Quarterly Report • Sep 16, 2019
Quarterly Report
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Half-Year Financial Report for the Period 1 January Through 30 June 2019 Overview Key Financial Data
| ACCENTRO Real Estate AG | 1st half-year 2019 1 January 2019 – 30 June 2019 |
1st half-year 2018 1 January 2018 – 30 June 2018 |
|---|---|---|
| Income statement | TEUR | TEUR |
| Consolidated revenues total Group | 34,540 | 97,922 |
| Gross profi t / loss (Interim result) | 11,808 | 19,192 |
| EBIT | 6,588 | 14,409 |
| EBT | 3,513 | 8,658 |
| Consolidated income | 2,941 | 5,746 |
| Interest coverage ratio (ICR)* | 4.15 | 3.79 |
* EBIT adjusted by non-period expenses/income in relation to balance of interest expense and interest income
| ACCENTRO Real Estate AG | 30 June 2019 | 31 December 2018 |
|---|---|---|
| Balance sheet ratios | TEUR | TEUR |
| Non-current assets | 66,840 | 81,109 |
| Current assets | 432,226 | 393,096 |
| Shareholders' equity | 197,503 | 199,104 |
| Equity ratio | 39.6 % | 42.0 % |
| Total assets | 499,067 | 474,205 |
| Loan to value (LTV)* | 55.2 % | 50.6 % |
* Net fi nancial debt divided by gross assets
| Company shares | |
|---|---|
| Stock market segment | Prime Standard |
| ISIN | DE000A0KFKB3 |
| German Securities Code Number (WKN) | A0KFKB |
| Number of shares on 30 June 2019 | 32,437,934 |
| Free fl oat | 12.1% |
| Highest price (1 January – 30 June 2019)* | EUR 9.78 |
| Lowest price (1 January – 30 June 2019)* | EUR 7.00 |
| Closing price on 28 June 2019* | EUR 7.20 |
| Market capitalisation on 28 June 2019* | EUR 233,553,125 |
* Closing prices in Xetra trading
Dear Shareholders, Dear Ladies and Gentlemen,
Berlin is in the process of becoming a perfectly normal German city. The rapid progress of this development has prompted intense political and societal discussions. In the city's incumbent coalition government of Social Democrats, The Left and Greens, the Senator for Urban Development is a member of The Left. Each year since she took the helm, the number of planning approvals has declined while the incoming population remains high. For the time being, the widening gap is covered to some extent by the high completions fi gures delivered by projects previously approved, but this number can soon be expected to decline. Unless the incoming migration slows down, prices in Berlin are likely to keep soaring, matched by mounting social issues.
In mid-July, Berlin's Real Estate Valuation Board published its latest Property Market Report, which covers the market action of 2018:
The number of fl ats sold decreased by more than 10%. At the same time, the turnover total increased by nearly 8% although the share of new-build fl ats, which tend to have higher price tags, dropped noticeably. Indeed, the sales of new-build condominiums declined by more than 20%.
The development propelled Berlin upward into the top ten of Germany's most expensive cities for the fi rst time: from rank 12 in 2017 to rank 5 in 2018. The only cities yet more expensive are Düsseldorf, Hamburg, Frankfurt am Main and Munich.
On the one hand, we benefi t – in the context of ongoing projects – from rising prices while, on the other hand, the political debate on subjects like expropriations and rent caps does little to boost the faith of investors in the future development of Berlin as an investment destination. At the moment, there are no signs for a fl agging interest in buying condominiums – if anything, the opposite is the case. But we will, of course, keep a close eye on how the discussion and the societal climate develops going forward.
Our positive development during the fi rst half-year of 2019 proceeded as planned. For the fi rst time, our total assets neared the mark of EUR 500 million, and they are likely to cross it during the second half of the year. The margins remain high and we manage to deliver a robust net income, and this even though we do not expect to see the bulk of this year's revenues until the second half-year.
In the course of the 2019 fi nancial year to date, we completed several interesting acquisitions, e. g. in Rostock, on the island of Usedom, in Düsseldorf, Leipzig and Berlin, and already integrated some of them into our portfolio. All things considered, we bought 350 fl ats in 13 diff erent properties for a total amount of EUR 72 million (notarised) and are planning to spend an amount in the upper triple-digit millions on additional project acquisitions.
On top of that, we contracted additional service mandates. At the moment, we are marketing development projects in a total sales volume of EUR 320 million on behalf of third parties, and we actually hold minority stakes in some of these projects. Increasingly, the mandates include newly constructed buildings. It is a business area that we intend to expand because of the extremely strong demand in Germany's metro regions.
All things considered, we are well-positioned and prepared to face the future.
Kind regards,
Jacopo Mingazzini Management Board
The condensed consolidated interim fi nancial statements of ACCENTRO Real Estate AG on which this report is based have been prepared in accordance with the International Financial Reporting Standards (IFRS) the way they are to be applied in the European Union.
All monetary fi gures in this report are quoted in Euro (EUR). Both individual and total fi gures represent the value with the smallest rounding diff erence. Accordingly, adding the values of the individual line items may result in minor diff erences compared to the reported totals.
The ACCENTRO Group is a listed property company focusing on residential real estate located in Germany. The business activities of the ACCENTRO Group centre on the trading of residential properties and individual apartments, especially the retailing of apartments to owner-occupiers and buy-to-let investors within the framework of retail privatisations of housing portfolios. The focus here is on tenant-sensitive housing privatisations.
