S IMMO AG: profit for the first half year up by nearly 50%
EBITDA increased to EUR 50.9m
• FFO rose to EUR 16.2m
• Income from property disposals totalling EUR 97.4m
• Dividend payment as part of new long-term strategy
For stock exchange listed S IMMO AG (Bloomberg: SPI:AV, Reuters: SIAG.VI) the first half of 2012 was highly satisfactory. “Even in comparison with the very successful first half of 2011, this year’s results to date present a very positive picture: We have been successful in improving our major performance indicators. This is not only a demonstration of the ongoing improvement of our earnings power but also provides a solid basis for the quarters to come”, comments Ernst Vejdovszky, Member of S IMMO’s Management Board.
Despite the property portfolio reduction as a result of profitable property sales, rental income performed very satisfactorily; amounting to EUR 60.6m, compared to EUR 61.7m for the first half of 2011. Gross profit from hotel operations was EUR 3.3m (first half of 2011: EUR 4.2m). S IMMO’s gross profit totalled EUR 53.2m (first half of 2011: EUR 54.5m).
EBITDA up by 2.8%
In the first half of 2012 S IMMO successfully sold 16 properties, with the income from property disposals amounting to EUR 97.4m, compared to EUR 18.4m in the same period last year. The gains on disposals totalled EUR 5.8m. Compared with the fair values as at 30 September 2011, the gains equalled EUR 10.8m. Following a considerable reduction in administration costs in 2011, S IMMO AG achieved further savings in the first half of 2012. This pushed EBITDA up to EUR 50.9m (first half of 2011: EUR 49.5m). Gains from property valuation in the first half of 2012 came to EUR 4.7m, compared to EUR 6.6m for the same period last year, and were entirely attributable to the German property portfolio. EBIT was EUR 51.0m, compared to EUR 51.3m in the first half of 2011.
Significant increase in net profit for period
For the six months ended 30 June 2012 net financing costs totalled EUR 28.6m (first half of 2011: EUR 32.0m), including a non-cash foreign exchange loss of EUR 1.8m. In total, the Group’s consolidated net income for the period amounted to EUR 15.1m, as against EUR 10.1m for the first half of 2011, resulting in an impressive 49.3% increase.
Key indicators at very satisfactory levels
Funds from operations (FFO) climbed 46.9% in the first half of 2012 to EUR 16.2m. The corresponding figure last year was EUR 11.0m. This gives a very respectable FFO yield of 11.1%. The profit on property sales combined with the lower gross profit from hotel operations resulted in a slight reduction in net operating income (NOI) to EUR 49.4m for the first half of 2012 (first half of 2011: EUR 50.2m). Following the dividend distribution, balance sheet NAV stood at EUR 7.00 per share at the end of the half year (31 December 2011: EUR 6.96 per share). EPRA NAV, the inner value of the share calculated in accordance with the guidelines of the European Public Real Estate Association, was EUR 8.88 per share (31 December 2011: EUR 8.70 per share).
Successful asset management
S IMMO had additional satisfactory renewals of rental agreements with major tenants in Hungary to report, with new rental successes in Southeastern Europe. The Eurocenter in Zagreb is now fully occupied, following the signing up of another international tenant. Additionally, S IMMO’s asset management team has accomplished some impressive achievements in Austria, including the signature of a 10-year rental agreement with the City of Vienna for nearly 4,000 m² of office and warehouse space in Arcade Meidling. Serdika Center, the shopping centre in Sofia, was awarded a further prize – “SEE Green Building of the Year”.
In recent weeks an upwards trend has been observed in the capital markets in spite of generally high levels of volatility and reduced liquidity on the Vienna Stock Exchange. The S IMMO Share closed at EUR 4.64 on 22 August 2012. Towards the end of July the Group was informed that Erste Group Bank AG had increased its holding in S IMMO AG to more than 10%. Holger Schmidtmayr, Member of S IMMO’s Management Board, is pleased with this development: “We see Erste Group’s increased interest as an expression of long-term confidence by our core shareholder, and also as confirmation that, in light of the current gap between the share price and its inner value, S IMMO Share is an attractive investment opportunity.”
For the remainder of 2012 S IMMO will be concentrating primarily on the share repurchase programme and the S IMMO INVEST participating certificate repurchase programme, which will run until the end of June 2013. S IMMO’s first ever distribution of a dividend in June 2012 represents a shift in the company’s long-term strategy, and the intention is to continue to pay dividends in the years to come.
Optimisation of the earnings potential of the portfolio continues to be on the agenda for the next months, with a clear focus on sustainable and stable value growth. Over the coming years S IMMO’s loan to value ratio will be reduced to under 55%. S IMMO will also take advantage of the current excellent climate in the German and Austrian property market to dispose of approximately 5% of the portfolio annually for a total of at least EUR 100m. With the sales carried out in the first half of 2012, this goal has already almost been reached for the current year. Letting activities will remain focused on the office buildings in Sofia and Bucharest. In the medium term the Group will concentrate on the Quartier Belvedere Central development project in Vienna, where, together with its partners, it will develop – in successive phases – a mixture of office, hotel and retail properties with gross floor space of around 130,000 m².
“At the halfway point in 2012, our business is performing as planned. S IMMO is continuing its successful path”, comments Friedrich Wachernig, of S IMMO’s Management Board.
|01 – 06/2012||01 – 06/2011|
|Revenues from operating costs||19.4||21.0|
|Revenues from hotel operations||18.6||19.6|
|Other operating income ||3.7||4.3|
|Expenses directly attributable to properties||-33.9||-36.7|
|Hotel operating expenses||-15.3||-15.4|
|Income from property disposals||97.4||18.4|
|Carrying value of property disposals||-91.5||-14.4|
|Gains on property disposals||5.8||3.9|
|Earnings before interest, tax, depreciation and amortisation (EBITDA)||50.9||49.5|
|Depreciation and amortisation||-4.5||-4.8|
|Gains on property valuation||4.7||6.6|
|Operating result (EBIT)||51.0||51.3|
|Participating certificates results||-6.5||-6.8|
|Net income before taxes (EBT) ||15.9||12.5|
|Taxes on income||-0.8||-2.4|
|Consolidated net income||15.1||10.1|
|of which attributable to shareholders in parent company||14.3||7.3|
|of which attributable to non-controlling interests||0.8||2.8|
|Earnings per share (EUR)||0.21||0.11|