STENPROP LIMITED
(Incorporated in Bermuda)
Registration number: 47031
BSX share code: STP.BH
JSE share code: STP
ISIN: BMG8465Y1093
HALF YEARLY REPORT 2016
Stenprop Limited ('Stenprop' or 'the Company' or 'the Group') is a European property investment
group focused on cultivating a diversified portfolio of quality investment properties delivering
sustainable earnings, distributions and capital growth to stakeholders. Our existing portfolio
is focused primarily in major cities in the UK, Germany and Switzerland with an emphasis on
commercial and retail assets. Stenprop has a primary listing on the Johannesburg Stock Exchange
('JSE') and a secondary listing on the Bermuda Stock Exchange ('BSX').
Highlights
EUR1.54 diluted EPRA* NAV per share
5.32 cents diluted adjusted EPRA earnings per share
3.0% increase on the diluted adjusted EPRA EPS at 30 September 2015
4.5 cents interim dividend per share declared
7.1% increase in half-year dividend per share against prior year
- Declaration of interim dividend on 23 November 2016 of 4.5 cents per share for the six months
ended 30 September 2016, payable on 20 January 2017, representing a 7.1% increase on the
prior year interim dividend
- Based on a projected full year dividend of 9.00 cents per share, a dividend yield of 7.4% on
the share price of EUR1.22^ at 21 November 2016, or 5.8% on the diluted EPRA NAV of EUR1.54 at
30 September 2016
- A diluted adjusted EPRA EPS of 5.32 cents for the period ended 30 September 2016,
representing a 3.0% increase on the diluted adjusted EPRA EPS at 30 September 2015.
IFRS loss per share was 1.95 cents (2015 EPS: 9.88 cents profit) and headline earnings were
5.80 cents per share (2015: 4.89 cents)
- Diluted EPRA net asset value per share of EUR1.54, a decrease of 7.8% since the year end,
primarily due to the downward pressure on Sterling. Diluted IFRS net asset value per share was
EUR1.48 per share (2015: EUR1.62)
- Stenprop repurchased 1,356,567 of its own shares for EUR1.8 million between 28 June and
11 July 2016 at an average price of EUR1.29 (excluding the final dividend of 4.7 cents).
- Subsequent to the period end, and with effect from 3 October 2016, Stenprop moved its
listing on the Bermuda Stock Exchange from a primary listing to a secondary listing
Foreign exchange rates in period
Average foreign exchange rates in period: GBP1.00:EUR1.223; CHF1.00:EUR0.9153 (2015: GBP1.00:EUR1.389; CHF1.00:EUR0.947)
Period end foreign exchange rates: GBP1.00:EUR1.157; CHF1.00:EUR0.921 (2015: GBP1.00:EUR1.349; CHF1.00:EUR0.915)
* 'EPRA' means European Public Real Estate Association. 'EPS' means earnings per share.
^ JSE closing price on 21 November 2016 was ZAR18.40. ZAR:EUR rate at the same date was 15.1225:1
Commentary
In a half year overshadowed by uncertainty caused by the
Brexit vote in the United Kingdom, Stenprop is particularly
pleased to announce strong interim results for the six
months ended 30 September 2016.
Investment strategy
Stenprop continues to focus on property investment in
the United Kingdom and Germany with an emphasis on
commercial and retail assets. Its objective is to cultivate
a diversified portfolio of investment properties delivering
sustainable and growing earnings, distributions and
capital growth to shareholders. It does not generally
pursue development exposure other than value add asset
management and related development of existing assets
to protect and improve capital values. Current policy is to
distribute 85% of its diluted adjusted EPRA earnings which
are available for distribution on a bi-annual basis.
Business review
Portfolio summary
As at 30 September 2016, including assets held for sale,
the Company's real estate portfolio comprised an interest
in 55 properties valued at EUR839.8 million, with 40% in the
United Kingdom, 42% in Germany and 18% in Switzerland
(by value). The portfolio, which has a gross lettable area
of approximately 254,1001 m2 and gross annual rent of
EUR50.9 million1, is predominantly in the office and retail
sectors which account for 50% and 38% of rental income respectively.
Top six properties by value as at 30 September 2016
Stenprop Annualised
share gross rental Weighted
Market Ownership of market Lettable (Stenprop average unexpired
value interest value area share) lease term
Property (EUR million) % (EUR million) Sector (m2) (EUR million) (years)
Bleichenhof, Hamburg 123.8 94.9 117.5 Mixed use 20,067 5.6 5.0
Pilgrim Street, London 90.2 100 90.2 Office 9,706 5.1 4.7
Euston House, London 86.8 100 86.8 Office 10,103 4.4 5.6
Trafalgar Court,
Guernsey 72.3 100 72.3 Office 10,565 4.9 10.6
Nova Eventis, Leipzig 218.8 28.4 62.2 Retail 96,387 5.2 5.3
Argyll Street,
London 93.4 50.0 46.7 Office 6,008 2.3 2.9
Total 685.3 - 475.7 - 152,836 27.5 5.9
These six properties account for 57% of the total portfolio asset value. The value of the three Central London properties
accounts for 27% of the total portfolio asset value.
(1)Includes Stenprop's share of the properties held within the associate and joint venture investments.
Additions and disposals
There were no additions or disposals in the period. On
30 September 2016 the sale of part of the Hermann
Quartier property in Berlin was notarised for a sales
price of EUR2.7 million. The sale reflects the execution of
management's strategy, adopted when the property was
acquired, to dispose of the Burger King annexe adjacent to
the property.
Financial review
Earnings
The basic loss attributable to ordinary shareholders for
the six month period to 30 September 2016 is EUR5.5 million
(2015 earnings: EUR27.3 million). This equates to a diluted
IFRS loss per share of 1.94 cents (2015 EPS: 9.86 cents).
The variance compared to the prior year is almost entirely
due to downward property valuation adjustments, which
including Stenprop's share of associates and joint ventures,
amounted to EUR22.1 million (2015: EUR14.5 million uplift) and
the impact of the average Sterling exchange rate in force for
the period of GBP1.00:EUR1.22 (2015: GBP1.00:EUR1.39). The headline
earnings are EUR16.5 million (2015: EUR13.5 million) equating to a
diluted headline EPS of 5.78 cents (2015: 4.88 cents).
In accordance with reporting standards widely adopted
across the real estate industry in Europe, the board of
directors feels it is appropriate and useful, in addition to
providing the IFRS disclosed earnings, to also disclose
EPRA(2) earnings. Adjusted EPRA earnings attributable
to shareholders are EUR15.2 million (2015: EUR14.3 million),
equating to a diluted adjusted EPRA EPS of 5.32 cents
(2015: 5.17 cents). This represents a 3.0% increase on the
diluted adjusted EPRA EPS at 30 September 2015.
Management fee income relates to fees earned by
the management companies on management and
administration services provided to certain managed
property syndicates and funds. During the period the
Group earned fees relating to the disposal of assets held
by managed syndicates of EUR1.0 million (2015: EUR0.7 million).
Ongoing management fees made up the balance of the
management fee income which totalled EUR2.2 million for the
six month period (2015: EUR1.8 million).
(2) The European Public Real Estate Association ("EPRA") issued
Best Practices Policy Recommendations in December 2014, which
provide guidelines for performance measures relevant to real
estate companies. Their recommended reporting standards are
widely applied across this market, aiming to bring consistency
and transparency to the sector. The EPRA earnings measure
is intended to show the level of recurring earnings from core
operational activities with the purpose of highlighting the Group's
underlying operating results from its property rental business and
an indication of the extent to which current dividend payments
are supported by earnings. The measure excludes unrealised
changes in the value of investment properties, gains or losses
on the disposal of properties and other items that do not
provide an accurate picture of the Group's underlying operational
performance. The measure is considered to accurately capture
the long-term strategy of the Group, and is an indication of the
sustainability of dividend payments.
Dividends
On 23 November 2016, the directors declared a dividend
of 4.5 cents per share payable on 20 January 2017, relating
to the six months to 30 September 2016. This interim
dividend will be a cash dividend and reflects the directors'
intention to maintain the historic payout ratio of at least
85% of diluted adjusted EPRA EPS. An announcement
containing details of the dividend and the timetable will be
made separately.
On 8 June 2016, the directors declared a final cash
dividend of 4.7 cents per share in respect of the year ended
31 March 2016. The final dividend was paid on 29 July 2016.
Share repurchases
Towards the end of June 2016 the Company began a limited
programme of share repurchases and during the period the
Company repurchased 1,356,567 shares for an aggregate
purchase price of EUR1.8 million. The combined average
price per share of the repurchased shares was EUR1.337.
The shares were purchased with the benefit of the dividend
thereby effectively reducing the average price per share to
EUR1.290. All shares repurchased are held as treasury shares.
