TIDMKEIF
RNS Number : 1538Y
Kenmore Euro Industrial Fund Ltd
28 August 2009
28 August 2009
KENMORE EUROPEAN INDUSTRIAL FUND LIMITED ("KEIF"/ the "Fund" / "Company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2009
Kenmore European Industrial Fund, a Guernsey registered closed-ended investment
company focusing on industrial property assets in Western Europe and
Scandinavia, today announces interim results for the six months to 30 June 2009.
Highlights:
* The Company sold ten assets, which allowed the net repayment of GBP17.1m of debt
and the release of further cash.
* Since the period end, the Fund has sold an additional 18 assets in France,
enabling the Fund to repay a further GBP46.1m of debt. As a result, if all
resultant cash balances were applied to reduce drawn debt facilities, KEIF's
current gearing would be 60.5% (30 June 2009 - 63.4%).
* Ongoing leasing activity, retaining strong defensive income profile:
*
* 28 new leases were signed during the half year, representing 3.08% of gross
income (GBP1,137,000) and 2.99% or 21,350 sq m of total area
* Of all leases that were subject to review during the six-month period, 64% were
retained for GBP2,261,000, representing 6.12% of total gross income.
* Further 0.75 pence per share dividend announced for the 2009 financial year, at
the same level as the interim dividend announced in March and paid in April.
Giles Weaver, Chairman, commented:
"2009 has continued to be a testing time for the European commercial property
sector. As I noted in May and before, the immediate focus for the Kenmore
European Industrial Fund has been undertaking a selective disposal programme not
only to strengthen the Company's balance sheet but also guard against any future
loan covenant issues potentially brought on by further readjustments.
At 30 June 2009 the portfolio was yielding 7.64% and continues to have a strong
defensive income profile. The key asset management focus for the remainder of
2009 and into 2010 is centred on staying close to tenants and assisting them
where possible as they deal with the prevailing economic climate. The Board also
believes that, through the Investment Manager's strong local network and
specialist in-house property expertise, the Fund is well placed to consider the
impact of likely future adjustments and address them before they become
significant issues in a continuingly difficult market. Over the last quarter,
more space was let than vacated (albeit for marginally less rental income than
was lost) and this is as a result of the Investment Manager's proactive asset
management approach."
For further information:
+--------------------------------------------+--------------------------+
| Kenmore Financial Services Limited | +44 20 7629 4480 |
| Denise Hamilton/Rob Brook | |
+--------------------------------------------+--------------------------+
| Financial Dynamics | +44 20 7831 3113 |
| Stephanie Highett/Dido Laurimore | |
+--------------------------------------------+--------------------------+
CHAIRMAN'S STATEMENT
2009 has continued to be a testing time for the European commercial property
sector. As I noted in May and before, the immediate focus for the Kenmore
European Industrial Fund has been undertaking a selective disposal programme not
only to strengthen the Company's balance sheet but also guard against any future
loan covenant issues potentially brought on by further readjustments. To that
end, I am pleased to report that during the first half of 2009, the Fund
successfully sold ten assets which allowed the net repayment of GBP17.1m of debt
and the release of further cash. Furthermore, since then the Fund has sold an
additional 18 assets in France allowing the repayment of a further GBP46.1m of
debt. I believe this sale gives the Fund greater flexibility with which to
address any future loan covenant issues.
Aside from the immediate focus, the Fund's investment objective, as stated at
admission in September 2006, remains to provide investors with an attractive
level of income together with the potential for capital growth. It is focused on
industrial assets in Western and Northern Europe, excluding the UK, and
primarily in France, Germany, Scandinavia and the Benelux countries.
Results
In common with our peers across the sector, the underlying performance of the
Fund continues to be impacted by downward pressures on pan-European commercial
property values. In the quarter since 31 March 2009, the net assets per share,
excluding deferred tax, have fallen 14.3 pence - not only have valuations
declined by a further 3.6% but Sterling has strengthened by over 9% in the
quarter. Since 31 December 2008, net assets per share, excluding deferred tax,
decreased by 33.4 pence to 75.2 pence, a fall of 30.8%.
The table below shows the movement in adjusted net asset value per share for the
current financial period (since 31 December 2008) and for the period since
admission:
+--------------------------+-------------+---------------+-------------+-------------+
| NAV per share (Pence) | Six months |
| | Since admission to 30 June 2009 |
+--------------------------+-------------------------------------------+
| Opening, excluding deferred tax and | 95.5 | 108.6 |
| after listing costs | | |
+----------------------------------------+---------------+---------------------------+
| Movement in portfolio valuations | (39.6) | (22.6) |
+----------------------------------------+---------------+---------------------------+
| Expensing of acquisition costs | (6.2) | - |
+----------------------------------------+---------------+---------------------------+
| Uplift from balance of retained | 11.4 | 2.3 |
| profits | | |
+----------------------------------------+---------------+---------------------------+
| Movement in mark to market of debt | (9.1) | (0.4) |
+----------------------------------------+---------------+---------------------------+
| Dividends paid | (11.3) | (0.8) |
+----------------------------------------+---------------+---------------------------+
| Foreign exchange movements | 28.0 | (8.3) |
+----------------------------------------+---------------+---------------------------+
| Deferred tax compensated for at | 6.5 | (3.6) |
| acquisition | | |
+----------------------------------------+---------------+---------------------------+
| As at 30 June 2009, excluding deferred | 75.2 | 75.2 |
| tax | | |
+--------------------------+-------------+---------------+-------------+-------------+
Losses before tax in six months to 30 June 2009 were GBP27.4m. Key components of
this include:
* operating profits less interest GBP5.1m
* unrealised revaluation losses GBP(31.7)m
During the first six months of 2009, and particularly in the second quarter, the
Euro (the currency in which the majority of the Fund's assets are held) weakened
14.5% against Sterling, which is used for reporting purposes. As a result, net
currency losses have caused an 8.3 pence reduction in the net asset value per
share. However, since admission, the Euro has still strengthened significantly,
adding 28.0 pence.
Portfolio
During this six month period, the Company disposed of one asset in Germany, one
asset in Norway and eight assets in France for GBP34.2m, realising a loss after
disposal costs of GBP1.0m against valuation. As at the balance sheet date, the
Company held properties at a market value of GBP333m. Further information on the
portfolio is contained within the Investment Manager's Review.
Gearing
The Board's stated policy is to selectively sell assets with a medium term
target of maintaining gearing (net of all cash) between 50% and 60%. As at 30
June 2009, the Company had drawn GBP259.5m of debt from its total facilities.
