Group's international
business relationships and the nature of contractual agreements,
differences arising between the actual results and the assumptions
made, or future changes to such assumptions, could necessitate
future adjustments to tax income and expense already recorded.
Deferred taxes
Deferred tax assets are recognised for all unused tax losses to
the extent that it is probable that taxable profit will be
available against which the losses can be utilised. Significant
management judgment is required to determine the amount of deferred
tax assets that can be recognised, based upon the likely timing and
the level of future taxable profits. (See also Note 17).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 3: CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Cont.)
Acquisition of assets
In regard to the transactions detailed in Note 5, the Group
management and the Directors have reviewed the characteristics of
the transactions in accordance with the requirements of IFRS3(R).
Although control over corporate entities was gained as a result of
the transaction, these entities were special purpose vehicles for
holding properties rather than separate business entities - this
judgment was made mainly due to the absence of business processes
inherent in these entities. Consequently, the Directors consider
that the transaction meets the criteria of acquisition of assets
and liabilities rather than business combination, and accounted for
the transaction as such.
NOTE 4: ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS
Application of new and revised international Financial Reporting
Standards (IFRSs)
1. New and revised IFRSs in issue but not yet effective
The Group has not applied the following new and revised IFRSs
that have been issued but are not yet effective:
-- IFRS 9 Financial Instruments(2)
-- IFRS 15 Revenue from Contracts with Customers(2)
-- IFRS 16 Leases(1)
-- Amendments to IAS 7 Disclosure initiative(1)
-- Amendments to IAS 12 recognition of deferred Tax Assets for unrealised losses(1)
1 Effective for annual periods beginning on or after 1 January
2019, with earlier application permitted.
2 Effective for annual periods beginning on or after 1 July
2018, with earlier application permitted.
IFRS 9 Financial Instruments
IFRS 9 issued in November 2009 introduced new requirements for
the classification and measurement of financial assets. IFRS 9 was
subsequently amended in October 2010 to include requirements for
the classification and measurement of financial liabilities and for
derecognition, and in November 2013 to include the new requirements
for general hedge accounting. Another revised of IFRS 9 was issued
in July 2014 mainly to include a) impairment requirements for
financial assets and b) limited amendments to the classification
and measurement requirements by introducing a 'fair value through
other comprehensive income' (FVTOCI) measurement category for
certain simple debt instruments.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 4: ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS (Cont.)
Application of new and revised international Financial Reporting
Standards (IFRSs) (Cont.)
1. New and revised IFRSs in issue but not yet effective (Cont.)
IFRS 9 Financial Instrument (cont.)
Key requirements of IFRS 9:
-- All recognised financial assets that are within the scope of
IAS 39 Financial Instruments: Recognition and Measurement are
required to be subsequently measured at amortised cost or fair
value. Specifically, debt investments that are held within a
business model whose objective is to collect the contractual cash
flows, and that have contractual cash flows that are solely
payments of principal and interest on the principal outstanding are
generally measured at amortised cost at the end of subsequent
accounting periods. Debt instruments that are held within a
business model whose objective is achieved both by collecting
contractual cash flows and selling financial assets, and that have
contractual terms of the financial assets give rise on specified
dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding, are measured at
FVTOCI. All other debt investments and equity investments are
measured at their fair value at the end of subsequent accounting
periods. In addition, under IFRS 9, entities may make an
irrevocable election to present subsequent changes in the fair
value of an equity investment (that is not held for trading) in
other comprehensive income, with only dividend income generally
recognised in profit or loss.
-- With regard to the measurement of financial liabilities
designated as at fair value through profit or loss, IFRS 9 requires
that the amount of change in the fair value of the financial
liability that is attributable to changes in the credit risk of
that liability is presented in other comprehensive income, unless
the recognition of the effects of changes in the liability's credit
risk in other comprehensive income would create or enlarge an
accounting mismatch in profit or loss. Changes in fair value
attributable to a financial liability's credit risk are not
subsequently reclassified to profit or loss. Under IAS 39, the
entire amount of the change in the fair value of the financial
liability designated as fair value through profit or loss is
presented in profit or loss.
-- In relation to the impairment of financial assets, IFRS 9
requires an expected credit loss model, as opposed to an incurred
loss model under IAS 39. The expected credit loss model requires an
entity to account for expected credit losses and changes in those
expected credit losses at each reporting date to reflect changes in
credit risk since initial recognition. In other words, it is no
longer necessary for a credit event to have occurred before credit
losses are recognised.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 4: ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS (Cont.)
Application of new and revised international Financial Reporting
Standards (IFRSs) (Cont.)
1. New and revised IFRSs in issue but not yet effective (Cont.)
IFRS 9 Financial Instrument (Cont.)
Key requirements of IFRS 9 (Cont.):
-- The new general hedge accounting requirements retain the
three types of hedge accounting mechanisms currently available in
IAS 39. Under IFRS 9, greater flexibility has been introduced to
the types of transactions eligible for hedge accounting,
specifically broadening the types of instruments that qualify for
hedging instruments and the types of risk components of
non-financial items that are eligible for hedge accounting. In
addition, the effectiveness test has been overhauled and replaced
with the principle of an 'economic relationship'. Retrospective
assessment of hedge effectiveness is also no longer required.
Enhanced disclosure requirements about an entity's risk management
activities have also been introduced.
The directors of the Company anticipate that the application of
IFRS 9 in the future may have an impact on amounts reported in
respect of the Group's financial assets and financial liabilities.
However, it is not practicable to provide a reasonable estimate of
the effect of IFRS 9 until the Group undertakes a detailed
review.
IFRS 15 Revenue from Contracts with Customers
In May 2014, IFRS 15 was issued which establishes a single
comprehensive model for entities to use in accounting for revenue
arising from contracts with customers. IFRS 15 will supersede the
current revenue recognition guidance including IAS 18 Revenue, IAS
11 Construction Contracts and the related interpretations when it
becomes effective.
The core principle of IFRS 15 is that an entity should recognise
revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or
services. Specifically, the Standard introduces a 5-step approach
to revenue recognition.
-- Step 1: Identify the contracts(s) with a customer.
-- Step 2: Identify the performance obligations in the contract.
-- Step 3: Determine the transaction price.
-- Step 4: Allocate the transaction price to the performance obligations in the contract.
-- Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 4: ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS (Cont.)
Application of new and revised international Financial Reporting
Standards (IFRSs) (Cont.)
1. New and revised IFRSs in issue but not yet effective (Cont.)
IFRS 15 Revenue from Contracts with Customers (Cont.)
Under IFRS 15, an entity recognises revenue when (or as) a
performance obligation is satisfied, i.e. when 'control' of the
goods or services underlying the particular performance obligation
is transferred to the customer. Far more prescriptive guidance has
been added in IFRS 15 to deal with specific scenarios. Furthermore,
extensive disclosures are required by IFRS 15.
The directors of the Company anticipate that the application of
IFRS 15 in the future may have an impact on the amounts reported
and disclosures made in the Group's consolidated financial
statements. However, it is not practicable to provide a reasonable
estimate of the effect of IFRS 15until the Group performs a
detailed review.
IFRS 16 Leases
In January 2016, the IASB published IFRS 16 Leases. The new
Standard supersedes IAS 17 Leases and its associated interpretative
guidance.
IFRS 16 applies a control model to the identification of leases,
distinguishing between leases and service contracts on the basis of
whether there is an identified asset controlled by the
customer.
IFRS 16 introduces significant changes to lessee accounting it
removes the distinction between operating and finance leases under
IAS 17 and requires a lessee to recognise a right-of-use asset and
a lease liability at lease commencement for all leases, except for
short-term leases and leases of low value assets.
IFRS 16 is effective for reporting periods beginning on or after
1 January 2019 with early application permitted for entities that
apply IFRS 15 at or before the date of initial application of IFRS
16.
The Group does not expect that this standard will have a
significant effect on its financial statements.
Amendments to IAS 7 Disclosure Initiative
The amendments require an entity to provide disclosures that
enable users of financial statements to evaluate changes in
liabilities arising from financing activities, including both
changes arising from cash flows and non-cash changes. The
amendments do not prescribe a specific format to disclose financing
activities, however an entity may fulfil the disclosure objective
by providing a reconciliation between the opening and closing
balances in the statement of financial position for liabilities
arising from financing activities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 4: ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS (Cont.)
Application of new and revised international Financial Reporting
Standards (IFRSs) (Cont.)
1. New and revised IFRSs in issue but not yet effective (Cont.)
Amendments to IAS 7 Disclosure Initiative (Cont.)
