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Arundel AG

Gotthardstrasse 21,

CH-8002 Zürich,

Switzerland

www.arundel-ag.com

PRESS RELEASE

(Ad Hoc Announcement Pursuant to Article 53 of the SIX Exchange Regulation Listing Rules)

13 September 2022

ARUNDEL AG

UNAUDITED RESULTS ANNOUNCED

FOR THE PERIOD ENDED 30 JUNE 2022

Arundel AG ("Company") is pleased to report its results for the six months ended 30 June 2022 ("Jun22"). Like other companies, our results have been adversely impacted by external events including inflation brought on by the war in Ukraine and supply chain shortages resulting from the Covid pandemic. As a consequence, interest rates are increasing and the US dollar has strengthened against most other currencies, notably the Euro and Sterling. These changes adversely impact the consolidated financial results of the Company, particularly earnings and net assets reported in US dollars.

Whilst many market commentators expect that inflation will peak in the first quarter of 2023, that interest rates will fall as governments struggle to address the cost-of-living crisis and that the US dollar will give up as least some of its gains against the major currencies, the timing and scale of these changes are impossible to predict with any certainty. Further increases in interest rates and/or the strength of the US dollar against the Euro, Sterling and/or the Indian Rupee will further adversely affect reported results in the future.

The activities of the Arundel Group (the "Group") have historically comprised:

  1. principal investments in selective assets held in Euros, Sterling and Indian Rupees;
  2. the provision of advice to various groups which generate fees and investment opportunities; and
  3. the financing of investment opportunities from which the Company generates fees and carried interests.

While continuing to pursue these areas, your Directors are focusing on those factors over which they have some control such as operating costs and debt reduction.

Financial review

Overall, your Company is reporting a consolidated net loss of $5.4 million for Jun22 compared to a net loss of $5.5 million for the six months ended 30 June 2021 ("Jun21"). Our consolidated results also reflect an adverse movement of $4.8 million through the translation reserve in the balance sheet. Consequently, total equity decreased from $22.8 million on 31 December 2021 to $11.8 million on 30 June 2022. Of this reduction, nearly 90% was attributable to non-cash items. Adverse movements in foreign exchange accounted for 71% of the decrease in net assets whilst a further 18% of the decrease was attributable to fair value losses on investment properties, depreciation and amortisation of debt issuance costs.

During the first half of 2022, 76% of the Company's revenue was derived from rental income and 24% was derived from investment advisory activities, compared to 75% and 25%, respectively during the first six months of 2021.

On 30 June 2022, the independent valuation of the Group's investment properties in Germany, which are leased to the Government of Saxony (the "Leipzig Properties"), was €142.0 million compared to €142.8 million on 31 December 2021. Increases in the yields on 10-year and 30-year German Government bonds on 30 June 2022 adversely impacted the discounted projections of future rents while higher inflation

Arundel AG

Registered in Switzerland No: CH-020.3.922.903-6

Registered Office as above

expectations increased the residual value due to the prospect of higher rents to be achieved at the end of the current lease term. However, the Euro weakened by 8.53% against the US dollar since 31 December 2021 resulting in an adverse foreign exchange movement of $12.7 million between reporting dates, although this foreign exchange loss was partially offset by the reduction in dollar terms of the senior Euro debt secured against the Leipzig Properties.

The Group's investment in its London property is carried at historical cost less amortization. On 30 June 2022 this amounted to $22.3 million. As sterling weakened by 11.1% against the US dollar between 31 December 2021 and June 2022, an adverse foreign exchange movement of $2.5 million was recorded on 30 June 2022.

While global increases in interest rates have impacted asset valuations, the Directors have worked hard over the last few years to restructure the Group's debt, primarily focusing on fixed rate obligations and extending maturity dates when required. As a result, approximately 95% of the Group's debt is in fixed-rate instruments, thereby helping to minimize the effect of higher interest rates in the short to medium term. Management will continue to seek opportunities to refinance the Group's most expensive debt and to extend the maturity of certain debt due within one year. Management also intends to reduce other expenses although the timing of these measures is likely to be affected by current market conditions.

Operational matters

Other developments during the first half of 2022 included the following:

  • On 7 January 2022, the Company announced that the Government of Saxony exercised an option to extend its lease on approximately 85% of the Leipzig Properties by three years to 30 June 2028. The balance of the Leipzig Properties is leased until 31 December 2047.
  • In late March 2022, the Group signed a mandate with a German advisory group to explore the sale of a stake in the Leipzig Properties. Unfortunately, increases in inflation and interest rates have affected prospective investors' ability and/or appetite to invest at this time. The exact proportion of equity to be sold and the timing of any sale will be dependent on developments over the next few months. A transaction is now unlikely to be completed prior to the end of 2022. Proceeds of any sale would primarily be used to repay debt and to provide working capital.
  • The Directors have appointed an agent to review optimisation of the Group's prime London property and plan also to do so for its investment in Indian land. The external factors mentioned above are expected to impact the timing of any decision on these assets as well. In July 2022, the UK subsidiary agreed a further one-year lease for a tenant occupying one floor of the London office building at an annual rent of circa $100,000 per annum. Leasing additional space is likely to take time as many companies are reviewing how they wish to proceed with their office space requirements going forward.
  • The Directors have continued to conduct an operational review and restructuring of the Group's activities and to reduce the number of subsidiary companies. To assist with the reduction of operational costs and in view of the limitations created by Brexit and the significant costs associated with maintaining regulated status in the UK, the Company's UK subsidiary decided to relinquish its authorisation as a regulated entity. Consequently, the Company announced on 26 July 2022 that Richard Borg, the Group's General Counsel and Compliance Officer would cease to be a member of executive management of the Company with immediate effect and that he would cease to be an employee of the Group effective 31 December 2022.
  • Personnel costs are under review across the Group and will reduce by at least $0.5 million during 2022 and a further $0.4 million per annum from the beginning of 2023. Other savings will be considered in the months ahead.
  • Now the previously discussed litigation has been concluded and regulatory compliance costs are no longer required in the UK, we expect to see significant savings on legal and professional fees going forward.

As indicated above, the Company continues to evaluate its assets and may decide to liquidate certain assets to reduce the Group's debt and/or to redeploy capital invested on more attractive terms. No firm decisions on any of the assets have been taken at the present time and the Company will keep shareholders appraised of material developments.

Management shareholdings

Arundel AG

Registered in Switzerland No: CH-020.3.922.903-6

Registered Office as above

On 30 June 2022 management owned 2,498,743 of the Company's issued share capital which represents 16.5% of the total number of shares in issue. These holdings remain unchanged from shares held by them on 31 December 2021.

We look forward to reporting on future developments.

Arundel AG

Approved by the board: 13 September 2022

Full details of the audited consolidated financial statements for the period ended 30 June 2022 are available at:

http://www.arundel-

ag.com/get.php/2022/Arundel_Group_Consolidated_Interim_Accounts_June_2022.pdf

Arundel AG

David Quint (Chairman)

Further information:

Ralph Beney

Ad hoc publicity info@arundel-ag.comPhone: +44 207 766 7000

Further information concerning the Company is also available from the Company's website at www.arundel-ag.com.

SIX Swiss Exchange - symbol ARON, security number 2217.101, ISIN CH0002271010 Not to be distributed in the United States of America

Arundel AG

Registered in Switzerland No: CH-020.3.922.903-6

Registered Office as above

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Arundel AG published this content on 13 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 September 2022 16:19:03 UTC.