Net asset value
The IFRS (basic and diluted) net asset value per share at
30 September 2016 was EUR1.48 (2015: EUR1.62).
As is the case with regard to the disclosure of EPRA
earnings, the directors feel that it is appropriate and useful,
in addition to IFRS NAV, to also disclose EPRA NAV(3).
The diluted EPRA NAV per share at 30 September 2016 was
EUR1.54 (2015: EUR1.67).
(3) The objective of the EPRA NAV measure is to highlight the fair
value of net assets on an ongoing, long-term basis. EPRA NAV is
used as a reporting measure to better reflect underlying net asset
value attributable to shareholders. Assets and liabilities that are
not expected to crystallise in normal circumstances such as the
fair value of financial derivatives and deferred taxes on property
valuation surpluses are therefore excluded. The EPRA measure
thus takes into account the fair value of assets and liabilities as
at the balance sheet date, other than fair value adjustments to
financial instruments, deferred tax and goodwill. As the Group has
adopted fair value accounting for investment property per IAS40,
adjustments to reflect the EPRA NAV include only those relating
to the revaluation of financial instruments and deferred tax.
The decrease over the period is primarily due to the
downward pressure on Sterling following the Brexit vote
and is considered further in the 'Foreign exchange'
section below.
Foreign exchange
Approximately 45% of Stenprop's net asset value is in
Sterling. As such the Sterling:Euro exchange rate has a
material impact on reported Euro earnings and net asset
values. In broad terms, a 10% decline in Sterling against the
Euro will result in an overall 4.5% decline in earnings or net
asset value reported in Euros. Euro rates against Sterling at
the start of April 2016 were GBP1.00:EUR1.27. Sterling devalued
by 8.6% over the 6 month reporting period to GBP1.00:EUR1.16.
Further downward pressure on Sterling has continued into
November. Against these foreign exchange challenges,
Stenprop's full year earnings expectations and impact on
net asset values have been revisited and are discussed
below in the 'Prospects' section.
Stenprop's diversification across the UK, Germany and
Switzerland continues to provide a natural spread of
currencies. It remains our policy not to hedge currencies
and to maintain this multi-currency exposure.
Portfolio valuation
Including the Company's share of associates and joint
ventures, its investment properties were valued at
EUR839.8 million (31 March 2016: EUR891 million), of which
EUR58.6 million were classified as assets held for sale at
30 September 2016 (2015: nil). The valuation of the
portfolio decreased by 5.7% primarily as a result of the
decline in Sterling. The UK properties have been translated
to Euros at a rate of GBP1.00:EUR1.16, which is 8.6% lower than
the exchange rate of GBP1.00:EUR1.27 at 31 March 2016.
United Kingdom
The UK portfolio (excluding Stenprop's share of
25 Argyll Street), was independently valued at
GBP248.0 million, a decrease of 2.40% on the year end
valuation of GBP254.1 million. Given that the UK properties
are all fully let with a WAULT of 6.4 years, this decrease in
value of the UK assets of GBP6.1 million (EUR7.1 million) over the
period was primarily as a result of valuers increasing the
yield slightly to reflect the increased risks to UK property as
a result of Brexit.
Germany
The German portfolio (excluding associates and joint
ventures) was independently valued at EUR252.9 million
(31 March 2016: EUR252.6 million). Included in this portfolio
is a fast food restaurant built on the Hermann Quartier
property and which has been classified as held for sale at
30 September 2016. The sale of this Burger King
restaurant for a sale price of EUR2.7 million was notarised on
30 September 2016, in line with expectations and book value.
Switzerland
The Swiss portfolio was independently valued at
CHF170.7 million, compared to the year end valuation of
CHF170.3 million. CHF60.4 million (35%) of the portfolio is
represented by the Baar, Vevey, Montreux and Interlaken
properties which have been marketed for sale and
have been classified as held for sale at the period end.
A decision has been taken to sell these more mature assets
and rotate the proceeds into other properties more likely to
show long term growth in value and earnings.
Joint ventures and associates
The Care Homes portfolio valuation of EUR33.9 million
remains broadly unchanged at the end of the period. The
portfolio was valued at EUR34.2 million as at 31 March 2016.
Stenprop's 50% interest in 25 Argyll Street, a property
located in the heart of London's West End, decreased by
1.2% against the 30 March 2016 valuation to GBP40.35 million,
as the impact of the Brexit vote was felt. This was entirely
due to the valuers changing the yield rather than a change
in rents. The property remains fully let.
Stenprop owns a 28.42% share in a fund called Stenham
European Shopping Centre Fund Limited ('SESCF').
SESCF owns a regional shopping centre known as Nova
Eventis situated near Leipzig. The directors of SESCF
are in the process of selling this asset. Based on the
sale negotiations, the directors of SESCF have reduced
the value of Nova Eventis by 17.4% from EUR265 million at
year end to EUR220 million, less selling costs. Stenprop has
reduced its valuation of its holding accordingly.
Capital management
The value of the property portfolio as at 30 September
2016, including the Group's share of associate and
joint venture properties and assets held for sale, was
EUR839.8 million. Bank debt at the same date was
EUR443.2 million resulting in an average loan to value ratio
of 52.8%, compared with the 51.6% reported at year end.
Stenprop is targeting an average loan to value ratio of 50%.
The weighted average debt maturity stood at 1.8 years at
30 September 2016 compared with 2.2 years at the year
end. Annual amortisation payments since the year end
remain broadly unchanged in Germany and Europe but
have been reduced in the UK by GBP0.7 million to nil following
the GBP12.4 million refinancing at Davemount Properties
Limited. The all-in contracted weighted average cost of
debt dropped to 2.70% from 2.80% at 31 March 2016.
Stenprop's current weighted average debt maturity profile of
1.8 years (31 March 2016: 2.2 years) is as previously reported,
temporarily skewed by three large loan structures:
- Swiss debt totalling CHF93.3 million which matures on
31 March 2017. Loans that remain with Stenprop,
after anticipated sales of CHF60.4 million discussed
below in 'Subsequent events', will be refinanced
during the second half of the year on a five-year term.
Swiss interest rates are at historically low levels and
Stenprop expects to refinance at an all in interest rate
of approximately 1.50% per annum. Stenprop has
previously been paying approximately 2.75% per annum
on its Swiss debt (including an extra 73 basis points due
to negative interest rates which have been imposed
on the swap contracts). The loans currently have
amortisation payments of CHF3.8 million per annum
which Stenprop expects to eliminate on refinancing.
- A loan of EUR84.9 million on the Bleichenhof property
in central Hamburg. This loan matures at the end
of December 2016. The property is undergoing a
refurbishment/repositioning at the rear of the property
to take advantage of the marriage value with the
large scale redevelopment of the property next door.
Discussions are ongoing with the existing lenders who
know the asset well and have expressed a desire to enter
into a new five year loan agreement. Whilst the directors
are confident that the facility will be refinanced, this is
subject to uncertainty, and in the event that the loan
is not refinanced, this may result in the property being
realised at a value lower than reflected in the statement
of financial position.
- The loan on Nova Eventis, which is held as an associate.
Stenprop owns a 28.42% interest in this property
which was funded with a four year loan which expired in
July 2016, and which was extended until 24 January
2017, while the sale process is underway. The loan is
at a floating all-in interest rate of 3.2% per annum.
The lenders are fully informed of the sale process
and are supportive. Should the sale not complete, the
directors expect that the loan will be refinanced on
favourable terms. This is however, subject to uncertainty
and in the event that the loan is not subsequently
refinanced, this may result in the property in the
associate being realised at a value lower than
its current carrying value.
Bermuda Stock Exchange listing and cessation
of quarterly reporting
Shareholders were advised on 30 September 2016 that
the Bermuda Stock Exchange ('BSX') approved Stenprop's
request to move the Company's listing on the BSX from
a primary listing to a secondary listing, with effect from
3 October 2016. This transfer does not affect the
Company's current listing on the Main Board of the JSE and
does not affect the trading of shares on either the JSE or
the BSX.
One of the consequences of moving from a primary to
a secondary listing on the BSX is that Stenprop will no
longer have to publish quarterly results. This change is in
line with the financial reporting protocol adopted by most
of our peers who are listed on the Johannesburg and / or
the London Stock Exchanges, neither of which require
quarterly reporting.
A second consequence is that Stenprop is no longer
required to have two board members who are resident in Bermuda.
Board appointments and resignations
On 4 April 2016 David Brown resigned from the Board as
an independent non-executive director. On the same
date Peter Hughes was appointed as an independent
non-executive director.
On 14 September 2016 Michael Fienberg resigned as
independent non-executive director following a change of
his residency. On the same date Paul Miller was appointed
as an independent non-executive director and Stephen
Ball, currently an independent non-executive director, was
appointed as lead independent non-executive director.
On 23 November 2016, the Board accepted the resignations
of Peter Hughes and James Keyes. Both were independent
non-executive directors and resident in Bermuda.
