Quarterly Report • May 28, 2008
Quarterly Report
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| Three months ended | Three months ended | |
|---|---|---|
| Earnings | March 31, 2008 | March 31, 2007 |
| Revenues in EUR thousands | 26,488 | 31,814 |
| EBIT in EUR thousands | 3,034 | 12,226 |
| EBT in EUR thousands | 1,640 | 12,887 |
| Group net earnings in EUR thousands | 1,238 | 9,889 |
| Return on sales in % | 4.67 | 31.08 |
| EBIT margin in % | 11.45 | 38.43 |
| Earnings per share in EUR | 0.05 | 0.41 |
| Placed equity in EUR million | 153.7 | 139.0 |
| Balance sheet | March 31, 2008 | December 31, 2007 |
| Total assets in EUR thousands | 225,617 | 239,879 |
| Equity in EUR thousands | 116,612 | 118,034 |
| Equity ratio in % | 51.69% | 49.21% |
| Staff | March 31, 2008 | March 31, 2007 |
| Average employees | 297 | 242 |
| Personnel costs in EUR thousands | 5,420 | 5,672 |
| Personnel costs in % of revenue | 20.46 | 17.83 |
Hint: Rounding differences likely to occur.
HCI Group has had an eventful start to the 2008 fi nancial year: the fi rst few months were not only characterised by a series of fundamental changes – we continued growing the business through product placement, successfully pursuing our diversifi cation strategy.
HCI Group placed EUR 153.7 million in equity during the fi rst three months of the current fi nancial year, up 10.6 % from the same period of the previous year (Q1 2007: EUR 139.0 million). This marked year-on-year increase in placement volumes was due in particular to the successful placement of structured products and real estate funds of funds. Clearly, this demonstrated the consistent pursuit of the diversifi cation strategy adopted by HCI Group. Although the commissions and margins generated through these products are relatively low – as a result of which the successful placement has not yet been fully refl ected in HCI's revenues – some products incorporate performance-based commission schedules.
Revenues of EUR 26.5 million during the period under review were lower than the EUR 31.8 million generated during the same period of the previous year. Earnings before interest and taxes (EBIT) of EUR 3.0 million also fell short of the result achieved in the fi rst quarter of 2007 (EUR 12.2 million). This decline was predominantly due to lower gross profi t (refl ecting margin developments) and to lower other operating income. The latter was in line with expectations: during the fi rst quarter of the 2007 fi nancial year, we had generated income from the brokerage of ships and real estate. As planned, no such transactions were entered into during the fi rst quarter of 2008. Consolidated net income for the period was EUR 1.2 million, which was thus lower than the EUR 9.9 million recorded for the same period of the previous year, also refl ecting a decline in the net fi nancial result.
Looking at the well-stocked product pipeline, and at planned placements whereby a major portion of high-commission and high-margin products will be sold from the third quarter onwards, we believe that we will be able to markedly improve our result over the course of the year. Against this background, we affi rm our target consolidated net income of EUR 33 million for the 2008 fi nancial year.
The shipping product sector contributed signifi cantly to the overall level of placements, with structured products in this asset class (Shipping Protect and freight rate certifi cates) being particularly successful. With placed equity capital of EUR 81.3 million, this product sector outperformed the previous year's fi gure by 4.7 % (Q1 2007: EUR 77.6 million). EUR 23.0 in equity capital alone was placed in structured products; this translates to more than a six-fold increase year-on-year (Q1 2007: EUR 3.5 million, including the HSC Optivita Europe LV index certifi cate). HCI Group thus seamlessly carried over the momentum of this class of products – which were launched in 2007 – into the current fi nancial year. Growth momentum was particularly strong in the real estate product sector, where placements almost tripled, rising from EUR 12.3 million (Q1 2007) to EUR 33.1 million in the period under review. This strong result was attributable in particular to the successful concept of the HCI Real Estate BRIC+ fund. Although placements in the secondary life insurance market, at EUR 37.7 million, fell short of the very strong results achieved during the same quarter of the previous year (Q1 2007: EUR 46.1 million), they nevertheless outperformed our own targets. Refl ecting the ongoing crisis in the fi nancial markets, demand for fund products in the private equity segment remained weak. This meant that the EUR 1.6 million in equity capital placed in this product sector was down on the same period of the previous year (Q1 2007: 3.0 million), as expected.
A further key event during the fi rst quarter was the takeover offer which MPC Capital AG submitted to the other shareholders of HCI Capital AG on 12 March 2008. The Management Board and Supervisory Board of HCI Capital AG published a comprehensive joint reasoned statement on the takeover offer on 26 March 2008. Moreover, the Management Boards of both companies have entered into a Business Combination Agreement, which provides for the continued independent existence of HCI Capital and the HCI brand, within the scope of the intended two-brand strategy. The Agreement also guarantees jobs within HCI Group, and Group locations for at least three years. We are convinced that this Agreement provides a key foundation for safeguarding the company's positive development potential, in the best interests of HCI Group staff, business partners, customers and of course its shareholders, with additional momentum being provided by an intensifi ed cooperation with MPC Capital AG.
Yours sincerely,
Hamburg, May 2008
Wolfgang Essing Chairman of the Management Board
The HCI share price performance during the fi rst three months of 2008 was defi ned by various factors. In general, equity markets were extremely volatile, refl ecting the impact of the fi nancial markets crisis. This was evident in the trading range established by the German blue-chip DAX index, which saw a high of just under 8,000 points at the beginning of the year, and a low of around 6,200 points in March. The SDAX, the benchmark index for HCI, fl uctuated between 4,200 and 5,200 points during the period under review, declining by 14.0 % during this period.