Under the terms of its facilities, GBP20.2m of proceeds from certain sales that
have occurred have not yet been applied to reduce the drawn facilities. After
these cash balances have been applied, the net drawn balance of GBP239.3m will
represent gearing of 71.9%. If all cash balances within the Fund were to be
applied to reduce the drawn debt facilities it would reduce gearing to 63.4%, up
from 61.6% at 31 December 2008. The loan to value covenants on the Company's
banking facilities currently range from 70% to 80% (averaging 75.1% based on
debt drawn).
Since 30 June 2009, the Company has announced the successful disposal of a
further 18 assets in France - the position after these sales, if all resulting
cash balances within the Fund were to be applied to reduce the remaining drawn
debt facilities, would be gearing of 60.5%.
The Company has hedged the risk of interest rate increases by the use of
interest rate swaps. As at 30 June 2009, a total of 97% of the Company's debt
has been protected in this way for a weighted average period of 2.1 years. The
blended cost of money based on debt drawn to date is currently 3.99% (4.98%
including margin).
Dividends
The Board has decided to declare a further interim dividend of 0.75 pence for
the 2009 financial year, being at the same level as the interim dividend
announced in March and paid in April. This will be paid on 25 September 2009 to
shareholders on the register on 11 September 2009.
Shareholder Communication
The Board considers it important that shareholders are kept regularly informed
of the progress of the Fund. The adjusted Net Asset Value per share will
continue to be published quarterly.
Corporate Governance
The Company is registered in Guernsey. As such, it is not formally required to
comply with the Combined Code on Corporate Governance. However, the Directors
intend to comply with the Code, and our statement on compliance is contained in
the 2008 Annual Report.
Prospects
I commented in May that, in line with the markets in which the Fund operates,
the value of the Fund's portfolio had been adversely impacted by macro-economic
malaise and this continues to be the case. The Board has, however, effected
disposals in order that some headroom remains between gearing (after the
application of all free cash) and covenants.
At 30 June 2009 the portfolio was yielding 7.64% and continues to have a strong
defensive income profile. The key asset management focus for the remainder of
2009 and into 2010 is centred on staying close to tenants and assisting them
where possible as they deal with the prevailing economic climate. The Board also
believes that, through the Investment Manager's strong local network and
specialist in-house property expertise, the Fund is well placed to consider the
impact of likely future adjustments and address them before they become
significant issues in a continuingly difficult market. Over the last quarter,
more space was let than vacated (albeit for marginally less rental income than
was lost) and this is as a result of the Investment Manager's proactive asset
management approach.
The Board will continue to review its selective disposal programme in order to
continue to give the Fund the greatest flexibility to deal with any future
sector pressures as they arise.
Giles Weaver
Chairman
27 August 2009
INVESTMENT MANAGER'S REVIEW
Property Market Review
Direct investment into commercial real estate in Europe for the first half of
2009 was EUR24 billion, 42% less than the previous half-year and 67% down on the
same period in 2008. Of this total, light industrial represented EUR2.2 billion,
being a 9% share of total transactions, up from 7% in 2008. Occupier demand
continued to weaken in the first half of 2009 and demand is likely to continue
to fall as Euro-Zone economic performance continues to struggle. This slackening
in demand and increasing void rates is naturally putting pressure on secondary
rental levels both in terms of head line rents and underlying rental levels as
both asking rates fall and incentives (rent-free, fit-out etc) increase. On a
positive note, lack of financing is constraining new supply on what were already
low levels of development over the past few years with most development being on
a non-speculative basis. In keeping with all sectors, industrial and warehouse
sector tenants continue to suffer as a result of poor economic performance. This
is leading to factory closures, consolidation and down-sizing that is impacting
on tenant retention. For the quarter, our own tenant retention was 54% and new
leasing exceeded tenants vacating by floor area, but was slightly down compared
to rental income. In light of the wider market this is again a strong
performance.
Belgium
Very few investment transactions took place in Belgium during the first half of
2009 and those that did take place were predominantly prime transactions.
Warehouse occupier take-up has fallen by an estimated 80% quarter-on-quarter
with light industrial activity down 46%. Outward yield shift is estimated to be
between 25 and 60 basis points depending on location and transaction size.
Transaction activity in this half-year is down 32% on the last six months of
2008 and 81% down on the same period in 2008.
With regards to the letting market, the take-up of industrial space has slowed
down since the end of 2008. Leases signed this quarter are the result of long
negotiations started in previous quarters or negotiations with existing tenants,
and tenants are reluctant to relocate unless significant incentives are agreed.
Finland
The transaction market has come to a near standstill with only domestic
institutions buying mainly prime office and retail assets. In the first half of
2009 total commercial real estate volumes amounted to EUR550 million, a 48%
decline on the last six months of 2008 and circa 80% on the same period in 2008.
Poor access to funding is the main reason with most local banks effectively
closed for business. Industrial transactions represented 31% of the total
volume.
The leasing market has slackened with falling demand across the country. It is
clear that many organisations have actually entered a contraction phase which
has seen increases in unemployment as well as downsizing. Tenant demand is
currently focused on mainly smaller units of 500 square metres or less. While
vacancy rates are historically low these have now begun to increase as occupiers
consolidate space requirements. However, an almost total lack of speculative
development will make oversupply unlikely.
France
After a strong start to the year in total take-up by tenants, the second quarter
saw a sharp deterioration with a fall of 37% over the previous quarter. While
rents have to-date remained stable, there is growing downward pressure. However,
rental values in France are amongst the lowest in Europe and thus rental
declines are expected to be more moderate than elsewhere. Vacancy levels are
increasing across all sectors.
Investment transaction volumes in France are significantly down on the
three-year average and 76% lower than a year ago. Nevertheless, France recorded
an 85% uplift in quarter two compared to quarter one.
Germany
Total warehouse take-up in the first half of 2009 amounted to over 1.4 million
square metres, in line with the last six months of 2008 and just 6% below the
same period in 2008. However, in the last quarter take-up declined nearly 30% on
the previous quarter. Despite continuing good demand and less space returning to
the market than previously feared, vacancy levels continued to edge up
throughout the last year. Occupier activity in the light industrial sector
slowed throughout the first six months of 2009 and occupiers are generally
introducing cost-cutting measures and many are renegotiating existing leases.
With a total of EUR3.4 billion invested in the last six months, Germany recorded
the second highest direct real estate investment volume in Europe behind the UK.
Total direct real estate investment in the last quarter amounted to EUR1.7
billion, up by 8% over the previous quarter. Total industrial investment
increased by 84% in the last quarter over the previous quarter. However, total
investment volumes in the industrial sector remained at a low level.