Subsequent events
As reported above, SESCF is in the process of selling the
Nova Eventis Shopping Centre.
As highlighted by the disclosure in the Balance Sheet of
'assets held for sale', Stenprop is in the early stages of a
strategy to dispose of selected Swiss properties, currently
valued at CHF60.4 million. The sales process at the date of
publishing this Interim Report is proceeding according to plan.
On 24 October 2016, Stenham Residential Berlin Fund
('SBRF'), an associate in which Stenprop has a 12.05%
shareholding, disposed of its final investment in ADO
Group on the Tel Aviv Stock Exchange for EUR4.7 million.
SBRF now has a single investment in shares of ADO
Properties Sarl, which is listed on the Frankfurt Stock
Exchange. Following the sale of the shares in ADO Group,
the directors of SBRF issued a voluntary share repurchase
notice in November 2016. Stenprop intends to participate
in the share repurchase and anticipates a cash receipt of
approximately EUR4.0 million in December.
Prospects
In the Integrated Annual Report published on
10 August 2016, guidance was given on the impact on EPRA
earnings per share of the weakening of Sterling against the
Euro. The Report commented that at an average exchange
rate for the year of EUR1.20:GBP1, the forecast adjusted annual
EPRA EPS for 2017 would drop from 10.58 cents to
10.29 cents per share. At an average exchange rate for
the year of EUR1.15:GBP1, the number would drop further to
10.15 cents per share.
Stenprop's guidance for adjusted annual EPRA EPS for
the full year ended 31 March 2017, in country currencies,
remains unchanged. With average exchange rates for
the first half of the year established, Stenprop is now
able to provide guidance on the impact of exchange rate
fluctuations in the second half of the year.
At an average exchange rate of EUR1.15:GBP1 for H2, giving an
average exchange rate for the full year of EUR1.19:GBP1, Stenprop
expects to deliver an adjusted EPRA EPS of 10.26 cents.
At an average exchange rate of EUR1.10:GBP1 for H2, giving an
average exchange rate for the full year of EUR1.16:GBP1, adjusted
EPRA EPS drops to 10.18 cents.
At an average exchange rate of EUR1.20:GBP1 for H2, giving an
average exchange rate for the full year of EUR1.21:GBP1, adjusted
EPRA EPS rises to 10.34 cents.
Based on an expected EPRA EPS of 10.26, Stenprop expects
to declare a final dividend in June 2017 of 4.5 cents, giving a
full year dividend of 9.00 cents a share. This represents a 1%
increase on the full dividend of 8.9 cents for the prior year,
and increases the pay-out ratio slightly to 87.7% compared
with the historic pay-out ratio of 85%.
This general forecast has been based on the Group's
forecast and has not been reported on by the external auditors.
Given the nature of its business, Stenprop has adopted
distribution per share as its key performance measure, as
this is considered more relevant than earnings or headline
earnings per share.
Independent review report to Stenprop Limited
We have been engaged by the Company to review the
condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September
2016 which comprises the condensed consolidated income
statement, the condensed consolidated statement of
financial position, the condensed consolidated statement
of changes in equity, the condensed consolidated cash
flow statement and related notes. We have read the
other information contained in the half-yearly financial
report and considered whether it contains any apparent
misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance
with International Standard on Review Engagements
(UK and Ireland) 2410 'Review of Interim Financial
Information Performed by the Independent Auditor of
the Entity' issued by the Auditing Practices Board. Our
work has been undertaken so that we might state to the
Company those matters we are required to state to it in
an independent review report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company,
for our review work, for this report, or for the conclusions
we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report
in accordance with the Listings Requirements of the
Johannesburg Stock Exchange.
As disclosed in note 1, the annual financial statements
of the group are prepared in accordance with IFRSs as
issued by the International Accounting Standards Board.
The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34,
'Interim Financial Reporting', as issued by the International
Accounting Standards Board.
Our responsibility
Our responsibility is to express to the Company a
conclusion on the condensed set of financial statements in
the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410
'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the
Auditing Practices Board for use in the United Kingdom.
A review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope
than an audit conducted in accordance with International
Standards on Auditing (UK and Ireland) and consequently
does not enable us to obtain assurance that we would
become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an
audit opinion, but we will issue a review report addressed to
the members of the entity. In order to comply with paragraph 8.60
of the JSE Listings Requirements, this review paragraph
will be referred to in the interim financial information and
will be made available by the Company for inspection at its
registered office. Our report will not be prepared for the
use of any third party nor for any purpose connected with
any specific transactions and should not be relied upon
by any such person or for any such purpose, save that you
may disclose the contents of our report to the Listings
Committee of the JSE Securities Exchange South Africa.
Conclusion
Based on our review, nothing has come to our attention
that causes us to believe that the condensed set of
financial statements in the half-yearly financial report for
the six months ended 30 September 2016 is not prepared,
in all material respects, in accordance with International
Accounting Standard 34 as issued by the International
Accounting Standards Board.
Emphasis of matter
In forming our conclusion, which is not modified, we have
considered the adequacy of the disclosures in notes
1, 8, 9 and 12 to the financial statements concerning
the Group's refinancing of the Bleichenhof property
and the refinancing by the Group's associate, Stenham
European Shopping Centre Fund Limited, of its interest
in the Nova Eventis property. At 30 September 2016, the
full value of the related loans are EUR85 million and EUR152
million, the related loans expire on 31 December 2016 and
24 January 2017 respectively, and the Group's share of the
net assets of the structures is EUR45 million and EUR21 million
respectively. Whilst the directors are confident that each
facility will be refinanced, should these facilities not
be refinanced, the lenders may exercise their security with
the result that one or both of the properties may ultimately
be realised at values materially lower than those reflected
in the statement of financial position.
Deloitte LLP
Chartered Accountants and Statutory Auditor
Guernsey
23 November 2016
Condensed consolidated
statement of comprehensive income
Reviewed Reviewed
six months six months
ended ended
30 September 30 September
2016 2015
Note EUR'000 EUR'000
Net rental income 3 18,942 19,625
Management fee income 2,222 1,786
Operating costs 4 (3,169) (4,650)
Net operating income 17,995 16,761
Fair value movement of investment properties 8 (7,386) 11,982
Loss from associates 9 (9,654) (1,016)
Income from joint ventures 10 566 6,410
Profit from operations 1,521 34,137
Net loss from fair value of derivative financial instruments (435) (180)
Net finance costs (4,878) (5,577)
Net foreign exchange gains 79 81
(Loss)/profit for the period before taxation (3,713) 28,461
Taxation (1,763) (1,030)
(Loss)/profit for the period after taxation (5,476) 27,431
(Loss)/profit attributable to:
Equity holders (5,535) 27,254
Non-controlling interest 59 177
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Fair value movement on derivative financial instruments - 519
Foreign currency translation reserve (17,514) (6,539)
Total comprehensive (loss)/profit for the period (22,990) 21,411
Total comprehensive (loss)/profit attributable to:
Equity holders (23,049) 21,234
Non-controlling interest 59 177
(Loss)/earnings per share
IFRS EPS (cents) 5 (1.95) 9.88
Diluted IFRS EPS (cents) 5 (1.94) 9.86
Results derive from continuing operations.