The privatisation services provided by the ACCENTRO Group involve both the retailing of apartments from the proprietary property stock of the ACCENTRO Group and the delivery of privatisation services on behalf of third parties.
In addition to apartment retailing, the business model of the ACCENTRO Group also includes the management of proprietary holdings.
The portfolio is not divided into segments.
ACCENTRO AG is the parent company of the ACCENTRO Group. ACCENTRO AG acts as an operationally active holding company for a number of member companies in which the housing stock is concentrated, and for one service company focused on the business of housing privatisation. For companies in which it holds a controlling interest, ACCENTRO AG assumes the top-down responsibilities of corporate controlling, funding, and administration within the ACCENTRO Group. ACCENTRO AG's sphere of ownership includes core divisions such as Legal, Accounting, Controlling, Risk Management, Funding, Purchasing, Asset Management and IT.
The ACCENTRO Group consists of several property holding companies directly managed by ACCENTRO AG in which the real estate assets of the ACCENTRO Group are held. All of the property vehicles are consolidated in the Consolidated Financial Statements of ACCENTRO AG. The ACCENTRO Gehrensee GmbH subgroup was sold and fi nally consolidated during Q2 2018. ACCENTRO AG retains only a minority stake of 25% that is recognised among the "equity interests accounted for using the equity method."
ACCENTRO Real Estate AG uses EBIT as fi nancial performance indicator for corporate controlling purposes. Here, the key control variable is the sales performance of the properties with its defi nitive factors, such as the number of condominium reservations placed by potential buyers, among others, and the actual selling prices realised. The latter is aggregated both as number of fl ats involved and as sales total. The other factors that the control system takes into account include the operating income of each sub-portfolio or of each property. In addition, control variables like the number of new clients as well as viewings and reservations serve as early indicators of the Company's performance.
Factors aggregated on the level of the parent Group include prompt and regular updates on the liquidity position. The liquidity planning for the next 12 months is conducted on a rolling basis. This centrally controlled responsibility helps to monitor the fi nancial stability of the corporate group. Continuously measuring the liquidity fl ows on the level of each company and the level of the parent Group is an integral part of this control.
The macroeconomic conditions in Germany deteriorated during the fi rst half-year of 2019 when compared to the prior-year period. In July 2019, the International Monetary Fund (IMF) revised its growth forecast for the global economy downwards for the third time this year. Reasons that prompted the IMF to update its economic forecast include the trade confl ict between the United States and China as well as the jitters caused by Brexit over the uncertainty of future trade relations between the United Kingdom and the European Union. Geopolitical tensions in the Gulf region also put a damper on the economic outlook.
According to the IMF, the German economy, too, is expected to grow by only 0.7% as a result of muted international demand for German products, which is 0.1% slower than initially assumed.
The Ifo Institute for Economic Research announced in June 2019, after the Germany gross domestic product had grown by a mere 0.4% during the fi rst quarter of 2019, that it anticipates a decline in Germany's economic output.
Mario Draghi, the outgoing President of the European Central Bank (ECB) who will vacate the position by 31 October 2019, indicated after a meeting of the Central Bank Council on 25 July 2019 that he intended to lower interest rates once more this fall and relaunch the bond-buying scheme. It is reasonable to assume that Christine Lagarde, the designated ECB President, will continue the bank's current accommodative monetary policy to boost European growth.
Against the background of a national economy that will continue to grow, albeit at a slower pace, ACCENTRO AG does not yet see signs of a negative economic impact on the housing market and thus on the business model of ACCENTRO. This assessment is backed by robust fi gures from the German labour market. In its Labour Market Report for July 2019, the Federal Labour Agency wrote on 31 July 2019: "The threat of becoming unemployed after losing your job remains low, and the opportunities to end unemployment by accepting a new job are on a very high level ..."
Germany's housing shortage, which is driven by a low supply elasticity, has kept pushing up property prices in 2019. Just like in 2018, the Federal Government's stated objective of completing around 375,000 fl ats annually will most likely be missed again this year. According to the Federal Statistical Offi ce, only 136,257 fl ats were approved for development nationwide during the fi rst fi ve months of 2019.
In July 2019, the incumbent German Government presented its fi rst housing benefi t and rent report – and thereby documented how ineff ective the housing policy of recent years has been. The situation on the German housing market was "clearly strained in the economically strong regions during the reporting period," the report says. The reporting period extends from 2016 through 2018, as the Federal Government publishes its housing benefi ts and rent report every two years.
The reason for the discrepancy between the needed and the actually completed accommodation are, from our point of view, explained primarily by overworked building authorities, the lack of development land, high construction costs and the short supply of skilled labour in the building trade, all of which factors cause delays to the development of urgently required new housing stock.
According to the housing benefi t and rent report released by the Federal Government, asking rents in the metropolitan core areas rose by an annual 6% between 2016 and 2018, whereas the average rent growth nationwide equalled 5% during the same period. New-build rents climbed to EUR 12.68 per square metre in cities with populations of more than 500,000 residents, and even the rents of existing fl ats with good amenities rose to EUR 11.46 on average.
In Berlin, the largest and most important market for ACCENTRO AG, the growing politicisation of the housing issue has become yet another factor discouraging the creation of new residential accommodation. In March 2019, the accelerating rent growth triggered a debate whether to expropriate Berlin's large-scale housing companies.
