Eurocastle Releases First Half 2022 Financial Results and Announces
Annual General Meeting on 8 September 2022
Contact: Oak Fund
Services (Guernsey) LimitedCompany AdministratorAttn: Tracy
LewisTel: +44 1481
723450
Eurocastle
Releases First
Half 2022
Financial Results
andAnnounces Annual
General Meeting on 8 September 2022
Guernsey, 9 August 2022 – Eurocastle Investment
Limited (Euronext Amsterdam: ECT) today has released its financial
report for the six months ended 30 June 2022.
-
Q2
ADJUSTED NET ASSET VALUE
(“NAV”)1 of €18.9 million, or €10.16 per share2,
down €0.37 per share vs. €10.53 per share at Q1 2022 (up €0.37 per
share since 31 December 2021) due to:
- Valuation increases:
- €0.06 per share, or 8% increase in Q2 2022 (€0.08 per share
increase in H1 2022) on the valuation of the remaining two NPL and
other loan interests.
- €0.04 per share, or 4% decrease in Q2 2022 (no movement in H1
2022) on the valuation of the remaining two real estate fund
investments.
- Recognition of tender offer costs in Q2 2022 of €0.38 per
share.
- No movement in reserves in Q2 2022 (release of €0.68 per share
of reserves in H1 2022).
On 8 July 2022, the Company announced the conclusion of the
strategic review and the decision to relaunch the Company’s
investment activity (the “Relaunch”). It also announced a tender
offer to provide a liquidity opportunity for those shareholders who
did not wish to participate in the Relaunch (the “Tender Offer”).
The Tender Offer was set at a price of €10.26 per share, a 28%
premium to the closing share price of €8.00 per share on 6 July
2022, and the maximum share buyback price authorised by the
Company’s shareholders.
On 20 July 2022, the Company held a general meeting (the
“General Meeting”) to vote on a resolution to waive the requirement
for the Company’s Manager and its affiliates (the “FIG Concert
Party”) to make a general offer for the Company should their
ownership interest in the Company exceed 30% as a result the Tender
Offer. This resolution was passed and as a result the Tender Offer
proceeded and closed on 4 August 2022 with 67% of eligible shares
tendered, resulting in Eurocastle accepting 864,980 shares in
exchange for €10.26 of cash per share tendered, or €8.9 million in
total.
H1
2022 BUSINESS HIGHLIGHTS
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Q1
2022
NAV |
|
Q2
Cash
Movement |
|
Q2 FV
Movement |
|
Q2
2022 NAV |
|
|
€ million |
€ per share |
|
€ million |
€ per share |
|
€ million |
€ per share |
|
€ million |
€ per share |
Real Estate
Funds |
|
1.9 |
1.00 |
|
- |
- |
|
(0.1) |
(0.04) |
|
1.8 |
0.96 |
Italian NPLs &
Other Loans |
|
1.3 |
0.71 |
|
(0.1) |
(0.04) |
|
0.1 |
0.06 |
|
1.3 |
0.72 |
Net Corporate
Cash3 |
|
16.4 |
8.82 |
|
0.1 |
0.04 |
|
(0.7) |
(0.38) |
|
15.7 |
8.48 |
Adjusted NAV |
|
19.6 |
10.53 |
|
- |
- |
|
(0.7) |
(0.37) |
|
18.9 |
10.16 |
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H1 2022 Overview
During H1 2022, the Company continued to make progress on
realising its remaining assets as part of its Realisation Plan with
41% of its YE 2021 NAV relating to investments realised in the
period. As at 30 June 2022, the Company’s investments comprised of
two RE Fund Investments and two NPL pools with a NAV of €3.1
million, or 10% of the Company’s NAV.
Investment Realisations & Highlights
- During H1 2022, the Company realised €2.1 million from its
investments, of which €1.9 million came from its Real Estate Funds
(~52% of their YE 2021 NAV) and €0.1 million from its minority NPL
and Other Loan holdings (~11% of their YE 2021 NAV).
- RE Redevelopment Funds – REFI II & REFI V:
- In REFI II, all units have been sold and the fund is now in
liquidation. In REFI V, assuming all units currently under contract
successfully close, only 3% of units will remain to be sold.
- During H1 2022, Eurocastle received €1.9 million comprising (i)
€1.0 million from REFI II (~70% of its YE 2021 NAV) and (ii) €1.0
million from REFI V (~42% of its YE 2021 NAV).