The HCI share could not escape this trend completely unscathed. Having started the year at EUR 14.90, bearish equity market sentiment pushed the share price to its period low of EUR 12.78. Following the announcement of MPC Capital AG's takeover offer on 12 February 2008, which provided for an offer price of EUR 14.22, the HCI share price hit an interim high of EUR 15.83. It returned to the offer price level at the beginning of March, after publication of HCI Capital AG's results and proposed dividend for the 2007 fi nancial year, remaining largely unchanged until the end of the period. Overall, the HCI share price declined by 4.6 % during the period under review.
A daily average of approx. 72,000 shares was traded on the Xetra electronic trading system during the period under review (Q1 2007: 79,000), indicating a very good level of market liquidity for a company listed in the Prime Standard.
Numerous changes to the shareholder structure of HCI Capital AG took place during the fi rst quarter of 2008, and up to the time this report was published. On 12 March 2008, MPC Capital AG extended a takeover offer to all other shareholders of HCI Capital AG. At the time of publishing the offer, MPC Capital AG already held a 15.1 % stake in the company's issued share capital and voting rights. Furthermore, on 11 February 2008 MPC Capital AG entered into an agreement to acquire an additional 20.03 % stake in HCI's capital from Corsair III Investments (Luxembourg). Shares tendered by way of acceptance of the takeover offer until the end of the offer periods on 28 April 2008 amounted to an aggregate 5.67 % of HCI Capital AG's issued share capital and voting rights. Taking into account the share exchange agreement with Corsair, upon consummation of the takeover offer MPC Capital AG now holds a 40.80 % stake in HCI Capital AG. Moreover, Mr Jochen Döhle has increased his interest in HCI Capital AG to 20.09 % (including indirect shareholdings via Döhle ICL Beteiligungsgesellschaft mbH, Peter Döhle Schiffahrts-KG, and Beteiligungs- und Verwaltungsgesellschaft Peter Döhle mbH). The new shareholder structure is thus as follows:
| MPC Capital AG | 40.80 % |
|---|---|
| Döhle Group | 20.09 % |
| Free fl oat | 39.11 % |
Given the free fl oat of 39.11 % and a share price of EUR 14.22 as at the reporting date, the market capitalisation amounted to EUR 133.5 million.
Independent research coverage of the HCI share currently indicates an average price target of EUR 14.97. The share is covered by twelve analysts preparing company reports and evaluations on an ongoing basis. Eight analysts currently recommend the share be held, or have adopted a 'neutral' stance. Three analysts have issued a 'buy' recommendation. One analyst has assessed the share to be an 'underperformer'.
During the period under review, senior management presented HCI Capital AG's company strategy and business performance at an analysts' conference, at the press conference to present the fi nancial statements, as well as at various road shows and capital markets conferences throughout Germany and the United Kingdom. In addition, numerous discussions were held with analysts and investors at the company's Hamburg headquarters.
Further presentations are planned for the 2008 fi nancial year, at capital markets conferences and within the scope of road shows with institutional investors in Germany and abroad, in order to maintain close contact and a continuous dialogue with capital market participants.
HCI Capital AG does not hold any treasury shares.
Leading German economic research institutes believe that the global economy is burdened by the crisis affecting the US real estate and fi nancial sectors. The US economy is bordering on recession, while growth momentum in Western European economies has weakened somewhat, and macro-economic demand in Japan grows only slightly anymore. Notwithstanding these trends, global economic growth is still advancing at an impressive rate, thanks to the strength of industrial production in emerging markets, which prevailed until recently. Overall, the global economy is still expected to continue to grow, albeit at a markedly slower pace compared to the previous year. The crisis affecting the US real estate and fi nancial sectors is seen as the most signifi cant downside risk for global economic momentum: should the US economy enter a marked recessionary phase, this would also be likely to feed through into a global slowdown.
The German business environment remained positive until the spring of 2008, in spite of various adverse factors. Economic research institutes believe that the domestic economy entered the new year with strong momentum: sentiment indicators remain at high levels, while demand and production indicators also show an upward trend. In addition, the falling unemployment rate demonstrates that the underlying ience being remarkable in view of the tight monetary policy of the previous year, the strong appreciation of the euro, the massive price increases of crude oil and foodstuffs, and the impact of the US real estate and fi nancial markets crisis.
The current economic environment poses a major challenge for central banks, as they try to manage the confl icting factors of an acute liquidity shortage in the fi nancial sector, a weakening economy, and infl ationary pressures emanating from the ongoing price increases affecting crude oil and foodstuffs. Leading central banks pursued different policies during the period under review. Whilst the US Federal Reserve signifi cantly lowered its key interest rate in several steps, to 2.00 % (as at 30 April 2008), particularly for the purpose of securing the supply of liquidity to the fi nancial sector, the European Central Bank maintained its key interest rate at 4.00 % unchanged, refl ecting its assessment that current infl ationary risks require more urgent attention. Against this background, no interest rate cuts are expected in the euro zone for the foreseeable future.
Having peaked at a level of around USD 106 per barrel during the fi rst quarter of 2008, crude oil traded at USD 102.41 per barrel at the end of the period under review. The euro continued to appreciate against the US dollar during the fi rst three months of 2008, trading at USD 1.58 by the end of March.
Forecasts by market analysts paint a mixed picture for closedend investment products during the 2008 fi nancial year. Even though sector observers do not rule out placement volumes reaching record levels, this will largely depend on how long the fi nancial market crisis remains a burden. In terms of individual segments, signifi cant potential for growth is attributed to specialty funds in particular, such as aircraft funds. A positive trend is also envisaged for real estate funds. Moreover, issuing houses continue to report strong demand for closedend ship funds.