By the end of August 2019, a draft bill for a "Berlin Rent Law" will be on the table whose purpose is to establish a generally binding rent cap and to freeze rents across Berlin for the next fi ve years. The bill's critics argue mainly that the existing housing stock will deteriorate and that modernisations will be aborted while the motivation to engage in new-build construction will decline.
ACCENTRO AG is responding to the turbulent developments on Berlin's real estate market by expanding into other metro regions in Germany. Specifi cally, we are now concentrating on other auspicious locations like the Hamburg metro area, Leipzig, Rhine-Ruhr and Rhine-Main.
The business performance of the ACCENTRO Group during the fi rst half-year of 2019 was satisfactory. For one thing, sales revenues and letting take-up have developed as planned in 2019 to date. The cash fl ow from operations prior to reinvestment in the real estate assets is clearly positive, and the property inventory was expanded as planned.
Against the background of the transactions yet expected to take place in Q4 of the ongoing fi nancial year, ACCENTRO Real Estate AG upholds the forecasts made for the trend in revenues and the EBIT in the consolidated fi nancial statements dated 31 December 2018.
The Company's share capital amounted to EUR 32,437,934.00 as of 30 June 2019.
There were no senior staff changes to the Supervisory Board or to the Management Board of ACCENTRO Real Estate AG during the reporting period. The Supervisory Board, consisting of Axel Harloff (chair), Dr. Dirk Hoff mann and Natig Ganiyev, was confi rmed for another term at the Annual General Meeting of ACCENTRO Real Estate AG on 14 May 2019.
The ACCENTRO Group's key revenue and earnings fi gures developed as follows during the fi rst six months of the 2019 fi nancial year:
| H1 2019 | H1 2018 | |
|---|---|---|
| EUR million | EUR million | |
| Revenues | 34.5 | 97.9 |
| EBIT | 6.6 | 14.4 |
| Consolidated income | 2.9 | 5.7 |
The consolidated revenues added up to EUR 34.5 million during the fi rst half of the 2019 fi nancial year (reference period: EUR 97.9 million) and is therefore well below the prior year fi gures, which was defi ned by the integration of the ACCENTRO Gehrensee GmbH subgroup into a joint venture.
At EUR 2.6 million, the total payroll and benefi t costs increased compared to the reference period with its total of EUR 1.9 million. The increase is explained by bonus payments in Q1 2019 and the continued expansion of the workforce.
The earnings before interest and taxes (EBIT) for the reporting period equalled EUR 6.6 million (reference period: EUR 14.4 million) and ranges within the parameters we predicted.
The substantial reduction of the negative net interest result during the fi rst half-year of 2019 (EUR –3.1 million; reference period: EUR –5.8 million) is explained by the signifi cant increase in interest income by more than EUR 1.4 million during H1 2019. Loans handed out to companies accounted for using the equity method or affi liated with the ACCENTRO Group via sales contracts amounted to c. EUR 30 million. Interest income attributable to tax refunds came to EUR 0.3 million.
The earnings before taxes equalled EUR 3.6 million, down from EUR 8.7 million by the end of the prior-year semester. Taking into account income taxes of EUR –0.6 million (reference period: EUR –2.9 million), this results in a consolidated income of EUR 2.9 million (reference period: EUR 5.7 million). A tax audit reduced the tax expense by taking out taxes related to other accounting periods. The tax refund resulted in a tax rate of 16.0%.
| H1 2019 | H1 2018 | |
|---|---|---|
| EUR million | EUR million | |
| Cash fl ow from operating activities | –14.5 | –53.6 |
| Cash fl ow from investment activities | 2.2 | –14.1 |
| Cash fl ow from fi nancing activities | 7.8 | 92.0 |
| Net change in cash and cash equivalents | –4.5 | 24.3 |
| Change in restricted cash and cash equivalents/adjustment of cash and cash equivalents |
–0.1 | 1.3 |
| (+) Increase/(–) decrease in cash and cash equivalents from the acquisition/disposal of fully consolidated companies |
0.2 | –5.4 |
| Cash and cash equivalents at the beginning of the period | 15.5 | 6.5 |
| Cash and cash equivalents at the end of the period | 11.1 | 26.8 |
Key Figures from the Cash Flow Statement
During the fi rst six months of 2019, the cash fl ow from operating activities amounted to EUR –14.5 million (reference period: EUR –53.6 million). The negative operating cash fl ow by mid-year 2019 is defi nitively caused by the continued build-up of inventory assets. To this end, cash investments in an amount of EUR 29.5 million were made, while EUR 13.9 million in capital expenditures on inventory assets were done by assuming debt within the framework of share deals. Due to the classifi cation of the properties as trading assets, investments in inventories are allocated to the current operations.
The positive cash fl ow from operations before divestments and reinvestments in inventory real estate assets in the amount of EUR 15.0 million during the fi rst half-year of 2019 (reference period: EUR –18.9 million) was essentially due to cash infl ows from selling prices for real estate portfolios and the associated decrease in trade receivables.
The cash fl ow from investment activities amounted to EUR 2.2 million during the reporting period (reference period: EUR –14.1 million). The positive cash fl ow refl ects mainly the repayment of a granted loan in the amount of EUR 2.4 million.