The amendments apply prospectively for annual periods beginning
on or after 1 January 2017 with earlier application permitted.
Entities are not required to present comparative information for
earlier periods.
Amendments to IAS 12 Recognition of Deferred Tax Assets for
Unrealised Losses
The amendments clarify the following:
1. Decreases below cost in the carrying amount of a fixed-rate
debt instrument measured at fair value for which the tax base
remains at cost give-rise to a deductible temporary difference,
irrespective of whether the debt instrument's holder expects to
recover the carrying amount of the debt instrument by sale or by
use, or whether it is probable that the issuer will pay all the
contractual cash flows;
2. When an entity assesses whether taxable profits will be
available against which it can utilise a deductible temporary
difference, and the tax law restricts the utilisation of losses to
deduction against income of a specific type (e.g. capital losses
can only be set off against capital gains), an entity assesses a
deductible temporary difference in combination with other
deductible temporary differences of that type, but separately from
other types of deductible temporary differences;
3. The estimate of probable future taxable profit may include
the recovery of some of an entity's assets for more than their
carrying amount if there is sufficient evidence that it is probable
that the entity will achieve this; and
4. In evaluating whether sufficient future taxable profits are
available, an entity should compare the deductible temporary
differences with future taxable profits excluding tax deductions
resulting from the reversal of those deductible temporary
differences.
The amendments apply retrospectively for annual periods
beginning on or after 1 January 2017 with earlier application
permitted.
2. Amendments to IFRSs that are mandatorily effective for annual
periods beginning on or after 1 January 2016
-- Amendments to IFRS 10, IFRS 12 and IAS 28 (Investment
Entities): Applying Consolidation Exception.
-- Amendments to IAS 1 Disclosure Initiative.
-- Amendments to IFRSs Annual Improvements to IFRSs 2012-2014 Cycle.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 4: ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS (Cont.)
Application of new and revised international Financial Reporting
Standards (IFRSs) (Cont.)
2. Amendments to IFRSs that are mandatorily effective for annual
periods beginning on or after 1 January 2016 (Cont.)
Amendments to IFRS 10, IFRS 12 and IAS 28 (Investment Entities);
Applying the Consolidation Exception (Effective for annual periods
beginning on or after 1 January 2016)
The amendments clarify that the exemption from preparing
consolidated financial statements is available to a parent entity
that is a subsidiary of an investment entity, even if the
investment entity measures all its subsidiaries at fair value in
accordance with IFRS 10. Consequential amendments have also been
made to IAS 28 to clarify that the exemption from applying the
equity method is also applicable to an investor in an associate or
joint venture if that investor is a subsidiary of an investment
entity that measures all its subsidiaries at fair value.
The amendments further clarify that the requirement for an
investment entity to consolidate a subsidiary providing services
related to the former's investment activities applies only to
subsidiaries that are not investment entities themselves.
Moreover, the amendments clarify that in applying the equity
method of accounting to an associate or a joint venture that is an
investment entity, an investor may retain the fair value
measurements that associate or joint venture used for its
subsidiaries.
Lastly, clarification is also made that an investment entity
that measures all its subsidiaries at fair value should provide the
disclosures required by IFRS 12 Disclosures of Interest on Other
Entities.
The amendments apply retrospectively.
Amendments to IAS 1 Disclosure Initiative
The amendments were in response to comments that there were
difficulties in applying the concept of materiality in practice as
the wording of some of the requirements in IAS 1 had in some cases
been read to prevent the use of judgment. Certain key highlights in
the amendments are as follows:
-- An entity should not reduce the understandability of its
financial statements by obscuring material information with
immaterial information or by aggregating material items that have
different natures or functions.
-- An entity need not provide a specific disclosure required by
an IFRS if the information resulting from that disclosure is not
material.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 4: ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS (Cont.)
Application of new and revised international Financial Reporting
Standards (IFRSs) (Cont.)
2. Amendments to IFRSs that are mandatorily effective for annual
periods beginning on or after 1 January 2016 (Cont.)
Amendments to IAS 1 Disclosure Initiative (Cont.)
-- In the other comprehensive income section of a statement of
profit or loss and other comprehensive income, the amendments
require separate disclosures for the following items:
- the share of other comprehensive income of associates and
joint ventures accounted for using the equity method that will not
be reclassified subsequently to profit or loss; and
- the share of other comprehensive income of associate and joint
ventures accounted for using the equity method that will be
reclassified subsequently to profit or loss.
Annual Improvements to IFRSs 2012-2014 Cycle
The Annual Improvements to IFRSs 2012-2014 Cycle include a
number of amendments to various IFRSs, which are summarised
below.
The amendments to IFRS 5 Introduce specific guidance in IFRS 5
for when an entity reclassifies and asset (or disposal group) from
held for sale to held for distribution to owners (or vice versa).
The amendments clarify that such a change should be considered as a
continuation of the original plan of disposal and hence
requirements set out in IFRS 5 regarding the change of sale plan do
not apply. The amendments also clarifies the guidance for when
held-for-distribution accounting is discontinued.
The amendments to IFRS 7 provide additional guidance to clarify
whether a servicing contract is continuing involvement in a
transferred asset for purpose of the disclosures required in
relation to transferred assets.
The amendments to IAS 19 clarify that the rate used to discount
post-employment benefit obligations should be determined by
reference to market yields at the end of the reporting period on
high quality corporate bonds. The assessment of the depth of a
market for high qualify corporate bonds should be at the currency
level (i.e. the same currency as the benefits are to be paid). For
currencies for which there is no deep market in such high quality
corporate bonds, the market yields at the end of the reporting
period on government bonds denominated in that currency should be
used instead.
The application of these amendments did not have a material
effect on the Group's consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 5: INVESTMENT PROPERTIES
A. Changes in years 2015 and 2016
Euro
in thousands
-------------
Balance at January 1 2015 582,572
Additions during the year (C) 97,708
Disposals during the year (243)
Reclassification to property held for
sale (D) (3,582)
Fair value adjustments during the year 55,293
-------------
Balance at 31 December 2015 731,748
=============
Additions during the year (C) (*) 52,885
Disposals during the year (D) (15,015)
Reclassification to property held for
sale (D) (2,242)
Fair value adjustments during the year 28,203
-------------
Balance at 31 December 2016 795,579
=============
(*) Including capital expenditure of approximately EUR12 million during 2016.
B. Fair value measurement of investment properties (Level 3 classification)
1. The fair value of investment property is determined at least
once a year or when indications of value changes arise, based on a
valuation performed by independent reputable experts.
The valuation is performed using the income capitalisation
method, which is a valuation model based on the present value of
expected Net Operating Income per property. Real estate valuations
are based on the net annual cash flows after capitalisation on
discounted rates that reflect the specific risks inherent in
property activity.
The valuations reflect the profile of the tenants which are
legally committed to the lease agreement and the remaining economic
life of the asset. The market rents used in the valuation vary per
location, uses and condition of the property, age and level of
finishing of various assets, even in the same building. Average
rent in respect of office spaces can range from EUR5-20 per month
per square meter; for retail properties, between EUR4-26 per month
per square meter; for logistics properties between EUR2-6 per month
per square meter. For office, commercial and logistics properties,
discounted rates range between 5.25 % -9.0%.
In estimating the fair value of the properties, the highest and
the best use of the properties is their current use.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 5: INVESTMENT PROPERTIES (Cont.)
B. Fair value measurement of investment properties (level 3 classification) (cont.)
1. (Cont.)
A number of factors contribute to the value of retail
properties, such as national and local economic development,
investment demand created by property investors, and interest
rates.
While changes in investment properties' fair value have an
effect on the Group's profit for the financial year, they do not
have an immediate impact on cash flow.
The significant unobservable inputs used in the fair value
measurement of the entity's investment properties are rents
achieved at market (when these increase, an increase in properties
value may occur), discount rates (when these increase, a decrease
in properties value may occur) and occupancy rates (when these
increase, an increase in property values may occur). Significant
increases (decreases) in any of those inputs in isolation would
result in a significantly lower (higher) fair value measurement.
Sensitivity to change in the properties' fair value, or the risk
associated with fair value, can be tested by altering the above key
parameters. Furthermore, the effect of the change in each parameter
is not necessarily similar - as such, changes in the rents and
discount rates might have a more significant effect on the
properties' value than similar change of the occupancy rates. In
addition it is noted that changes in different parameters might
occur simultaneously. For example a change in occupancy may connect
to a change in market rents when they impact fair value
simultaneously.
