17.12.2014
IMMOFINANZ with stable operating performance in the first half year, but burdened by Russian crisis – share repurchase program resolved
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.
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.
IMMOFINANZ – a publicly listed European commercial real estate group with focus on two asset classes: Office and retail in eight core markets.