The cash fl ow from fi nancing activities amounted to EUR 7.8 million during the reporting period (reference period: EUR 92.0 million) and is defi nitively infl uenced by a cash infl ow in the amount of EUR 37.5 million from loans drawn down and by a cash outfl ow for payments of interest and principal in the amount of EUR 24.5 million. EUR 5.2 million were used for dividend payments in May 2019 (May 2018: EUR 5.2 million).
Cash and cash equivalents amounted to EUR 11.1 million as of 30 June 2019, compared to EUR 15.5 million by 31 December 2018.
| 30 June 2019 | 31 Dec. 2018 | |
|---|---|---|
| EUR million | EUR million | |
| Non-current assets | 66.8 | 81.1 |
| Owner-occupied properties and buildings | 23.3 | 23.4 |
| Non-current receivables | 0.0 | 2.4 |
| Equity investments and equity interests accounted for using the equity method |
8.3 | 7.7 |
| Other non-current assets | 35.2 | 47.6 |
| Current assets | 432.2 | 393.1 |
| Inventory assets | 388.6 | 345.2 |
| Receivables | 6.2 | 18.6 |
| Other current assets | 26.3 | 13.8 |
| Cash and cash equivalents | 11.1 | 15.5 |
| Non-current liabilities | 169.7 | 176.4 |
| Current liabilities | 131.9 | 98.7 |
| Shareholders' equity | 197.5 | 199.1 |
| Total assets | 499.1 | 474.2 |
Key Figures from the Balance Sheet
The total assets increased by EUR 24.9 million since the balance sheet date of 31 December 2018, climbing to a sum total of EUR 499.1 million. The main reason behind it is the rise in inventory assets by EUR 43.4 million and the converse eff ect brought about by a drop in trade receivables by EUR 12.4 million and by a decline in the cash position by EUR 4.4 million.
The non-current liabilities are dominated by the corporate bond from January 2018 and fi nancial liabilities to banks. The non-current liabilities have remained essentially unchanged since yearend 2018. Current liabilities increased by EUR 33.2 million to EUR 131.9 million since the end of 2018 (EUR 98.7 million). The increase in current fi nancial liabilities mirrors the sales planning of the ACCENTRO Group and the associated repayment of loans from selling prices received.
During the reporting period, the shareholders' equity of the ACCENTRO Group declined from EUR 199.1 million as of 31 December 2018 to EUR 197.5 million by 30 June 2019. The positive consolidated income of EUR 2.9 million in H1 2019 is matched by dividend payments for the 2018 fi nancial year in the amount of EUR 5.2 million. The equity ratio dropped from 42.0% as of 31 December 2018 to 39.6% by 30 June 2019.
The balance sheet structure has experienced no material changes since year-end 2018. Due to the rise in borrowings, the loan-to-value (LTV) increased from 50.6% by year-end 2018 to 55.2% as of 30 June 2018.
The economic situation of the ACCENTRO Group remained unchanged during the fi rst six months of the 2019 fi nancial year. ACCENTRO AG therefore reaffi rms the account of the economic situation it made in the 2018 annual report, which was published on 20 March 2019.
No events of material signifi cance for ACCENTRO Real Estate AG transpired between the balance sheet date of 30 June 2019 and the day on which the fi nancial statements were compiled.
In its annual report for the 2018 fi nancial year, ACCENTRO AG predicted a minor increase in revenues for the 2019 fi nancial year on the bases of EUR 163.3 million adjusted for the sale of the Gehrensee transaction along with a moderate growth in earnings before interest and taxes (EBIT) in the lower double-digit percentage range. Given the present market situation on the key markets of ACCENTRO AG, which is defi ned by permanently stable demand for condominiums, in combination with the persistently positive macroeconomic signals for 2019, ACCENTRO Real Estate AG reaffi rms its forecasts at this time.
In Berlin, the main market for ACCENTRO AG, the political debate in the 2019 fi nancial year has concentrated on the idea of expropriating property companies and, since June 2019, about a rent cap, too. Although concretely structured draft bills are not on the table yet, the discussion as such has caused unease among a number of market players with a view to future developments. Given its size, ACCENTRO AG does not consider itself directly threatened by the expropriation debate, but the political dynamic of the expropriation idea is as diffi cult to gauge for the Company as for everybody else. If a rent moratorium were to take eff ect in 2020, it would not jeopardise the business model of ACCENTRO. While a limit on rent hikes would admittedly freeze the net rental income for the ACCENTRO Group on the present level, the fact would have no major negative impact on the comprehensive income. Condominium sales would not be jeopardised by the rent cap. Prospective owner-occupiers will be infl uenced in their decision to buy a given fl at by the diff erence between their passing rents and the encumbrance with interest and redemption payments, while the decisions of buy-to-let investors will hinge on the ECB's interest rate policy or the availability of safe alternative investment opportunities. For the time being, ACCENTRO AG is unaware of any signs indicating a fl agging interest in condominiums.
In fact, ACCENTRO AG considers the current political debate an opportunity because the uncertainty regarding the further development could prompt property owners to divest themselves of their assets. This could in turn create interesting buying opportunities in Germany's fi rst city.