2. Supplemental information
Lettable area
As 31 December 2016 As 31 December 2015
-------------------------------------- --------------------------------------
Offices Logistic Retail Total Offices Logistic Retail Total
-------- --------- ------- -------- -------- --------- ------- --------
Sqm Sqm
-------------------------------------- --------------------------------------
501,336 273,137 89,177 863,650 506,666 256,942 93,292 856,900
Percent of
total assets 58% 32% 10% 100% 59% 30% 11% 100%
Fair value - analysis by use
As 31 December 2016 As 31 December 2015
-------------------------------------- --------------------------------------
Offices Logistic Retail Total Offices Logistic Retail Total
-------- --------- ------- -------- -------- --------- ------- --------
Euro in thousands Euro in thousands
-------------------------------------- --------------------------------------
583,824 130,667 83,330 797,821 533,175 115,040 87,114 735,329
Percent of
total assets 73% 16% 11% 100% 72% 16% 12% 100%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 5: INVESTMENT PROPERTIES (Cont.)
B. Fair value measurement of investment properties in Level 3 (Cont.)
2. Supplemental information (cont.)
NOI - analysis by use
As 31 December 2016 As 31 December 2015
------------------------------------- -------------------------------------
Offices Logistic Retail Total Offices Logistic Retail Total
-------- --------- ------- ------- -------- --------- ------- -------
Euro in thousands Euro in thousands
------------------------------------- -------------------------------------
37,386 9,153 6,144 52,683 30,720 8,441 6,593 45,754
Percent of
total assets 71% 17% 12% 100% 67% 19% 14% 100%
Adjustment to fair value - analysis by use
As 31 December 2016 As 31 December 2015
-------------------------------------- -------------------------------------
Offices Logistic Retail Total Offices Logistic Retail Total
-------- --------- -------- ------- -------- --------- ------- -------
Euro in thousands Euro in thousands
-------------------------------------- -------------------------------------
26,224 3,230 (1,251) 28,203 49,789 1,501 4,003 55,293
Percent of
total assets 93% 11% (4%) 100% 96% 3% 1% 100%
Average rent
Offices Logistic Retail
------------------------ ---------------------- ----------------------
As 31 December
------------------------------------------------------------------------
2016 2015 2016 2015 2016 2015
----------- ----------- ---------- ---------- --------- -----------
EUR/sqm/month 7.9 7.9 3.6 3.4 8 7.9
Range (4.7-20.5) (4.1-20.1) (2.3-5.9) (2.3-5.2) (4-25.7) (3.5-25.7)
EUR
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 5: INVESTMENT PROPERTIES (Cont.)
C. Additions
1. In July 2015 the Group completed an acquisition of a loan
facility of a portfolio of 6 office properties in Germany, at total
acquisition costs of approximately EUR40 million plus minor
acquisition expenses. The properties were part of the second
portfolio mentioned in Note 5 the Group annual financial statement
for the year 2015. As a result of the acquisition of the loan
facility, the Group regained full control over the aforementioned
six properties and consolidated them from the date of acquisition.
The acquired portfolio has a lettable area of 63,000 sqm at an
occupancy rate of 72% and it generates an aggregate annual net rent
of approximately EUR5.5 million.
The revaluation of these properties in 2015 resulted in a
revaluation profit of approximately EUR42 million, which was
recognized in the income statement under Fair Value of Investment
Properties.
In December 2016, the Group financed one of the aforementioned
six properties located in Potsdam. For further details, see Note
7H.
2. During 2015 the Group has acquired a 135,000 sqm complex of
office buildings in Stuttgart, Germany, for a total acquisition
cost of approximately EUR55 million.
The 135,000 sqm complex includes 63,000 sqm of lettable area at
an occupancy rate of 95% and rights for further development of
additional 55,000 sqm. It generates an aggregate annual net rent of
approximately EUR4.5 million.
3. In January 2016 the Group acquired two office buildings for a
total acquisition cost of EUR15 million.
The acquisition was financed by the Group's own resources and by
a EUR10.5 million loan facility provided by a German bank as
detailed in Note 7E.
4. In March 2016 the Group acquired a complex of three office
buildings in Frankfurt Oberursel, Germany, for a total price
consideration of EUR25.5 million.
The acquisition was financed by the Group's own resources and by
a EUR18.5 million loan facility provided by a German bank as
detailed in Note 7F.
D. Disposals
1. As of 31 December 2015, 3 properties valued at approximately
EUR3.6 million were classified as held for sale. During 2016 these
properties were sold for a consideration of EUR4.6 million.
2. During the last quarter of 2016, the Group sold a vacant
property located in Hamburg for a consideration of EUR14 million
and a property located in Breman for a consideration of EUR1.3
million. The proceeds from the disposal were in line with the
properties' carrying amounts and were used to repay the borrowings
associated with the asset.
3. As of December 2016 a property valued at approximately EUR2.2
million was reclassified as held for sale. After the reporting
period this property was sold for a consideration similar to its
carrying amount.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 6: OTHER LONG-TERM ASSETS AND LIABILITIES
31 December
----------------------
2016 2015
--------- -----------
Euro in thousands
----------------------
Other long-term financial assets:
Available-for-sale investment
- unquoted equity shares (1) 2,373 2,250
Long-term loans receivable (2) 9,135 10,292
Other financial assets 496 545
--------- -----------
Total long term financial assets 12,004 13,087
========= ===========
Other long-term non-financial
assets 89 104
========= =========
Other long-term financial liabilities:
Other financial liabilities 1,972 2,052
========= =========
(1) Available-for-sale investment -unquoted equity shares:
Investments in Ordinary shares in related companies. Group
interests in these companies were not accounted for using the
equity method because of lack of significant influence (the Group
has neither voting rights, nor representation in the management of
these companies). The fair value of the investments at the end of
the reporting period is based on the market values of the
companies' investments in real estate.
(2) Long-term loans receivable
a. The Group has an agreement to provide funding for three
residential projects in Berlin up to a sum of EUR6.2 million
(before accrued interest). The Group is entitled to a minimum
interest rate of 15% plus a share in the projects' profits. The
loans and the accrued interest are repayable from the revenues of
the projects.
To secure the recoverability of these loans, the Group received
a lien over the shares of the project companies and lien rights
over the projects and their income. In addition, the loans are
secured by personal guarantees of shareholders of the project
companies and the developers have committed not to grant a lien
naming rights over the project, except a lien in favour of the
financing bank, and not to allot any securities of the project
companies without the consent of the Group.
As of 31 December 2016:
-- Loans that relate to two out of the three projects, amounting
EUR6.1 million, which include accrued interest of EUR2.3 million,
were classified to prepaid and other current assets due to their
repayment date which is within the next 12 months.
-- The repayment date of the remaining loan and its accrued
interest was extended to the second half of 2018 and as such it is
included under long term loans receivable.
-- The first and second projects were sold and the third project is approximately 83% sold.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 6: OTHER LONG-TERM ASSETS (Cont.)
(2) Long-term loans receivable (Cont.)
b. In May 2016 the Group has engaged in a JV project for
development of residential in Berlin, in which an existing building
will be converted to 60 residential units. The project is intended
to be financed by a construction loan and the additional required
funds of approximately EUR4 million are provided as loan by the
Group, in terms similar to the previous projects.
The loan and the accrued interest are repayable from the
revenues of the project, in the second half of 2019.
c. After the end of the reporting period the Group has engaged
in two additional JV projects for development of 95 residential
units in Berlin. The projects are intended to be financed by a
construction loan and the additional required funds of
approximately EUR7 million are provided as loan by the Group, in
terms similar to the previous projects.
The loan and the accrued interest are repayable from the
revenues of the project, in the second half of 2020.
NOTE 7: INTEREST - BEARING LOANS AND BORROWING
Interest-bearing loans and borrowings (net of cost of raising
loans):
31 December
-------------------
Effective
interest
rate Maturity 2016 2015
------------- -------------- --------- --------
% Euro in thousands
-------------
Current:
Current maturities
of long term loans (*)1.75-3.14 2017 11,804 7,075
========= ========
Non-current:
Secured bank loans (*)1.75-3.14 (**)2018-2026 349,526 316,765
========= ========
(*) Includes the effects of related interest rate swaps as discussed hereunder.
(**) Amount of EUR1,337 million matures in 2026.
A. In December 2014 the Group refinanced a EUR240 million
non-recourse debt provided by the Royal Bank of Scotland with two
German banks.
The new seven years term debt facility has been provided at an
interest rate of 3.4% per annum and an amortisation rate of 3% per
annum. The Group entered into new hedging arrangements with the
lenders (as per the requirement of the financing agreements) for a
full cash flow hedge of floating interest.