The Netherlands
After fairly stable take-up volumes in the first quarter of 2009, total take-up
in the Netherlands decreased strongly in the last quarter, down by 63% on the
previous quarter. Third party logistic companies continued to drive take-up
levels, accounting for 56% of the total take-up volume and 55% of the total
number of transactions. However, as elsewhere, occupier activity is focused on
space consolidation and cost cutting measures.
In total EUR1.2 billion was invested in direct real estate in the first six months
of 2009, 61% less than the second half of 2008 and nearly 80% less than in the
same period in 2008. Total investment amounted to EUR700 million in the last
quarter, reflecting a 40% increase quarter-on-quarter. Over the first two
quarters of 2009, prime yields have yet again moved out from 7.5% to 7.75%, and
are expected to continue to weaken more throughout 2009. Secondary yields have
moved at least as much and are now at around 10.0% to 10.25%.
In common with other western European economies, growth is expected to slow over
the next two years before stabilising at 2% per annum and remain at this level
for some time. Particular downside risks in the short term stem from excessive
weakening in consumer confidence and spending linked to reductions in house
prices. In the same way, employment growth is likely to decline or stagnate over
the next two to three years.Rents have so far remained largely stable with only
slight weakening but are expected to weaken further during the second half of
2009.
Norway
Occupier activity in the Norwegian industrial sector continued to decline
throughout the first six months of the year. With the economy in recession and
export volumes significantly down, demand is driven mainly by local groups.
Due to historically limited speculative development, vacancy in industrial
property continues to be low, however, consolidation and the vacation of
existing stock have contributed to increasing vacancy rates over the last few
months. Whilst development of larger distribution warehousing space has
increased in recent years, the volume of newly developed light industrial space
remains low and therefore the majority of light industrial space continues to be
older premises.
In total EUR570 million has been invested in the first half of 2009. Investment
activity increased in the last quarter - up more than three times on the
previous quarter, however, investment volumes remained 41% lower than in the
second half of 2008 and 51% below the first half of last year. Investment
activity in the industrial sector remained subdued throughout the last six
months. Whilst volumes have increased by 74% quarter-on-quarter, this increase
was realised from volumes as low as EUR30 million in the first quarter of 2009.
Total industrial investment in the first half of 2009 therefore stood at only
EUR85 million.
Sweden
Demand for industrial floor space in the Swedish market remained subdued during
the first six months of 2009, with an equally limited level of occupier activity
expected during the rest of the year. Occupiers are increasingly starting to
consolidate occupied stock with demand focused on prime locations and prime
quality in order to enhance the efficiency of occupied space and thus gain cost
advantages.
Whilst vacancy rates continue to remain low due to the historic limited
speculative development, more occupiers are starting to offer surplus floor
space for sub-letting. The number of companies completely vacating occupied
space is also increasing. As a result, vacancy levels are edging up and are
expected to grow throughout 2009.
Total direct commercial real estate investment volumes for the first half of
2009 were EUR890 million which are 81% lower than volumes in the second half of
2008 and 80% lower than those in the first half of 2008. Total investment in the
last quarter amounted to EUR500 million, 25% higher than in the previous quarter.
Investment volumes in the industrial sector edged up in the last quarter,
however, in volume terms the increase remained limited. In total, EUR84 million
was invested in industrial properties in the last six months. The majority of
these transactions involved domestic investors.
Portfolio Overview
The value and leasing changes in the portfolio in the first quarter were
outlined in the Interim Management Statement for that period announced to
shareholders on 19 May 2009. During the second quarter, 13 new leases were
signed representing 2.27% of gross income (GBP786,267) and 2.01% or 14,505
square metres of total area. Furthermore, 21 lease renewals were signed
representing 2.64% of gross income (GBP914,172) and 2.30% or 16,606 square
metres of total area. Vacating tenants during this quarter amounted to 21
tenants representing GBP854,467 of ERV and 14,186 square metres.
Of the leasing activity undertaken during the second quarter the more prominent
leases signed include: Amplitude (Lisses Bois Chaland, France) 1,700 square
metres at a rent of GBP125,000; 326 square metres to Hydrolic (Roissy en Brie,
France) for a rent of GBP22,820; and a lease to Etraco at Merksem (Belgium) at a
rent of GBP21,863 for 525 square metres. Significant lease renewals included
2,171 square metres to Rema at Østmarkveien 27 (Norway) for a rent of GBP319,783
and 2,448 square metres to I-21 at Zaventem (Belgium).
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
| At 30 June | Belgium | Finland | France | Germany | Netherlands | Norway | Sweden | TOTAL |
| 2009 | | | | | | | | |
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
| Number of | 9 | 7 | 55 | 4 | 3 | 10 | 7 | 95 |
| Assets | | | | | | | | |
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
| Number of | 67 | 15 | 241 | 22 | 3 | 47 | 48 | 443 |
| Tenants | | | | | | | | |
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
| Total Area | 125,979 | 36,914 | 249,333 | 91,936 | 20,001 | 86,081 | 103,324 | 713,568 |
| (sqm) | | | | | | | | |
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
| Average Lot | GBP5,340 | GBP3,199 | GBP2,634 | GBP5,870 | GBP2,700 | GBP5,716 | GBP4,124 | GBP3,504 |
| Size GBP'000 | | | | | | | | |
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
| Value (per | GBP382 | GBP607 | GBP681 | GBP255 | GBP405 | GBP664 | GBP279 | GBP467 |
| sqm) | | | | | | | | |
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
| Area/Tenancy | 1,880 | 2,461 | 1,035 | 4,179 | 6,667 | 1,832 | 2,153 | 1,611 |
| (sqm) | | | | | | | | |
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
| Area/Asset | 13,998 | 5,273 | 4,533 | 22,984 | 6,667 | 8,608 | 14,761 | 7,511 |
| (sqm) | | | | | | | | |
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
| Vacancy | 10.33% | 10.82% | 8.95% | 28.86% | 0.00% | 2.04% | 12.33% | 11.26% |
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
| Average Rent | GBP34 | GBP49 | GBP53 | GBP25 | GBP47 | GBP62 | GBP31 | GBP44 |
| (sqm/pa) | | | | | | | | |
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
| Average | 2.03 | 5.67 | 2.06 | 6.26 | 4.41 | 4.66 | 4.06 | 3.23 |
| Lease Term | | | | | | | | |
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
| Running | 7.30% | 6.64% | 7.86% | 6.57% | 8.85% | 6.82% | 8.77% | 7.64% |
| Yield | | | | | | | | |
+--------------+----------+----------+----------+----------+-------------+----------+----------+----------+
As at 30 June 2009, the Fund's total portfolio was valued at GBP332,907,000, a
3.6% decrease from the first quarter valuation (excluding the effect of sales
and currency movements). By value the portfolio breaks down across seven
countries as follows: France 44%, Norway 17%, Belgium 14%, Sweden 9%, Germany
7%, Finland 7% and Netherlands 2%. Following the French sales in July 2009, the
exposure to France has been reduced to 35% of the portfolio.