We are not aware of any risks to the Company's going concern status. Accordingly, the disclosures made in the opportunity and risk report of the consolidated fi nancial statements as of 31 December 2018 (annual report 2018, pp. 41+) continue to apply.
| ACCENTRO Real Estate AG | 30 June 2019 | 31 Dec. 2018 |
|---|---|---|
| Assets | TEUR | TEUR |
| Non-current assets | ||
| Goodwill | 17,776 | 17,776 |
| Owner-occupied properties and buildings | 23,283 | 23,366 |
| Plant, equipment, EDP software and rights of use | 471 | 355 |
| Non-current trade receivables | 0 | 2,357 |
| Non-current other receivables and other assets | 16,247 | 28,814 |
| Equity investments | 4,455 | 4,231 |
| Equity interests accounted for using the equity method | 3,835 | 3,518 |
| Deferred tax assets | 774 | 692 |
| Total non-current assets | 66,840 | 81,109 |
| Current assets | ||
| Inventory property | 388,641 | 345,241 |
| Trade receivables | 6,174 | 18,607 |
| Other receivables and other current assets | 25,532 | 12,709 |
| Current income tax receivables | 799 | 1,074 |
| Cash and cash equivalents | 11,080 | 15,464 |
| Total current assets | 432,226 | 393,096 |
| Total assets | 499,067 | 474,205 |
| ACCENTRO Real Estate AG | 30 June 2019 | 31 Dec. 2018 |
|---|---|---|
| Equity | TEUR | TEUR |
| Subscribed capital | 32,438 | 32,431 |
| Capital reserves | 78,568 | 78,433 |
| Retained earnings | 84,046 | 86,284 |
| Attributable to parent company shareholders | 195,052 | 197,149 |
| Attributable to non-controlling interests | 2,451 | 1,956 |
| Total equity | 197,503 | 199,104 |
| Liabilities | TEUR | TEUR |
| Non-current liabilities | ||
| Provisions | 18 | 18 |
| Financial liabilities | 69,824 | 76,773 |
| Bonds | 98,895 | 98,561 |
| Deferred income tax liabilities | 969 | 1,080 |
| Total non-current liabilities | 169,706 | 176,431 |
| Current liabilities | ||
| Provisions | 456 | 843 |
| Financial liabilities | 91,994 | 54,357 |
| Bonds | 1,563 | 1,563 |
| Advanced payments received | 12,884 | 7,033 |
| Current income tax liabilities | 9,529 | 13,261 |
| Trade payables | 1,666 | 4,816 |
| Other liabilities | 13,766 | 16,798 |
| Total current liabilities | 131,858 | 98,669 |
| Total equity and liabilities | 499,067 | 474,205 |
| ACCENTRO Real Estate AG | Q2 2019 01 April 2019 – 30 June 2019 |
Q2 2018 01 April 2018 – 30 June 2018 |
H1 2019 01 Jan. 2019 – 30 June 2019 |
H1 2018 01 Jan. 2018 – 30 June 2018 |
|---|---|---|---|---|
| TEUR | TEUR | TEUR | TEUR | |
| Revenues from sales of inventory property | 17,051 | 63,270 | 29,633 | 91,137 |
| Expenses from sales of inventory property | –12,517 | –58,348 | –22,247 | –77,612 |
| Capital gains from inventory property | 4,534 | 4,923 | 7,386 | 13,525 |
| Letting revenues | 2,393 | 2,555 | 4,450 | 4,970 |
| Letting expenses | –679 | –911 | –1,354 | –1,797 |
| Net rental income | 1,714 | 1,644 | 3,096 | 3,173 |
| Revenues from services | 321 | 1,393 | 456 | 1,815 |
| Expenses from services | –192 | –15 | –303 | –269 |
| Net service income | 129 | 1,378 | 154 | 1,546 |
| Net income from companies accounted for using the equity method | 370 | 60 | 461 | 60 |
| Other operating income | 503 | 663 | 710 | 889 |
| Interim result | 7,250 | 8,667 | 11,808 | 19,192 |
| Total payroll and benefi t costs | –1,314 | –977 | –2,638 | –1,939 |
| Depreciation and amortisation of intangible assets and property, plant and equipment |
–181 | –45 | –350 | –80 |
| Impairments of inventories and accounts receivable | 0 | 0 | 0 | 0 |
| Other operating expenses | –1,185 | –1,642 | –2,231 | –2,765 |
| EBIT (earnings before interest and taxes) | 4,570 | 6,004 | 6,588 | 14,409 |
| Income from equity investments | 9 | 9 | 18 | 18 |
| Interest income | 846 | 9 | 1,426 | 18 |
| Interest expenses | –2,571 | –3,092 | –4,520 | –5,786 |
| Net interest income | –1,725 | –3,083 | –3,094 | –5,769 |
| EBT (earnings before taxes) | 2,854 | 2,931 | 3,513 | 8,658 |
| Income taxes | –122 | –1,122 | –572 | –2,913 |
| Consolidated income | 2,732 | 1,809 | 2,941 | 5,746 |
| thereof attributable to non-controlling interests | 6 | 16 | –12 | –56 |
| thereof attributable to shareholders of the parent company | 2,726 | 1,793 | 2,952 | 5,802 |
| EUR | EUR | EUR | EUR | |
|---|---|---|---|---|
| Basic net income per share (32,437,934 shares; prior year: 30,317,934 shares) |
0.08 | 0.06 | 0.09 | 0.19 |
| ACCENTRO Real Estate AG | H1 2019 01 Jan. 2019 – 30 June 2019 |
H1 2018 01 Jan. 2018 – 30 June 2018 |
|---|---|---|
| TEUR | TEUR | |
| Consolidated income (continuing and discontinued operations) | 2,941 | 5,746 |