The loan agreement includes various covenants, including LTV,
Debt-To-Rent and WAULT. To the date of this report the Company
complies with all of them.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 7: INTEREST - BEARING LOANS AND BORROWING (Cont.)
B. In March 2015 the Group refinanced 9 out of 11 commercial
properties acquired in April 2014. The loan was provided by a
German bank at an interest rate of 1.96% per annum and amounts to
EUR33 million. The seven year facility bears an amortisation rate
of 3% resulting in a repayment amount of approximately EUR26
million in 31 March 2022.
Throughout the term of the loan, the borrowing entities are
obliged to comply with the following covenants:
-- LTV (Loan to Value) of 65%.
-- Debt service coverage ratio ("DSCR") of 125%.
-- WAULT -a weighted average lease remaining term - of at least 3 years.
To the date of this report the Company complies with the above
covenants.
C. In January 2016, the Group financed the acquisition of two
office buildings in Munich and Duisburg. The loan amounted to
EUR10.5 million and was provided by a German bank for a 10 years
term at a fixed interest rate of 1.8% per annum and an annual
amortisation rate of 3%.
D. In March 2016 the Group financed the acquisition of a complex
in Frankfurt, Oberursel. The loan amounted to EUR18.5 million and
was provided by a German bank for a 10 years term at a fixed
interest rate of 2.26% per annum and an annual amortisation rate of
2.5%.
E. In May 2016, the Group refinanced a EUR24 million
non-recourse debt facility with a EUR40 million loan provided by a
German lender. The debt facility, which was secured by the
property, was previously acquired by the Group during 2015 as part
of the acquisition of the complex of office buildings in Stuttgart,
Germany.
The new 10 years term debt facility was provided at a fixed
interest rate of 2.25% per annum and an annual amortisation rate of
4.15%.
F. In August 2016, the Group refinanced an additional part of
the property complex located in Stuttgart, Germany. The EUR3.85
million debt facility was provided by a the same German lender for
a 10 year term at a fixed interest rate of 2.1% per annum and
annual amortisation rate of 3.5%.
G. In December 2016, the Group financed an office building
located in Potsdam, which was previously acquired by the Group's
own resources. The EUR16 million debt facility was provided by a
German lender for a 10 year term at a fixed interest rate of 1.76%
and annual amortisation rate of 3%.
H. To the date of this report the borrowing entities comply with
all the covenants set in their financing agreements.
I. The outstanding costs of raising loans as of 31 December,
2016 are EUR3.6 million (2015: EUR3.8 million). These are presented
net of interest-bearing loans and borrowings and amortised over the
period of the loans.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 8: TRADE RECEIVABLES
31 December
-------------------
2016 2015
--------- --------
Euro in thousands
-------------------
Trade receivables 3,027 3,532
Provision for doubtful debts (1,730) (1,948)
--------- --------
1,297 1,584
========= ========
Trade receivables are non-interest bearing and are generally
30-90 day terms.
As at 31 December, the ageing analysis of trade receivables, net
is as follows:
90 -
< 30 30 - 60 - 120 >120
Total days 60 days 90 day day days
----- ----- -------- ------- ---- -----
Euro in thousands
--------------------------------------------
2016 1,297 303 304 61 19 610
2015 1,584 429 477 57 93 528
Movements in the provision for doubtful debts:
Euro in
thousands
----------
At 1 January 2015 2,446
Released 240
Utilised (738)
At 31 December 2015 1,948
==========
Released (144)
Utilised (74)
----------
At 31 December 2016 1,730
==========
NOTE 9: PREPAID EXPENSES AND OTHER CURRENT ASSETS
31 December
-------------------
2016 2015
---------- -------
Euro in thousands
-------------------
Prepaid expenses and other (*) 7,627 1,294
Service charge 4,721 3,761
Designated cash 3,785 2,194
---------- -------
16,133 7,249
========== =======
(*) The balance increased during the period due to
classification of residential projects loans amounted to EUR6.1
million as described in Note 6(2) and as a result of an increase in
the balance of cash designated for capital expenditure.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 10: CASH AND CASH EQUIVALENTS
31 December
----------------------
2016 2015
------------ --------
Euro in thousands
----------------------
Cash at banks 54,158 33,583
============ ========
NOTE 11: SHARE CAPITAL
A. The authorised share capital of the Group is represented by
an unlimited number of Ordinary shares with no par value:
Issued
and outstanding
----------------
Number
of shares
----------------
At 1 January 2015 293,971,291
Issue of shares (d) 171,428,571
----------------
At 31 December 2015 465,399,862
Change in the period -
----------------
At 31 December 2016 465,399,862
================
B. Distributable reserve:
The directors have elected to transfer all premiums arising from
the issue of ordinary shares by the Company to a distributable
reserve, which balance as of 31 December 2016 is EUR379.4 million
(as of 31 December 2015 - EUR398 million). The change during the
year was due to dividends distributed in 2016 (as detailed in D
below).
In accordance with the Companies (Guernsey) law, 2008, any
distribution is subject to a solvency test to determine whether the
Company is able to distribute funds to shareholders.
C. In February 2015, the Company issued 171,428,571 ordinary
shares at a price of 70c by way of placing on the AIM market of the
London Stock Exchange resulting in a raise of EUR120 million
(excluding raising costs of approximately EUR4 million).
D. Distribution of dividends:
Following the Company's Admission to AIM, the Company has
adopted a quarterly dividend policy.
During 2015 the Company declared quarterly dividends amounted to
a total of 3.64 cents per share. The total amount of EUR14.89
million was paid to the shareholders during 2015.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 11: SHARE CAPITAL (Cont.)
D. Distribution of dividends: (Cont.)
In March 2016 the Company declared a dividend of 0.95 cent per
share. The total amount of EUR4.42 million was paid to the
shareholders in April 2016.
In July 2016, the Company declared a dividend of 1.00 cent per
share. The total amount of EUR4.65 million was paid to the
shareholders in August 2016.
In September 2016, the Company declared a dividend of 1.02 cent
per share. The total amount of EUR4.75 million was paid to the
shareholders in November 2016.
In December 2016, the Company declared a dividend of 1.02 cent
per share the total amount of EUR4.75 million was paid to the
shareholders after the end of the reporting period in February
2017.
E. NAV and EPRA NAV:
As of 31 December As of 31 December
2016 2015
------------------------ ------------------------
EUR, EUR, EUR, EUR,
thousands per share thousands per share
----------- ----------- ----------- -----------
NAV (*) 437,892 0.94 409,484 0.88
Financial derivatives 7,923 5,092
Deferred Tax,
net 20,472 12,892
----------- -----------
EPRA NAV (**) 466,287 1.00 427,468 0.92
(*) Net Asset Value
(**) EPRA NAV is calculated based on the NAV excluding the
effect of deferred taxes and the value of hedging instruments.
F. As of 31 December 2015, Mr Harry Hyman, the Non-Executive
Chairman of the Company held 125,000 Ordinary Shares of No Par
Value, representing 0.026% of the issued share capital of the
Company.
During 2016, the Company was notified that Mr Harry Hyman
purchased 1,378 Ordinary Shares of No Par Value in the Company at
an average price of 96.9 cent per share. After the end of the
reporting period and up to the time of this report, the Company was
notified that Mr Harry Hyman purchased additional 372 Ordinary
Shares of No Par Value in the Company at an average price of 99.5
cent per share. Following the described purchases, Mr Hyman holds
126,750 Ordinary Shares of No Par Value, representing 0.027% of the
issued share capital of the Company.
G. In February 2016 the Company obtained an Aa3 ("very strong")
issuer rating by Midroog rating agency, a subsidiary of
Moody's.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 12: EARNINGS PER-SHARE
The calculation of the basic and diluted earnings per share is
based on the following data:
Year ended 31
December
--------------------
2016 2015
--------- ---------
Euro in thousands
--------------------
Earnings
Earnings for the purposes of basic
earnings per share being net profit
attributable to owners of the
Company 49,037 60,071
========= =========
Year ended 31
December
------------------
2016 2015
-------- --------
In thousands
------------------
Number of shares
Weighted average number of ordinary
shares for the purposes of the
basic earnings per share 465,400 450,329
======== ========
Year ended 31
Earnings Per Share: December
------------------
2016 2015
-------- --------
Basic (Euro per share) 0.105 0.133
======== ========
Diluted (Euro per share) 0.105 0.133
======== ========
There is no difference in the current year or the previous year
between basic and diluted earnings per share.
