S IMMO AG: Operating figures for 2018 confirm growth path
- Significant rise in FFO I by 43% to EUR 61.1m
- Earnings per share of EUR 3.08 results in RoE of 19.9%
- EPRA NAV at EUR 21.25 per share as of 31 December 2018
- Dividend proposal of 70 cents per share
The listed real estate investment company S IMMO AG generated consolidated net income of EUR 204.2m in the 2018 financial year – an increase of 53% compared with the prior year. The earnings per share of EUR 3.08 is the highest level in the company’s history. EPRA NAV per share came to EUR 21.25 as of 31 December 2018 (2017: EUR 17.63).
Ernst Vejdovszky, CEO of S IMMO AG, had the following comment: “The annual results for 2018 confirm that we are successfully continuing the positive development of the last few years. We achieved a significant increase in FFO I in the financial year 2018. At the same time, we laid the foundation for the continued growth of our long-term earnings by completing projects and acquiring properties with clear potential for rising rents. Based on these excellent results, we are proposing a dividend of EUR 0.70 for the 2018 financial year, thus accomplishing our goal of consistently increasing our dividend in particularly impressive fashion.”
Strong operational performance
Total revenues for the 2018 financial year came to EUR 192.4m, which is higher than the prior-year figure (2017: EUR 191.4m) despite the lucrative large-volume disposals in the third quarter of 2017. The company was already able to more than offset the rental income that was eliminated through these sales in the 2018 financial year thanks to a considerable improvement in revenues from hotel operations, property purchases in Germany and a strong like-for-like performance of 4.9%. The excellent operating performance is also reflected in the gross profit, which rose to EUR 103.0m (2017: EUR 98.2m).
Property investments focused on Germany
S IMMO completed purchases totalling around EUR 123m in Germany in the 2018 financial year. The property investments in 2018 were focused on portfolio properties with upside rent potential in medium-sized German cities such as Leipzig, Kiel and Erfurt. In addition, the company has acquired plots of land in the area surrounding Berlin with a total area of roughly 900,000 m² thus far. These property reserves are aimed at securing future earnings for the company.
EBIT up significantly
At EUR 167.8m, the result from property valuation was considerably higher than in the previous year (2017: EUR 127.6m). This reflects the quality of the property portfolio and the favourable conditions in all markets S IMMO AG is active in. As a result, EBIT amounted to EUR 243.2m (2017: EUR 208.1m).
Strong improvement in financial income, record earnings per share
The financial income came to EUR -7.3m (2017: EUR -47.4m). This tremendous improvement was primarily the result of the higher dividend income from the shareholdings in IMMOFINANZ AG and CA Immobilien Anlagen AG, the further decline in expenses for interest and derivatives and very positive results from joint ventures.
Combined with the solid operating performance and the excellent result from property valuation, this outstanding financial income pushed net income to EUR 204.2m and, in turn, led to record earnings per share of EUR 3.08 (2017: EUR 1.97).
Capital market: Substantial dividend increase
At -9.97%, the annual performance of the S IMMO share came in significantly ahead of the ATX (-19.7%) in 2018. In line with the recovery of the equity markets, the S IMMO share has gained ground again since the beginning of 2019 and was trading at EUR 18.22 as of 31 March 2019, which represents a year-to-date performance of 25.3%. The company is also benefiting from this uptrend on the capital markets by way of the significant increase in the value of its shares in IMMOFINANZ AG and CA Immobilien Anlagen AG in the first quarter of 2019.
Based on the substantial increase in FFO I and the very good consolidated net income, an increase in the dividend from EUR 0.40 to EUR 0.70 per share will be proposed to the Annual General Meeting. Based on the closing price of EUR 18.22 as of the end of the first quarter, the share offers an attractive dividend yield of 3.8% and a discount of 14.3% to the EPRA NAV. The company’s goal is still to steadily increase its dividend.
Outlook for 2019
S IMMO is confident that conditions will remain positive in the real estate markets in which it is active and expects to generate continuous growth. The focus will once again be on Germany in 2019, but attractive acquisition opportunities are also being assessed in CEE. Promising development properties have already been purchased in Budapest and Bucharest this year.
“During the last financial year, we benefited from the fact that we made the right investment decisions in the past as well as from the value-creating management of our properties. We will once again work to leverage the potential of our portfolio in the 2019 financial year. At the same time, we are securing earnings opportunities for the long term by acquiring property reserves in Germany and CEE,” said Friedrich Wachernig, member of S IMMO AG’s Management Board.
Consolidated income statement for the period from 01 January 2018 to 31 December 2018
in EUR million/fair-value method
|revenues from operating costs||33.4||33.4|
|revenues from hotel operations||54.7||46.0|
|Other operating income||1.9||2.9|
|Property operating expenses||-53.4||-59.9|
|Hotel operating expenses||-38.0||-36.2|
|Income from property disposals||52.4||470.3|
|Book value of property disposals||-52.4||-459.9|
|Gains on property disposals||0||10.3|
|Earnings before interest, tax, depreciation and amortisation (EBITDA)||83.1||89.6|
|Depreciation and amortisation||-7.7||-9.0|
|Results from property valuation||167.8||127.6|
|Operating result (EBIT)||243.2||208.1|
|Results from companies measured at equity||14.7||3.6|
|Participating certificates result||0||-6.0|
|Net income before tax (EBT)||236.0||160.7|
|Taxes on income||-31.8||-27.3|
|Consolidated net income||204.2||133.5|
|of which attributable to shareholders in parent company||203.7||130.1|
|of which attributable to non-controlling interests||0.5||3.4|
|Earnings per share (in EUR)||3.08||1.97|