| + Depreciation / amortisation of non-current assets |
350 | 80 |
| – / + Net income from associates carried at equity | 479 | –60 |
| + / – Increase / decrease in provisions | –386 | –619 |
| + / – Other non-cash expenses/income | –384 | 5 |
| – / + Increase / decrease in trade receivables and other assets that are not attributable to investing or fi nancing activities |
14,790 | –8,798 |
| + / – Increase / decrease in trade payables and other liabilities that are not attributable to investing or fi nancing activities |
1,121 | –7,625 |
| + / – Other income tax payments | –3,881 | –7,655 |
| = Operating cash fl ow before de-/reinvestments in the trading real estate portfolio |
15,030 | –18,927 |
| – / + Cash investments in the trading real estate portfolio (net after assumption of debt, some without cash eff ect) |
–29,525 | –34,673 |
| = Cash fl ow from operating activities |
–14,496 | –53,600 |
| + Interest received |
0 | 0 |
| – Cash outfl ows for investments in intangible assets |
–6 | –114 |
| – Cash outfl ows for investments in property, plant and equipment |
–55 | –2,381 |
| – Cash outfl ows for investments in non-current assets |
–235 | –11,663 |
| – Disbursements of loans granted |
0 | 0 |
| + Cash received from distributions/sales of shares consolidated at equity |
70 | 60 |
| + Repayment of loans granted |
2,404 | 0 |
| = Cash fl ow from investment activities |
2,178 | –14,099 |
Continued on page 16
Continued from page 15
| ACCENTRO Real Estate AG | H1 2019 01 Jan. 2019 – 30 June 2019 |
H1 2018 01 Jan. 2018 – 30 June 2018 |
|
|---|---|---|---|
| TEUR | TEUR | ||
| + | Payments made by shareholders | 0 | 0 |
| – | Dividend payments to shareholders | –5,190 | –5,154 |
| + | Proceeds from issuing bonds and raising (fi nancial) loans | 37,487 | 134,994 |
| – | Repayment of bonds and (fi nancial) loans | –20,999 | –36,384 |
| – | Interest received | –3,504 | –1,430 |
| = | Cash fl ow from fi nancing activities | 7,795 | 92,026 |
| Net change in cash and cash equivalents | –4,524 | 24,326 | |
| + | Increase in cash and cash equivalents from investments in fully consolidated companies | 241 | 977 |
| Change in restricted cash and cash equivalents/adjustment of cash and cash equivalents | –101 | 1,334 | |
| – | Decrease in cash and cash equivalents from the disposal of fully consolidated companies | 0 | –6,358 |
| + | Cash and cash equivalents at the beginning of the period | 15,464 | 6,541 |
| = | Cash and cash equivalents at the end of the period | 11,080 | 26,820 |
| ACCENTRO Real Estate AG | Subscribed capital |
Capital reserve |
Retained earnings |
Attributable to parent company sharehold ers |
Non controlling interests |
Total |
|---|---|---|---|---|---|---|
| TEUR | TEUR | TEUR | TEUR | TEUR | TEUR | |
| As of 1 January 2019 | 32,431 | 78,433 | 86,284 | 197,148 | 1,956 | 199,104 |
| Total consolidated income | – | – | 2,952 | 2,952 | –12 | 2,940 |
| Changes in non-controlling interests | – | – | – | – | 507 | 507 |
| Dividend payments | – | – | –5,190 | –5,190 | – | –5,190 |
| Cash capital increase | – | –41 | – | –41 | – | –41 |
| Change in equity after applying IFRS 2 | – | 118 | – | 118 | – | 118 |
| Acquisition/disposal of company shares | 7 | 60 | – | 67 | – | 67 |
| As of 30 June 2019* | 32,438 | 78,569 | 84,045 | 195,052 | 2,451 | 197,503 |
* Adding the values of the individual line items may result in slight diff erences compared to the sum totals posted.
| ACCENTRO Real Estate AG | Subscribed capital |
Capital reserve |
Retained earnings |
Attributable to parent company sharehold ers |
Non controlling interests |
Total |
|---|---|---|---|---|---|---|
| TEUR | TEUR | TEUR | TEUR | TEUR | TEUR | |
| As of 1 January 2018 | 24,925 | 53,462 | 73,576 | 151,963 | 1,734 | 153,696 |
| Total consolidated income | – | – | 5,802 | 5,802 | –56 | 5,746 |
| Changes in non-controlling interests | – | – | – | – | 1,557 | 1,557 |
| Convertible bonds converted | 5,393 | 7,375 | – | 12,768 | – | 12,768 |
| Dividend payments | – | – | –5,154 | –5,154 | – | –5,154 |
| As of 30 June 2018* | 30,318 | 60,837 | 74,224 | 165,378 | 3,235 | 168,613 |
* Adding the values of the individual line items may result in slight diff erences compared to the sum totals posted.
ACCENTRO Real Estate AG with its subsidiaries is a listed real estate company whose core business consists of trading residential real estate within the framework of housing privatisations. The Company's registered offi ce is at Uhlandstr. 165 in 10719 Berlin, Germany. Its shares are admitted for trading to the Regulated Market (Prime Standard) of the Frankfurt Stock Exchange.
