Corporate | 17 December 2014 19:53
DGAP-News: IMMOFINANZ AG / Key word(s): Real Estate/Half Year Results
17.12.2014 / 19:53
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KEY FIGURES (in MEUR) // 1 May 2014 - 31 Oct. 2014 // Δ in % // 1 May 2013
- 31 Oct. 2013
Rental income // 234.6 // -4.7% // 246.1
Results of asset management // 184.4 // -11.0% // 207.1
Results of property sales // 5.7 // -20.8% // 7.2
Results of property development // 5.1 // n.a. // -8.2
Expenses not directly attributable // -29.8 // 33.2% // -44.6
Results of operations // 169.5 // 1.6% // 166.8
Operating profit (EBIT) // 194.4 // -15.5% // 230.2
Net profit* // -30.2 // n.a. // 165.0
Gross cashflow* // 143.9 // -24.6% // 190.9
* The comparable prior year figure is including 100% BUWOG
The results of operations generated by IMMOFINANZ Group were stable in a
year-on-year comparison at EUR 169.5 million in the first half of 2014/15
(H1 2013/14: EUR 166.8 million). In spite of this performance, net profit
for the first half of 2014/15 was negative at EUR -30.2 million (H1
2013/14: EUR 110.3 million resp. EUR 165.0 million incl. 100% BUWOG). This
development resulted primarily from the negative effects caused by the
foreign exchange-adjusted revaluation of investment properties in the
second quarter, which reflected the decline in the value of properties in
Eastern Europe and above all in Russia, Poland and the Czech Republic.
These foreign exchange-adjusted revaluation results of EUR -75.0 million
reduced net profit, but have no effect on cash. Current income tax expense
was also higher in the second quarter, among others due to the sale of
logistics properties in Switzerland. Earnings before tax improved
substantially over the first quarter to plus EUR 8.9 million in the second
quarter (Q1 2014/15: EUR -18.5 million), but net profit for the second
quarter was negative at EUR -16.2 million (Q1 2014/15: EUR -14.0 million).
"The Ruble continued to weaken against US Dollar and Euro during the second
quarter of our 2014/15 financial year, this trend has intensified within
the last weeks and days, with the decline in the Ruble from the beginning
of 2014 to the beginning of December amounting to nearly 40%. These
developments have also had an effect on our business in Russia and, in
turn, could have a stronger-than-expected influence on our operating
results during the coming quarters through the extension of short-term
temporary reductions in lease payments and a possible further decline in
the exchange rate", says Eduard Zehetner, CEO of IMMOFINANZ Group. The
continued deterioration of the situation in Russia would presumably also
have negative consequences for the foreign exchange-adjusted revaluation of
the Group's Russian assets.
"The tenants in our Moscow shopping centers are confronted with a variety
of problems, above all from the sharp drop in the Ruble. That means an
increase in costs because in general our lease agreements are fixed in US
Dollars or Euros. In order to support these long-term partnerships, we have
met with numerous retailers in recent months and offered temporary
reductions in lease payments on a case by case basis. That will help them
to reduce the higher costs caused by foreign exchange effects. Since the
Ruble has fallen further in the past months, we will have to continue this
temporary payment reduction policy", comments Zehetner. "We do not expect
any significant improvement in the situation in Russia over the short-term,
but hope at best for an unsteady sideward development during the coming
months. In spite of the current uncertainties, we believe in the Russian
market and in Russia as an economic factor. Moscow and the surrounding
region are still undersupplied with high-quality retail space compared to
other major European cities. We will therefore continue to evaluate new
investments with a moderate volume in this market."
Payout policy:
The Executive Board and the supervisory board of IMMOFINANZ AG have
resolved today to carry out the share repurchase program 2014-15 with an
intended volume of up 10,167,053 shares (see also ad hoc-announcement on 17
December 2014). "The strong decline in the price of IMMOFINANZ shares due
to the crisis in Russia and the related high discount to net asset value
provide an attractive opportunity to buy back our own shares", says CEO
Zehetner.
The payment of a cash dividend for the current financial year 2014/15
depends on the attainment of a distributable balance sheet profit of
IMMOFINANZ AG. In light of current and further developments in Russia, the
Executive Board doesn't provide a concrete guidance on the size of a
potential dividend.