The aggregate volume of equity capital placed by HCI Group was up by a signifi cant 10.6 % year-on-year during the fi rst three months of 2008, at EUR 153.7 million (Q1 2007: EUR 139.0 million). The overall growth was attributable in particular to successful placements in the shipping product sector – predominantly refl ecting growth in structured products such as guaranteed products and freight rate certifi cates – as well as dynamic growth in equity capital placed in the real estate product sector. These strong results more than compensated for the slowdown in placements in secondary life insurance market funds and private equity funds of funds. At the same time, the positive results achieved especially in structured products clearly shows the growing benefi ts of the diversifi cation strategy adopted by HCI Group.
Equity capital placed outside Germany totalled EUR 2.9 million during the period under review (Q1 2007: EUR 10.4 million). Related sales activities during the fi rst quarter of 2008 focused exclusively on the Austrian market.
Placements in the various product lines are analysed below:
Growth momentum in ship funds was attributable to structured products, which HCI successfully launched in 2007. At EUR 58.2 million, placements of traditional closed-end ship investments and asset creation plans fell short of the EUR 76.4 million fi gure reported for the same quarter of the previous year; this was in line with projections. In contrast, placements of structured products (HSC Shipping Protect I and II; HSC Freight Rate Certifi cate III) were fi rmly established just about one year after this product class was launched in early 2007. With EUR 23.0 million in equity capital placed during the fi rst three months of the current fi nancial year, volumes in this segment multiplied compared to the same period of the previous year (Q1 2007: EUR 1.2 million). Aggregate equity capital placed in the ship segment totalled EUR 81.3 million, up 4.7 % year-on-year (Q1 2007: EUR 77.6 million).
Business in closed-end real estate funds was very brisk indeed during the period under review. Refl ecting a marked year-on-year improvement, total placements during the fi rst three months of the 2008 fi nancial year amounted to EUR 33.1 million, rising nearly three-fold (plus EUR 20.8 million) from the EUR 12.3 million recorded in the fi rst quarter of 2007. This development was primarily attributable to the placement success of the HCI Real Estate BRIC+ fund. The product concept of this fund of funds, which invests in real estate funds in the emerging property markets in Brazil, Russia, India and China, incorporates a global diversifi cation structure that so far is unique in the market. The HCI Real Estate BRIC+ fund alone contributed EUR 29.5 million to placements achieved in the real estate product sector. As a particularly positive effect in this context, we succeeded in acquiring major banks as distribution partners for this product, which has also strengthened our distribution platform.
Equity capital placed in the secondary life insurance market, comprising secondary life insurance funds and asset creation plans, totalled EUR 37.7 million. Even though this fi gure refl ected a year-on-year decline of approx. 18.0 % (Q1 2007: EUR 46.1 million), we are nevertheless satisfi ed with the results achieved during the fi rst quarter of 2008, which were fully in line with our projections. HSC Optivita X UK, a fund investing in UK life insurance policies, provided a signifi cant contribution, with EUR 35.9 million placed in this fund alone. An additional EUR 1.1 million was placed in the HSC Optivita IX Germany product. No structured products were offered in this product sector during the period under review. A re-launch of the HSC Optivita Europe LV index certifi cate – which had contributed EUR 2.3 million to placements in the fi rst quarter of 2007 – is planned for the third quarter of the current fi nancial year.
Equity capital placed in private equity funds of funds amounted to EUR 1.6 million: as expected, this was a signifi cant 45.1 % decline from the EUR 3.0 million placed in the same quarter of the previous year, albeit at a low absolute level of placements. Prevailing uncertainty on the fi nancial markets continued to have a tangible negative impact on demand for investment offers in the private equity sector.
The strong increase in placements which HCI Group achieved during the fi rst quarter of 2008 was essentially based on structured products and real estate funds of funds, both generating lower levels of commission and margins compared to other product groups. Against this background, revenues of EUR 26.5 million during the period under review were down by approx. 16.7 % compared to the EUR 31.8 million generated in the same period of the previous year.
At EUR 20.5 million, fund design and sales revenues for the fi rst quarter of 2008 still fell markedly short of the same quarter of the previous year (Q1 2007: EUR 25.4 million). Trust and service fees of EUR 5.5 million were slightly lower year-on-year (Q1 2007: EUR 6.1 million); this was attributable to non-recurring effects in the real estate sector, which had been pronounced in the fi rst quarter of 2007. Management revenues increased from EUR 0.3 million (Q1 2007) to EUR 0.5 million.
In the 2007 fi nancial year, the brokerage of ships and real estate had generated signifi cant other operating income already in the fi rst quarter of the year. As projected, no such transactions took place during the fi rst three months of the current fi nancial year. Accordingly, other operating income of EUR 1.0 million was lower than in the same period of the previous year (Q1 2007: EUR 4.8 million).
The cost of purchased services, which predominantly comprises commissions paid to distribution partners, was EUR 13.8 million in the period under review, down by approx. 8.0 % year-on-year (Q1 2007: EUR 15.0 million), refl ecting the structure of placements where the bulk of volumes was in lower-commission products. The lower rate of decline in commission expenses, compared to the decline in revenues, is another clear indication that sales in the fi rst quarter of 2008 were dominated by products yielding lower margins. Accordingly, the gross profi t margin of 47.1 % for the fi rst quarter of 2008 was markedly lower than the 53.5 % margin recorded for the same quarter of 2007.
Personnel expenses were down by approx. 5.3 %, to EUR 5.4 million in the fi rst three months of the current fi nancial year, predominantly due to lower provisions for variable remuneration. Personnel expenses related to fi xed remuneration only showed a slight increase. On average, HCI Group employed 297 staff (Q1 2007: 242) during the period under review.
Other operating expenses of EUR 5.2 million as at the reporting date were up 20.9 % year-on year (Q1 2007: EUR 4.3 million). The increase in non-staff expenditure was largely due to additional consultancy expenses incurred in relation to the takeover offer by MPC Capital AG; essentially, this represents non-recurring effects.