NOTE 13: BALANCES AND TRANSACTIONS WITH RELATED PARTIES
Amounts owed by Amounts owed to
related parties related parties
-------------------- --------------------
31 December 31 December
-------------------- --------------------
2016 2015 2016 2015
--------- --------- --------- ---------
Euro in thousands Euro in thousands
-------------------- --------------------
Related parties 169 243 5,507 2,350
========= ========= ========= =========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 13: BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
A. Compensation of key management personnel of the Company:
2016 2015
--------- --------
Euro in thousands
-------------------
Directors' fees 282 236
Management fees (*) 1,360 1,412
--------- --------
Total compensation paid to
key management personnel 1,642 1,648
========= ========
(*) - including the remuneration to the Company's finance
director
Assets Management Company and ultimate controlling party:
At the date of this report Summit Real Estate Holdings Ltd
("SHL") holds approximately 50.01% of the Ordinary shares in the
Company. SHL is under the control of Mr. Zohar Levy, the Managing
Director of the Group. Summit Management CO S.A. ("SMC"), a company
100% owned by Zohar Levy, was appointed as an Asset Manager on 19
May 2006. The terms of this appointment were revised in February
2014. Additional amendment has been taken place after the end of
the reporting period. For the terms and conditions of the
management agreement, refer to Note 13b.
The amounts owed to related parties as of 31 December 2016
include the provision for management fees to SMC in the amount of
EUR971,000 (including a provision for a performance based
compensation in the amount of EUR750,000).
Terms and conditions of the management agreement
The management agreement was amended in 14 February 2014 in
preparation for Admission to AIM. According to the amendment of the
agreement, SMC is responsible for providing certain public company
services and advisory services to the Group, including the services
of the Group's Managing Director and Finance Director.
Since the Admission of the company, SMC is entitled to an
advisory fee equal to EUR750,000 per annum, payable quarterly, and
to a performance-based bonus of up to EUR750,000 per annum
depending on certain performance criteria (as detailed below). The
advisory fee reflects the asset management costs on the level of
SMC including the cost of employment of the Managing Director and
the Finance Director, if relevant, together with certain
administrative and other costs of the company.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 13: BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
B. Compensation of key management personnel of the Company: (Cont.)
Terms and conditions of the management agreement (Cont.)
The annual performance-based bonus of EUR750,000 may be payable
in each accounting year, where the amount is based on hurdles to be
determined by the remuneration and nomination committee of the
Group. The bonus shall be payable if the Group's Funds From
Operations ("FFO") is equal to or greater than 112% of the FFO
determined by remuneration and nomination committee of the Group
for the applicable accounting year ("Base FFO"). Where the
Company's FFO in the accounting year is above the Base FFO but less
than 112% of the Base FFO, SMC shall be entitled to an amount equal
to the pro-rata proportion of the annual performance-based Bonus.
Any Bonus which SMC is entitled to receive in any relevant
accounting year shall be reduced by an amount equal to any carried
interest amount paid to SMC pursuant to the articles of association
of SFL in respect of the same accounting year, provided that any
Bonus shall not be reduced to less than zero.
As at 31 December 2016 the performance criteria were met and a
provision in the amount of EUR750,000 was included in the Group's
annual financial statements. The payment of the performance-based
bonus is subject to an approval of the remuneration and nomination
committee of the Group.
In March 2017 the management agreement was revised through
implementation of three principal amendments to the fee payable to
SMC.
The annual advisory fee payable to SMC remains EUR750,000, but
going forward SMC is obliged to provide the services of the
Managing Director only and not the services of the Finance
Director, which is engaged directly by the Group since November
2014.
The existing annual performance-based bonus entitlement of SMC
remains capped at a maximum of EUR750,000 per annum. However, the
basis on which the Bonus amount is calculated has been amended so
that it is no longer based on the Group's FFO, but by reference to
the aggregate return to the shareholders of the Company at the end
of each accounting year, whether as a result of dividends received
and/or an increase in the net asset value of the Group (excluding
any increase due to revaluations) (the "Return"). The
performance-based bonus is calculated on a pro-rata basis for any
increase in the Return up to and including 5.5%.
SMC shall be entitled to receive a "Special Bonus" if, at any
time in the period commencing on 1 January 2017 and ending on the
date falling three years thereafter (i.e. 1 January 2020), there is
a qualifying sale or series of sales of any properties of the
Group. A qualifying sale or series of sales is one, which alone or
in aggregate, results in the proceeds received by the Summit Group,
(net of any costs and expenses incurred in connection with the
relevant sale(s)) and less the value (as stated in the Group's
valuation as at 30 June 2016) of the properties sold, being greater
than EUR50 million (the whole of such amount being the "Qualifying
Amount"). The Special Bonus shall be an amount equal to five per
cent. of the Qualifying Amount and is subject to a total aggregate
cap of EUR10 million over the three year term.
In addition, in the first accounting year in which a Special
Bonus is payable, any bonus payable in that same year shall be
deducted from the amount of the Special Bonus so payable.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 13: BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
B. Compensation of key management personnel of the Company: (Cont.)
Terms and conditions of the management agreement (Cont.)
The articles of association of SFL ("SFL Articles") contain
certain provisions which relate to SMC's carried interest
entitlement in respect of their services provided under the initial
Portfolio Management Agreement from 2006. SMC holds special B
shares in Summit Finance Limited which will give it the right to
receive a carried interest if the Company distributes a cash return
on shareholders' equity of at least 8% in any financial year ("the
Hurdle"). SMC will be entitled to receive 25% of the cash return in
that year in excess of the Hurdle after deducting the carried
interest entitlement. If the Company has not achieved a cash return
on shareholders' equity of at least 8% in any previous year ("a
Shortfall"), the carried interest will not be paid until the
Shortfall has been made up. Where such fees arise, they are charged
to the consolidated statement of comprehensive income. No amounts
were ever due in respect of aforementioned. As of 31 December 2016,
the Shortfall is approximately EUR205.1 million. Therefore, the
likelihood that SMC would be entitled to receive any carried
interest is extremely low.
SFL articles were amended so SMC's entitlement to receive any
carried interest payable is by virtue of its ownership of B shares
in SFL. The SFL Articles and the amended Portfolio Management
Agreement provide that the B shares may be held by whoever is the
appointed asset manager under the Portfolio Management Agreement or
any other asset or portfolio management agreement to which the
Group is a party from time to time.
NOTE 14: TRADE AND OTHER PAYABLES
31 December
----------------------
2016 2015
---------- ----------
Euro in thousands
----------------------
Accrued expenses 2,676 2,225
Accrued interest 1,512 1,621
Service charge prepayments 4,845 3,052
VAT 520 505
Provision for maintenance 8,089 7,785
Other trade payables 7,081 4,975
---------- ----------
24,723 20,163
========== ==========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 15: GENERAL AND ADMINISTRATIVE EXPENSES
Year ended
31 December
-------------------
2016 2015
--------- --------
Euro in thousands
-------------------
Management and directors' fees
(a) 1,792 1,741
Professional fees (b) 1,259 1,491
Salaries 2,963 2,594
Administration fees 98 172
Other expenses 1,084 577
Office expenses 240 209
--------- --------
7,436 6,784
========= ========
(a) See Note 13 for details on the management agreement
(b) Professional fees include audit fees in the amount of EUR207,000 (2015: EUR278,000).
NOTE 16: FINANCIAL EXPENSES (INCOME)
Year ended
31 December
----------------------------
2016 2015
------------------ -------
Euro in thousands
----------------------------
Financial expenses:
Interest on bank borrowings 10,393 10,177
Amortisation of cost of raising
loans 842 775
Expenses on currency exchange
(*) - 3,516
Release of hedging reserve (hedging
of foreign exchange -shareholder
loan) (*) - 3,596
Early repayment penalty (*) - 4,446
Other 580 550
------------------ ---------
Total financial expenses 11,815 23,060
================== =========
Financial income:
Interest income on short-term
deposits 15 6
Income on currency exchange 132 -
Other 1,632 1,308
------------------ ---------
Total financial income 1,779 1,314
================== =========
(*) Non-recurring expenses as a result of the repayment of the
Shareholders Loan, as described in Note 13 to the Group annual
financial statements for the year 2015.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 17: TAXATION
A) Taxes on income recognized in the consolidated statement of comprehensive income:
Year ended
31 December
-------------------
2016 2015
--------- --------
Euro in thousands
-------------------
Current income tax:
Current income tax charge 198 154
Deferred income tax (See C):
Relating to origination and
reversal of
temporary differences 8,155 7,308
--------- --------
Income tax expense reported
in the statement of
comprehensive income 8,353 7,462
========= ========
B) The Company is subject to taxation under the laws of
Guernsey. The Company qualifies for exempt status, which results in
no Guernsey taxation on income it receives, including interest and
dividends received, or capital gains from the disposal of
investments. Exempt status is achieved by application. Application
is made to the Director of Income Tax in Guernsey for confirmation
that the Company is eligible for exempt status under the Income Tax
(Exempt Bodies) (Guernsey) Ordinance, 1989. The exemption must be
reapplied on an annual basis. The subsidiaries are subject to
income taxes in their country of domicile in respect of their
income. The ordinary corporate income tax rate in Germany as of 31
December 2016 is 15.825% (31 December 2015: 15.825%). The majority
of the Group subsidiaries are subject to German tax which will
include RETT on property transactions, where applicable. Certain
Group subsidiaries are taxable in Guernsey at 0%.