DEVELOPMENTS IN DETAIL:
The results of operations generated by IMMOFINANZ Group were stable in a
year-on-year comparison at EUR 169.5 million in the first half of 2014/15
(H1 2013/14: EUR 166.8 million). A slight increase in like-for-like rental
income from the final quarter of 2013/14 to the first quarter of 2014/15
(+1.4%) was followed by stable like-for-like development in the second
quarter (-0.04% versus Q1 2014/15).
The like-for-like decline in rental income in Russia equalled -1.1% (versus
Q1 2014/15), but there was an increase in impairment losses to receivables
from previous quarters due to the rising uncertainty. From the current
point of view, an increase in impairment losses to Russian receivables in
the coming quarters is likely.
In spite of this solid operating performance, net profit for the first half
of 2014/15 was negative at EUR -30.2 million (H1 2013/14: EUR 110.3 million
resp. EUR 165.0 million incl. 100% BUWOG). This development resulted
primarily from the negative effects caused by the foreign exchange-adjusted
revaluation of investment properties in the second quarter, which reflected
the decline in the value of properties in Eastern Europe and above all in
Russia, Poland and the Czech Republic. These foreign exchange-adjusted
revaluation results of EUR -75.0 million reduced net profit, but have no
effect on cash. Income tax expense was also higher in the second quarter
due to the sale of logistics properties in Switzerland. Earnings before tax
improved substantially over the first quarter to plus EUR 8.9 million in
the second quarter (Q1 2014/15: EUR -18.5 million), but net profit for the
second quarter was negative at EUR -16.2 million (Q1 2014/15: EUR -14.0
million).
Sustainable free cash flow (FFO) amounted to EUR 64.3 million for the first
half of 2014/15, which represents an annualised FFO yield after tax of
9.8%* based on market capitalisation. After an FFO of EUR 47.7 million in
the first quarter 2014/2015, the FFO totalled EUR 16.7 million in the
second quarter 2014/15. This reduction in FFO is explained almost equally
by lower property sales in the second quarter, higher income tax payments
in Switzerland and an increase in gross rent receivables in Russia.
* Sustainable cash flow (excl. BUWOG): Gross cash flow (EUR 143.9 million)
+ interest received on financial investments (EUR 2.6 million) - interest
paid (EUR 76.0 million) - cash outflows for derivative transactions (EUR
11.9 million) + results of property sales (EUR 5.7 million) based on market
capitalisation as of 16 December 2014 (share price: EUR 2.03) excl.
treasury shares and market capitalisation of the BUWOG shares held (EUR
756.0 million based on a share price of EUR 15.49 as of 16 December 2014).
Rental income declined to EUR 234.6 million following the sale of
properties during the first half of 2014/15 (H1 2013/14: EUR 246.1
million). The results of property sales totalled EUR 5.7 million, compared
with EUR 7.2 million in the previous year. The results of property
developed improved from EUR -8.2 million to EUR 5.1 million. Consequently,
the results of operations increased by 1.6% to EUR 169.5 million (H1
2013/14: EUR 166.8 million).
Results of asset management
IMMOFINANZ Group recorded rental income of EUR 234.6 million in the first
half of 2014/15. This represents a decline of 4.7% compared with the first
half of the previous year (EUR 246.1 million) and resulted mainly from the
planned sale of properties.
The results of asset management totalled EUR 184.4 million, which
represents a year-on-year decline of 11.0%. This development reflected an
increase in property expenses that resulted, in particular, from the
write-off of Russian receivables. These write-offs amounted to EUR 7.9
million and are attributable, among others, to tenants who were forced to
terminate their business activities because of the crisis. The remaining
outstanding rent receivables in Russia following write-offs totalled EUR
12.9 million as of 31 October 2014 and are opposed to advance payments of
EUR 6.5 million.
Results of property sales
Property sales generated results of EUR 5.7 million in the first half of
2014/15 (H1 2013/14: EUR 7.2 million). The portfolio optimisation included
the sale of smaller properties as well as three logistics properties in
Switzerland to a Credit Suisse AG real estate fund and the subsequent
strategic exit from the Swiss market.
Results of property development
The sale of real estate inventories and the valuation of active development
projects generated results of EUR 5.1 million in the first half of 2014/15
(H1 2013/14: EUR -8.2 million). In October 2014 IMMOFINANZ Group opened the
first shopping center in its new VIVO! brand in the Polish city of Piła.
This shopping center has roughly 24,000 sqm of rentable space and had an
occupancy rate of 91% on the opening date.