Condensed consolidated
statement of financial position
Reviewed Audited
30 September 31 March
2016 2016
Note EUR'000 EUR'000
ASSETS
Investment properties 8 638,361 729,782
Investment in associates 9 29,663 39,298
Investment in joint ventures 10 34,441 37,620
Other debtors 12,635 7,406
Total non-current assets 715,100 814,106
Cash and cash equivalents 32,220 36,811
Trade and other receivables 5,838 6,367
Assets classified as held for sale 11 58,590 -
Total current assets 96,648 43,178
Total assets 811,748 857,284
EQUITY AND LIABILITIES
Capital and reserves
Share capital and share premium 7 395,141 389,927
Equity reserve (1,206) 480
Retained earnings 44,481 63,426
Foreign currency translation reserve (15,850) 1,664
Total equity attributable to equity shareholders 422,566 455,497
Non-controlling interest 2,191 2,132
Total equity 424,757 457,629
Non-current liabilities
Bank loans 181,001 178,708
Derivative financial instruments 5,163 4,173
Other loan and interest 12 12
Deferred tax 8,026 9,705
Total non-current liabilities 194,202 192,598
Current liabilities
Bank loans 173,033 188,785
Derivative financial instruments 710 1,769
Accounts payable and accruals 16,672 16,503
Deferred tax 2,374 -
Total current liabilities 192,789 207,057
Total liabilities 386,991 399,655
Total equity and liabilities 811,748 857,284
IFRS net asset value per share (cents) 6 1.48 1.61
EPRA net asset value per share (cents) 6 1.55 1.67
Condensed consolidated
statement of changes in equity
Share Foreign
capital currency Cash flow Attributable Non-
and share Equity Retained translation hedge to equity controlling Total
premium reserve earnings reserve reserve shareholders interest equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 April 2016 389,927 480 63,426 1,664 - 455,497 2,132 457,629
Issue of share capital 5,214 (14) - - - 5,200 - 5,200
Credit to equity for
- equity-settled share-based
payments - 142 - - - 142 - 142
Repurchase of own shares - (1,814) - - - (1,814) - (1,814)
Total comprehensive
(loss)/profit for the period - - (5,535) (17,514) - (23,049) 59 (22,990)
Ordinary dividends - - (13,410) - (13,410) - (13,410)
Balance at
30 September 2016 395,141 (1,206) 44,481 (15,850) - 422,566 2,191 424,757
Balance at 1 April 2015 374,127 - 37,561 22,143 (519) 433,312 1,815 435,127
Issue of share capital 10,909 (25) - - - 10,884 - 10,884
Credit to equity for
- equity-settled share-based
payments - 328 - - - 328 - 328
Total comprehensive
profit for the period - - 27,254 (6,539) 519 21,234 177 21,411
Ordinary dividends - - (11,653) - - (11,653) - (11,653)
Balance at
30 September 2015 385,036 303 53,162 15,604 - 454,105 1,992 456,097
Condensed consolidated statement of cash flows
Reviewed Reviewed
six months six months
ended ended
30 September 30 September
2016 2015
Note EUR'000 EUR'000
Operating activities
Profit from operations 1,521 34,137
Share of loss in associates 9 9,654 1,016
Decrease/(increase) in fair value of investment property 8 7,386 (11,982)
Share of profit in joint ventures 10 (566) (6,410)
Exchange rate gains 79 81
Decrease in trade and other receivables 972 373
(Decrease)/increase in trade and other payables (311) 896
Interest paid (4,893) (5,320)
Interest received 681 520
Net tax paid (479) (263)
Net cash generated from operating activities 14,044 13,048
Investing activities
Dividends received from associates - 1,388
Dividends received from joint ventures 403 210
Purchases of investment property 8 - (24,485)
Capital expenditure 8 (698) (2,417)
Acquisition of investment in joint venture 10 - (26,782)
Net cash used in investing activities (295) (52,086)
Financing activities
New bank loans raised - 50,069
Dividends paid (13,411) (8,198)
Repayment of borrowings (2,526) (36,437)
Repurchase of shares (1,814) -
Financing fees paid (192) (945)
Payments made on swap break (63) (571)
Net cash (used in)/from financing activities (18,006) 3,918
Net decrease in cash and cash equivalents (4,257) (35,120)
Effect of foreign exchange rate changes (334) 110
Cash and cash equivalents at beginning of the period 36,811 80,430
Cash and cash equivalents at end of the period 32,220 45,420
Notes to the condensed consolidated financial statements
1. Basis of preparation
These reviewed and unaudited condensed consolidated financial statements (the 'IFRS Statements') for the six months
ended 30 September 2016 have been prepared in accordance with the recognition and measurements principles of the
International Financial Reporting Standards ('IFRS') and its interpretations adopted by the International Accounting
Standards Board ('IASB'), specifically IAS 34 'Interim Financial Reporting', the JSE Listings Requirements and the BSX Listing
Regulations as applicable.
These financial statements have been prepared by, and are the responsibility of, the directors of Stenprop.
The accounting policies and methods of computation are consistent with those applied in the preparation of the annual
financial statements for the year ended 31 March 2016 which were audited and reported on by the Group's external auditors,
except for the new standards adopted during the period. The consolidated annual financial statements for the year ended
31 March 2016 are available on the Company's website www.stenprop.com.
Going concern
At the date of signing these accounts, the Group has positive operating cash flow forecasts and positive net assets.
Management have reviewed the Group's cash flow forecasts for the 18 months to 31 March 2018 and, in the light of this
review and the current financial position, they are satisfied that the Company and the Group have access to adequate
resources to meet the obligations and continue in operational existence for the foreseeable future, and specifically the
12 months subsequent to the signing of these financial statements. The directors believe that it is therefore appropriate to
prepare the accounts on a going concern basis.
Refinancing of loans and valuation of investment properties
The expiry of the Swiss and Bleichenhof debt due on 31 March 2017 and 31 December 2016 respectively, is primarily
responsible for the high level of bank loans shown under current liabilities in the condensed consolidated statement
of financial position. Stenprop has seen evidence of significant liquidity in both the German and Swiss lending markets,
particularly at the levels of gearing shown by the properties in question. Stenprop has strong refinancing experience and
given the strength of the assets and the level of existing gearing, Stenprop expects to secure favourable all-in interest
rates, on refinancing and the directors are confident that both facilities will be refinanced. However, due to the proximity of the
Bleichenhof maturity date, this refinancing is subject to uncertainty, and in the event that the loan is not able to
be refinanced, the lender may exercise their security which may result in the Company realising the property at a value significantly
lower than that reflected in the statement of financial position (refer note 8).
The Nova Eventis shopping centre near Leipzig, in which the Group has a 28.4% interest, was subject to a sale process
during the period. The original loan, which matured on 24 July 2016 was extended for a period of six months to
24 January 2017 on terms which are substantially the same as the original loan term. The lenders are fully informed on
the sale process and are supportive. Should the sale not complete, the directors expect that the loan will be refinanced
on favourable terms. Whilst the directors are confident that the facility will be refinanced, this is subject to uncertainty,
and in the event that the directors of SESCF are not able to secure refinancing, the lender may exercise their security which
may result in SESCF realising the property at a value lower than its current carrying value which will have a significant
impact on the valuation of the Company's interest in the associate (refer note 9).
Adoption of new and revised standards
In the current period the following new and revised Standards have been adopted:
IFRS 14 Regulatory Deferral Accounts (1 January 2016)
IFRS 11 (amendments) Accounting for acquisitions of interests in joint operations (1 January 2016)
IAS 16 and IAS 38 (amendments) Clarification of acceptable methods of depreciation and amortisation
(1 January 2016)
IAS 27 (amendments) Equity method in separate financial statements (1 January 2016)
IAS 1 (amendments) Disclosure Initiative (1 January 2016)
IFRS 10, IFRS 12 & IAS 28 (amendments) Sale or contribution of assets between an Investor and its Associate or Joint
Venture (1 January 2016)
Annual Improvements 2012 to 2014 cycle (1 January 2016)
At the date of authorisation of these financial statements, the following applicable standards which have not been applied
to these financial statements, were in issue but not yet effective. They are effective for periods commencing on or after the
disclosed date:
IFRS 9 Financial instruments (1 January 2018)
IFRS 15 Revenue from Contracts with Customers (1 January 2018)
IFRS 16 Leases (1 January 2019)
IAS 12 (amendments) Recognition of Deferred Tax Assets for Unrealised Losses (1 January 2017)
IAS 7 (amendments) Disclosure Initiative (1 January 2017)
IAS 2 (amendments) Classification and Measurement of Share-based Payment Transactions
(1 January 2018)
IFRS 10 & IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(effective date deferred indefinitely)
Management are in the process of assessing these standards and do not expect that the adoption of the standards listed
above will have a material impact on the financial statements of the Group in the forthcoming period.
Arising from the adoption as set out above and the changes in the business in the period, the following are the new
accounting policies applicable in the period:
Repurchase of share capital (Own Shares)
Where share capital recognised as equity is repurchased, the amount of the consideration paid, including directly
attributable costs, is recognised as a deduction from equity. Such shares may either be held as Own Shares
(treasury shares) or cancelled. Where Own Shares are subsequently re-sold from treasury, the amount received is
recognised as an increase in equity.
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the condensed consolidated financial statements requires the use of certain critical judgements and
estimates that affect the reported amounts of assets and liabilities at the reporting date and the reported amounts of
revenues and expenses reported during the period. Although the estimates are based on management's best knowledge
of the amount, event or actions, actual results may ultimately differ from those estimates.
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting
year, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year, are discussed below.
Investment properties
The Group's investment properties are stated at estimated fair value, determined by the directors, based on independent
external appraisals. The valuation of the Group's property portfolio is inherently subjective due to a number of factors
including the individual nature of each property, its location and the expectation of future rentals.
As a result, the valuations placed on the property portfolio are subject to a degree of uncertainty and are made on the basis
of assumptions that may not prove to be accurate, particularly in times of volatility or low transaction flow in the market.
Following Brexit, the Group's UK valuers, JLL, have noted that there remains a shortage of comparable evidence of arm's
length transactions and have therefore had to exercise a greater degree of judgement than would be applied under more
liquid market conditions.
The estimated market value may differ from the price at which the Group's assets could be sold at a particular time, since
actual selling prices are negotiated between willing buyers and sellers. As a result, if the assumptions prove to be false, actual
results of operations and realisation of net assets could differ from the estimates set forth in these financial statements,
and the difference could be significant.