The result of associates and joint ventures accounted for using the equity method was EUR 1.0 million during the period under review, down from the previous year (Q1 2007: EUR 1.2 million). HAMMONIA Reederei GmbH & Co. KG (EUR 0.2 million), Aragon AG (EUR 0.5 million), and NY Credit Operating LP (EUR 0.3 million) were the main contributors. The year-onyear decline was largely attributable to a lower contribution by Hammonia Reederei GmbH & Co KG (Q1 2007: EUR 1.0 million), refl ecting exchange rate effects decreasing charter revenue denominated in US dollars.
Given the business developments outlined above, operating earnings before interest and taxes (EBIT) of EUR 3.0 million for the period from 1 January to 31 March 2008 fell short of the result achieved in the fi rst quarter of 2007 (EUR 12.2 million).
The net fi nancial result of minus EUR 1.4 million refl ected a negative swing of EUR 2.1 million from the previous year's fi gure (Q1 2007: EUR 0.7 million). While interest income rose to EUR 0.7 million (Q1 2007: EUR 0.5 million), the increase in interest expenses, to EUR 1.0 million (Q1 2007: EUR 0.6 million), refl ected the higher leverage largely attributable to fi nancing the shareholding held by HCI Real Estate Finance I GmbH & Co. KG in NY Credit Operating LP, which was consolidated for the fi rst time as at 31 December 2007. The decline in the other fi nancial result for the period under review, which showed a defi cit of EUR 0.9 million (Q1 2007: EUR 0.7 million), was largely due to the negative currency translation effects as a result of the weak US dollar.
Earnings before taxes (EBT) of EUR 1.6 million for the period under review showed a marked decline from the fi gure achieved in the fi rst quarter of 2007 (EUR 12.9 million).
Income taxes amounted to EUR 0.4 million for the fi rst three months of the 2008 fi nancial year.
Consolidated net income for the period of EUR 1.2 million was lower than in the same period of the previous year (Q1 2007: EUR 9.9 million).
During the current reporting period, the HCI Group generated a cash fl ow from operating activities of minus EUR 3.1 million, thus signifi cantly lower compared to the cash fl ow of EUR 2.6 million in Q1 2007. This reduction is due mainly to the strong decline of consolidated net income for the period versus previous year's fi gure.
The negative cash fl ow from investing activities is mainly caused by the purchase of shares in eFonds Holding AG amounting to EUR 6.0 million.
The positive cash fl ow from fi nancing activities was mainly driven by the loan fi nancing of the investment in eFonds Holding AG. This was partly netted by repayments of funds especially for the investment in Aragon AG, which amounted to EUR 2.2 million.
HCI Group's fi nancial resource fund totalled EUR 28.5 million as per 31 March 2008, a decline of EUR 6.2 million compared to previous year's fi gure as per 31 March 2007.
Total assets amounted to EUR 225.6 million as at the reporting date of 31 March 2008, down 6.0 % from 31 December 2007 (EUR 239.9 million). This decline was largely due to lower trade receivables (down EUR 7.0 million, to EUR 24.7 million), and a lower level of cash and cash equivalents (down EUR 6.2 million, to EUR 28.5 million).
Shareholders' equity amounted to EUR 116.6 million as at 31 March 2008. The decline by EUR 1.5 million – despite a EUR 1.2 million contribution from consolidated net income – was attributable to fair value changes and currency translation effects recognised directly in equity. Given the concurrent decline in total assets, HCI Group's equity ratio rose from 49.2 % as at 31 December 2007 to 51.7 % on the reporting date.
The decrease in liabilities was largely due to lower trade liabilities (down EUR 9.2 million, to EUR 9.8 million).
The macro-economic outlook for 2008 remains mixed. Leading economic research institutes believe that the global economy will continue to grow, albeit at a slower pace than in the previous year. The crisis affecting the US real estate sector and the fi nancial markets remains a burden, as it also holds additional risks for global growth. In Germany, the negative impact emanating from foreign trade will be increasingly felt over the course of the year, with the momentum in the export sector, in particular, likely to slow down. In contrast, the research institutes envisage domestic demand growth to continue. The real gross domestic product growth rate for 2008 is forecast to be around 1.8%, whilst relief on the labour market is seen to last throughout the year, albeit with a lower decline in the unemployment rate. The infl ation rate – currently at higher levels – is expected to return to a year-on-year rate of approx. 2.6%. Against this background, there is no scope for interest rate cuts in the euro zone.
Overall, the outlook for closed-end investment products remains positive, with a mixed picture depending on the subsegment.
Thanks to its well-stocked product pipeline, the HCI Group is in a good position to even outperform the previous year's record placement levels in the 2008 fi nancial year. HCI Group plans to place aggregate equity capital amounting to EUR 880 million in 2008. On this basis, we expect consolidated net income for the year of EUR 33 million, which equates to earnings per share of approximately EUR 1.38.
For the 2008 fi nancial year, the HCI Group will offer a product range that has reached a very high degree of diversifi cation, in terms of asset classes, product types and target customers.
HCI Group plans a total placement volume of EUR 413 million in the ship product sector, comprising closed-end funds, asset creation plans, and institutional business. The level of equity capital placements in closed-end real estate funds (including institutional business in this sector) is projected to be EUR 150 million. Given the fi nancial markets crisis and the associated burdens on demand, the contribution of the private equity product sector to placement volumes is expected to be limited, at around EUR 12 million. We expect placements amounting to EUR 85 million in the secondary life insurance market, driven by demand for funds investing in UK life insurance policies in particular.
We foresee a good potential for further growth in structured products, a product sector launched during the previous year. Placement volumes in this sector are planned at EUR 100 million, comprising further guaranteed products (HSC Shipping Protect, HSC Multi Asset Protect), freight rate certifi cates, and a re-launch of the HSC Optivita Europe LV index certifi cate.