A reconciliation between the tax benefit in the consolidated
statement of comprehensive income and the profit before taxes
multiplied by the current tax rate can be explained as follows:
Year ended
31 December
----------------------
2016 2015
---------- ----------
Euro in thousands
----------------------
Profit before taxes on income 63,900 70,929
========== ==========
Tax at the statutory tax rate
in Germany (15.825%) 10,112 11,225
Increase (decrease) in respect
of:
Losses for which deferred taxes
were not recorded 1,915 481
Effect of different tax rate (4,479) (3,359)
Non-deductible expense (87) 365
Deferred tax reverse - -
Difference between tax and
reporting GAAP 1,651 (583)
Other (759) (667)
---------- ----------
Income tax expense 8,353 7,462
========== ==========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 17: TAXATION (Cont.)
C) Deferred income tax:
Consolidated
statement
of financial
position
--------------------
2016 2015
--------- ---------
Euro in thousands
--------------------
Deferred tax asset (liability)
Revaluations of investment
properties to fair value (33,623) (20,661)
Losses carried forward 11,386 6,889
Revaluations of financial instruments 810 235
Provisions 840 548
Other 115 97
--------- ---------
Deferred tax assets (liabilities),
net (20,472) (12,892)
========= =========
The Group offsets deferred tax assets and liabilities when these
are originated by the same tax entity. After offsetting such assets
and liabilities, the net balances are:
Consolidated
statement
of financial
position
--------------------
2016 2015
--------- ---------
Euro in thousands
--------------------
Deferred tax asset 655 485
========= =========
Deferred tax liability (21,127) (13,377)
========= =========
Consolidated
statement of
comprehensive
loss (income)
-----------------------
2016 2015
------------- --------
Euro in thousands
-----------------------
Deferred tax expense (income)
Revaluations of investment
properties to fair value 12,962 8,567
Losses carried forward (4,497) (1,617)
Provisions (292) 258
Other (18) 100
------------- --------
Increase in deferred tax, net 8,155 7,308
============= ========
Other comprehensive
loss
----------------------
2016 2015
---------- ----------
Euro in thousands
----------------------
Deferred tax expense (income)
Revaluations of financial instruments 575 (39)
Increase in deferred tax, net 575 (39)
========== ==========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 17: TAXATION (Cont.)
D) Group's carried forward tax losses for which deferred taxes
were not recognized are EUR97 million (as of 31 December 2015 -
EUR91 million). Deferred tax assets on loss carry forward are
recognized by the Group according to the applicable tax laws, to
the extent that it is probable that taxable profit will be
available against which the losses can be utilised.
E) Real Estate Transfer Tax:
Transactions concerning German real estate may trigger Real
Estate Transfer Tax (RETT) of 3.5% to 6.5% of the purchase price or
the asset value, according to the location of the real estate.
NOTE 18: FINANCIAL INSTRUMENTS
The Group's principal financial liabilities, other than
derivatives, comprise mainly bank loans, and trade payables. The
main purpose of these financial liabilities is to raise finance for
the Group's operations. The Company has various financial assets
such as trade receivables and cash and short-term deposit. As to
derivative transactions, see Note 7.
The main risks arising from the Group's financial instruments
are market risk, credit risk and liquidity risk as summarized
below.
Market risk:
Market risk is the risk that the fair value of future cash flows
of financial instruments will fluctuate because of changes in
market prices. Market prices comprise two types of risks that are
relevant to the Company: Interest rate risk and Price risk.
-- Interest rate risk:
The Group's exposure to the risk of changes in market interest
rates relates primarily to the Group's long-term debt obligations
with floating interest rates.
The Group's policy is to fix the interest rate of its bank loans
by entering into fixed interest rate loan agreements and by
entering into interest rate swaps, in which the Group agrees to
exchange, at specified intervals, the difference between fixed and
variable rate interest amounts calculated by reference to an
agreed-upon notional principal amount. At 31 December 2016 after
taking into account the effect of interest rate swaps, the majority
of the Group's borrowings are at a fixed rate of interest. All
interest rate swap contracts exchanging floating rate interest
amounts for fixed rate interest amounts are designated as cash flow
hedges in order to reduce the Group's cash flow exposure resulting
from variable interest rates on borrowings. The interest rate swaps
and the interest payments on the loan occur simultaneously and the
amount accumulated in equity is reclassified to profit or loss over
the period that the floating rate interest payments on debt affect
profit or loss.
However, fixing the interest rates of bank loan agreements
exposes the Group to market risk on changes in fair value of the
swap, as presented below:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 18: FINANCIAL INSTRUMENTS (Cont.)
Market risk (Cont.):
-- Interest rate risk (Cont.):
Sensitivity of changes in swap interest rate
effect
--------------------------
5% increase 5% decrease
in swap in swap
interest interest
rate rate
------------ ------------
Euro in thousands
--------------------------
2016 (39) 39
2015 179 (179)
-- Price risk:
The Group's marketable securities and available for sale
financial instruments are susceptible to price risk arising from
uncertainties about future values of the investment in those
instruments. The Group manages the equity price risk through
diversification and placing limits on individual and total equity
instruments. The Company's senior management monitors value and
extent of such investments on an ongoing basis.
The sensitivity analysis below has been determined based on the
exposure to equity price risks at the end of the reporting period.
As of 31 December 2016, the Group does not hold any marketable
securities and available for sale financial instruments:
Sensitivity of changes in equity price
Profit (losses)
impact
--------------------------
5% increase 5% decrease
in equity in equity
price price
------------ ------------
Euro in thousands
--------------------------
2016 - -
2015 86 (86)
-- Credit risk:
Credit risk is the risk that counterparty will not meet its
obligations, as reflected as of the period end in the Group's
financial statements, under a financial instrument or customer
contract, leading to a financial loss. The Group is exposed to
credit risk from its operating activities.
The Group performs ongoing credit evaluations of its lessees and
the financial statements include specific allowances for doubtful
accounts which, in management's estimate, adequately reflect the
underlying loss of debts whose collection is doubtful.
The Group does not have significant credit risk exposure to any
single counterparty or any group of counterparties having similar
characteristics. The Group defines counterparties as having similar
characteristics if they are related entities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 18: FINANCIAL INSTRUMENTS (Cont.)
-- Credit risk (Cont.):
The carrying amount of financial assets recognised in financial
statements net of impairment losses represents Group's maximum
exposure to credit risk, without taking into account collateral or
other credit enhancements held.
Collateral and other credit enhancements are obtained in most
cases, pursuant to management assessment of the client's credit
quality and an assignment of its credit limits.
The Group does not invest its cash with banks that have a low
credit rating.
Liquidity risk:
The table below summarises the maturity profile of the Group's
financial liabilities at 31 December 2016 based on contractual
undiscounted payments.
As at 31 December 2016
-------------------------------------------------------------
Up to
1 year 1-2 years 2-3 years 3-4 years > 4 years Total
-------- --------- --------- --------- --------- -------
Euro in thousands
-------------------------------------------------------------
Interest bearing
loans and borrowings 23,180 44,780 32,523 21,357 297,536 419,376
Trade and other
payables 26,398 - - - - 26,398
Other liabilities 65 - - - - 65
Payables to
related parties
and shareholders 5,507 - - - - 5,507
-------- --------- --------- --------- --------- -------
55,150 44,780 32,523 21,357 297,536 451,346
======== ========= ========= ========= ========= =======
The table below summarises the maturity profile of the Group's
financial liabilities at 31 December 2015 based on contractual
undiscounted payments.