As already noted above under 'Refinancing of loans and valuation of investment properties', there is uncertainty on the
refinancing of the loan which may affect the valuation of the Bleichenhof property.
Associates
As already noted above under 'Refinancing of loans and valuation of investment properties', there is uncertainty on the refinancing of
the loan which may affect the valuation of the Nova Eventis property. Furthermore, the directors of SESCF have deemed the company to be a going
concern. Stenprop Limited has therefore deemed it appropriate to continue to disclose the investment in associate relating
to SESCF as a noncurrent asset.
2. Operating segments
The Group is focused on real estate investment in well-developed, large economies with established real estate markets.
The investment portfolio is geographically diversified across Germany, the United Kingdom and Switzerland, and these
geographical locations provide the basis of the business segments identified by the Group. Each segment derives its
revenue from the rental of investment properties in the respective geographical regions.
Relevant financial information is set out below:
i) Information about reportable segments
United
Germany Kingdom Switzerland Total
EUR'000 EUR'000 EUR'000 EUR'000
Reviewed for the period ended 30 September 2016
Net rental income 6,485 9,107 3,350 18,942
Fair value movement of investment properties 77 (7,524) 61 (7,386)
Net gain/(loss) from fair value of financial liabilities 65 (1,300) 800 (435)
Loss from associates (9,654) - - (9,654)
Income from joint ventures 592 (243) - 349
Net finance costs (1,442) (2,210) (1,230) (4,882)
Operating costs (441) (65) (246) (752)
Total profit/(loss) per reportable segments (4,318) (2,235) 2,735 (3,818)
Reviewed 30 September 2016
Investment properties 249,929 286,918 101,514 638,361
Investment in associates 29,663 - - 29,663
Investment in joint ventures 10,346 24,049 - 34,395
Cash 13,235 10,692 2,734 26,661
Other 13,673 3,096 1,123 17,892
Assets classified as held for sale 2,970 - 55,620 58,590
Total assets 319,816 324,755 160,991 805,562
Borrowings - bank loans (145,558) (122,613) (85,863) (354,034)
Other (9,571) (14,078) (7,118) (30,767)
Total liabilities (155,129) (136,691) (92,981) (384,801)
Reviewed for the period ended 30 September 2015
Net rental income 5,431 10,194 4,000 19,625
Fair value movement of investment properties 2,641 13,050 (3,709) 11,982
Net gain/(loss) from fair value of financial liabilities 51 (985) 754 (180)
Income from associates (1,016) - - (1,016)
Income from joint ventures 1,099 5,093 - 6,192
Net finance costs (1,431) (2,879) (1,267) (5,577)
Operating costs (307) (150) (326) (783)
Total profit per reportable segments 6,468 24,323 (548) 30,243
Audited 31 March 2016
Investment properties 252,510 321,532 155,740 729,782
Investment in associates 39,298 - - 39,298
Investment in joint venture 10,329 27,250 - 37,579
Cash 10,435 15,053 3,395 28,883
Other 9,687 2,277 1,178 13,142
Total assets 322,259 (366,112) (160,313) (848,684)
Borrowings - bank loans (145,913) (134,512) (87,068) (367,493)
Other (9,154) (12,231) (7,826) (29,211)
Total liabilities (155,067) (146,743) (94,894) (396,704)
ii) Reconciliation of reportable segment profit or loss
Reviewed Reviewed
six months six months
ended ended
30 September 30 September
2016 2015
EUR'000 EUR'000
Rental income
Net rental income for reported segments 18,942 19,625
Profit or loss
Fair value movement of investment properties (7,386) 11,982
Net loss from fair value of financial liabilities (435) (180)
Loss from associates (9,654) (1,016)
Income from joint ventures 349 6,192
Net finance costs (4,882) (5,577)
Operating costs (752) (783)
Total (loss)/profit per reportable segments (3,818) 30,243
Other profit or loss - unallocated amounts
Management fee income 2,222 1,786
Income from joint ventures 217 218
Net finance income 4 -
Tax, legal and professional fees (79) (202)
Audit fees (143) (158)
Administration fees (144) (156)
Non-executive directors (82) (128)
Staff remuneration costs (1,323) (1,847)
Other operating costs (646) (1,376)
Net foreign exchange gain 79 81
Consolidated (loss)/profit before taxation (3,713) 28,461
iii) Reconciliation of reportable segment financial position
ASSETS
Investment properties 638,361 729,782
Investment in associates 29,663 39,298
Investment in joint venture 34,395 37,579
Cash 26,661 28,883
Other 17,892 13,142
Assets classified as held for sale 58,590 -
Total assets per reportable segments 805,562 848,684
Other assets - unallocated amounts
Investment in joint ventures 46 41
Cash 5,559 7,928
Other 581 631
Total assets per consolidated statement of financial position 811,748 857,284
LIABILITIES
Borrowings - bank loans (354,034) (367,493)
Other (30,767) (29,211)
Total liabilities per reportable segments (384,801) (396,704)
Other liabilities - unallocated amounts
Other (2,190) (2,951)
Total liabilities per consolidated statement of financial position (386,991) (399,655)
Reviewed Reviewed
six months six months
ended ended
30 September 30 September
2016 2015
EUR'000 EUR'000
3. Net rental income
Rental income 20,879 21,763
Other income - tenant recharges 3,382 2,577
Other income 115 178
Rental income 24,376 24,518
Direct property costs (5,434) (4,893)
Total net rental income 18,942 19,625
4. Operating costs
Tax, legal and professional fees 403 505
Audit fees 143 123
Interim audit fees 37 41
Administration fees 197 211
Investment advisory fees 241 198
Non-executive directors 82 131
Staff remuneration costs 1,323 2,176
Other operating costs 743 1,265
3,169 4,650
5. Earnings per ordinary share
Reconciliation of (loss)/profit for the period to adjusted EPRA(1) earnings
(Loss)/earnings per IFRS income statement attributable to shareholders (5,535) 27,254
Adjustments to calculate EPRA earnings, exclude:
Changes in fair value of investment properties 7,386 (11,982)
Changes in fair value of financial instruments 435 180
Deferred tax in respect of EPRA adjustments 665 609
Adjustments above in respect of joint ventures and associates
Changes in fair value 12,169 (2,478)
Deferred tax in respect of EPRA adjustments (478) (318)
EPRA earnings attributable to shareholders 14,643 13,265
Further adjustments to arrive at adjusted EPRA earnings
Straight-line unwind of purchased swaps 556 1,021
Adjusted EPRA earnings attributable to shareholders 15,199 14,286
Weighted average number of shares in issue (excluding treasury shares)(2) 284,521,579 275,801,583
Share-based payment award 920,287 652,799
Diluted weighted average number of shares in issue 285,441,866 276,454,382
(Loss)/earnings per share
IFRS EPS (cents) (1.95) 9.88
Diluted IFRS EPS (cents) (1.94) 9.86
EPRA EPS (cents) 5.15 4.81
Diluted EPRA EPS (cents) 5.13 4.80
Adjusted EPRA EPS (cents) 5.34 5.18
Diluted adjusted EPRA EPS (cents) 5.32 5.17
(1) The European Public Real Estate Association (EPRA) issued Best Practices Policy Recommendations in December 2014, which provide
guidelines for performance measures relevant to real estate companies. Their recommended reporting standards are widely applied
across this market, aiming to bring consistency and transparency to the sector. The EPRA earnings measure is intended to show the level
of recurring earnings from core operational activities with the purpose of highlighting the Group's underlying operating results from its
property rental business and an indication of the extent to which current dividend payments are supported by earnings. The measure
excludes unrealised changes in the value of investment properties, gains or losses on the disposal of properties and other items that do
not provide an accurate picture of the Group's underlying operational performance. The measure is considered to accurately capture the
long-term strategy of the Group, and is an indication of the sustainability of dividend payments.
(2) As at 30 September 2016, the Company held 1,356,567 treasury shares (March 2016 and September 2015: nil).
Straight-line unwind of purchased swaps
A further adjustment was made to the EPRA earnings attributable to shareholders relating to the straight-line unwind
of the value as at 1 April 2014 of the swap contracts in the property companies acquired. When the property companies
were acquired by Stenprop with effect from 1 April 2014, it also acquired the bank loans and swap contracts which were in
place within these property companies. As a result, Stenprop took over loans with higher swap interest rates than would
have been the case had new loans and swaps been put in place at 1 April 2014. To compensate for this, the value of the
swap break costs was calculated at 1 April 2014 and the purchase consideration for the property companies was reduced
accordingly to reflect this liability.