Over and above the well-established product areas, the HCI Group will also be exploring two new asset classes with closed-end funds in the 2008 fi nancial year. Here, EUR 120 million is planned in terms of placements, comprising an aircraft fund and the HCI Deepsea Oil Explorer, the latter developed in cooperation with MPC Capital AG.
Given the projected placements, we envisage a major portion of high-commission and high-margin products (especially closed-end ship funds, aircraft funds, and the HCI Deepsea Oil Explorer) to be sold from the third quarter onwards. Against this background, we expect a marked improvement in profi tability during the second half of the year.
All told, we are convinced that the key strategic measures HCI Group has implemented over recent years – in terms of product development, sales, and asset management – will yield sustainable benefi ts during the 2008 fi nancial year. Thanks to its know-how, its close linkup with relevant markets, and its strong brand, the HCI Group has outstanding potential to maintain and continuously grow its leading position among providers of closed-end investment products in Germany.
Hamburg, May 2008
HCI Capital AG The Management Board
Wolfgang Essing Dr. Rolando Gennari Dr. Oliver Moosmayer
interim fi nancial statements as at March 31, 2008
| Three months ended March 31, |
Three months ended March 31, |
||
|---|---|---|---|
| EUR '000 Note |
2008 | 2007 | |
| Revenues | (5) | 26,488 | 31,814 |
| Other operating income | (6) | 950 | 4,773 |
| Change in inventories | - 250 | 205 | |
| Cost of purchased services | - 13,769 | - 14,987 | |
| Personnel expenses | - 5,420 | - 5,672 | |
| Depreciation, amortisation and impairment of property, plant and equipment and intangible assets |
- 685 | - 817 | |
| Other operating expenses | - 5,240 | - 4,284 | |
| Results of associated companies and joint ventures accounted for using the equity method |
(7) | 960 | 1,194 |
| Earnings before interest and taxes (EBIT) | 3,034 | 12,226 | |
| Interest income | (8) | 677 | 473 |
| Interest and similar expenses | (8) | - 1,140 | - 550 |
| Other fi nancial result | (8) | - 931 | 738 |
| Earnings before taxes (EBT) | 1,640 | 12.887 | |
| Income taxes | (9) | - 402 | -2,998 |
| Consolidated net income for the period | 1,238 | 9,889 | |
| Consoldiated net income for the period attributable to the group | 1,238 | 9,889 | |
| Consolidated net income for the period atributable to minority shareholders | 0 | 0 | |
| Earnings per share (basic) in EUR | (10) | 0.05 | 0.41 |
| Earnings per share (diluted) in EUR | (10) | 0.05 | 0.41 |
as at March 31, 2008
| March 31, | December 31, | |
|---|---|---|
| Note | 2008 | 2007 |
| ASSETS | EUR '000 | EUR '000 |
| Non-current assets | 130,376 | 130,099 |
| Intangible assets | 5,043 | 5,538 |
| Property, plant and equipment | 1,804 | 1,875 |
| Investments in associated companies and interests in joint ventures accounted for using the equity method |
88,072 | 86,226 |
| Investment securities | 15,878 | 15,834 |
| Other fi nancial assets | 18,542 | 19,953 |
| Deferred taxes | 1,037 | 673 |
| Current assets | 95,241 | 109,780 |
| Work in progress and fi nished services | 1,497 | 1,772 |
| Trade receivables | 24,748 | 31,785 |
| Receivables from related parties (12) |
1,000 | 1,052 |
| Income tax receivables | 13,818 | 9,966 |
| Other assets | 18,152 | 22,965 |
| Other fi nancial assets | 17,905 | 22,373 |
| Other miscellaneous assets | 247 | 592 |
| Securities | 7,501 | 7,501 |
| Cash and cash equivalents | 28,525 | 34,739 |
| Total assets | 225,617 | 239,879 |
| EQUITY AND LIABILITIES | EUR '000 | EUR '000 |
| Equity | 116,612 | 118,034 |
| Subscribed capital | 24,000 | 24,000 |
| Capital reserve | 76,016 | 76,016 |
| Retained earnings | 37,225 | 35,987 |
| Accumulated other equity (3) |
- 6,097 | - 3,437 |
| Net cost in excess of net assets acquired on the acquisition of companies under common | - 14,532 | - 14,532 |
| control and successive share acquisitions | ||
| Non-current provisions and liabilities | 17,627 | 18,606 |
| Pension provisions | 19 | 19 |
| Liabilities to banks (4) |
15,424 | 16,532 |
| Other miscellaneous liabilities | 19 | 19 |
| Deferred taxes | 2,165 | 2,036 |
| Current provisions and liabilities | 91,378 | 103,239 |
| Other provisions | 1,542 | 1,267 |
| Financial debt | 52,252 | 49,514 |
| Liabilities to banks (4) |
44,681 | 41,943 |
| Other fi nancials debt | 7,571 | 7,571 |
| Trade payables | 9,874 | 19,066 |
| Payables to related parties (12) |
1,014 | 2,206 |
| Income tax payables | 17,291 | 17,984 |
| Other current liabilities | 9,405 | 13,202 |
| Other fi nancial liabilities | 1,837 | 2,304 |
| Other miscellaneous liabilities | 7,568 | 10,898 |
| Total equity and liabilities | 225,617 | 239,879 |
for the period from January 1 to March 31, 2008
| Three months | Three months | |
|---|---|---|
| ended March 31, | ended March 31, | |
| EUR ' 000 | 2008 | 2007 |
| Consolidated net income for the period | 1,238 | 9,889 |
| Depreciation, amortisation and impairment of intangible assets and property, plant and equipment | 685 | 817 |
| Gains(-) from associated companies and joint ventures | - 960 | - 1,194 |
| Gains(-) from the disposal of intangible assets and property, plant and equipment | - 113 | - 60 |
| Increase in pension provisions | 1 | 1 |
| Tax expense | 402 | 2,601 |
| Elimination of net interest income and net investment income | 1,394 | - 661 |
| Other non-cash income and expenses | 602 | 22 |
