Leasinvest Real Estate - Half-year results financial year 2005-2006 (period of 01/07/2005-31/12/2005)

 

The present financial year 01/07/05 - 30/06/06 is the first financial year in which Leasinvest Real Estate reports its consolidated figures under IFRS (International Financial Reporting Standards). For the present reporting Leasinvest Real Estate did not follow IAS 34 with regard to interim financial reporting.

 

The possibility exists that the recording and valuation criteria used for the drawing up of the consolidated half-yearly financial statements on 31/12/05 are subject to modifications, when the first consolidated annual accounts under IFRS, for the financial year 30/06/06, are drawn up.

 

The impact of IFRS on Shareholder's equity in the opening balance sheet on 01/07/04 consists of a number of accounting restatements and amounted to + 6.81 million EUR. On 31/12/05 the impact on Shareholder's equity of the transfer from BGAAP to IFRS amounted to -7.35 million EUR (-5.35 million EUR on 31/12/04) mainly due to the restatement concerning the deduction of the transaction costs (cfr. Infra) and on the P&L -0.056 million EUR and -0.7 million EUR on 31/12/04.

 

This transfer has led to a number of accounting amendments, of which the valuation of the real estate portfolio.

 

The accounting of investment properties and their valuation at fair value is ruled by IAS 40.

 

Within the framework of the conversion of their financial statements under IAS/IFRS standards and following the numerous debates with regard to this question among sicafis, their auditors, their independent real estate valuers and the controlling authorities, the sicafis have adapted the accounting method for their real estate assets in the balance sheet.

 

For the financial statements for the year ending on 31/12/2005 and with retroactive effect to 01/01/2004, the independent real estate valuers responsible for the valuing of the estates of the sicafis, have defined, in a first phase, the investment value of the real estate (this corresponds to the previously used term 'investment value').

 

In a second phase those same real estate valuers have determined, for the entire real estate sector, the level of the registration taxes which would be paid in case of a future hypothetical sale of a real estate building. These taxes are deducted of the investment value in order to obtain the fair value of the estate. This last value will, as from now, be recorded in the sicafi's consolidated balance sheets.

 

Based on an important number of real estate transactions which occurred in Belgium over the past three years (2003-2005), the independent real estate valuers have concluded that the average level of registration costs amounts to 2.5% of the investment value, as far as the individual value of a building amounts to over 2.5 million EUR. For buildings worth less than 2.5 million EUR, the transaction costs at the level of the registration taxes are commonly borne by the acquiring party in the three regions of the country (12.5% in the Region of Brussels-Capital and the Walloon Region, 10% in the Flemish Region).

 

Leasinvest Real Estate is active in the professional real estate market; only 1 building has a value below 2.5 million EUR.  The deduction of the transaction costs amount to 6.97 million EUR on 31/12/05 or 2.15 EUR per share. Leasinvest Real Estate has opted to record the quarterly changes of this method in the Shareholder's equity.

 

 

The rental income amounted to 9.36 million EUR on 31/12/05, or a decrease of 4.8% compared to 31/12/04 (9.8 million EUR) despite a slight increase of the occupancy rate (2) over this period (from 92.44% to 92.97%). The effect of the investments at the end of 2004 (Square de Meeûs and Montoyer 63) was not sufficient to compensate, amongst other things, the sale of the building rue de Trèves (Committee of the Regions)

 

The property charges have diminished by 25% from -2.25 million EUR to -1.70 million EUR thanks to a less intensive maintenance and renovation program after a year (financial year ending 30/06/05) in which the portfolio went through important maintenance and investments works.

The operating result has risen by 1.67% from 7 million EUR to 7.2 million EUR.

 

The combination of an active hedging policy at the end of June 2005 together with the low short term interest rates has led to an improved financial result by 27% compared to the half year ending on 31/12/04. The financial result amounted to -1.37 million EUR on 31/12/05 compared to -1.9 million EUR on 31/12/04, or an improvement of 0.53 million EUR.

 

The net current result, part of the group, ended at 5.41 million EUR compared to 5.11 million EUR for the half year ending on 31/12/04, an increase of 5.7%. Per share this results in a net current result, share of the group, of 1.67 EUR on 31/12/05 and 1.68 EUR (1) on 31/12/04.

 

The changes in fair value of property investment on 31/12/05 were 4.37 million EUR higher than the half year ending on 31/12/04 and amounted to 3.18 million EUR (31/12/04 : -1.19 million EUR).  At the end of 2004 reductions in value were recorded as a result of the downward pressure on the estimated rental levels. At the end of 2005, on balance, we perceived positive changes in the value of the portfolio (mainly from the buildings Louise 250 and the Riverside Business Park) by, primarily, a decrease of the estimated real estate yields and the fact that the important investment program of the previous financial year has led, for some buildings, to value creation.

 

 

in 1,000 EUR	31.12.2004	31.12.2005
	restated
ASSETS
NON-CURRENT ASSETS	288,446	273,174
Investment properties	287,375	272,238
Other non-current assets	68	76
Non-current financial assets	1,002	859
CURRENT ASSETS	4,336	6,456
Current financial assets	35	455
Trade receivables	2,180	2,072
Tax receivables and other current assets	468	32
Cash and cash equivalents	1,091	3,560
Deferred charges and accrued income	562	337
TOTAL ASSETS	292,781	279,630
LIABILITIES
TOTAL SHAREHOLDER'S EQUITY	180,305	186,413
Shareholder's equity attributable to the shareholders	172,344	178,072
of the mother company
Capital	35,729	35,729
Issued capital	35,729	35,729
Share premium account	31,280	31,280
Reserves	100,147	102,030
Result	12,679	16,343
Impact on fair value of estimated transaction costs resulting from	-7,490	-6,972
hypothetical disposal of investment properties
Change in fair value of financial assets and liabilities	0	-338
- on hedging instruments	0	-338
MINORITY INTERESTS	7,961	8,341
LIABILITIES	112,476	93,217
NON-CURRENT LIABILITIES	45,656	35,311
Non-current financial debts	45,000	34,100
a Credit institutions	45,000	34,100
Other non-current financial debts	0	555
Other non-current liabilities	656	656
CURRENT LIABILITIES	66,820	57,906
Provisions	0	46
Current financial debts	53,574	49,248
c Other	53,574	49,248
Trade debts and other current debts	3,135	2,782
Others	3,135	2,782
Other current liabilities	1,454	1,097
Accrued charges and deferred income	8,657	4,733
TOTAL SHAREHOLDER'S EQUITY,	292,781	279,630
MINORITY INTERESTS AND LIABILITIES