The portfolio comprised 95 properties totalling 713,568 square metres with 443
individual leases. The current portfolio rent is GBP31.07m (NOI) reflecting a
net yield of 7.64% with a void of 11.26% by area and reversionary yield of
9.81%. In this quarter, the void increased from 9.21% due to sales.
Investment Management Team
Ron Robson, Finance Director of the Kenmore Group resigned in August 2009 for
personal reasons. Ron will continue to work as a consultant to Kenmore on KEIF
matters for the immediate future.
Outlook
The downward market trend has continued in this quarter and looks set to
continue on into 2010. Falling market valuations continue to lag realisable
market value. Furthermore, low transactions levels coupled with a lack of
available financing continue to frustrate disposal strategies.
The key focus for the Fund remains to reduce gearing through targeted sales, as
well as to maximise leasing and lease renewals through active asset management
initiatives. The market trend is for increasing vacancy and low occupier demand
and this will in the short term be, along with further value decline, the
biggest threat to performance.
Nevertheless, despite the poor leasing conditions in the wider market, it is
pleasing that new leases exceeded tenants vacating as a percentage of floor
area, but was slightly down compared to rental income, which we consider a
strong relative performance.
Kenmore Financial Services Limited
Investment Manager
PORTFOLIO STATISTICS
Geographical Analysis as at 30 June 2009
+-----------------------------------+---------+---------+
| | % Portfolio |
+-----------------------------------+-------------------+
| France | | 44% |
+-----------------------------------+---------+---------+
| Norway | | 17% |
+-----------------------------------+---------+---------+
| Belgium | | 14% |
+-----------------------------------+---------+---------+
| Sweden | | 9% |
+-----------------------------------+---------+---------+
| Germany | | 7% |
+-----------------------------------+---------+---------+
| Finland | | 7% |
+-----------------------------------+---------+---------+
| The Netherlands | | 2% |
+-----------------------------------+---------+---------+
Tenure Analysis as at 30 June 2009
+-----------------------------------+---------+---------+
| | % Portfolio |
+-----------------------------------+-------------------+
| Freehold | | 98% |
+-----------------------------------+---------+---------+
| Leasehold | | 2% |
+-----------------------------------+---------+---------+
Lease Expiry Profile
At 30 June 2009 the average lease length through to expiry for the portfolio was
3.2 years.
Top Ten Tenants at 30 June 2009
+-----------------------------------+---------+---------+-----------------------+
| Tenant | Passing Rent | % Total Portfolio |
| | GBP'000s | Passing Rent |
+-----------------------------------+-------------------+-----------------------+
| Kuehne + Nagel Logistics | | 1,342 | 4.0% |
+-----------------------------------+---------+---------+-----------------------+
| EDEKA | | 1,215 | 3.6% |
+-----------------------------------+---------+---------+-----------------------+
| Bauda AS | | 962 | 2.9% |
+-----------------------------------+---------+---------+-----------------------+
| Machinery Oy | | 942 | 2.8% |
+-----------------------------------+---------+---------+-----------------------+
| Kuehne + Nagel Chilled Logistics | | 707 | 2.1% |
+-----------------------------------+---------+---------+-----------------------+
| Skandinavisk Transport System AS | | 557 | 1.7% |
+-----------------------------------+---------+---------+-----------------------+
| Daimler Chrysler AG | | 552 | 1.6% |
+-----------------------------------+---------+---------+-----------------------+
| Blondie Logistics | | 530 | 1.6% |
+-----------------------------------+---------+---------+-----------------------+
| I.N.A. | | 529 | 1.6% |
+-----------------------------------+---------+---------+-----------------------+
| Bongs Konvolutter | | 502 | 1.5% |
+-----------------------------------+---------+---------+-----------------------+
| | | 7,838 | 23.4% |
+-----------------------------------+---------+---------+-----------------------+
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months to 30 June 2009
+------------------------------------------+-------+-------------+-------------+-----------+
| | Notes | Six | Six | Year to |
| | | months | months | 31 |
| | | to 30 | to 30 | December |
| | | June | June | 2008 |
| | | 2009 | 2008 | (Audited) |
| | | (Unaudited) | (Unaudited) | GBP'000 |
| | | GBP'000 | GBP'000 | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Revenue | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Rental income | | 18,207 | 17,981 | 35,716 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Other income | | 4,283 | 3,871 | 7,023 |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Losses on investments | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Unrealised losses on revaluation of | | (31,671) | (16,847) | (46,728) |
| investment properties | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Realised losses on disposal of | | (1,006) | (128) | (972) |
| investment properties | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | (10,187) | 4,877 | (4,961) |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Expenditure | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Property acquisition and related costs | | (19) | (1,445) | (2,106) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Other expenses | | (9,606) | (10,253) | (16,473) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Total expenditure | | (9,625) | (11,698) | (18,579) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Net operating loss before finance costs | | (19,812) | (6,821) | (23,540) |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Net finance costs | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Interest receivable | | 443 | 378 | 1,077 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Finance costs | 6 | (7,487) | (7,427) | (21,114) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Unrealised (losses)/gains on derivatives | | (542) | 5,694 | (14,066) |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | (7,586) | (1,355) | (34,103) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Loss before taxation | | (27,398) | (8,176) | (57,643) |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Taxation on loss | 7 | 9,633 | 3,245 | 8,900 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Loss for the period | | (17,765) | (4,931) | (48,743) |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Other comprehensive (loss)/income for | | | | |
| the period, after tax: | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Exchange differences on translating | | (12,365) | 8,902 | 46,507 |
| foreign operations | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Other comprehensive (loss)/income for the | (12,365) | 8,902 | 46,507 |
| period, net of tax | | | |
+--------------------------------------------------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Total comprehensive (loss)/income for | | (30,130) | 3,971 | (2,236) |
| the period | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Basic loss per share | 8 | (12.7p) | (3.5p) | (34.8p) |
+------------------------------------------+-------+-------------+-------------+-----------+
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2009
+------------------------------------------+-------+-------------+-------------+-----------+
| | Notes | 30 June | 30 June | 31 |
| | | 2009 | 2008 | December |
| | | (Unaudited) | (Unaudited) | 2008 |
| | | GBP'000 | GBP'000 | (Audited) |
| | | | | GBP'000 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Non-current assets | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Property, plant and equipment | | 47 | 64 | 62 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Investment properties | 11 | 327,582 | 430,781 | 418,645 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Other investments, including derivatives | | - | 9,221 | - |
+------------------------------------------+-------+-------------+-------------+-----------+
| Deferred tax assets | | 7,403 | 1,059 | 2,111 |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | 335,032 | 441,125 | 420,818 |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Current assets | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Assets classified as held for sale | | - | - | 15,975 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Trade and other receivables | | 15,827 | 16,110 | 18,642 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Cash and cash equivalents | | 48,434 | 16,437 | 34,571 |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | 64,261 | 32,547 | 69,188 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Total assets | | 399,293 | 473,672 | 490,006 |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Current liabilities | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Trade and other payables, including | | (33,024) | (27,198) | (40,628) |
| derivatives | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Current tax liabilities | | (806) | (429) | (606) |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | (33,830) | (27,627) | (41,234) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Non-current liabilities | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Loans and borrowings | | (259,611) | (288,794) | (311,365) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Deferred tax liabilities | | - | (9,728) | (375) |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | (259,611) | (298,522) | (311,740) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Total liabilities | | (293,441) | (326,149) | (352,974) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Net assets | | 105,852 | 147,523 | 137,032 |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Represented by: | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Share capital | | - | - | - |