| Increase / decrease in working capital | - 4,655 | - 1,885 |
| Increase / decrease in inventories | 275 | - 243 |
| Decrease in trade receivables | 7,037 | 5,890 |
| Increase / decrease in other assets | 2,918 | 4,767 |
| Increase / decrease in current provisions | 275 | - 265 |
| Increase / decrease in trade payables | - 9,193 | - 4,676 |
| Increase / decrease in receivables from and payables to related parties | - 1,139 | - 3,332 |
| Decrease in other liabilities | - 4,489 | - 4,024 |
| Other movements in operating activities | - 339 | - 2 |
| Taxes paid | - 5,136 | - 6,694 |
| Tax refunds | 106 | 12 |
| Interest paid | - 300 | - 414 |
| Interest received | 181 | 296 |
| Distributions received | 3,412 | 158 |
| Cash fl ows from operating activities | - 3,143 | 2,888 |
| Proceeds from disposals of intangible assets, property, plant and equipment as well as assets held for sale | 49 | 0 |
| Proceeds from disposal of investment securities and investments in associates held for sale | 110 | 177 |
| Payments for investments, intangible assets and property, plant and equipment | - 121 | - 140 |
| Payments for investments in associated companies and interest in joint ventures | - 6,025 | 0 |
| Payments for investments securities and securities classifi ed as current assets | - 44 | - 294 |
| Cash fl ows from investing activities | - 6,031 | - 257 |
| Proceeds from additions to fi nancial liabilities | 6.000 | 8,861 |
| Repayments of fi nancial liabilities | - 3,040 | - 3,375 |
| Cash fl ow from fi nancing activities | 2,960 | 5,486 |
| Net Changes in cash and cash equivalents | - 6,214 | 8,117 |
| Cash and cash equivalents at beginning of period | 34,739 | 58,613 |
| Cash and cash equivalents at end of period | 28,525 | 66,730 |
for the period from January 1 to March 31, 2008
| in EUR '000 | Subscribed capital |
Capital reserve |
Retained earnings |
Income and expenses rec ognised direct ly in equity |
Foreign currency trans lation adjust ment |
Net cost in excess of net assets acquired on the acquisition of companies under common control and successive share acquisi tions |
Consolidated equity |
|---|---|---|---|---|---|---|---|
| Balance at 01.01.2007 | 24,000 | 76,016 | 38,006 | 0 | - 143 | - 14,532 | 123,347 |
| Consolidated net income for the period |
9,889 | 9,889 | |||||
| Changes in foreign currency translation adjustment |
- 163 | - 163 | |||||
| Consolidated comprehensive income |
9,889 | - 163 | 9,726 | ||||
| Balance at 31.03.2007 | 24,000 | 76,016 | 47,895 | 0 | - 306 | - 14,532 | 133,073 |
| Balance at 01.01.2008 | 24,000 | 76,016 | 35,987 | - 2,334 | - 1,103 | - 14,532 | 118,034 |
| Consolidated net income for the period |
1,238 | 1,238 | |||||
| Proportional change in the fair value of derivatives of cash fl ow hedges at associates |
- 1,878 | - 1,878 | |||||
| Changes in foreign currency translation adjustment |
- 709 | - 709 | |||||
| Expenses for capital procurement | - 73 | - 73 | |||||
| Consolidated comprehensive income |
1,238 | - 1,951 | - 709 | - 1,422 | |||
| Balance at 31.03.2008 | 24,000 | 76,016 | 37,225 | - 4,285 | - 1,812 | - 14,532 | 116,612 |
to the consolidated interim fi nancial statements of HCI Capital AG as at 31 March 2008 in accordance with IFRS
The consolidated interim fi nancial statements of HCI Capital AG and its subsidiaries (referred to below as: "HCI Group") as at 31 March 2008 have been prepared in accordance with IAS 34 whereby the Notes have been compiled in a condensed version in accordance with IAS 34.10.
The accounting policies followed in the consolidated interim fi nancial statements of the HCI Group are those applied in preparing the IFRS consolidated fi nancial statements of HCI Capital AG as at 31 December 2007. The consolidated interim fi nancial statements as at 31 March 2008 should therefore be read in conjunction with the consolidated fi nancial statements as at 31 December 2007. Please refer to the consolidated fi nancial statements as at 31 December 2007 for IASB and IFRIC standards and interpretations in effect since 1 January 2008.
The standards and interpretations listed below, as published by IASB and IFRIC in 2006 and 2007, are not yet mandatory for the preparation of the consolidated interim fi nancial statements as at 31 March 2008 for the HCI Group:
At present, the HCI Group assumes that the application of the above standards, with exception of IAS 1 and IFRS 8, at the time the application of these standards and their interpretations became mandatory, will not have any signifi cant effects on the fi nancial situation, net assets and results of the group. With regard to IFRS 8 the company is currently in the process of appraising its possible effects. Following the amendment of IAS 1 changes in the presentation and titles of fi nancial statements are to be expected.
Pursuant to the share purchase agreement of 24 January 2008, HCI Capital AG has acquired registered shares in eFonds Holding AG amounting to a 25.1% stake in the company, for a purchase price of EUR 6,025,004. The purchase price has been fully refi nanced. The purpose of this investment is to support the HCI Group's sales activities through the fi nancial products brokerage activities of the acquired entity. No fi nancial information was available from eFonds Holding AG at the time of preparing the consolidated interim fi nancial statements as at 31 March 2008; as a result, it was not yet possible to allocate the purchase price accordingly.