As of 30 June 2019, ACCENTRO Real Estate AG acted as the operating holding company for a number of property vehicles.
These condensed consolidated interim fi nancial statements were approved for publication by the Management Board of the Company in August 2019. The condensed consolidated interim fi nancial statements were not reviewed by an auditor.
It was decided not to include a statement of comprehensive income because there are no other eff ects recognised directly in equity that should be posted with the other comprehensive income.
The condensed consolidated interim fi nancial statements for the fi rst semester of the 2019 fi nancial year were prepared in accordance with the provisions of IAS 34 "Interim Financial Reporting" as adopted by the EU by way of a regulation. The condensed consolidated interim fi nancial statements should be read in conjunction with the consolidated fi nancial statement of ACCENTRO Real Estate AG for the year ended 31 December 2018.
The accounting policies applied in the condensed interim consolidated fi nancial statements are the same as those applied in the preparation of the consolidated fi nancial statements for the year ended on 31 December 2018.
Accounting Guidance Applied for the First Time during the 2019 Financial Year:
IFRS 16 "Leases" was applied for the fi rst time by the ACCENTRO Group as of 1 January 2019. IFRS 16 specifi es an accounting model that requires lessees to recognise all rights to use the underlying assets ("right-of-use assets") and liabilities arising from lease agreements in their balance sheets. For lessors, the accounting model does not diff er signifi cantly from that specifi ed in IAS 17 "Leases," i.e. lessors continue to classify leases as fi nance leases or operating leases. ACCENTRO has continued to classify the leases entered into as lessors (in particular the letting of residential accommodation) as operating leases.
Assets and liabilities are reported on the basis of their economic content under the assets and liabilities already presented in the balance sheet.
Within the ACCENTRO Group, IFRS 16 was applied for the fi rst time according to the modifi ed retrospective method. This means that the ACCENTRO Group measures the lease liabilities arising from operating leases with a remaining term of more than twelve months by recognising the cash value of the remaining lease payments while taking into account the incremental borrowing rate of 3.75% (as of 1 January 2019). The capitalised right of use was recognised as of 1 January 2019 in the same amount as the lease liability, so that the initial recognition of all leases had no eff ect on equity. The ACCENTRO Group takes advantage of a simplifi cation provision in IFRS 16 and does not present leases with maturities of less than 12 months.
The ACCENTRO Group enters into lease agreements particularly for offi ce accommodation, motor vehicles and technical equipment. When recognising leasing liabilities, ACCENTRO AG took renewal options and break options into account whenever it was reasonably safe to assume that these options would be exercised in future. ACCENTRO AG principally presents non-leasing components such as service deliverables separately from lease payments.
As a result of applying IFRS 16, the total assets as of 1 January 2019 increased only insignifi cantly by around TEUR 170 due to the addition of assets for rights to use leased assets and lease liabilities.
The depreciation expense recognised in income amounts to c. TEUR 80 p.a.
Based on the cumulative minimum lease payments as of 31 December 2018, the opening balance sheet value of the lease liabilities as of 1 January 2019 is reconciled as follows:
| TEUR | |
|---|---|
| Cumulative minimum lease payments as of 31 December 2018 | 503 |
| Application simplifi cations for short-term leases | –332 |
| Gross lease liabilities as of 1 January 2019 | 171 |
| Discounting | 1 |
| Present value of lease liabilities as of 1 January 2019 | 170 |
The amendments to IFRS 9 "Financial Assets with a Negative Prepayment Penalty," the amendments to the "Annual Improvement Project 2015–2017" and IFRIC 23 "Accounting for Uncertainties Relating to Income Taxes" had no ramifi cations for the ACCENTRO Group.
Amendments to IAS 28 "Non-Current Investments in Associates and Joint Ventures" The introduction of IAS 28.14A clarifi ed that long-term and equity-replacing fi nancings granted to companies valued at equity participate in the loss participation in accordance with IAS 28.38 while also being subject to the impairment model in accordance with IFRS 9. In its consolidated fi nancial statements, ACCENTRO recognises loans that are aff ected by this clarifi cation. However, the clarifi cation had no eff ect as of 1 January 2019.
All amounts posted in the balance sheet, income statement, statement of changes in equity, and cash fl ow statement, as well as in the notes and tabular overviews, are quoted in thousands of euros (TEUR), unless otherwise noted. Both individual and total fi gures represent the value with the smallest rounding diff erence. Accordingly, adding the values of the individual line items may result in minor diff erences compared to the reported totals.
As of 30 June 2019, the condensed consolidated interim fi nancial statements of ACCENTRO Real Estate AG included 35 subsidiaries and six joint ventures. During the fi nancial half-year ending 30 June 2019, the basis of consolidation as of 31 December 2018 (30 subsidiaries, six joint ventures) expanded to include another fi ve companies created for the privatisation unit. One new company was formed, while another four companies were acquired. No business operations were taken over during that time. None of the companies underwent fi nal consolidation.
The internal reporting to the Management Board of ACCENTRO Real Estate AG does not include regional drill downs or any other segmentation.
There were no related-party transactions during the reporting period.
The ACCENTRO Group had 56 employees on the payroll by mid-year 2019. As of 31 December 2018, it had a total of 51 employees. The plan for the second half-year of 2019 is to keep expanding the workforce at a moderate pace.