+------------------------------------------+-------+-------------+-------------+-----------+
| Share premium | | 2,985 | 2,985 | 2,985 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Special distributable reserve | | - | 122,000 | 117,716 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Translation reserve | | - | 19,140 | 56,745 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Revenue reserve | | 102,867 | 3,398 | (40,414) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Equity shareholders' funds | | 105,852 | 147,523 | 137,032 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Net asset value per share | | 75.6p | 105.4p | 97.9p |
+------------------------------------------+-------+-------------+-------------+-----------+
HF Green CP Spencer
Director Director
CONDENSED CONSOLIDATED STATEMENT OF CHANGES OF CHANGES IN EQUITY
+----------------------------+-----------+----------------+-------------+-----------+----------+--+
| | Share | Special | Translation | Revenue | Group |
| | Capital | Distributable | Reserve | Reserve | Total |
| | & Premium | Reserve | GBP'000 | GBP'000 | GBP'000 |
| | GBP'000 | GBP'000 | | | |
+----------------------------+-----------+----------------+-------------+-----------+----------+
| As at 31 December 2008 | 2,985 | 117,716 | 56,745 | (40,414) | 137,032 |
+----------------------------+-----------+----------------+-------------+-----------+----------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Transfer between reserves | - | (117,716) | (56,745) | 174,461 | - |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Net loss for the period | - | - | - | (17,765) | (17,765) |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Other comprehensive income | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Foreign currency | - | - | - | (12,365) | (12,365) |
| translation differences | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Total comprehensive | - | - | - | (30,130) | (30,130) |
| (loss)/ income for the | | | | | |
| period | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Dividends paid | - | - | - | (1,050) | (1,050) |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+----------+
| As at 30 June 2009 | 2,985 | - | - | 102,867 | 105,852 |
| (unaudited) | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+----------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+----------+
| As at 31 December 2007 | 2,985 | 126,200 | 10,238 | 8,329 | 147,752 |
+----------------------------+-----------+----------------+-------------+-----------+----------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Net loss for the period | - | - | - | (4,931) | (4,931) |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Other comprehensive income | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Foreign currency | - | - | 8,902 | - | 8,902 |
| translation differences | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Total comprehensive | - | - | 8,902 | (4,931) | 3,971 |
| income/ (loss) for the | | | | | |
| period | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Dividends paid | - | (4,200) | - | - | (4,200) |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| As at 30 June 2008 | 2,985 | 122,000 | 19,140 | 3,398 | 147,523 |
| (unaudited) | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+----------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+----------+
| As at 31 December 2007 | 2,985 | 126,200 | 10,238 | 8,329 | 147,752 |
+----------------------------+-----------+----------------+-------------+-----------+----------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Net loss for the period | - | - | - | (48,743) | (48,743) |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Other comprehensive income | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Foreign currency | - | - | 46,507 | - | 46,507 |
| translation differences | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Total comprehensive | - | - | 46,507 | (48,743) | (2,236) |
| income/ (loss) for the | | | | | |
| period | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| Dividends paid | - | (8,484) | - | - | (8,484) |
+----------------------------+-----------+----------------+-------------+-----------+-------------+
| | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+----------+
| As at 31 December 2008 | 2,985 | 117,716 | 56,745 | (40,414) | 137,032 |
| (audited) | | | | | |
+----------------------------+-----------+----------------+-------------+-----------+----------+--+
Following implementation of The Companies (Guernsey) Law, 2008, the Company is
no longer required to maintain separate distributable reserves. Accordingly the
balances brought forward on the Special Distributable Reserve and the
Translation Reserve have been transferred to the Revenue Reserve.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months to 30 June 2009
+--------------------------------------------+-------+-------------+-------------+-----------+
| | Notes | Six | Six | Year to |
| | | months | months | 31 |
| | | to 30 | to 30 | December |
| | | June | June | 2008 |
| | | 2009 | 2008 | (Audited) |
| | | (Unaudited) | (Unaudited) | GBP'000 |
| | | GBP'000 | GBP'000 | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Cash flows from operating activities | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Loss before taxation | | (27,398) | (8,176) | (57,643) |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Interest expense | | 7,487 | 7,427 | 21,114 |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Interest income | | (443) | (378) | (1,077) |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Unrealised losses on revaluations of | | 31,671 | 16,847 | 46,728 |
| investment properties | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Realised losses on disposal of investment | | 1,006 | 128 | 972 |
| properties | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Movement in financing derivatives | | 2,394 | (5,807) | 13,121 |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Depreciation | | 5 | 8 | 19 |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Foreign exchange movements | | (1,675) | 524 | 2,169 |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Decrease / (increase) in trade and | | 4,835 | 2,443 | (88) |
| other receivables | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| (Decrease) / increase in trade and other | | (9,139) | (2,672) | 1,771 |
| payables | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Interest paid | | (7,487) | (7,427) | (21,114) |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Interest received | | 443 | 378 | 1,077 |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Taxation paid | | (569) | (1,492) | (2,356) |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Net cash inflow from operating activities | | 1,130 | 1,803 | 4,693 |
+--------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Cash flows from investing activities | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Acquisition of investment properties | | (7) | (11,261) | (14,878) |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Development expenditure | | (777) | (2,966) | (7,163) |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Proceeds from disposal of investment | | 34,152 | 11,542 | 62,102 |
| properties | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Acquisition of property, plant and | | 11 | (28) | (36) |
| equipment | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Net cash inflow / (outflow) from investing | | 33,379 | (2,713) | 40,025 |
| activities | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Cash flows from financing activities | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| (Repayment) / receipt of borrowings | | (17,136) | 6,700 | (18,594) |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Dividends paid | 10 | (1,050) | (4,200) | (8,484) |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Net cash (outflow) / inflow from financing | | (18,186) | 2,500 | (27,078) |
| activities | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Net increase in cash and cash equivalents | | 16,323 | 1,590 | 17,640 |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Cash and cash equivalents at start | | 34,571 | 13,981 | 13,981 |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Foreign exchange movements on cash and | | (2,460) | 866 | 2,950 |
| cash equivalents | | | | |
+--------------------------------------------+-------+-------------+-------------+-----------+
| Cash and cash equivalents at end | | 48,434 | 16,437 | 34,571 |
+--------------------------------------------+-------+-------------+-------------+-----------+
NOTES TO THE INTERIM REPORT
1. Basis of preparation
These interim financial statements represent the condensed consolidated
financial information of the Company and its subsidiaries (together referred to
as "the Group") for the 6 months ended 30 June 2009. These have been prepared in
accordance with the Disclosure and Transparency Rules (the "DTR") of the UK's
Financial Services Authority, the requirements of IAS 34 Interim Financial
Reporting issued by the International Accounting Standards Board, the Statement
of Recommended Practice issued by the Association of Investment Companies (as
revised in January 2009) where practicable and with the accounting policies set
out in the statutory accounts of the Group for the year ended 31 December 2008.
