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3 March 2012

Annual report 2010/11 of M. Goldschmidt Holding A/S – A year of attractive investments opportunities

M. Goldschmidt Holding A/S, owned by Mikael Goldschmidt, has released its annual report for the 2010/11 financial year. The financial highlights are as follows:

  • The consolidated operating profit before depreciation and amortisation was DKK 163 million, and net profit was DKK 36 million
  • Total assets amounted to DKK 5,040 million, of which equity amounted to DKK 1,957
  • The Group's cash holdings and securities portfolio amounted to DKK 1,166 million, of which the shareholding only amounted to DKK 122 million. The Group was thus not exposed to equity market fluctuations to any noticeable extent
  • The Group's large securities portfolio predominantly consists of highly liquid, short-term bonds. Consequently, the Group was not exposed to fluctuations in the fixed income market to any noticeable extent
  • Generally, the Group does not use and currently only has insignificant exposure to derivative products
  • The Group completed the divestment of 19 properties with a satisfactory profit
  • The Group acquired three properties during the financial year and an additional nine properties after the end of the financial year, most of them located in the Greater Copenhagen area
  • The Group's largest subsidiary, Imerco Holding A/S, generated revenue of DKK 1,137 million and EBITDA of 46 million. Imerco is Denmark's most robustly capitalised retail chain within houseware products.

Relative to general economic trends, the performance is considered to be acceptable

Highlights of 2010/11

The Group divested a number of property assets at a profit in 2011 following a successful optimisation process. In addition, the Group made a number of property market acquisitions during the year at attractive prices. The Group's acquisitions were primarily made in Copenhagen properties with constructional or operational challenges, which the Group is particularly adept at solving quickly and efficiently. As these newly acquired properties were gradually optimised and let, the Group commenced negotiations for divestment purposes with different parties. Any additional divestments in 2012 resulting from these negotiations will lead to a significant sales proceeds and a profit to the Group in the current financial year.

Due to the general crisis in the property market and the financial sector in Denmark, there are still a considerable number of properties with an inappropriate and short-term ownership structure. Some of these properties involve constructional and operational challenges, which means that they do not satisfy the requirements of traditional institutional investors primarily looking for well run and hassle-free properties in prime locations. The Group takes a very special interest in such challenging properties. The Group expects that this segment will offer a number of attractive investment opportunities for a number of years to come, before a new market equilibrium is reached.

Furthermore, the weak Danish economy and the turmoil in the financial markets has resulted in falling interest rates and rising inflation. This has increased demand for inflation-protected assets such as well-run real property in good locations.

The Group's large retail operation, Imerco, lifted revenue by 4% and generated an operating profit of DKK 46 million. Imerco invested substantially in new IT, infrastructure and stores in preparation for future challenges and opportunities. The retail market in Denmark is expected to continue to be characterised by a strong degree of reluctance among consumers, but as the largest and most robustly capitalised retail chain in Denmark, Imerco is well-positioned to exploit this to its own benefit going forward.

Mikael Goldschmidt's personal business activities are not publicly available, but they comprise, among other things, ownership of 25 properties. These activities performed highly satisfactorily and contributed a pre-tax profit of DKK 100 million in 2011, which is not included in the consolidated financial statements.

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