EUROCASTLE INVESTMENT
LIMITED
Contact:
International Administration Group (Guernsey) Limited
Company Administrator
Attn: Mark Woodall
Tel: +44 1481 723450
Eurocastle Releases First Half 2018 Financial
Results and
Announces Second Quarter Dividend of €0.15 per
share
Guernsey, 10 August 2018 -
Eurocastle Investment Limited (Euronext Amsterdam: ECT) today has
released its financial results for the first half year ended 30
June 2018.
-
Net Asset Value ("NAV") of
€494.7 million[1], or €9.38
per share[2] (€9.53 per
share pro forma post share tender).
-
Normalised FFO[3] of €7.3
million, or €0.14 per share2, for the
second quarter of 2018 (€0.15 per share pro forma post share
tender).
-
Second Quarter 2018
Dividend of €0.15 per share declared on 9 August 2018 and to be
paid on 31 August 2018 to shareholders of record at close of
business on 17 August 2018, with an ex-dividend date of 16 August
2018.
|
|
Q2 2018 |
|
Q1 2018 |
|
H1 2018 |
|
H1 2017 |
|
|
€
million |
€ per
share |
|
€
million |
€ per
share2 |
|
€
million |
€ per
share |
|
€
million |
€ per
share2 |
NAV1 |
|
494.7 |
9.382 |
|
505.1 |
9.58 |
|
494.7 |
9.382 |
|
630.6 |
10.49 |
Normalised
FFO3 |
|
7.3 |
0.142 |
|
7.3 |
0.14 |
|
14.6 |
0.282 |
|
35.1 |
0.58 |
Distributions2 |
|
7.2[4] |
0.15 |
|
17.4 |
0.33 |
|
24.64 |
0.48 |
|
42.1 |
0.70 |
SECOND QUARTER
2018 BUSINESS HIGHLIGHTS
doBank Financial
Performance
-
For the first half of 2018, the doBank Group
reported EBITDA of €34.1 million, up 13% over the same period last
year (H1 2017: €30.3 million) following an increase in its EBITDA
margin by 3% from 29% to 32%.
-
doBank's net profit for the first six months of
2018 was €21.0 million, up 7% over the same period last year (H1
2017: €19.7 million).
doBank Business
Update
-
In June 2018, doBank's Board of Directors
approved a project to restructure doBank into a listed servicing
company, allowing for a better use of capital to support the
group's growth. As part of this restructuring, doBank's banking
activity will be transferred to a newly established banking entity
wholly owned by the parent company. doBank views the new group
structure, which it expects to come into effect in 2019 (subject to
regulatory approvals), as a means to align itself with its European
peers by removing significant limits to the use of its capital
whilst optimising the group's financial structure.
-
On 1 August 2018, doBank announced that it has
reached final agreement with four of the main Greek banks to manage
on an exclusive basis a €1.8 billion GBV portfolio of
non-performing exposures ("NPEs").
New Investment
-
In May 2018, the Company closed on a €7.7
million investment to acquire an interest, alongside other Fortress
affiliates, in a portfolio of Italian distressed loans to a single
borrower with a GBV of ~€81 million. The loans are secured by 1st
lien ship mortgages.
BUSINESS
HIGHLIGHTS SUBSEQUENT TO 30 JUNE 2018
Share
Tender
-
On 2 July 2018, the Company announced a tender
offer for the repurchase of up to €40 million of ordinary shares in
the Company for a fixed price of €8.00 per share. The share tender,
which closed on 6 August 2018, was fully subscribed and resulted in
the repurchase of 5 million shares, or 9.48% of the ordinary voting
shares in issue, returning capital of €40 million.
-
The tender was NAV and earnings accretive,
increasing pro forma Q2 NFFO per share by approximately 10.5% and
Q2 NAV per share by approximately 1.5%.
Share Buy-back Programme
-
On 2 July 2018, the Company further announced
its first open market share buy-back programme, which commenced
following the settlement of the share tender on 6 August 2018.