The interim financial statements were approved by the Board of Directors on 27
August 2009. The interim financial statements do not include all of the
information and disclosures required for full annual financial statements and
should be read in conjunction with the Annual Report and Accounts for the year
ended 31 December 2008 which were prepared under full IFRS requirements and are
available on request from the company's registered office or to download from
www.kenmoreeifund.com.
The financial information contained in this report in respect of the year ended
31 December 2008 has been extracted from the Annual Report and Accounts for the
year ended 31 December 2008. The Auditors' Report on these financial statements
was unqualified.
The interim condensed consolidated financial statements for the current and
comparative periods are unaudited. The auditors have carried out a review of the
interim condensed consolidated financial statements and their report is set out
at the end of this document.
The Directors have prepared cash flow forecasts for the Group for a period of 12
months from the date of authorisation of these interim financial statements. The
Group's forecasts and projections reflect the Directors' plans for the coming
year and their current view on future property market conditions. The forecasts
demonstrate that the Group should be able to operate within the level of its
current loan facilities without taking any benefit of either projected property
sales or lease renewals which are not currently unconditional.
The Group's banking facilities are subject to financial covenants and other
conditions which the Group monitors regularly. These covenants and conditions
are sensitive to changes in property values. Whilst the Directors cannot
envisage all possible circumstances, they currently believe that the Group has
sufficient resources available to it to ensure continued compliance with these
conditions. Accordingly, they continue to adopt the going concern basis in
preparing the interim report and financial statements.
The Group results consolidate the results of KEIF Luxembourg Sarl and KEIF
Luxembourg Scandi Sarl. Both companies are incorporated in Luxemburg and their
principal business is that of intermediary holding companies.
Certain cash flow and interest items have been reclassified to enhance
understanding of the prior periods' results and to aid comparability with
current year presentation. This has no impact on the movement in cash and cash
equivalents.
2. Significant accounting policies
The interim condensed consolidated financial statements are prepared on the
historical cost basis, except in relation to derivative financial instruments
and investment properties which are stated at fair value.
The accounting policies applied by the Group in these condensed consolidated
interim financial statements are the same as those applied by the Group as
disclosed in its accounts as at and for the year ended 31 December 2008, except
for the impact of the adoption of standards described below.
IFRS 8 Operating Segments (effective for annual periods beginning on or after 1
January 2009) is a disclosure standard that has resulted in a redesignation of
the Group's reportable segments (see note 4), but has had no impact on the
reported results or financial position of the Group.
IAS 1 (revised 2007) Presentation of Financial Statements (effective for annual
periods beginning on or after 1 January 2009) has introduced a number of
terminology changes (including revised titles for the condensed financial
statements) and has resulted in a number of changes in presentation and
disclosure. However, the revised standard has had no impact on the reported
results or financial position of the Group.
3. Group risk factors
As with all businesses, the Group is affected by certain risks, not wholly
within the Board's control, which could have a material impact on the Group and
could cause actual results to differ materially from forecast and historical
results. The most significant of these is the risk of a further or continued
downturn in property values due to debt shortages and slackening tenant demand.
The principal risks and uncertainties facing the Group have not changed from
those as set out in the Report of the Directors in the 2008 Annual Report and
Accounts.
4. Segment Reporting
The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009.
IFRS 8 requires operating segments to be identified on the basis of internal
reports.
In prior years, additional segment information was not reported as the directors
were of the opinion that the Group engaged in a single segment of business being
property investments, in one geographical area, Europe (excluding United
Kingdom). However internal reports to the Board split the group into
geographical segments.
Information regarding these segments is presented below. Amounts reported for
the prior period have been restated to conform to the requirements of IFRS 8.