As at 31 December 2015
-------------------------------------------------------------
Up to
1 year 1-2 years 2-3 years 3-4 years > 4 years Total
-------- --------- --------- --------- --------- -------
Euro in thousands
-------------------------------------------------------------
Interest bearing
loans and borrowings 17,875 20,209 41,871 29,688 271,305 380,948
Trade and other
payables 21,641 - - - - 21,641
Other liabilities 89 - - - - 89
Payables to
related parties
and shareholders 2,350 - - - - 2,350
-------- --------- --------- --------- --------- -------
41,955 20,209 41,871 29,688 271,305 405,028
======== ========= ========= ========= ========= =======
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 18: FINANCIAL INSTRUMENTS (Cont.)
Capital management:
The primary objective of the Group's capital management is to
ensure that it maintains a strong credit rating and healthy capital
ratios in order to support its business and maximise shareholder
value.
The Group manages its capital structure and makes adjustments to
it, in light of changes in economic conditions. To maintain or
adjust the capital structure, the Group may adjust the dividend
payment to shareholders, return capital to shareholders or issue
new shares.
The Group is not subject to any externally imposed capital
requirements.
No changes were made in the objectives, policies or processes
during the years ended 31 December 2016 and 31 December 2015.
The gearing ratios at 31 December 2016 and 31 December 2015 were
as follows:
2016 2015
--------- --------
Euro in thousands
-------------------
Non current interest bearing loans
and borrowings 355,774 320,379
Current liabilities 13,479 8,553
Less cash and short term deposits (54,158) (33,583)
--------- --------
Net debt 315,095 295,349
--------- --------
Equity 459,679 424,702
--------- --------
Total capital 774,774 720,051
========= ========
Gearing ratio 41% 41%
========= ========
Fair value of financial instruments and non-financial
instruments:
Fair value of financial instruments carried at amortised
cost:
The directors consider that the carrying amounts of financial
assets and financial liabilities recognised at amortised cost in
the financial statements approximate their fair values.
Fair value measurements recognised in the statement of financial
position:
The financial instruments that are measured subsequent to
initial recognition at fair value, grouped into Levels 2 and 3
based on the degree to which the fair value is observable.
-- Level 1 fair value measurements marketable securities are
those derived from quoted prices (unadjusted) in active markets for
identical assets or liabilities.
-- Level 2 fair value measurements (swaps) are derived from
inputs other than quoted prices that are observable for those
instruments directly (i.e. as prices).
-- Level 3 fair value measurements (available-for-sale
investment - unquoted equity share) are derived from valuation
techniques that include inputs for the asset or liability that are
not based on observable market data (unobservable inputs).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 18: FINANCIAL INSTRUMENTS (Cont.)
Fair value measurements recognised in the statement of financial
position (Cont.):
31 December 2016
--------------------------------
Level Level Level
1 2 3 Total
----- ------- ------- -------
Euro in thousands
--------------------------------
Non - Financial assets:
Investment properties
(see Note 5) - - 797,821 797,821
Available-for-sale financial
assets
Unquoted equity shares
(a) - - 2,373 2,373
----- ------- ------- -------
Total - - 800,194 800,194
===== ======= ======= =======
Financial liabilities
Derivative instruments
- swaps (b) - (7,923) - (7,923)
===== ======= ======= =======
(a) The change in unquoted equity shares from 31 December 2015
resulted from an increase in the value of investment in the
unquoted equity in the amount of EUR123 thousand (During 2015:
EUR124 thousand). The increase presented in other comprehensive
income - net profit (loss) arising on revaluation of available for
sale financial asset.
(b) Derivative instruments:
The fair value of derivative interest rate contracts (interest
rate swap agreements) are estimated by discounting expected future
cash flows using current market interest rates and yield curve over
the remaining term of the instrument.
The Group contracted hedging instruments under the form of
"Interest rate swaps" at a fixed rate of 0.9%-1.2% from the initial
repayment date to the new repayment date at the end of 2021.
EUR1,675 thousand (2015: EUR1,478 thousand) of the balance is
presented in current liabilities, and EUR6,248 thousand in
non-current liabilities (2015: EUR3,614 thousand in other long-term
financial assets).
31 December 2015
--------------------------------
Level Level Level
1 2 3 Total
----- ------- ------- -------
Euro in thousands
--------------------------------
Non - Financial assets:
Investment properties
(see Note 5) - - 735,331 735,331
Available-for-sale financial
assets
Unquoted equity shares - - 2,250 2,250
----- ------- ------- -------
Total - - 737,581 737,581
===== ======= ======= =======
Financial liabilities
Derivative instruments
- swaps (b) - (5,094) - (5,094)
===== ======= ======= =======
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 19: OPERATING LEASE
Operating Lease- Group as Lessor
The Group has entered into commercial property leases on its
investment property portfolio. These non-cancellable leases have
remaining average terms of between 1 and 20 years (the average
non-cancellable lease length is approximately 4.4 years). The
majority of the leases include a clause to enable upward revision
of the rental charge on an annual basis according to the price
index or a fixed increase rate.
Future minimum rentals receivable under non-cancellable
operating leases are as follows:
Euro in thousands
--------------------------
For the For the
year ended year ended
31 December 31 December
2016 2015
------------ ------------
Within one year 55,164 54,124
After one year but not more
than five years 156,291 149,249
More than five years but not
more than ten years 55,142 45,724
More than ten years but not
more than fifteen years 13,314 12,026
More than fifteen years 1,110 2,775
------------ ------------
281,021 263,898
============ ============
The increase in future minimum rentals receivable is mainly due
to the acquisitions of additional properties during the reporting
period, as detailed in Note 5.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 20: THE COMPANY'S HOLDINGS AS OF 31 DECEMBER 2016
Direct and
Country indirect holdings
Principal activity of incorporation %
----------------------------------- ------------------ ------------------
Summit Finance Limited Inter group financing company Guernsey 100%
Intermediate holding
Neston (International) Limited company Gibraltar 100%
Inter group financing
Summit LoanCo LTD company Guernsey 100%
Summit Luxco s.a.r.l Intermediate holding company Luxembourg 100%
Inter group financing
Gallia invest Sarl company Luxembourg 100%
Inter group financing
Summit Sterne Guernsey Ltd. company Guernsey 100%
Intermediate holding
Summit Re One GmbH company Germany 100%
Intermediate holding
Summit Real Estate Silver GmbH company Germany 94.80%
Intermediate
Summit RE Two GmbH holding company Germany 100%
Intermediate
Summit Real Estate Gold GmbH holding company Germany 94.80%
Intermediate holding
Summit RE Three GmbH company Germany 100%
Intermediate holding
Summit Real Estate Bronze GmbH company Germany 94.80%
Summit Real Estate Magdebug Intermediate holding
GmbH company Germany 100%
Intermediate holding
Summit Real Estate Hauau GmbH company Germany 100%
Inter group financing
Summit RE Four GmbH company Germany 100%
Intermediate holding
Summit RE Five GmbH company Germany 100%
Intermediate holding
Summit RE Six GmbH company Germany 100%
Summit Real Estate Platinum GmbH Shelf company Germany 94.80%
Summit Real Estate Titanium GmbH Shelf company Germany 94.80%
M.S.C Objekt Magdeburg GmbH &
Co.
KG Real Estate company Germany 99.73%
M.S.C Objekt Hanau GmbH Co. KG Real Estate company Germany 99.73%
Summit Real Estate Blue GmbH Real Estate company Germany 99.73%
Summit Real Estate Orange GmbH Real Estate company Germany 99.73%
Summit Real Estate Yellow GmbH Real Estate company Germany 99.73%
Summit Real Estate White GmbH Real Estate company Germany 99.73%
Summit Real Estate Red GmbH Real Estate company Germany 99.73%
Summit Real Estate Purple GmbH Real Estate company Germany 99.73%
Summit Real Estate Black GmbH Real Estate company Germany 99.73%
Summit Real Estate Ismaning
GmbH Real Estate company Germany 94.67%
Summit Real Estate Duisburg
GmbH Real Estate company Germany 94.67%
Summit RE GmbH & Co. Black 1KG Real Estate company Germany 99.73%
Summit RE GmbH & Co. Black 2KG Real Estate company Germany 99.73%
Summit RE GmbH & Co. Black 3KG Real Estate company Germany 99.73%
BDPE S.a.r.l Real Estate company Luxembourg 99.73%
Summit Real Estate Cammarus Intermediate holding
GmbH company Germany 99.73%
Summit Real Estate Brown GmbH Real Estate company Germany 99.73%
Summit Real Estate Indigo GmbH Real Estate company Germany 99.73%
Summit Real Estate Maroon GmbH Real Estate company Germany 99.73%
Summit Real Estate Lime GmbH Real Estate company Germany 99.73%
Summit Real Estate Azure GmbH Real Estate company Germany 99.73%
Summit Real Estate Alpha GmbH Real Estate company Germany 99.73%
Summit Real Estate Lilac GmbH Real Estate company Germany 99.73%
Summit Real Estate Delta GmbH Real Estate company Germany 99.73%
Summit Real Estate Gamma GmbH Real Estate company Germany 99.73%
Lommy GmbH Real Estate company Germany 99.73%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 20: THE COMPANY'S HOLDINGS AS OF 31 DECEMBER 2016 (Cont.)