The item accumulated other equity includes foreign currency translation adjustments (EUR 1,812 thousand) as well as expenses directly balanced against equity. As per 31 December 2007 this comprised fair value changes of derivatives forming part of cash fl ow hedges related to derivatives that are used by NY Credit Operating Partnership LP amounting to minus EUR 2,334 thousand. This fair value change increased as per 31 March 2008 by EUR 1,878 thousand to minus EUR 4,212 thousand. For the fi rst time this item as per 31 March 2008 also comprises expenses of Aragon AG for capital procurement at an amount of EUR 73 thousand.
In the third quarter 2007 HCI Group raised a loan of EUR 22 million, due 30 September 2012, to fi nance the purchase of a shareholding in ARAGON AG. A scheduled repayment of EUR 2,200 thousand was made on this loan during the fi rst quarter of 2008.
HCI Real Estate Finance I GmbH & Co KG raised a loan in the amount of USD 55,500 thousand to refi nance the purchase of shares in NY Credit Operating Partnership LP. HSH Nordbank AG subsequently extended the loan facility until 31 December 2008, taking into consideration a redemption of USD 13,000 thousand during the course of the year. As at 31 March 2008, the carrying amount of the amount drawn, including accrued interest, is measured at EUR 33,942 thousand (31 December 2007: EUR 35,921 thousand).
HCI Capital AG took out a loan in the amount of EUR 6,000 thousand to fi nance the purchase of shares in eFonds Holding AG. The loan bears interest at 8.53% p. a., until further notice.
Revenue consists of the following:
| Three months ended | Three months ended | |
|---|---|---|
| EUR '000 | 31 March 2008 | 31 March 2007 |
| Sales revenues | ||
| Ship | 12,014 | 16,061 |
| Real estate | 3,448 | 1,435 |
| Private equity | 177 | 307 |
| Secondary life insurance market | 4,821 | 7,603 |
| Design and sales revenues | 20,460 | 25,406 |
| Trust and service fees | ||
| Ship | 4,493 | 4,434 |
| Real estate | 425 | 1,106 |
| Private equity | 98 | 96 |
| Secondary life insurance market | 486 | 432 |
| Trust and service contract fees | 5,502 | 6,068 |
| Management fees | 526 | 340 |
| Total revenues | 26,488 | 31,814 |
Other operating income for the period from 1 January to 31 March 2008 includes EUR 644 thousand in VAT refunds related to real estate brokerage services rendered in the previous year. The fi gure for the same period of the previous year included EUR 2,772 thousand in commission income for broker services rendered to a third party for the purchase of a vessel, and EUR 1,332 thousand in compensation payments for collateralisation services and real estate brokerage services.
| EUR '000 | Three months ended 31 March 2008 |
Three months ended 31 March 2007 |
|---|---|---|
| ARAGON AG | 446 | 0 |
| NY Credit Operating Partnership LP | 303 | 0 |
| Hammonia Reederei GmbH & Co. KG | 246 | 991 |
| BH & HCI Real Estate Holding B.V. | 23 | 136 |
| HELLESPONT HAMMONIA GmbH & Co. KG | - 11 | 67 |
| BH & HCI Overschiestraat Holding B.V. | - 47 | 0 |
| Results of joint ventures accounted for using the equity method | 960 | 1.194 |
The other fi nancial result includes EUR 570 thousand (Q1 2007: EUR 1,048 thousand) in fees which the HCI Group receives as preliminary distributions from secondary life insurance market funds.
The fi gure also includes EUR 1,671 thousand (Q1 2007: EUR 373 thousand) in foreign exchange losses.
Income taxes comprise current tax expenses at an amount of EUR 637 thousand partly netted by earnings from deferred taxes of EUR 235 thousand.
Basic and diluted earnings per share are determined as follows:
| Three months ended 31 March 2008 |
Three months ended 31 March 2007 |
||
|---|---|---|---|
| Consolidated net income for the period attributable to the group | EUR '000 | 1,238 | 9,889 |
| Weighted average number of shares outstanding | '000s of shares | 24,000 | 24,000 |
| Earnings per share for the period | EUR | 0.05 | 0.41 |
As there were no dilutive instruments outstanding during the periods, presented diluted earnings per share equal basic earnings per share.
Segment information is determined using the accounting policies applied in the preparation of the consolidated fi nancial statements.
Revenue from external customers represents revenue from designing, initiating and distributing investments and from providing trust, after sale and management services to parties outside the group. The HCI Group uses EBIT, a metric commonly used around the world representing net earnings before interest and income taxes, to measure its segment results.
The results for the periods presented are as follows:
| EUR '000 | Three months ended 31 March 2008 | Three months ended 31 March 2007 | ||||
|---|---|---|---|---|---|---|
| Revenue from external customers EBIT |
Revenue from external customers |
EBIT | ||||
| Ship | 16,872 | 5,824 | 20,495 | 11,353 | ||
| Real estate | 4,009 | 288 | 2,827 | 2,157 | ||
| Private equity | 276 | 42 | 404 | 75 | ||
| Secondary life insurance market | 5,307 | 197 | 8,034 | 1,930 | ||
| Total segments | 26,464 | 6,351 | 31,760 | 15,515 | ||
| Other / holding | 24 | - 3,317 | 54 | - 3,289 | ||
| Group | 26,488 | 3,034 | 31,814 | 12,226 |
Receivables from and payables to related parties consist of the following:
| EUR '000 | 31 March 2008 | 31 December 2007 |
|---|---|---|
| Receivables from joint ventures and associates | 944 | 923 |
| Receivables from non-consolidated subsidiaries | 56 | 129 |
| Receivables from related parties | 1,000 | 1,052 |
| Payables to non-consolidated subsidiaries | 610 | 608 |
| Payables to HCI Group Management and Supervisory Board members | 404 | 1,598 |
| Payables to related parties | 1,014 | 2,206 |
| Provisions for bonuses due to HCI Group management | 163 | 0 |
| Other provisions | 163 | 0 |
Income from and expenses paid and payable to related parties are summarized as follows:
| EUR '000 | Three months ended 31 March 2008 |
Three months ended 31 March 2007 |
|---|---|---|
| Income from joint ventures and associates | 999 | 1,194 |
| Income from related parties | 999 | 1,194 |
| Expenses paid and payable to HCI Group Management and Supervisory Board members | 490 | 1.109 |
| Expenses for joint ventures and associates | 58 | 0 |
| Expenses paid or payable to related parties | 548 | 1,109 |
Expenses paid and payable to HCI Group management consist of the fi xed remuneration components for the respective periods and the proportional bonus entitlements of the Management Board members as well as the remuneration of the Supervisory Board members.