Additional Reserves:
The Company reduced these reserves from €14.8 million to €12.8
million during the period. The reduction of €2.0 million reflects
€0.7 million of reserves being utilised, in line with anticipated
costs, and a release of €1.3 million of the existing reserves in H1
2022. The majority of this release relates to the legacy German tax
matter following a revision to the Company’s estimated total
liability. As at 30 June 2022, of the total Additional Reserves of
€12.8 million, €6.7 million related to the legacy German tax matter
with the balance of approximately €6.1 million in place to allow
for an orderly liquidation process.
- As previously announced, the Company made a payment of €4.6
million in March 2022 in relation to the legacy German tax matter
against which it raised a corresponding tax asset. The current
remaining financial impact (excluding associated costs of €0.2
million) is estimated to be between €1.7 million and €1.9 million.
Notwithstanding the Company’s expectation that the tax matter will
eventually be resolved in the Company’s favour, as at 30 June 2022,
the full potential liability is fully reserved for within the
Additional Reserves.
Subsequent Events To 30 June
2022:
Tender Offer
As stated above, the Tender Offer closed on 4 August 2022 and
the Company bought back 864,980 shares, or €8.9 million, resulting
in a current share count at the date of this announcement of
992,555.
Investment Realisations
Subsequent to H1 2022, the Company received €1.5 million from
its investments, or just under half of the Company’s total Q2 2022
NAV for its investments, comprising:
- €1.3 million from REFI V, or ~90% of its Q2 2022 NAV.
- €0.3 million from one of the two remaining NPL pools following
the completion of its sale on 29 July 2022 in line with its Q2 22
NAV.
Following these distributions, Eurocastle’s remaining Q2 ‘22 NAV
for all of its investments would be €1.6 million, or 8% of the
Company’s Adjusted NAV, which is expected to be realised within the
next 15 months.
Net Available Cash for Relaunch
Taking into account the Tender Offer settlement and cash flows
received from the investments subsequent to H1 2022, the Company
has a cash position of €17.8 million and approximately €8.4 million
of net available cash to commence seeking new investments under the
new investment strategy.
The tables below show the Company’s balance sheet and Net
Corporate Cash as at 30 June 2022 as well as pro forma for the
Tender Offer and investment cash flows received subsequent to H1
2022.
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Q2 2022 NAV |
|
Q2 2022
NAV PRO FORMA FOR TENDER & Q3
REALISATIONS |
|
|
€ million |
€ per share |
|
€ million |
€ per share |
Investments |
|
3.1 |
1.68 |
|
1.6 |
1.61 |
Cash |
|
25.2 |
13.54 |
|
17.8 |
17.94 |
German
Tax1 and Other Assets |
|
4.7 |
2.53 |
|
4.7 |
4.73 |
Total Assets |
|
33.0 |
17.75 |
|
24.1 |
24.28 |
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Accrued
Liabilities |
|
(1.3) |
(0.72) |
|
(1.3) |
(1.34) |
IFRS NAV |
|
31.6 |
17.04 |
|
22.8 |
22.94 |
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|
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Liquidation Cash
Reserves |
|
(6.1) |
(3.30) |
|
(6.1) |
(6.17) |
Legacy German Tax
Cash Reserve |
|
(2.0) |
(1.08) |
|
(2.0) |
(2.02) |
Legacy German Tax
Asset Reserve4 |
|
(4.6) |
(2.50) |
|
(4.6) |
(4.68) |
Adjusted NAV |
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18.9 |
10.16 |
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10.0 |
10.07 |
Share count |
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1,857,535 |
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992,555 |
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Q2 2022 NET
CORPORATE CASH |
|
Q2 2022
NET CORPORATE CASH PRO FORMA TENDER &
Q3 REALISATIONS |
|
|
€ million |
€ per share |
|
€ million |
€ per share |
Cash |
|
25.2 |
13.54 |
|
17.8 |
17.94 |
Other Assets |
|
0.1 |
0.03 |
|
0.1 |
0.05 |
Accrued
Liabilities |
|
(1.3) |
(0.72) |
|
(1.3) |
(1.34) |
Liquidation Cash
Reserves |
|
(6.1) |
(3.30) |
|
(6.1) |
(6.17) |
Legacy
German Tax Cash Reserve |
|
(2.0) |
(1.08) |
|
(2.0) |
(2.02) |
Net Corporate Cash |
|
15.7 |
8.48 |
|
8.4 |
8.46 |
Share count |
|
|
1,857,535 |
|
|
992,555 |
Income Statement for the Six and Three Months ended 30