+------------------+-----------+----------+----------+-----------+-------+---+------+---+---+------+---+-------------+----+------+---+---+---+
| Six months to 30 June 2009 (Unaudited) |
+------------------------------------------------------------------------------------------------------------------------------------+
| | France | Finland | Belgium | Norway | Holding | All | Total | Inter-segmental | Consolidated |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | companies | other | GBP'000 | GBP'000 | GBP'000 |
| | | | | | GBP'000 | GBP'000 | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Revenue from | 11,917 | 942 | 2,122 | 2,903 | - | 4,606 | 22,490 | - | 22,490 |
| external | | | | | | | | | |
| customers | | | | | | | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Net operating | (10,423) | (2,929) | (2,169) | (2,789) | (307) | (1,195) | (19,812) | - | (19,812) |
| profit/(loss) | | | | | | | | | |
| before finance | | | | | | | | | |
| costs | | | | | | | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Interest | 1,256 | - | 2 | 389 | 8,003 | 17 | 9,667 | (9,224) | 443 |
| receivable | | | | | | | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Finance costs | (3,333) | (758) | (1,086) | (938) | (8,583) | (2,013) | (16,711) | 9,224 | (7,487) |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Unrealised | (1,743) | (318) | (210) | 170 | 1,972 | (413) | (542) | | (542) |
| gains/(losses) | | | | | | | | | |
| on derivatives | | | | | | | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Taxation | 5,618 | 840 | 941 | 1,138 | - | 1,096 | 9,633 | | 9,633 |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Net | (8,625) | (3,165) | (2,522) | (2,030) | 1,085 | (2,508) | (17,765) | | (17,765) |
| profit/(loss) | | | | | | | | | |
| for the period | | | | | | | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Segment assets | 196,003 | 25,183 | 46,609 | 87,895 | 349,140 | 73,365 | 778,195 | (378,902) | 399,293 |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Segment | (145,056) | (29,485) | (45,732) | (82,109) | (289,140) | (80,976) | (672,498) | 379,057 | (293,441) |
| liabilities | | | | | | | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| | | | | | | | | | |
+------------------+-----------+----------+----------+-------------------+----------+-------+------+-----------------------------+-----------+
| Six months to 30 June 2008 (Unaudited) |
+------------------------------------------------------------------------------------------------------------------------------------+
| | France | Finland | Belgium | Norway | Holding | All | Total | Inter-segmental | Consolidated |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | companies | other | GBP'000 | GBP'000 | GBP'000 |
| | | | | | GBP'000 | GBP'000 | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Revenue from | 10,205 | 869 | 1,931 | 3,372 | - | 5,475 | 21,852 | | 21,852 |
| external | | | | | | | | | |
| customers | | | | | | | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Net operating | (4,440) | (367) | 1,739 | (1,828) | (768) | (1,157) | (6,821) | | (6,821) |
| profit/(loss) | | | | | | | | | |
| before finance | | | | | | | | | |
| costs | | | | | | | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Interest | 977 | - | 3 | 461 | 7,723 | 46 | 9,210 | (8,832) | 378 |
| receivable | | | | | | | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Finance costs | (3,140) | (633) | (1,046) | (3,055) | (5,766) | (2,619) | (16,259) | 8,832 | (7,427) |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Unrealised gains | 1,960 | 300 | 543 | 1,586 | - | 1,305 | 5,694 | | 5,694 |
| on derivatives | | | | | | | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Taxation | 1,670 | (17) | (376) | 1,435 | - | 533 | 3,245 | | 3,245 |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Net | (2,973) | (717) | 863 | (1,401) | 1,189 | (1,892) | (4,931) | | (4,931) |
| profit/(loss) | | | | | | | | | |
| for the period | | | | | | | | | |
+------------------+-----------+----------+----------+-----------+-----------+----------+--------------+------------------+--------------+
| Segment assets | 228,703 | 23,264 | 50,315 | 107,491 | 327,865 | 118,389 | 856,027 | (382,355) | 473,672 |
+------------------+-----------+----------+----------+-----------+-----------+--------------+------------------------+-----------+-----------+
| Segment | (178,928) | (28,314) | (50,111) | (101,422) | (233,348) | (116,512) | (708,635) | 382,486 | (326,149) |
| liabilities | | | | | | | | | |
+------------------+-----------+----------+----------+-----------+-------+---+------+---+---+------+---+-------------+----+------+---+---+---+
+------------------+-----------+----------+----------+----------+-----------+-----------+-----------+-----------------+---------+----+
| Year to 31 December 2008 (Unaudited) |
+-------------------------------------------------------------------------------------------------------------------------------+
| | France | Finland | Belgium | Norway | Holding | All | Total | Inter-segmental | Consolidated |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | companies | other | GBP'000 | GBP'000 | GBP'000 |
| | | | | | GBP'000 | GBP'000 | | | |
+------------------+-----------+----------+----------+----------+-----------+-----------+-----------+-----------------+--------------+
| Revenue from | 20,071 | 1,795 | 4,179 | 6,270 | 4 | 10,420 | 42,739 | | 42,739 |
| external | | | | | | | | | |
| customers | | | | | | | | | |
+------------------+-----------+----------+----------+----------+-----------+-----------+-----------+-----------------+--------------+
| Net operating | (17,616) | (474) | (195) | (3,094) | 1,990 | (4,151) | (23,540) | | (23,540) |
| profit/(loss) | | | | | | | | | |
| before finance | | | | | | | | | |
| costs | | | | | | | | | |
+------------------+-----------+----------+----------+----------+-----------+-----------+-----------+-----------------+--------------+
| Interest | 1,952 | 23 | 9 | 1,162 | 15,860 | 119 | 19,125 | (18,048) | 1,077 |
| receivable | | | | | | | | | |
+------------------+-----------+----------+----------+----------+-----------+-----------+-----------+-----------------+--------------+
| Finance costs | (6,371) | (1,415) | (2,132) | (9,697) | (12,498) | (7,049) | (39,162) | 18,048 | (21,114) |
+------------------+-----------+----------+----------+----------+-----------+-----------+-----------+-----------------+--------------+
| Unrealised | (4,538) | (614) | (376) | (3,494) | (2,589) | (2,455) | (14,066) | | (14,066) |
| gains/(losses) | | | | | | | | | |
| on derivatives | | | | | | | | | |
+------------------+-----------+----------+----------+----------+-----------+-----------+-----------+-----------------+--------------+
| Taxation | 5,176 | 99 | 445 | 2,865 | 14 | 301 | 8,900 | | 8,900 |
+------------------+-----------+----------+----------+----------+-----------+-----------+-----------+-----------------+--------------+
| Net | (21,397) | (2,381) | (2,249) | (12,258) | 2,777 | (13,235) | (48,743) | | (48,743) |
| profit/(loss) | | | | | | | | | |
| for the year | | | | | | | | | |
+------------------+-----------+----------+----------+----------+-----------+-----------+-----------+-----------------+--------------+
| Segment assets | 258,390 | 30,940 | 59,698 | 98,158 | 404,458 | 103,220 | 954,864 | (464,858) | 490,006 |
+------------------+-----------+----------+----------+----------+-----------+-----------+-----------+-----------------+--------------+
| Segment | (213,362) | (38,748) | (62,766) | (97,696) | (290,386) | (114,820) | (817,778) | 464,804 | (352,974) |
| liabilities | | | | | | | | | |
+------------------+-----------+----------+----------+----------+-----------+-----------+-----------+-----------------+---------+----+
5. Investment management fees
The investment management fees charged in the period were GBP1,727,000 (six
months to 30 June 2008 - GBP2,145,000; year to 31 December 2008 - GBP854,000).