Under the share buy-back programme, the Company is seeking to buy
back shares up to an aggregate market value equivalent to €3.0
million. The share buy-back programme will end no later than 15
November 2018, at which point the Board will review the success of
the programme and determine whether to renew the programme for a
further period.
NORMALISED
FFO
Normalised FFO ("NFFO") is a
non-IFRS financial measure that, with respect to all of the
Company's Italian Investments other than the doBank Group,
recognises i) income on an expected yield basis updated
periodically, allowing Eurocastle to report the run rate earnings
from these investments in line with their expected annualised
returns and ii) any additional gains or losses not previously
recognised through NFFO at the point investments are realised. Cash
flow receipts are therefore allocated by the Company between income
and capital in accordance with this expected yield methodology.
With respect to the doBank Group, following the IPO, the Company
now recognises NFFO based on its share of doBank's reported annual
net income after tax together with any gains or losses arising from
the sale of its shares. The income cash flow profile of each of the
Company's investments may not exactly equal the NFFO recognised by
the Company each period but will do so over the life of each
investment.
Normalised FFO for the Six Months Ended 30 June
2018 |
Average Net Invested
Capital[5] |
Annualised |
|
H1 2018 |
|
€ Thousands |
Yield |
|
€ Thousands |
doBank Group |
81,151 |
17% |
|
6,875 |
Italian NPLs |
95,515 |
29% |
|
13,682 |
Real Estate Fund
Investments |
31,971 |
4% |
|
662 |
Italian Investments NFFO before expenses |
208,637 |
20% |
|
21,219 |
Legacy portfolios |
|
|
|
1,177 |
Manager base &
incentive fees[6] |
|
|
|
(5,415) |
Other
operating expenses |
|
|
|
(2,405) |
Normalised FFO |
|
|
|
14,576 |
Per Share[7] |
|
|
|
0.28 |
Normalised FFO for the Three Months Ended 30 June
2018 |
Average Net Invested
Capital1 |
Annualised |
|
Q2 2018 |
|
€ Thousands |
Yield |
|
€ Thousands |
doBank Group |
81,151 |
16% |
|
3,247 |
Italian NPLs |
86,378 |
29% |
|
6,270 |
Real Estate Fund
Investments |
31,500 |
4% |
|
308 |
Italian Investments NFFO before expenses |
199,028 |
20% |
|
9,825 |
Legacy portfolios |
|
|
|
1,207 |
Manager base &
incentive fees2 |
|
|
|
(2,531) |
Other
operating expenses |
|
|
|
(1,203) |
Normalised FFO |
|
|
|
7,298 |
Per Share3 |
|
|
|
0.14 |
Following the change in
classification to an investment entity as defined under IFRS 10 in
July 2017, the Company does not consolidate the entities it
controls and therefore fair values all of its investments (whether
through subsidiaries, joint ventures or associates).
Income Statement for the Six and Three Months ended 30 June
2018 (Unaudited) |
H1 2018 |
Q2 2018 |
|
€ Thousands |
€ Thousands |
Portfolio Returns |
|
|
doBank Group |
(37,472) |
4,556 |
Romeo NPLs |
3,467 |
1,239 |
FINO NPLs |
7,894 |
3,019 |
Other NPL Pools |
3,068 |
1,986 |
Real Estate
Funds |
(527) |
(1,247) |
Fair
value movement on Italian investments |
(23,570) |
9,553 |
Fair
value movements on residual Legacy entities |
1,177 |
1,207 |
Other
income - Gains on foreign currency translation and other
derivatives |
1 |
(1) |
Total (loss) / income |
(22,392) |
10,759 |
|
|
|
Operating Expenses |
|
|
Interest expense |
266 |
190 |
Manager base
and incentive fees |
5,415 |
2,531 |
Remaining operating expenses |
2,139 |
1,073 |
Other Operating expenses |
7,554 |
3,604 |
Total expenses |
7,820 |
3,794 |
|
|
|
Net (loss) / profit for the period |
(30,212) |
6,965 |
€ per share3 |
(0.57) |
0.13 |
For the six months ended 30 June
2018, the total net loss reported was €30.2 million, or €0.57 per
share. Excluding the €37.5 million loss that arose from the doBank
investment, which is marked-to-market based on doBank's closing
share price, Eurocastle recognised a €7.3 million profit, or €0.14
per share. For the three months ended 30 June 2018, the Company
recorded a profit of €7.0 million, or €0.13 per share of which €4.6
million arose from the doBank investment after taking into account
the annual dividend received in May 2018.