June 2022 (unaudited)
|
H1 2022 |
Q2 2022 |
|
€ Thousands |
€ Thousands |
Portfolio Returns |
|
|
Italian NPLs & Other Loans |
152 |
104 |
Real Estate Funds |
(5) |
(82) |
Fair value movement on Italian investments |
147 |
22 |
Loss on foreign currency
translation |
(2) |
(1) |
Total gain |
145 |
21 |
|
|
|
Operating Expenses |
|
|
Interest expense |
11 |
6 |
Manager base and incentive fees |
75 |
26 |
Remaining operating expenses |
635 |
303 |
Other Operating expenses |
710 |
329 |
Total expenses |
721 |
335 |
|
|
|
Net loss for the
period |
(576) |
314 |
€ per share |
(0.31) |
(0.17) |
Balance Sheet and Adjusted NAV Reconciliation as at 30
June 2022
|
|
Italian Investments€
Thousands |
Corporate€ Thousands |
Total€ Thousands |
Assets |
|
|
|
|
Cash and cash equivalents |
- |
25,153 |
25,153 |
|
Other assets |
- |
50 |
50 |
|
Tax Asset |
- |
4,645 |
4,645 |
|
Investments: |
|
|
|
|
Italian NPLs & Other Loans |
1,347 |
- |
1,347 |
|
Real Estate Funds |
1,780 |
- |
1,780 |
Total assets |
3,127 |
29,848 |
32,975 |
Liabilities |
|
|
|
|
Trade and other payables |
- |
545 |
545 |
|
Tender offer costs |
- |
710 |
710 |
|
Manager
base and incentive fees |
- |
74 |
74 |
Total liabilities |
- |
1,329 |
1,329 |
IFRS Net Asset Value |
3,127 |
28,519 |
31,646 |
Liquidation cash
reserves |
- |
(6,122) |
(6,122) |
Legacy German tax
cash reserve |
|
(2,006) |
(2,006) |
Legacy German tax
asset reserve5 |
- |
(4,645) |
(4,645) |
Adjusted NAV |
3,127 |
15,746 |
18,873 |
Adjusted NAV (€ per Share) |
1.68 |
8.48 |
10.16 |
|
Tender Offer settlement |
- |
(8,875) |
(8,875) |
|
Distributions received subsequent to Q2 2022 |
(1,530) |
1,530 |
- |
Q2 2022 PRO FORMA ADJUSTED NAV |
1,597 |
8,401 |
9,998 |
€ per
Share based on 992,555 shares |
1.61 |
8.46 |
10.07 |
ANNUAL GENERAL MEETING
The Company will hold its Annual General Meeting
on Thursday, 8 September 2022, at the Company’s registered office
at 3:00 pm Guernsey time (4:00 pm CET). Notices and proxy
statements will be posted on 24 August 2022 to shareholders of
record at close of business on 23 August 2022.
NOTICE: This announcement contains inside
information for the purposes of the Market Abuse Regulation
596/2014.
ADDITIONAL INFORMATION
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).
Terms not otherwise defined in this announcement
shall have the meaning given to them in the Circular.
ABOUT EUROCASTLE
Eurocastle Investment Limited (“Eurocastle” or
the “Company”) is a publicly traded closed-ended investment
company. On 18 November 2019, the Company announced a plan to
realise the majority of its assets with the aim of accelerating the
return of value to shareholders. On 8 July 2022, the Company
announced the relaunch of its investment activity with the aim to
build a Southern European speciality finance and real estate
platform. 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”,
“endeavour”, “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 or achieve its targets
regarding asset disposals or asset performance.
1 In light of the Realisation Plan announced in November 2019,
the Adjusted NAV as at 30 June 2022 reflects additional reserves
for future costs and potential liabilities, which have not been
accounted for under the IFRS NAV. No commitments for these future
costs and potential liabilities existed as at 30 June 2022. IFRS
NAV as at 30 June 2022 was €31.6 million or, €17.04 per share.2 Per
share calculations for Eurocastle throughout this document are
based on 1.9 million shares unless otherwise stated.3 Reflects
corporate cash, plus other assets, net of liabilities and
additional reserves.4 In March 2022, the Company made a payment of
€4.6 million in relation to the legacy German tax matter.
Notwithstanding the Company’s expectation that the tax matter will
eventually be resolved in the Company’s favour, as at 30 June 2022,
this tax asset was fully reserved for within the Additional
Reserves.5 In March 2022, the Company made a payment of €4.6
million in relation to the legacy German tax matter.
Notwithstanding the Company’s expectation that the tax matter will
eventually be resolved in the Company’s favour, as at 30 June 2022,
this tax asset was fully reserved for within the Additional
Reserves.
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