Administrative expenses
Administrative expenses that are not directly attributable (overhead costs
and personnel expenses) were cut from EUR -44.6 million in the first half
of the previous year to EUR -29.8 million. This decline resulted from a
reduction in legal, auditing and consulting costs, a decline in personnel
expenses and lower additions to provisions.
Results of operations, EBIT, EBT and net profit
In spite of lower rental revenues the results of operations slightly
increased by 1.6% year-on-year to EUR 169.5 million due to the successful
and scheduled sale of properties (H1 2013/14: EUR 166.8 million).
Revaluation results adjusted for foreign exchange effects amounted to EUR
-75.0 million (H1 2013/14: EUR -41.6 million), above all due to a decline
in the value of properties in Russia, Poland and the Czech Republic. The
causal factors identified by the external appraisers for the Russian market
included the general uncertainty over future economic developments, while
the decisive factors for Poland and the Czech Republic were related mainly
to the pricing pressure due to numerous recently completed projects in the
office sector and the restrained economic growth.
In contrast, revaluation results resulting from foreign exchange effects
were clearly positive at EUR 101.0 million (H1 2013/14: EUR 107.7 million)
due to the increase in the Euro versus the Ruble during the reporting
period. Other revaluation results equalled EUR 24.9 million (H1 2013/14:
EUR 63.4 million). EBIT fell from EUR 230.2 million in the previous year to
EUR 194.4 million.
Financial results declined to EUR -204.1 million (H1 2013/14: EUR -80.3
million). This position includes non-cash foreign exchange accounting
effects of EUR -104.6 million (H1 2013/14: EUR -7.3 million). These
represent mainly USD financial liabilities offset by currency related gains
in property values on the one hand and the purely non-cash conversion
effects of EUR inter-company loans to Russian subsidiaries on the other
(EUR 35.0 million). Other financial results (EUR -23.6 million; H1 2013/14:
EUR 6.6 million) were negatively affected, among others by the non-cash
valuation of derivatives that are held to hedge interest rate risk. These
factors reduced earnings before tax from EUR 149.9 million in the first
half of the previous year to EUR -9.7 million.
Net profit for the first half of 2014/15 was negative at EUR -30.2 million
(H1 2013/14: EUR 110.3 million resp. EUR 165.0 million incl. 100% BUWOG)
due to the negative valuation of properties (EUR -75.0 million).
Cash flow*
Gross cash flow declined from EUR 190.9 million in the first half of the
previous year to EUR 143.9 million, above all due to higher income tax
payments of EUR 9.4 million on the gain from the sale of Swiss logistics
properties, which was included in the previous quarter as required by IFRS.
In addition, the increase in gross rent receivables of EUR 17.4 million in
Russia and the absence of cash flow from the BUWOG Group had a negative
impact on gross cash flow. Cash flow from operating activities declined
from EUR 141.4 million to EUR 82.6 million. Cash flow from investing
activities was substantially lower at EUR -110.8 million (H1 2013/14: EUR
402.2 million), and cash flow from financing activities improved from EUR
-636.4 million to EUR 194.0 million.
* The comparable prior year figures including BUWOG operating segment
Net Asset Value (NAV)
Net asset value per share declined to EUR 4.48 as of 31 October 2014 due to
the negative results recorded for the first half-year (30 April 2014: EUR
4.56).
Book value per share
The book value per share amounts to EUR 4.11 per 31 October 2014 (30 April
2014: EUR 4.19).
Outlook
IMMOFINANZ Group expects continued positive development or steady economic
recovery in the region's core markets, in spite of the subdued growth that
has resulted from the geopolitical risks like the crisis in Ukraine and the
tensions in the Near East. The exception in this region is Russia, which is
now projected to fall into a recession in 2015. The Russian economy is
facing a number of challenges caused by the steady and strong decline in
the Ruble, the low oil price and the growing consumer uncertainty. However,
the unusually low oil price could drive growth in 2015 for the countries
that benefit from lower-priced imports of this raw material. The effects of
the crisis in Ukraine on the commercial development of the IMMOFINANZ
target markets, above all Russia, cannot be estimated at the present time.
The tenants in IMMOFINANZ Group's Moscow shopping centers are confronted
with a variety of problems, above all from the sharp drop in the Ruble.