Balance Sheet and NAV Reconciliation as at 30 June
2018 (Unaudited) |
|
Italian Investments € Thousands |
Corporate € Thousands |
Total € Thousands |
Assets |
|
|
|
|
Cash and cash
equivalents |
|
- |
149,048 |
149,048 |
Other assets |
|
- |
23 |
23 |
Investments: |
|
|
|
|
doBank
Group |
|
226,935 |
- |
226,935 |
Romeo NPLs |
|
49,743 |
- |
49,743 |
FINO NPLs |
|
5,249 |
- |
5,249 |
Other NPL
Pools |
|
43,193 |
- |
43,193 |
Real Estate
Funds |
|
27,618 |
- |
27,618 |
Other net
assets of subsidiaries (residual legacy entities) |
|
- |
149 |
149 |
Total assets |
|
352,738 |
149,220 |
501,958 |
|
|
|
|
|
Liabilities |
|
|
|
|
Trade and other
payables |
|
- |
4,568 |
4,568 |
Manager base and
incentive fees |
|
- |
2,710 |
2,710 |
Total liabilities |
|
- |
7,278 |
7,278 |
|
|
|
|
|
Net Asset Value |
|
352,738 |
141,942 |
494,680 |
|
|
|
|
|
FINO deferred purchase
price commitment |
|
64,680 |
(64,680) |
- |
RE Fund Investment V
remaining unfunded estimated investment |
|
419 |
(419) |
- |
|
|
|
|
|
NAV (segments adjusted for outstanding
commitments)[8] |
|
417,837 |
76,843 |
494,680 |
NAV (€ per
share)[9] |
|
7.93 |
1.45 |
9.38 |
Taking into account the €40
million share tender that settled on 6 August 2018, which resulted
in €0.15 per share of accretion in the Company's NAV, the Corporate
NAV segment (after adjusting for outstanding commitments) would be
€36.8 million and the total Company NAV would be €454.7 million, or
€9.53 per share.
ADDITIONAL
INFORMATION
For additional information that
management believes to be useful for investors, please refer to the
latest presentation posted on the Investor Relations section of the
Company's website, www.eurocastleinv.com. For investment portfolio
information, please refer to the Company's most recent Financial
Report, which is available on the Company's website
(www.eurocastleinv.com).
EARNINGS CALL
INFORMATION
Eurocastle's management will host
an earnings conference call at 2:00 P.M. London time (9:00 A.M. New
York time) later today. All interested parties are welcome to
participate on the live call. You can access the conference call by
dialling first +1-800-215-5243 (from within the U.S.) or
+1-330-863-8154 (from outside of the U.S.) ten minutes prior to the
scheduled start of the call; please reference "Eurocastle Second
Quarter 2018 Earnings Call" or "conference ID number 9975518".
A webcast of the conference call
will be available to the public on a listen-only basis at
www.eurocastleinv.com. Please allow extra time prior to the call to
visit the site and download the necessary software required to
listen to the internet broadcast. A replay of the webcast will be
available for three months following the call.
For those who are not available to
listen to the live call, a replay will be available until 11:59
P.M. New York time on Monday, 10 September 2018 by dialling
+1-855-859-2056 (from within the U.S.) or +1-404-537-3406 (from
outside of the U.S.); please reference access code "9975518".
ABOUT
EUROCASTLE
Eurocastle Investment Limited is a
publicly traded closed-ended investment company that focuses on
investing in performing and non-performing loans and other real
estate related assets primarily in Italy. The Company is Euro
denominated and is listed on Euronext Amsterdam under the symbol
"ECT". Eurocastle is managed by an affiliate of Fortress Investment
Group LLC, a leading global investment manager. For more
information regarding Eurocastle Investment Limited and to be added
to our email distribution list, please visit
www.eurocastleinv.com.