The following contingent liabilities and other fi nancial commitments exist at 31 March 2008:
| 31 March 2008 | 31 December 2007 | ||||||
|---|---|---|---|---|---|---|---|
| EUR '000 | EUR '000 | USD '000 | EUR '000 | EUR '000 | USD '000 | ||
| Guarantees | 1,275,457 | 320,572 | 1,509,863 | 1,362,044 | 317,364 | 1,541,008 | |
| of which: related to con struction phase loans |
1,029,406 | 158,962 | 1,376,346 | 1,124,730 | 170,174 | 1,408,066 | |
| of which: drawn | 798,379 | 251,361 | 864,945 | 851,120 | 229,372 | 917,141 | |
| Placement guarantees | 419,934 | 80,702 | 536,394 | 313,644 | 68,354 | 361,828 | |
| of which: for funds not yet in distribution |
393,213 | 58,345 | 529,494 | 279,602 | 55,045 | 331,244 | |
| Future payments under operating leases |
4,107 | 4,107 | 5,006 | 5,006 |
Guarantees extended by HCI include those granted within the scope of construction phase loans. However, such loans are usually collateralised via assignment of refundment guarantees which are required from the shipyards' bankers under the respective construction agreements. Accordingly, in these cases the guarantees extended by HCI are indirectly secured by refundment guarantees pledged.
The Management Board and Supervisory Board propose to the Annual General Meeting held on 15 May 2008 to use the net retained profi t (Bilanzgewinn) of HCI Capital AG (determined in accordance with the German Commercial Code) of EUR 25,818 thousand as at 31 December 2007 to distribute a dividend of EUR 0.70 per share, equivalent to a total distribution of EUR 16,800 thousand.
The CEO, Wolfgang Essing, and the supervisory board of HCI Capital AG on 23 April 2008 mutually agreed on a termination of his contract effective from 30 June 2008. On 8 May 2008 the supervisory board appointed Dr. Ralf Friedrichs as new member of the management board and CEO.
On 12 March 2008, MPC Capital AG extended a takeover offer to all other shareholders of HCI Capital AG. At that time, MPC Capital AG already held a 15.1% stake in the issued share capital and voting rights of HCI Capital AG. Furthermore, on 11 February 2008 MPC Capital AG entered into an agreement to acquire an additional 20,03 % stake in HCI's capital from Corsair III Investments (Luxembourg). Shares tendered by way of acceptance of the takeover offer until the end of the offer periods on 28 April 2008 amounted to an aggregate 5.67 % of HCI Capital AG's issued share capital and voting rights. Taking into account the share exchange agreement with Corsair, upon consummation of the takeover offer MPC Capital AG now holds a 40.80 % stake in HCI Capital AG.
No further signifi cant reportable events occurred subsequent to the balance sheet date.
These documents include certain forward-looking statements and information regarding future developments; these are based on the views and convictions of the Management Board of HCI Capital AG, and on assumptions and information currently available to HCI Capital AG. Words such as 'expect', 'assess', 'assume', 'intend', 'plan', 'should', 'might', 'project', or similar concepts referring to the company are designed to identify such forward-looking statements, which are subject to a number of uncertainties.
Many factors could cause the actual results achieved by HCI Group to be materially different from the forecasts expressed in such forward-looking statements.
HCI Capital AG accepts no responsibility or liability to the general public for updating or correcting any forward-looking statements. All forward-looking statements are subject to differing risks and levels of uncertainty: as a result, the actual fi gures may deviate from projected values. Forward-looking statements refl ect the prevailing opinion at the time they were made.
30.01.2008 Publication of equity capital placements 2007
HCI CAPITAL: MEHR WERT. 10.03.2008 Annual fi nancial report 2007 / Press conference to present the fi nancial statements / Analysts' conference
onshäuser in Deutschland, das die Konzeption und Realisierung geschlossener Beteiligungsangebote in zahlreichen Produktklassen anbietet. Seit ihrer Grün-13.05.2008 Report on the fi rst three months of 2008
dung hat die HCI Gruppe 468 Emissionen mit einem Investitionsvolumen von rund 13,3 Mrd. EUR (Stand 31. Dezember 2007) realisiert. 15.05.2008 Annual General Meeting
Über 100.000 Anleger haben mit uns in die Bereiche Schiffsbeteiligungen, Immobilien investments, Private Equity, Zweitmarktlebensversicherungen, Aufbaupläne und strukturierte Produkte investiert und uns so zu einem der führen-13.08.2008 Half-yearly fi nancial report 2008
den Emissionshäuser in Deutschland gemacht. 12.11.2008 Report on the fi rst nine months of 2008
HCI Capital AG Bleichenbrücke 10 D-20354 Hamburg Telefon +49 40 88 88 1-125 Telefax +49 40 88 88 1-109 [email protected] oder www.hci-capital.de
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