The following table shows the Company’s consolidated profit/loss for the period and earnings per share, both based on the IFRS consolidated financial statements of Deutsche Wohnen AG as of and for the fiscal years ended December 31, 2010, December 31, 2009 and December 31, 2008, as well as the net loss for the year and the distributable balance sheet profit, each based on the respective unconsolidated annual financial statements prepared in accordance with the German Commercial Code (Handelsgesetzbuch) and the annual dividend paid per share for the fiscal years ended December 31, 2010, December 31, 2009 and December 31, 2008. January 1 – December 31, 2010 January 1 – December 31, 2009 January 1 – December 31, 2008 (audited, in 5 million)
(unless otherwise indicated)
Consolidated profit/loss for the period (IFRS) . . . 23.8 (13.3) (255.9) Basic earnings per share (IFRS) inS1). . . 0.29 (0.34) (10.32) Net loss for the year (HGB) . . . (23.7) (45.6) (80.3) Distributable balance sheet profit (HGB) . . . 16.4 — — Dividend paid per share inS2)(unaudited) . . . 0.20 — —
Dividend payment for the respective fiscal year (unaudited) . . 16.4 — —
1) The basic earnings per share for the 2008 fiscal year relates to the earnings from continued operations.
2) The dividend paid per share was calculated on the basis of the number of Company shares actually issued as of the time of the respective distribution (with respect to fiscal year 2010: 81,840,000 shares).
Currently, any dividends are not subject to withholding tax. Moreover, these dividends are non-taxable income for our shareholders being tax resident in Germany, having not held 1% or more of the shares in the last 5 years and have acquired such shares as private (non-business) assets before January 1, 2009. This is because the dividend payments are considered to be a return of paid in capital (dividend payments out of “EK 04” or, since 2001, from the capital reserve as determined pursuant to tax law (tax capital reserves)). According to the law as in effect since 2009, profits from the sale of shares that were acquired after December 31, 2008 are now taxable also for shareholders tax resident in Germany and holding less than 1% of the shares. This results in our dividend payments having tax effects also for shareholders who purchased after December 31, 2008, as dividend payments lower the acquisition costs of the shares (as it has already been applicable e.g. for sharesholders holding at least 1% of the shares or holding the shares as business assets), which may result in a greater amount of taxable capital gain upon the shareholder’s sale of the shares. Normally, dividends distributed to shareholders who are German residents are subject to personal or corporate income tax. The tax rate for dividends distributed to private investors are subject to a flat dividend withholding tax of 25% plus a solidarity surcharge of 5.5%. Other rules may apply for shareholders not tax resident in Germany.
As of December 31, 2010, Deutsche Wohnen AG’s tax capital reserve amounted toS660 million. The future tax treatment of our divided payments depends on the composition of the share capital as determined pursuant to tax law. Based on current tax law, the current amount of tax capital reserve and the composition of the share capital as determined pursuant to tax law, we expect that dividend payments will remain being not subject to withholding tax and (to the extent available) deductible against acquisition costs at the tier of a shareholder, tax resident in Germany, for several years.
In the past, the funds that were required to pay dividends were primarily financed from the repayment of the loans extended to subsidiaries. The subsidiaries, in turn, typically financed these repayments through the sale of apartments. Sometimes dividends were also financed with borrowed capital. As part of realigning the operating business to focus on Residential Property Management, we generally intend to pay dividends going forward only when they can be covered by cash flow available for distributions from the Company. Our short-term objectives are to strengthen the balance sheet, build up the Company’s cash reserves, and continue to implement our selective growth strategy. We are aiming to maintain the leverage of the Company at a loan-to-value ratio (“LTV Ratio”) of approximately 60% in the medium term, subject to short- to medium-term increases due to debt incurred in connection with acquisitions. To that extent, we may not be in the position to pay again a dividend from the operating profit and free capital reserve of the Company within the meaning of Section 272(2) No. 4 of the German Commercial Code (Handelsgesetzbuch) in the medium term.
CAPITALIZATION
The following tables show the Company’s capitalization and indebtedness based on the historical figures as of September 30, 2011 prior to the Offering (first column) and adjusted for the implementation of the capital increase underlying the Offering assuming gross proceeds of S175 million (based on the placement of 20,460,000 New Shares) (second column). For simplification purposes it is assumed that the costs of the Offering can be fully charged against capital reserve and no deferred taxes are to be taken into account.