Reconciliation of profit for the period to headline earnings
Reviewed Reviewed
six months six months
ended ended
30 September 30 September
2016 2015
EUR'000 EUR'000
(Loss)/earnings per IFRS income statement attributable to shareholders (5,535) 27,254
Adjustments to calculate headline earnings, exclude:
Changes in fair value of investment properties 7,386 (11,982)
Changes in fair value of financial instruments - 519
Deferred tax in respect of headline earnings adjustments 1,113 609
Adjustments above in respect of joint ventures and associates
Changes in fair value of investment properties 14,684 (2,551)
Deferred tax (1,135) (367)
Headline earnings attributable to shareholders 16,513 13,482
Earnings per share
Headline EPS (cents) 5.80 4.89
Diluted headline EPS (cents) 5.78 4.88
Reviewed Reviewed Audited
30 September 30 September 31 March
2016 2015 2016
EUR'000 EUR'000 EUR'000
6. Net asset value per ordinary share
Net assets attributable to equity shareholders 422,566 454,105 455,497
Adjustments to arrive at EPRA net asset value:
Derivative financial instruments 5,873 5,362 5,942
Deferred tax 10,400 7,653 9,705
Adjustments above in respect of non-controlling interests 2,187 2,343 2,838
EPRA net assets attributable to shareholders 441,026 469,463 473,982
Number of shares in issue (excluding treasury shares)(1) 285,325,313 279,720,942 282,984,626
Share-based payment award 920,287 652,799 647,806
Diluted number of shares in issue 286,245,600 280,373,741 283,632,432
Net asset value per share (basic and diluted)
IFRS net asset value per share (cents) 1.48 1.62 1.61
Diluted IFRS net asset value per share (cents) 1.48 1.62 1.61
EPRA net asset value per share (cents) 1.55 1.68 1.67
Diluted EPRA net asset value per share (cents) 1.54 1.67 1.67
7. Share capital
Authorised
1,000,000,000 ordinary shares with a par value of EUR0.000001258 each 1 1 1
Reviewed Reviewed
six months six months Audited
ended ended year ended
30 September 30 September 31 March
2016 2015 2016
Issued share capital
Opening balance 282,984,626 272,236,146 272,236,146
Issue of new shares 3,697,254 7,484,796 10,748,480
Closing number of shares issued(1) 286,681,880 279,720,942 282,984,626
Share capital
Share premium (EUR'000) 397,999 387,895 392,785
Less: Acquisition/transaction costs (EUR'000) (2,858) (2,859) (2,858)
Total share premium (EUR'000) 395,141 385,036 389,927
There were no changes made to the number of authorised shares of the Company during the period under review.
Stenprop Limited has one class of share; all shares rank equally and are fully paid.
The Company has 286,681,880 (March 2016: 282,984,626) ordinary shares in issue at the reporting date. On 9 June 2016,
3,687,191 and 10,063 new ordinary shares were issued on the JSE and the BSX respectively at an issue price of EUR1.41 per
share in respect of the Share Purchase Plan and Deferred Share Bonus Plan respectively.
(1) As at 30 September 2016, the Company held 1,356,567 treasury shares (March 2016 and September 2015: nil). This was as a result of a limited
share repurchase programme between 28 June and 11 July 2016.
8. Investment property
The fair value of the consolidated investment properties at 30 September 2016 was EUR638,361,000 (31 March 2016:
EUR729,782,000). This excludes an amount of EUR58,590,000 (31 March 2016: EURnil) for properties which have been classified
as held for sale. The carrying amount of investment property is the fair value of the property as determined by registered
independent appraisers having an appropriate recognised professional qualification and recent experience in the location
and category of the property being valued ('valuers').
The fair value of each of the properties for the period ended 30 September 2016 was assessed by the valuers in
accordance with the Royal Institute of Chartered Surveyors ('RICS') standards and IFRS 13. Valuers are qualified for
purposes of providing valuations in accordance with the 'Appraisal and Valuation Manual' published by RICS.
The valuations performed by the independent valuers are reviewed internally by senior management. This includes
discussions of the assumptions used by the external valuers, as well as a review of the resulting valuations.
Discussions of the valuations process and results are held between the senior management and the external valuers on a
biannual basis. The Audit Committee reviews the valuation results and, provided the committee is satisfied with the results,
recommends them to the board for approval.
The valuation techniques used are consistent with IFRS 13 and use significant 'unobservable' inputs. Investment properties
are all at level 3 in the fair value hierarchy and valuations represents the highest and best use of the properties. There have
been no changes in valuation techniques since the prior year.
There are interrelationships between all these unobservable inputs as they are determined by market conditions.
An increase in more than one unobservable input would magnify the impact on the valuation. The impact on the valuation
would be mitigated by the interrelationship of two unobservable inputs moving in the opposite directions, e.g. an increase
in rent may be offset by an increase in yield, resulting in no net impact on the valuation. Expected vacancy rates may impact
the yield with higher vacancy rates resulting in higher yield. All revenue is derived from the underlying tenancies given on the
investment properties.
The key unobservable inputs used in the valuation of the Group's investment properties at 30 September 2016 are detailed
in the table below:
Combined
portfolio
(including Percentage Market Annualised Net initial
share of of portfolio value gross yield
jointly by market 30 September rental (weighted Voids
controlled value 2016 Area income average) by area
entities) (%) (EUR million) Properties (m2) (EUR million) (%) (%)
UK 36.7 286.9 13 63,504 18.2 5.68 0.0
Germany 32.0 249.9 23 92,032 14.0 5.08 4.4
Switzerland 13.0 101.6 9 36,714 5.1 4.47 24.7
Subtotal 81.7 638.4 45 192,250 37.3 5.25 6.8
Share of joint
ventures and
associates 18.3 142.8 6 49,728 10.3 5.66 2.0
Total 100.0 781.2 51 241,978 47.6 5.27 5.8
As discussed in note 1 under 'Refinancing of loans and valuation of investment properties', there is uncertainty on the
refinancing of the loan which may affect the valuation of the Bleichenhof property.
Reviewed Audited
30 September 31 March
2016 2016
EUR'000 EUR'000
Opening balance 729,782 695,196
Properties acquired - 48,206
Capitalised expenditure 698 3,604
Disposals through the sale of property - (6,701)
Foreign exchange movement in foreign operations (26,143) (33,462)
Net fair value (loss)/gain on investment property (7,386) 22,939
Transfer to assets held for sale (58,590) -
Closing balance 638,361 729,782
Acquisitions
Germany
Stenprop Hermann Ltd - 24,458
Stenprop Victoria Ltd - 23,748
- 48,206
Disposals
UK
GGP1 Limited - (6,701)
- (6,701)
Prior year acquisitions
The acquisition of a retail centre known as Hermann Quartier for a purchase price, including acquisition costs of
EUR24.5 million completed on 24 August 2015. The property is on a high-street location in Berlin's central suburb of Neukolln
with excellent public transport links, including an underground station inside the shopping centre. The acquisition was
financed 50% by debt at an all-in interest rate of 1.42% per annum. The return on equity on this investment exceeded 7%
per annum at inception.
The acquisition of the Victoria retail centre for EUR23.7 million, including acquisition costs, completed on 24 November
2015. The property is located in the Lichtenberg district of Berlin, approximately 15 minutes by underground from the city
centre and is anchored by Kaufland (a hypermarket chain) on a new 17-year lease. The return on equity on this investment
exceeded 8% per annum at inception.
Prior year disposals
On 20 January 2016, the Group disposed of one of the eight properties owned by GGP1 Limited known as Leigh, UK, for
GBP5.37 million (equating to EUR6.7 million after disposal costs). The proceeds of the sale were utilised to part pay down the
outstanding Santander facility of GBP10.4 million by GBP2.04 million.
9. Investments in associates
Details of the Group's associates at the end of the reporting period are as follows:
% equity
Place of Principal owned by
Name incorporation activity subsidiary
Stenham European Shopping Centre Fund Limited ('SESCF') Guernsey Fund 28.42*
Stenham Berlin Residential Fund Limited Guernsey Fund 12.05
* 28.16% of the investment in the underlying property is held through SESCF, and 0.26% of the property investment is held via a wholly-owned
subsidiary, Leatherback Property Holdings Limited, a company incorporated in the British Virgin Islands.