During the fi rst half of 2019, German Stock Index (DAX) achieved its best result of the past 12 years with an increase by around 17%, which was probably due to the current monetary policy trajectory of the central banks above all.
German real estate stocks steered clear of this development, most notably the stocks of Berlin-based real estate stock corporations. Both real estate investors and real estate stocks have responded nervously to the intensifying discussions on the subject of expropriating Berlin's property companies and introducing a rent cap for the next fi ve years.
Although ACCENTRO Real Estate AG is not directly aff ected by the expropriation debate, the Company's stock has been impacted by the turbulent sentiment on Berlin's real estate market, especially in June 2019.
The ACCENTRO share price was quoted at EUR 9.68 on the fi rst trading day of 2019 (Xetra). During the course of the fi rst half-year, the level proved impossible to maintain. The Company's stock closed at EUR 7.20 on 28 June 2019, the last trading day of the fi rst half-year of 2019.
The average daily trading volume (Xetra) of ACCENTRO stock during the fi rst semester of 2019 was 2,455 units. Overall, 0.30 million ACCENTRO Real Estate AG units were traded in the Xetra trading system between 2 January and 28 June 2019. The low trading volume is mainly explained by the Company's relatively small free fl oat of 12.1%.
Due to the softened share price, the market capitalisation of ACCENTRO AG decreased by EUR 80.4 million during Q1 2019, declining from EUR 314.0 million to EUR 233.6 million.
As of 1 January 2019, the subscribed capital of ACCENTRO Real Estate AG totalled EUR 32.44 million. It represents 32,437,934 no-par value bearer shares and experienced no change during the fi rst half-year of 2019.
The chart below provides an overview of the shareholding structure:
Shareholder structure on 30 June 2019 (fi gures based on shareholder disclosures)
| Company shares | |
|---|---|
| Stock market segment | Prime Standard |
| ISIN | DE000A0KFKB3 |
| German Securities Code Number (WKN) | A0KFKB |
| Number of shares on 30 June 2019 | 32,437,934 |
| Free fl oat | 12.1% |
| Highest price (1 January – 30 June 2019)* | EUR 9.78 |
| Lowest price (1 January – 30 June 2019)* | EUR 7.00 |
| Closing price on 28 June 2019* | EUR 7.20 |
| Market capitalisation on 28 June 2019* | EUR 233,553,125 |
* Closing prices in Xetra trading
In the 2019 fi nancial year as in previous years, regular disclosures and the dialogue with the capital market were specifi cally prioritised. In the ongoing 2019 fi nancial year, ACCENTRO Real Estate AG will attend the following fi nancial analyst events:
The corporate development of ACCENTRO Real Estate AG is continuously monitored by analysts. The latest analyst assessments returned the following ratings for the ACCENTRO stock:
I hereby certify to the best of my knowledge, and in accordance with the applicable accounting principles, that the consolidated interim fi nancial statements give a true and fair account of the earnings, fi nancial and asset position of the Group, and that the Group interim management report includes a fair review of the development and performance of the Group's business and state of aff airs, together with a description of the principal opportunities and risks associated with the Group's prospective development.
Berlin, 8 August 2019
Jacopo Mingazzini Management Board
| 3 September 2019 | SRC Forum Financials & Real Estate 2019, Frankfurt am Main |
|---|---|
| 23–26 September 2019 | Baader Investment Conference 2019, Munich |
| 6 November 2019 | Quarterly Statement for the Period 1 January through 30 September 2019 |
All dates are provisional. For the fi nal dates, please check our website: www.accentro.ag.
This interim report contains specifi c forward-looking statements. A forward-looking statement is any statement that does not relate to historical facts and events. This applies, in particular, to statements relating to future fi nancial earning capacity, plans and expectations with respect to the business and management of ACCENTRO Real Estate AG, growth, profi tability and the general economic and regulatory conditions and other factors to which ACCENTRO Real Estate AG is exposed.
Forward-looking statements are based on current estimates and assumptions made by the Company to the best of its knowledge. Such forward-looking statements are based on assumptions and are subject to risks, uncertainties and other factors that may cause the actual results including the net asset, fi nancial and earnings situation of ACCENTRO Real Estate AG to diff er materially from or disappoint expectations expressed or implied by these statements. The business activities of ACCENTRO Real Estate AG are subject to a number of risks and uncertainties that may also cause a forward-looking statement, estimate or prediction to become inaccurate.
This translation of the original German version of the 2019 Half-Year Financial Report of ACCENTRO Real Estate AG has been prepared for the convenience of our English-speaking shareholders.
The German version is authoritative.
Our fi nancial reports are available for download on our homepage www.accentro.ag or may be requested free of charge by writing to ACCENTRO Real Estate AG, Uhlandstr. 165, 10719 Berlin, Germany.
ACCENTRO Real Estate AG Uhlandstr. 165 10719 Berlin, Germany Phone: +49 (0)30 887 181 - 0 Telefax: +49 (0)30 887 181 - 11 E-Mail: [email protected] Home: www.accentro.ag
Jacopo Mingazzini
Chairman of the Supervisory Board
Axel Harloff , Hamburg
ACCENTRO Real Estate AG Investor & Public Relations Phone: +49 (0)30 887 181 - 799 Telefax: +49 (0)30 887 181 - 779 E-Mail: [email protected]
Concept, Editing, Layout
Goldmund Kommunikation, Berlin www.goldmund-kommunikation.de
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