The accounts for the year ended 31 December 2008 provide details of the
investment manager and the investment management contract which remains
unchanged.
6. Finance costs
+------------------------------------------+-------------+-------------+-----------+
| | Six | Six | Year to |
| | months | months | 31 |
| | to 30 | to 30 | December |
| | June 2009 | June 2008 | 2008 |
| | (Unaudited) | (Unaudited) | (Audited) |
| | GBP'000 | GBP'000 | GBP'000 |
+------------------------------------------+-------------+-------------+-----------+
| Interest on borrowings | 7,370 | 7,397 | 14,289 |
+------------------------------------------+-------------+-------------+-----------+
| Net foreign exchange | (692) | (192) | 6,256 |
| (gain) / loss | | | |
+------------------------------------------+-------------+-------------+-----------+
| Other interest | 809 | 222 | 569 |
+------------------------------------------+-------------+-------------+-----------+
| | 7,487 | 7,427 | 21,114 |
+------------------------------------------+-------------+-------------+-----------+
7. Taxation
The income tax credit for the six months ended 30 June 2009 reflects the
estimated total effective rate on loss before taxation (as adjusted for
unrealised gains on revaluation of investment properties and interest rate
swaps, and the investment manager's performance fee) for the Group of
approximately 15.5% for the year ending 31 December 2009.
8. Loss per share
The loss per Ordinary Share is based on the net loss for the period of
GBP17,765,000 (six months to 30 June 2008 - loss GBP4,931,000; year to 31
December 2008 - loss GBP48,743,000) and on 140,000,000 Ordinary Shares, being
the weighted average number of shares in issue during the period.
9. Earnings
Earnings for the six months to 30 June 2009 should not be taken as a guide to
the results for the year to 31 December 2009.
10. Dividends
An interim dividend for 2009 of 0.75 pence per share, totalling GBP1,050,000 was
paid on 28 April 2009 to shareholders on the register on 14 April 2009. A
further interim dividend of 0.75 pence per share, totalling GBP1,050,000 will be
paid on 25 September 2009 to shareholders on the register on 11 September 2009.
11. Investment properties
+------------------------------------------+-------------+-------------+------------+
| Freehold and leasehold properties | 30 June | 30 June | 31 |
| | 2009 | 2008 | December |
| | (Unaudited) | (Unaudited) | 2008 |
| | GBP'000 | GBP'000 | (Audited) |
| | | | GBP'000 |
+------------------------------------------+-------------+-------------+------------+
| Balance at start | 418,645 | 414,746 | 414,746 |
+------------------------------------------+-------------+-------------+------------+
| Cost of acquisitions and development | 9,045 | 14,227 | 22,041 |
| costs | | | |
+------------------------------------------+-------------+-------------+------------+
| Transfer to assets classified as held | - | - | (15,975) |
| for sale | | | |
+------------------------------------------+-------------+-------------+------------+
| Disposals | (21,206) | (11,688) | (63,109) |
+------------------------------------------+-------------+-------------+------------+
| Change in fair value | (31,671) | (16,847) | (46,728) |
+------------------------------------------+-------------+-------------+------------+
| Foreign exchange movements | (47,231) | 30,343 | 107,670 |
+------------------------------------------+-------------+-------------+------------+
| Balance at end | 327,582 | 430,781 | 418,645 |
+------------------------------------------+-------------+-------------+------------+
CB Richard Ellis Ltd, who have appropriate professional qualifications and
recent experience in the location and category of the property being valued,
completed a valuation of Group investment properties at 30 June 2009 on an open
market basis in accordance with the requirements of the Appraisal and Valuation
Manual published by the Royal Institution of Chartered Surveyors, which is
deemed to equate to fair value. Fair value is determined by reference to market
based evidence, which is the amounts for which the assets could be exchanged
between a knowledgeable, willing buyer and a knowledgeable, willing seller in an
arm's length transaction as at the valuation date. The market value of these
investment properties amounted to GBP332,907,000 (30 June 2008 - GBP445,672,000;
31 December 2008 - GBP433,567,000).
On the acquisition of certain properties, the Group negotiated a purchase price
adjustment for contingent deferred tax. The aggregate amount of such adjustments
obtained to 30 June 2009 was GBP5,325,000 (30 June 2008 - GBP14,891,000; 31
December 2008 - GBP14,922,000). It is assumed that in the case of a future sale,
any prospective buyer would seek a similar adjustment and so the closing
valuation has been reduced to reflect this. These adjustments have been
reported with "Cost of acquisitions and development costs" in the above
reconciliation.
12. Related Party Transactions
The transactions which took place in the six months to 30 June 2009 with related
parties were consistent with those reported in the Company's accounts for the
year ended 31 December 2008.
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE CONDENSED INTERIM
FINANCIAL STATEMENTS
We confirm that to the best of our knowledge:
* the condensed set of financial statements has been prepared in accordance with
IAS 34 Interim Financial Reporting;
* the interim management report includes a fair review of the information required
by:
* DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the financial
year and their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the remaining six
months of the year; and
* DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
Signed on behalf of the Board of Directors on 27 August 2009
CP Spencer
Director
INDEPENDENT REVIEW REPORT TO THE MEMBERS OF
KENMORE EUROPEAN INDUSTRIAL FUND
LIMITED
Introduction
We have been engaged by the company to review the condensed set of consolidated
financial statements in the half-yearly financial report for the six months
ended 30 June 2009 which comprises the unaudited Condensed Consolidated
Statement of Comprehensive Income, the unaudited Condensed Consolidated
Statement of Financial Position, the unaudited Condensed Consolidated Statement
of Changes in Equity, the unaudited Condensed Consolidated Cash Flow Statement,
and the related explanatory 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 consolidated financial statements.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Services Authority
("the UK FSA"). Our review has been undertaken so that we might state to the
company those matters we are required to state to it in this 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 reached.
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 DTR of the UK FSA.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with International Financial Reporting Standards ("IFRS")
as adopted by the EU. The condensed set of consolidated financial statements
included in this half-yearly financial report has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of consolidated 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 UK. A review of interim financial information
consists of making enquiries, 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.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of consolidated financial statements in the half-yearly
financial report for the six months ended 30 June 2009 is not prepared, in all
material respects, in accordance with IAS 34 as adopted by the EU and the DTR of
the UK FSA.
KPMG Channel Islands Limited
Guernsey
27 August 2009
This information is provided by RNS
The company news service from the London Stock Exchange
END
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