Summarised financial information in respect of each of the Group's associates is set out below:
Stenham Stenham
European Berlin
Shopping Stenpark Residential
Centre Fund Management Fund
Limited Limited Limited Total
EUR'000 EUR'000 EUR'000 EUR'000
30 September 2016
Non-current assets 180.0 - 38,832 39,012
Assets held for sale 218,820 - 4,700 223,520
Current assets 9,017 29,395 38,412
Non-current liabilities - - - -
Current liabilities (154,762) - (200) (154,962)
Equity attributable to owners of the Company 73,255 - 72,727 145,982
Revenue 9,713 - 32,919 42,632
(Loss)/Profit from continuing operations and
total comprehensive income (42,733) - 20,638 (22,095)
31 March 2016
Non-current assets - - 55,672 55,672
Current assets 265,286 - - 265,286
Non-current liabilities 15,408 - 4,600 20,008
Current liabilities (164,318) - (150) (164,468)
Equity attributable to owners of the Company 116,376 - 60,122 176,498
Revenue 20,638 - 4,621 25,259
Profit from continuing operations
and total comprehensive income 1,343 - 6,876 8,219
Reconciliation of the above summarised financial information to the carrying amount of the interest in the associates
recognised in the financial statements:
Stenham Stenham
European Berlin
Shopping Stenpark Residential
Centre Fund Management Fund
Limited Limited Limited Total
EUR'000 EUR'000 EUR'000 EUR'000
30 September 2016
Opening balance 33,019 - 6,279 39,298
Share of associates' (loss)/profit* (12,135) - 2,481 (9,654)
Adjustment to associate balance 20 - - 20
Distribution received from associates (1) - - (1)
Closing balance 20,903 - 8,760 29,663
31 March 2016
Opening balance 34,041 41 5,570 39,652
Share in associates acquired during the period 367 - - 367
Reclassification of associate to joint venture - (41) - (41)
Share of associates' profit* 366 - 709 1,075
Distribution received from associates (1,755) - - (1,755)
Closing balance 33,019 - 6,279 39,298
* The share of associates' profit includes the fair value movement in the underlying investments for the period. The investment property in Stenham
European Shopping Centre, Nova Eventis was valued by the directors of the associate at EUR220 million less selling costs at 30 September 2016,
a 17.4% reduction of the fair value at 31 March 2016 of EUR265 million. The Stenham Berlin Residential Fund share price increased by 39.5% from
EUR1.24 to EUR1.73 per share during the period under review.
Stenham European Shopping Centre Fund Limited ('SESCF')
In January 2016, external property agents were appointed to market the sole asset owned by SESCF, known as Nova
Eventis, for sale. The original loan, which matured on 24 July 2016 was extended for a period of six months to 24 January
2017 on terms which are substantially the same as the original loan term. Should the sale not complete, the directors
expect that the loan will be refinanced on favourable terms. Whilst the directors are confident that the facility will
be refinanced, this is subject to uncertainty, and in the event that the directors of SESCF are not able to secure
refinancing, the lender may exercise their security which may result in SESCF realising the property at a value lower
than its current carrying value which will have an impact on the valuation of the Company's interest in the associate.
The lenders are fully informed on the sale process and are supportive. As at 30 September 2016, the consolidated accounts
of SESCF show the investment property as held for sale and its accounts have been prepared on a going concern basis.
Stenprop Limited has therefore deemed it appropriate to continue to disclose the investment in associate relating to
SESCF as a non-current asset and for the accounts to be prepared on a going concern basis. Readers are referred to
note 1 where this is discussed, under refinancing of loans and valuation of investement properties.
10. Investment in joint ventures
Details of the Group's joint ventures at the end of the reporting period are as follows:
% equity
Place of Principal owned by
Name incorporation activity subsidiary
Luxembourg
Elysion S.A. Luxembourg Holding company 50.00
Elysion Braunschweig Sarl Luxembourg Property company 50.00
Elysion Dessau Sarl Luxembourg Property company 50.00
Elysion Kappeln Sarl Luxembourg Property company 50.00
Elysion Winzlar Sarl Luxembourg Property company 50.00
Guernsey
Stenpark Management Limited Guernsey Management company 50.00
BVI
Stenprop Argyll Limited BVI Holding company 50.00
Regent Arcade House Holdings Limited BVI Property company 50.00
Summarised consolidated financial information in respect of the Group's joint ventures is set out below:
Stenpark Stenprop
Elysion Management Argyll
S.A. Limited Limited Total
EUR'000 EUR'000 EUR'000 EUR'000
Reviewed 30 September 2016
Investment property 34,120 - 93,362 127,482
Current assets 554 401 5,514 6,469
Assets 34,674 401 98,876 133,951
Bank loans (22,946) - (43,128) (66,074)
Shareholder loan third party - - (21,807) (21,807)
Shareholder loan Group (14,263) - (21,807) (36,070)
Deferred tax (296) - - (296)
Financial liability (855) - (2,073) (2,928)
Current liabilities (231) (309) (5,577) (6,117)
Liabilities (38,591) (309) (94,392) (133,292)
Net (liabilities)/assets of joint ventures (3,917) 92 4,484 659
Net assets of joint ventures excluding shareholder loans 10,346 92 48,098 58,536
Group share of net assets 10,346 46 24,049 34,441
Revenue 1,383 540 2,621 4,544
Interest payable (994) - (680) (314)
Tax expense (81) - - (81)
Profit/(loss) from continuing operations and total 592 433 (486) 539
comprehensive income excluding interest due to Group
Share of joint ventures profit/(loss) due to the Group 592 217 (243) 566
Stenpark Stenprop
Elysion Management Argyll
S.A. Limited Limited Total
EUR'000 EUR'000 EUR'000 EUR'000
Audited 31 March 2016
Investment property 34,349 - 103,375 137,724
Current assets 613 405 4,130 5,148
Assets 34,962 405 107,505 142,872
Bank loans (23,222) - (47,131) (70,353)
Shareholder loan third party - - (23,851) (23,851)
Shareholder loan Group (14,140) - (23,850) (37,990)
Deferred tax (223) - - (223)
Financial liability (1,068) - (1,585) (2,653)
Current liabilities (120) (324) (4,290) (4,734)
Liabilities (38,773) (324) (100,707) (139,804)
Net assets/(liabilities) of joint ventures (3,811) 81 6,798 3,068
Net assets of joint ventures excluding shareholder loans 10,329 81 54,499 64,909
Group share of net assets 10,329 41 27,250 37,620
Revenue 2,797 1,115 4,990 8,902
Interest payable (2,456) - - (2,456)
Tax expense (91) - - (91)
Profit from continuing operations and total
comprehensive income excluding interest due to Group 2,569 848 9,654 13,071
Share of joint ventures profit due to the Group 2,569 424 4,827 7,820
Reconciliation of the above summarised financial information to the carrying amount of the interest recognised in the
consolidated financial statements:
Stenpark Stenprop
Elysion Management Argyll
S.A. Limited Limited Total
EUR'000 EUR'000 EUR'000 EUR'000
Reviewed 30 September 2016
Opening balance 10,329 41 27,250 37,620
Share of joint venture profit/(loss) 592 217 (243) 566
Distribution received from joint venture (575) (200) (637) (1,412)
Foreign exchange movement in foreign operations - (12) (2,321) (2,333)
Closing balance 10,346 46 24,049 34,441
Stenpark Stenprop
Elysion Management Argyll
S.A. Limited Limited Total
EUR'000 EUR'000 EUR'000 EUR'000
Audited 31 March 2016
Opening balance 8,506 - - 8,506
Reclassification of associate to joint venture - 41 - 41
Share in joint ventures acquired during the period - - 26,782 26,782
Share of joint venture profit 2,569 424 4,827 7,820
Distribution received from joint ventures (746) (420) (1,072) (2,238)
Foreign exchange movement in foreign operations - (4) (3,287) (3,291)
Closing balance 10,329 41 27,250 37,620
Prior period acquisitions
On 20 May 2015, the Group acquired a 50% interest in Regent Arcade House Holdings Limited ('RAHHL') through Stenprop
Argyll Limited, a wholly owned subsidiary of the Group. RAHHL owns the property known as 25 Argyll Street. The acquisition
cost of this interest was GBP18.9 million which was based on a valuation of the property of GBP75 million. RAHHL refinanced the
property with an interest only bank loan of GBP37.5 million at an all-in rate of 2.974% per annum, with a term of five years.
11. Assets held for sale
Management consider four properties and an annexe of a fifth property ('Burger King') to meet the conditions relating to
assets held for sale, as per IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations'. These properties are
expected to be disposed of during the next quarter and are recognised at either the sale price per signed sales and purchase
agreement, or in the case where this is not yet finalised, the fair value as determined by a third party valuer.