FORWARD LOOKING
STATEMENTS
This release contains statements
that constitute forward-looking statements. Such forward-looking
statements may relate to, among other things, future commitments to
sell real estate and achievement of disposal targets, availability
of investment and divestment opportunities, timing or certainty of
completion of acquisitions and disposals, the operating performance
of our investments and financing needs. Forward-looking statements
are generally identifiable by use of forward-looking terminology
such as "may", "will", "should", "potential", "intend", "expect",
"endeavor", "seek", "anticipate", "estimate", "overestimate",
"underestimate", "believe", "could", "project", "predict",
"project", "continue", "plan", "forecast" or other similar words or
expressions. Forward-looking statements are based on certain
assumptions, discuss future expectations, describe future plans and
strategies, contain projections of results of operations or of
financial condition or state other forward-looking information. The
Company's ability to predict results or the actual effect of future
plans or strategies is limited. Although the Company believes that
the expectations reflected in such forward-looking statements are
based on reasonable assumptions, its actual results and performance
may differ materially from those set forth in the forward-looking
statements. These forward-looking statements are subject to risks,
uncertainties and other factors that may cause the Company's actual
results in future periods to differ materially from forecasted
results or stated expectations including the risks regarding
Eurocastle's ability to declare dividends, amortise the Company's
debts, renegotiate the Company's credit facilities, make new
investments, or achieve its targets regarding asset disposals or
asset performance.
[1] NAV for Q2
2018 is before deducting the second quarter 2018 dividend of €0.15
per share declared and to be paid in August 2018.
[2] Per share
calculations for Eurocastle throughout this document are based on
the weighted average or outstanding voting shares and therefore
exclude shares held in treasury. As at 30 June 2018, 66.1 million
shares were in issue of which 52.7 million were voting shares and
13.4 million were held in treasury. Amounts per share are therefore
calculated on the following basis: Q2 2018, Q1 2018 and H1 2018 Net
Asset Value per share ("NAV per share") and NFFO per share - based
on 52.7 million voting shares in issue; Q1 2018 distribution paid
on 52.7 million voting shares; H1 2017 NAV per share, NFFO per
share and distribution based on 60.1 million voting shares.
[3] Normalised
FFO ("NFFO") is a non-IFRS measure used to explain the financial
performance of the Company, as outlined on page 9 of the H1 2018
Interim Report.
[4] Q2 2018
declared dividend of €0.15 per share estimated at €7.2 million
based on 47.7 million outstanding voting shares post August 2018
share tender. Actual nominal amount of dividend will be determined
based on the total voting shares outstanding on 17 August 2018 (Q2
2018 dividend record date) which will be dependent on the amount of
shares that will be bought back under the open market buy-back
programme that commenced on 6 August 2018.
[5] Time
weighted average of invested capital (net of any capital returned)
over the relevant period.
[6] Manager
base fees are equal to the sum of (i) 1.5% of the Company's Net
Asset Value excluding Net Corporate Cash and (ii) 0.75% of the
Company's Net Corporate Cash (including cash committed to
investments but not yet deployed) calculated and paid monthly in
arrears. Incentive fees are equal to 25% of the euro amount by
which the Company's NFFO derived from Italian Investments (net of
allocable fees and expenses) exceeds the net amount invested in
such investments multiplied by a simple interest rate of 8% per
annum (calculated on a cumulative but not compounding basis).
[7]Amounts per
share calculated on the following basis: Q2 2018 and H1 2018 NFFO
on 52.7 million weighted average voting shares.
[8] NAV
segments adjusted for outstanding commitments. NAV of FINO NPLs
includes €64.7 million of deferred purchase price on FINO payable
over the next few years and NAV of Real Estate Funds includes a
remaining unfunded estimated investment at €0.4 million in RE Fund
Investment V. NAV of Net Corporate Cash deducts outstanding
commitments listed above.
[9] Amounts per
share calculated on 52.7 million outstanding voting shares.
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Eurocastle Investment Limited via
Globenewswire
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