As of September 30, 2011, prior to completion of the Offering
Based on the figures as of September 30, 2011, assuming implementation of the Offering4) (In 5 million) (unaudited) (unaudited)
Total current liabilities . . . . 210.9 210.9
Thereof guaranteed1). . . 5.5 5.5 Thereof secured2) . . . 111.8 111.8
Thereof unguaranteed/unsecured . . . 93.6 93.6
Total non-current liabilities . . . . 2,065.9 2,065.9
Thereof guaranteed1). . . 0 0
Thereof secured2) . . . 1,875.1 1,875.1
Thereof unguaranteed/unsecured . . . 190.8 190.8
Total liabilities . . . . 2,276.8 2,276.8 Total equity . . . . 878.2 1,045.2
Issued share capital . . . 81.8 102.35) Capital reserve . . . 370.0 516.66) Retained earnings . . . 426.0 426.0
Non-controlling interests . . . 0.3 0.3
Total Capitalization3). . . 3,155.0 3,322.0 1) These liabilities are secured by guarantee bonds.
2) These liabilities are secured by mortgages.
3) Total capitalization is calculated from total current liabilities plus total non-current liabilities plus total equity.
4) For the Offering, the Company intends to generate gross proceeds of approximatelyT150.0 million to T200.0 million. For the calculation in this table,T175.0 million as the mid-point of this range are assumed as the gross proceeds from the Offering. Furthermore, the costs of the Offering are assumed to amount to approximatelyT8.0 million. On the basis of these assumptions, net proceeds from the Offering would beT167.0 million. These calculations are based on the assumed placement of all 20,460,000 New Shares. A 10% reduction in the number of New Shares would lead to a 10% reduction in gross proceeds, a 10% reduction in net proceeds, a 2% reduction in total equity and a 1% reduction in total capitalization.
5) Issued share capital increases byT20.46 million based on a placement of 20,460,000 New Shares.
6) The capital reserve increases by the amount of the difference between the aggregate gross proceeds from the Offering and the sum of the aggregate par value of the New Shares and the costs of the Offering.
Indebtedness
As of September 30, 2011, prior to completion of the Offering
Based on the figures as of September 30, 2011, assuming implementation of the Offering4) (In 5 million) (unaudited) (unaudited) A. Cash . . . 42.1 209.15) B. Cash equivalents . . . — — C. Trading securities . . . — — D. Liquidity(A)+(B)+(C) . . . . 42.1 209.1 E. Current financial receivables1). . . 5.5 5.5
F. Current bank debt . . . 17.8 17.8
G. Current portion of non-current debt . . . 68.9 68.9
H. Other current financial debt . . . 5.7 5.7
I. Current financial liabilities2)(F)+(G)+(H) . . . . 92.4 92.4 J. Net current financial indebtedness(I)-(E)-(D) . . . . . 44.8 (122.2)
K. Non-current bank loans . . . 1,753.2 1,753.2
L. Bonds issued . . . — —
M. Other non-current loans . . . 63.8 63.8
N. Non-current financial liabilities3)(K)+(L)+(M) . . . . 1,817.0 1,817.0 O. Net financial indebtedness(J)+(N). . . . 1,861.8 1,694.8
1) Current financial receivables equal trade receivables.
2) Referred to as “Current Financial Debt” in paragraph 127 of the ESMA update of the CESR recommendations of March 23, 2011, ESMA/2011/81 (the “ESMA update”).
3) Referred to as “Non current Financial Indebtedness” in the ESMA update.
4) For the Offering, the Company intends to generate gross proceeds of approximatelyT150.0 million to T200.0 million. For the calculation in this table,T175.0 million as the mid-point of this range are assumed as the gross proceeds from the Offering. Furthermore, the costs of the Offering are assumed to amount to approximatelyT8.0 million. On the basis of these assumptions, net proceeds from the Offering would beT167.0 million. These calculations are based on the placement of all 20,460,000 New Shares. A 10% reduction in the number of New Shares would lead to a 10% reduction in gross proceeds, a 10% reduction in net proceeds, an 8% reduction in cash, a 14% deterioration in net current financial indebtedness and a 1% deterioration in net financial indebtedness.