That means an increase in costs because in general the lease agreements are
fixed in US Dollars or Euros. In order to support these long-term
partnerships, discussions have been held with numerous retailers in recent
months and temporary reductions in lease payments have been offered on a
case by case basis. IMMOFINANZ also intends to continue this temporary
payment reduction policy since the Ruble has fallen further in the past
months. The current situation indicates that like-for-like rental income in
Russia will decline in the coming quarters. Based on the above-mentioned
developments after the balance sheet date, further write-downs and/or
write-offs to the outstanding receivables in the third quarter of 2014/15
have to be expected.
The continued deterioration of the situation in Russia would presumably
also have negative consequences for the foreign exchange-adjusted
revaluation of our Russian assets.
Following the spin-off of the majority holding and the successful listing
of the former residential property subsidiary BUWOG at the end of the
2013/14 financial year, IMMOFINANZ Group holds an equity stake of 49% in
BUWOG, which it intends to sell over the medium-term - but at least at the
book value per share and with a minimal impact on the market. BUWOG has
received a significantly higher valuation from investors than it did under
the IMMOFINANZ umbrella. The discount between the price of the BUWOG share
and the net asset value (NAV) has declined substantially since the initial
listing. This discount, which was implicitly roughly 36% before the
spin-off based on the IMMOFINANZ share price, has since been reduced
significantly. The BUWOG share was initially listed in the Prime Standard
segment of the Frankfurt Stock Exchange at EUR 13.00 and in the Prime
Market of the Vienna Stock Exchange at EUR 13.20. The price of the BUWOG
share has risen further since that time to an annual high to date of EUR
15.93 (Vienna Stock Exchange).
In addition to the 49% equity stake, IMMOFINANZ also invested in a EUR
260.0 million 3.5% convertible bond issued by BUWOG. BUWOG is entitled to
call this bond in full up to 27 December 2014 and to repay the nominal
value at 101%. The BUWOG management has announced that this call option
will be exercised, which will result in cash inflows (excluding interest)
of more than EUR 262.6 million for IMMOFINANZ Group.
IMMOFINANZ Group will use the liquidity from the sale of the BUWOG shares
and the BUWOG convertible bond to repay existing, more expensive financing,
for current and planned portfolio investments, opportunistic growth
opportunities and general corporate purposes.
The report on the first half-year of IMMOFINANZ AG as of 31 October 2014
can be reviewed on the company's website under
http://www.immofinanz.com/en/investor-relations/financial-reports/ starting
on 18 December 2014.
On IMMOFINANZ Group
IMMOFINANZ Group is the leading listed commercial real estate investor and
developer in Central and Eastern Europe.. The company is included in the
leading ATX index of the Vienna Stock Exchange and also trades on the
Warsaw Stock Exchange. Since its founding in 1990, the company has compiled
a high-quality property portfolio that now comprises more than 470
investment properties with a carrying amount of approx. EUR 6.8 billion. As
a "real estate machine" the company concentrates on linking its three core
business areas: the development of sustainable, specially designed prime
properties in premium locations, the professional management of these
properties and cycle-optimised sales. IMMOFINANZ Group concentrates its
activities in the retail, office and logistics segments of eight regional
core markets: Austria, Germany, Czech Republic, Slovakia, Hungary, Romania,
Poland and Russia. Further information under: http://www.immofinanz.com /
http://blog.immofinanz.com / http://properties.immofinanz.com
For additional information please contact:
MEDIA INQUIRIES
Bettina Schragl
Head of Corporate Communications | Press Spokesperson
IMMOFINANZ Group
T +43 (0)1 88 090 2290
M +43 (0)699 1685 7290
communications@immofinanz.com
INVESTOR RELATIONS
Stefan Schönauer
Head of Corporate Finance & Investor Relations
IMMOFINANZ Group
T +43 (0)1 88 090 2312
M +43 (0)699 1685 7312
investor@immofinanz.com
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17.12.2014 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
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Language: English
Company: IMMOFINANZ AG
Wienerbergstraße 11
1100 Wien
Austria
Phone: +43 (0) 1 88090 - 2291
Fax: +43 (0) 1 88090 - 8291
E-mail: investor@immofinanz.com
Internet: http://www.immofinanz.com
ISIN: AT0000809058
WKN: 911064
Listed: Freiverkehr in Berlin, München, Stuttgart; Frankfurt in
Open Market ; Wien (Amtlicher Handel / Official Market)
End of News DGAP News-Service
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