The fair value of these properties, and their comparatives are shown in the table below:
Reviewed Audited
Ownership 30 September 31 March
interest 2016 2016
Company Property (%) EUR'000 EUR'000
Germany
Stenprop Hermann Ltd 'Burger King' element of
the Hermann Quartier property 100.00 2,970 2,990
2,970 2,990
Switzerland
Clint Properties S.a.r.l. (Lux) Interlaken 100.00 6,260 6,220
Baar 100.00 21,634 21,843
Montreux 100.00 22,361 21,166
Vevey 100.00 5,365 5,331
55,620 54,560
Opening balance - -
Transfers from investment property 58,590 -
Closing balance 58,590 -
Reviewed Audited
30 September 31 March
2016 2016
EUR'000 EUR'000
12. Borrowings
Opening balance 367,493 364,931
Loan repayments (351) (30,608)
New loans - 56,196
Amortisation of loans (2,175) (7,514)
Capitalised borrowing costs (186) (1,049)
Amortisation of transaction fees 218 378
Foreign exchange movement in foreign operations (10,965) (14,841)
Total borrowings 354,034 367,493
Amount due for settlement within 12 months 173,033 188,785
Amount due for settlement between one to three years 72,209 29,892
Amount due for settlement between three to five years 99,792 139,816
Amount due for settlement after five years 9,000 9,000
354,034 367,493
Non-current liabilities
Bank loans 181,001 178,708
Total non-current loans and borrowings 181,001 178,708
The maturity of non-current borrowings is as follows:
One year to five years 172,001 169,708
More than five years 9,000 9,000
181,001 178,708
Current liabilities
Bank loans 173,033 188,785
Total current loans and borrowings 173,033 188,785
Total loans and borrowings 354,034 367,493
The facilities are secured by debentures and legal charges over the properties to which they correspond. There is no
cross-collaterisation of the facilities.
On 26 May 2016, two Stenprop subsidiaries, Davemount Properties Limited ('Davemount') and GGP1 Limited ('GGP1')
refinanced their loan facilities with Santander. Santander has provided a single facility of GBP12.4 million for a five-year period,
split GBP4.0 million to Davemount and GBP8.4 million to GGP1. The all-in rate on this facility is 3.46%, which compares to 2.7% on
the previous Davemount facility and 3.72% on the previous GGP1 facility.
A loan of GBP84.9 million on the Bleichenhof property in central Hamburg matures on 31 December 2016. Discussions are
ongoing with the existing lenders and Stenprop expects to refinance the loan on favourable terms. Whilst the directors
are confident that the facility will be refinanced, this is subject to uncertainty, and in the event that the loan is not able to be
refinanced, the lender may exercise their security which may result in the property being realised at a value lower than that
reflected in the statement of financial position
13. Financial risk management
Fair value of financial instruments
The following table summarises the Group's financial assets and liabilities into categories required by IFRS 7 Financial
instruments disclosures. The directors consider that the carrying amounts of financial assets and financial liabilities
recorded at amortised cost in the financial statements approximate their fair values.
Held at Total
fair value carrying
through Held at amount
profit amortised 30 September
and loss cost 2016
EUR'000 EUR'000 EUR'000
Financial assets
Cash and cash equivalents - 32,220 32,220
Accounts receivable - 2,669 2,669
Other debtors - 14,043 14,043
- 48,932 48,932
Financial liabilities
Bank loans - 354,034 354,034
Other loan and interest - 12 12
Derivative financial instruments 5,873 - 5,873
Accounts payable and accruals - 16,672 16,672
Reviewed 30 September 2016 5,873 370,718 376,591
Held at Total
fair value carrying
through Held at amount
profit amortised 31 March
and loss cost 2016
EUR'000 EUR'000 EUR'000
Financial assets
Cash and cash equivalents - 36,811 36,811
Accounts receivable - 3,509 3,509
Other debtors - 9,338 9,338
- 49,658 49,658
Financial liabilities
Bank loans - 367,493 367,493
Other loan and interest - 12 12
Derivative financial instruments 5,942 - 5,942
Accounts payable and accruals - 16,503 16,503
Audited 31 March 2016 5,942 384,008 389,950
Fair value hierarchy
The table below analyses the Group's financial instruments carried at fair value, by valuation method. The different levels
have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Total
financial
instruments Designated at fair value
recognised
at fair value Level 1 Level 2 Level 3
EUR'000 EUR'000 EUR'000 EUR'000
Reviewed 30 September 2016
Liabilities
Derivative financial liabilities 5,873 - 5,873 -
Total liabilities 5,873 - 5,873 -
Audited 31 March 2016
Liabilities
Derivative financial liabilities 5,942 - 5,942 -
Total liabilities 5,942 - 5,942 -
Details of changes in valuation techniques
There have been no significant changes in valuation techniques during the period under review.
Significant transfers between Level 1, Level 2 and Level 3
There have been no significant transfers during the period under review.
14. Related party transactions
Parties are considered related if one party has control, joint control or significant influence over the other party in making
financial and operating decisions. Transactions with related parties are made on terms equivalent to those that prevail in an
arm's-length transaction.
Other than those further referred to below, there were no other related party transactions during the period ended
30 September 2016.
P Arenson and M Fienberg, both directors of the Company until 14 September 2016 when M Fienberg resigned, are also
directors of Stenham Limited which at 30 September 2016 had an indirect beneficial interest of 4.85% in Stenprop Limited
through its wholly-owned subsidiary, Stenham Group Limited (March 2016: 4.91%).
At 30 September 2016, P Arenson held an indirect 1.12% interest in the share capital of Stenham Limited (March 2016:
2.58%). His interest in Stenprop Limited is 3.77% as at 30 September 2016 (March 2016: 3.16%).
M Yachad is a non-executive director of the Company and an executive director of Peregrine Holdings Limited, which has a
beneficial interest (direct and indirect) of 6.75% in the shares of the Company at 30 September 2016 (March 2016: 6.41%).
15. Events after the reporting period
(i) BSX listing
With effect from 3 October 2016 the Bermuda Stock Exchange ('BSX') approved Stenprop's request to move the
Company's listing on the BSX from a primary listing to a secondary listing. The transfer does not affect the Company's
current primary listing on the Main Board of the Johannesburg Stock Exchange ('JSE') or the trading of shares on either
the JSE or BSX.
(ii) Stenham Berlin Residential Fund Limited ('SBRF')
On 24 October 2016, Stenham Residential Berlin Fund ('SBRF'), an associate in which Stenprop has a 12.05%
shareholding, disposed of its final investment in ADO Group on the Tel Aviv Stock Exchange for EUR4.7 million. SBRF now
has a single investment in shares of ADO Properties Sarl, which is listed on the Frankfurt Stock Exchange. Following the
sale of the shares in ADO Group, the Directors of SBRF issued a voluntary share buyback notice in November. Stenprop
intends to participate in the share buyback and anticipates a cash receipt of approximately EUR4.0m in December.
(iii) Nova Eventis sale
The Group holds an investment in SESCF which owns a shopping centre known as Nova Eventis near Leipzig. This asset
is in the process of being sold. The current loan on this asset expires on 24 January 2017. The directors of SESCF will
seek to extend this loan if they consider that the sale may complete after the maturity date.
(iv) Bleichenhof refinancing
The loan of EUR84.9 million secured against the Bleichenhof property in central Hamburg matures on 31 December
2016. Stenprop is in the process of refinancing this loan on five year term with the existing lender, Berlin Hyp AG. The
property is undergoing a refurbishment/repositioning at the rear of the property to take advantage of the marriage
value with the large scale redevelopment of the property next door.
Corporate information
STENPROP LIMITED SA transfer secretaries BSX sponsor
(Incorporated in Bermuda) Computershare Investor Services Estera Securities (Bermuda) Limited
Registration number: 47031 Proprietary Limited (Registration number 25105)
BSX share code: STP.BH (Registration number 2004/003647/07) Canon's Court
JSE share code: STP 70 Marshall Street 22 Victoria Street
ISIN: BMG8465Y1093 Johannesburg, 2001 Hamilton, HM12, Bermuda
South Africa (Postal address the same as the
Registered office of the Company physical address above)
Stenprop Limited Correspondence address
(Registration number 47031) PO Box 61051 Bermudian registrars
20 Reid Street Marshalltown, 2107 Computershare Investor Services
3rd Floor, Williams House South Africa (Bermuda) Limited
Hamilton, HM11 (Company number 41776)
Bermuda Legal advisors Corner House
Berwin Leighton Paisner LLP 20 Parliament Street
Company secretary Adelaide House Hamilton, HM12
Apex Corporate Services Ltd. London Bridge Bermuda
(Registration number 33832) London, EC4R 9HA
3rd Floor, Williams House United Kingdom Correspondence address
20 Reid Street 2nd Floor, Queensway House
Hamilton HM11, Bermuda Postal address of the Company Hilgrove Street
(PO Box 2460 HM JX, Bermuda) Kingsway House St. Helier
Havilland Street Jersey
JSE sponsor St Peter Port, GY1 2QE JE1 1ES
Java Capital Trustees and Sponsors Guernsey Channel Islands
Proprietary Limited
(Registration number 2006/005780/07) South African corporate advisor Auditors
6A Sandown Valley Crescent Java Capital Proprietary Limited Deloitte LLP
Sandown (Registration number 2012/089864/07) Regency Court
Sandton, 2196 6A Sandown Valley Crescent Glategny Esplanade
South Africa Sandown St Peter Port
(PO Box 2087, Parklands, 2121) Sandton, 2196 GY1 3HW
South Africa Guernsey
(PO Box 2087, Parklands, 2121) Channel Islands
Released on JSE on 24 November 2016
www.stenprop.com