Direct and
indirect
Country holdings
Principal activity of incorporation %
----------------------- ------------------ ----------
Summit Real Estate Amber
GmbH Real Estate company Germany 99.73%
Summit Real Estate Lavender
GmbH Real Estate company Germany 99.73%
Summit Real Estate Magenta
GmbH Real Estate company Germany 99.73%
Summit Real Estate Ruby
GmbH Real Estate company Germany 99.73%
Summit Real Estate Epsilon
GmbH Real Estate company Germany 99.73%
Summit Real Estate Krypton
GmbH Real Estate company Germany 99.73%
Inter group financing
RE one finance GmbH company Germany 100%
Summit Real Estate BOS GmbH Real Estate company Germany 99.73%
Summit Real Estate Delphinus
GmbH Real Estate company Germany 99.73%
Summit Real Estate Formica
GmbH Real Estate company Germany 99.73%
Summit Real Estate Grey
GmbH Real Estate company Germany 99.73%
Grundstucksgesellschaft
Gewerbepark Hansalinie
GmbH Real Estate company Germany 99.73%
Summit Real Estate Kappa
GmbH Real Estate company Germany 99.73%
Summit Real Estate Lupus
GmbH Real Estate company Germany 99.73%
Summit Real Estate Omega
GmbH Real Estate company Germany 99.73%
Summit Real Estate Papilio
GmbH Real Estate company Germany 99.73%
Summit Real Estate Salmo
GmbH Real Estate company Germany 99.73%
Summit Real Estate Ursus
GmbH Real Estate company Germany 99.73%
Summit Real Estate Zeta
GmbH Real Estate company Germany 99.73%
Summit Real Estate Camelus
GmbH Real Estate company Germany 99.73%
Summit Real Estate Hamburg
GmbH Real Estate company Germany 99.73%
Gadelander Str. 77 Projekt
GmbH Real Estate company Germany 99.73%
Inter group financing
RE three finance GmbH company Germany 100%
Summit Real Estate Hirundo
GmbH Shelf company Germany 94.80%
H130 Boblingen GmbH Real Estate company Germany 94.60%
Summit Sindelfingen GmbH Real Estate company Germany 94.60%
Summit RE Beta GmbH Real Estate company Germany 94.80%
Summit RE Leo GmbH Shelf company Germany 94.80%
Summit RE Tau GmbH Shelf company Germany 94.80%
Summit RE Aquila GmbH Shelf company Germany 94.80%
Summit RE Corvus GmbH Shelf company Germany 94.80%
Summit RE Oberusel GmbH Real Estate company Germany 94.89%
Intermediate holding
Deutsche Real Estate AG company Germany 78.47%
Summit Real Estate Lambda Intermediate holding
GmbH company Germany 100%
Intermediate holding
W2005 Projectpauli GmbH company Germany 99.33%
Intermediate holding
W2005 Pauli 1 BV company Netherlands 94.90%
Verwaltungsgesellschaft
Deutsche Real Estate mbH Residual company Germany 78.47%
DRESTATE Objekt Berlin,
Friedrichstraße GmbH
& Co. KG Real Estate company Germany 78.47%
DRESTATE Objekt Habmurg,
Osterfeldstraße GmbH
& Co.KG Real Estate company Germany 74.49%
GET Grundstücksgesellschaft Intermediate holding
mbH company Germany 74.23%
DRESTATE Objekt Hamburg,
Mendelssohnstraße GmbH
& Co. KG Real Estate company Germany 78.47%
DRESTATE Objekt Stuttgart,
Rosensteinstraße GmbH
& Co. KG Real Estate company Germany 78.47%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER, 2016
NOTE 20: THE COMPANY'S HOLDINGS AS OF 31 DECEMBER 2016 (Cont.)
Direct and
indirect
Country holdings
Principal activity of incorporation %
---------------------- ------------------- ------------
DRESTATE Objekt Berlin,
Hauptstraße GmbH &
Co. KG Real Estate company Germany 78.47%
DRESTATE Objekt Düsseldorf,
Bonner Straße GmbH
& Co. KG Real Estate company Germany 78.47%
DRESTATE Objekt Ludwigshafen,
Carl-Bosch-Straße GmbH
& Co. KG Real Estate company Germany 78.47%
DRESTATE Objekt Böblingen,
Otto-Lilienthal-Straße
GmbH & Co. KG Real Estate company Germany 78.47%
GbR Heidelberg, Mannheimer
Straße Real Estate company Germany 68.66%
DRESTATE Objekte Erste GmbH
& Co. KG Real Estate company Germany 78.47%
DRESTATE Objekt Saarbrücken,
Kaiserstraße GmbH &
Co. KG Real Estate company Germany 78.47%
DRESTATE Objekt Saarbrücken,
Hafenstraße GmbH &
Co. KG Real Estate company Germany 78.47%
DRESTATE Objekt Berlin-Teltow,
Potsdamer Straße GmbH
& Co. KG Real Estate company Germany 78.47%
DRESTATE Objekt Norderstedt,
Kohfurth GmbH & Co. KG Real Estate company Germany 78.47%
DRESTATE Objekte Hamburg
Vierundzwanzigste GmbH &
Co. KG Real Estate company Germany 78.47%
Verwaltungsgesellschaft
DRESTATE mbH Residual company Germany 78.47%
DRESTATE Objekte Zweite
GmbH & Co. KG Real Estate company Germany 78.47%
DRESTATE Carreé Seestraße
GmbH & Co. KG Real Estate company Germany 78.47%
Achte TAXXUS Real Estate Intermediate holding
GmbH company Germany 78.47%
DRESTATE Objekt Seesen,
Rudolf-Diesel-Straße
GmbH & Co. KG Real Estate company Germany 78.47%
K-Witt Kaufzentrum Wittenau
GmbH & Co. KG Real Estate company Germany 78.47%
Inter group financing
DRESTATE Finance GmbH company Germany 78.47%
DRESTATE Services GmbH Real Estate company Germany 78.47%
Objekt Verwaltungs GmbH Intermediate holding
Deutsche Real Estate company Germany 39.24%
DRESTATE Objekte Dritte
GmbH & Co. KG Real Estate company Germany 78.47%
DRESTATE Objekte Vierte
GmbH & Co. KG Real Estate company Germany 78.47%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2016
NOTE 20: THE COMPANY'S HOLDINGS AS OF 31 DECEMBER 2016 (Cont.)
Direct and
indirect
Country holdings
Principal activity of incorporation %
----------------------------- ------------------ ----------
DRESTATE Objekt Hamburg
Pinkertweg GmbH Real Estate company Germany 78.47%
Beteiligungsgesellschaft
Pinkertweg GmbH & Co. KG Intermediate holding company Germany 78.47%
Verwaltungsgesellschaft
Objekte DRESTATE mbH Intermediate holding company Germany 39.24%
Grit 68. Vermögensverwaltungs
GmbH Intermediate holding company Germany 78.47%
Object Verwaltungsgesellschaft
2013 Drestate mbH Intermediate holding company Germany 39.24%
Object Verwaltungsgesellschaft
2015 Drestate mbH Intermediate holding company Germany 39.24%
Deutsche Shopping GmbH &
Co. KG Intermediate holding company Germany 78.47%
DRESTATE Objekt Worms, Am
Ochsenplatz GmbH & Co. KG Real Estate company Germany 78.47%
DRESTATE Objekt Gießen-Linden,
Robert-Bosch-Straße
GmbH & Co. KG Real Estate company Germany 78.47%
K-Witt Kaufzentrum Wittenau
II GmbH & Co. KG Real Estate company Germany 78.47%
Verwaltung K-Witt Kaufzentrum
Wittenau II GmbH Intermediate holding company Germany 78.47%
DRESTATE Wohnen GmbH Residual Company Germany 78.47%
BAKOLA Miteigentumsfonds
I Objekt Duisburg -
Averdunk Financial Participation Germany 54.98%
DRESTATE Objekt München,
Maria-Probst-Straße
GmbH & Co. KG Real Estate company Germany 78.47%
- - - - - - - - - - - - - - - - - - -
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UVORRBWAVAUR
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May 16, 2017 02:01 ET (06:01 GMT)
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