Earnings Release • Sep 3, 2014
Earnings Release
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Ireland | 3 September 2014 20:08
DEMIRE Deutsche Mittelstand Real Estate AG: DEMIRE reports on the performance of the first three months of 2014/2015
DEMIRE Deutsche Mittelstand Real Estate AG / Release of an announcement according to Article 37x of the WpHG [the German Securities Trading Act]
03.09.2014 20:08
Interim report according to Article 37x of the WpHG, transmitted by
DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
Frankfurt/Main, September 3, 2014 - DEMIRE Deutsche Mittelstand Real Estate
AG ('DEMIRE', ISIN DE000A0XFSF0) reports on the performance of the first
quarter of the 2014/2015 fiscal year (April 1, 2014 to March 31, 2015).
The first quarter continued to be marked by the Group's comprehensive and
ongoing realignment. On the one hand, income from the rental of the German
commercial real estate portfolio and a clear reduction in current operating
expenses had a considerable positive impact on Group earnings. On the other
hand, the proportionate results from Ukrainian project companies accounted
for using the equity method and other expenses relating to our Ukrainian
investments had an adverse earnings effect.
In the reporting quarter, we were successful in terminating some of our
previous investments with the sale of the 32.44% interest in the Luxembourg
investment company that held the Turkish properties. As communicated in
June 2014, we will receive the cash proceeds from the transaction in the
second quarter (July to September).
In the first three months of fiscal year 2014/2015, the DEMIRE Group
achieved an improvement in earnings before interest and taxes (EBIT) of EUR
-0.5 million after reporting EUR -0.8 million in the previous year's
quarter despite several expenses relating to the ongoing Group realignment.
Profit on the rental of real estate inventory rose strongly from EUR 0.1
million in the prior year to EUR 0.6 million. This increase largely stemmed
from two commercial properties in Munich, which were acquired in the
previous year. Both properties were included in the full three-month period
for the first time. In the reporting quarter, no real estate companies or
real estate was sold. Thus, the corresponding results were at the breakeven
point (previous year: EUR 0.4 million). The same was true for the
profit/loss on asset management since these activities largely related to a
single property and were discontinued in the reporting quarter.
Profit/loss from investments accounted for using the equity method improved
slightly from EUR -0.2 million in the previous year to EUR -0.1 million in
the quarter under review. This mainly resulted from lower losses from
investments accounted for using the equity method. Other operating income
and other effects amounted to EUR 0.1 million after EUR 0.4 million in the
prior year. Whereas unrealised fair value adjustments had resulted in a
positive EUR 0.2 million earnings contribution in the previous year, the
reporting quarter was burdened by an impairment on sales tax receivables in
the Ukraine of EUR 0.3 million (previous year: EUR 0.0 million). The
increase in other operating income from EUR 0.2 million to EUR 0.3 million
relates primarily to the derecognition of liabilities in Georgia affecting
profit or loss.
General and administrative expenses experienced a significant improvement
in the reporting quarter totalling EUR -0.6 million after EUR -1.1 million
in the previous year. This was mainly the result of numerous measures
employed to adjust the Group's cost structure. The success of these
measures is successively becoming visible. Other operating expenses rose
from EUR -0.4 million in the prior year to EUR -0.6 million, mainly as a
result of currency losses (Ukraine).
The financial result of EUR -4.2 million after EUR -0.1 million in the
prior year was largely impacted by non-cash, temporary effects relating to
the reporting date resulting from the fair value measurement of the
2013/2018 convertible bond. This fair value measurement reflects the strong
increase in the price of the bond from EUR 0.96 as of March 31, 2014 to EUR
1.30 as of June 30, 2014. Accordingly, the Group's net profit/loss for the
period amounted to EUR -4.8 million after EUR -0.8 million in the previous
year. Excluding the IFRS related valuation effect mentioned above, the net
financial result, consisting of interest expenses and interest income, and
the net profit/loss for the period amounted to EUR -0.6 million and EUR
-1.2 million respectively in the reporting quarter.
As per the June 30, 2014 reporting date, total assets of the DEMIRE Group
amounted to EUR 45.8 million after EUR 48.4 million as of the end of the
previous fiscal year. On the assets side of the balance sheet, this
development was mainly reflected in a decline of cash and cash equivalents.
As of the reporting date, they declined from EUR 4.0 million to EUR 1.0
million due to reporting date-related effects. This was in contrast to the
growth in property, plant, and equipment from EUR 0.2 million to EUR 1.2
million resulting from a prepayment for the announced acquisition of a real
estate portfolio in the second quarter of the current 2014/2015 fiscal
year.
The fair value adjustment mentioned above is also reflected on the equity
and liabilities side of the balance sheet: Shareholders' equity declined
from EUR 7.7 million as of March 31, 2014 to EUR 3.1 million due to the
loss for the period. Non-current financial liabilities rose from EUR 24.6
million as of the end of the previous fiscal year to EUR 29.5 million
mainly due to the valuation effect. Trade payables and other liabilities
were reduced significantly. As of the reporting date, these amounted to EUR
2.8 million after EUR 4.3 million on March 31, 2014.
The net asset value (NAV) calculated according to EPRA requirements
amounted to EUR 6.7 million as at June 30, 2014. Based on 14.1 million
shares outstanding, this is equivalent to a NAV of EUR 0.48 per share.
Significant events subsequent to the end of the reporting period and the
outlook
The current 2014/2015 fiscal year will continue to be marked by the Group's
realignment. We want to take advantage of the current favourable market
environment to rapidly build an attractive and value-generating portfolio
of commercial real estate. This includes the purchase of a portfolio
consisting of seven commercial properties in several German metropolitan
areas, which we had previously announced. This transaction is expected to
be completed in the second quarter of the current 2014/2015 fiscal year.
To finance our growth strategy and to strengthen the financial position of
DEMIRE, we are currently considering various options, including the
issuance of a bond. The Company aims to establish a large core portfolio
generating attractive cash flows from the very start which should
contribute to the Group's successful development by way of ongoing revenues
and long-term value appreciation.
We are confident that in a matter of a few years we will have established a
clearly focussed and highly profitable core portfolio of German commercial
real estate with an attractive risk-return ratio and well-balanced cash
flows.
03.09.2014 The DGAP Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
Language: English
Company: DEMIRE Deutsche Mittelstand Real Estate AG
Lyoner Straße 32
60528 Frankfurt am Main
Germany
Internet: www.demire.ag
End of Announcement DGAP News-Service
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