S IMMO AG: Very strong third quarter 2018
- Gross profit exceeds previous year’s level
- Earnings per share increases to EUR 1.20
- Financial result improves by more than EUR 32m
- Record FFO I (plus almost 30% compared to previous year’s figure)
The first three quarters of the financial year 2018 were very successful for the listed company S IMMO AG, as key operating figures increased compared with the prior-year period. EBT rose to EUR 95.4m (Q3 2017: EUR 93.3m) and the financial result improved to EUR -7.4m. Despite the extensive sales completed in recent years and the resulting reduction of rental income for the first three quarters of 2018, FFO I – a key indicator for assessing a property company’s operating success – also rose to a record level of EUR 47.7m (Q3 2017: EUR 36.8m), which represents a gain of nearly 30%. Along with a positive like-for-like performance, this solid result can be attributed primarily to higher dividend income and lower financing costs. “Despite the large-scale sales we executed in 2016 and 2017, we achieved a very strong performance in the first three quarters of 2018. We increased the net profit for the period to roughly EUR 80m, which pushed earnings per share to EUR 1.20. This clearly demonstrates the quality of our day-to-day work,” commented Ernst Vejdovszky, CEO of S IMMO AG.
Increase in gross profit
In the first three quarters, S IMMO’s total revenues amounted to EUR 139.6m (Q3 2017: EUR 144.2m) and rental income to EUR 76.5m (Q3 2017: EUR 86.0m). The decrease in rental income due to disposals was countered by a positive like-for-like performance of rents as well as acquisitions and pleasing gross profit from hotel operations. In total gross profit increased to EUR 76.2m (Q3 2017: EUR 74.2m).
Development of EBITDA and EBIT
In the first three quarters, EBITDA came to EUR 62.8m (Q3 2017: EUR 71.3m). Income from property valuations reached a very solid level of EUR 45.8m in the first three quarters (Q3 2017: EUR 68.2m). EBIT came to EUR 102.9m (Q3 2017: EUR 133.0m).
Significantly improved financial result
In the first three quarters, the financial result improved by more than EUR 32m year-on-year and totalled EUR 7.4m (Q3 2017: EUR -39.7m). This positive development is primarily attributable to dividend income of EUR 14.3m (Q3 2017: EUR 4.3m) from the shareholdings in CA Immobilien Anlagen AG and IMMOFINANZ AG. The very good result was also due to lower loan and derivative costs, which are partly related to disposals in the previous year. Another positive effect was achieved with the elimination of participating certificate expenses (participating certificate expenses in Q3 2017: EUR 3.5m).
Increase in EBT, net income for the period and earnings per share
Higher gross profit and the significantly improved financial result offset the property valuations, which are below those of the previous year. EBT came to EUR 95.4m (Q3 2017: EUR 93.3m). Income tax expenses decreased slightly to EUR -15.7m (Q3 2017: EUR -16.2m). As a result, net income for the period of which attributable to shareholders in parent company came to EUR 79.6m (Q3 2017: EUR 73.8m) in the first three quarters. Accordingly, earnings per share rose by 7.1% to EUR 1.20 (Q3 2017: EUR 1.12).
Outlook for 2018
S IMMO still benefits from the positive economic developments in its markets and the low-interest environment. The company continues to be active on the purchasing side and is expected to make acquisitions roughly amounting to EUR 100m in 2018. Currently, attractive acquisition opportunities can be found primarily in emerging German cities such as Leipzig, Kiel and Rostock. The potential for growth and the demographic development of these cities ensure sustainable cash flow and offer attractive upside potential. S IMMO is exploring interesting investment opportunities in other markets as well. According to Friedrich Wachernig, member of S IMMO AG´s Management Board, “Apart from all acquisitions, we continue to enjoy tremendous success in project development. We are currently looking forward to the successful and on-schedule completion of our two office projects in Bratislava and Bucharest – the Einsteinova Business Center and The Mark. The Einsteinova Business Center is already fully leased – including to tenants such as IBM and UNIQA. Also at The Mark we have already pre-let more than 75% of the space before completion.”
Consolidated income statement for the period 1 January 2018–30 September 2018
in EUR millions / fair value method
|thereof rental income||76.5||86.0|
|thereof revenues from operating costs||24.7||25.4|
|thereof revenues from hotel operations||38.3||32.8|
|Other operating income||1.4||1.4|
|Property operating expenses||-38.8||-47.2|
|Hotel operating expenses||-26.0||-24.2|
|Income from property disposals||6.6||461.3|
|Book value of disposed properties||-6.6||-450.9|
|Gains on property disposals||0||10.3|
|Depreciation and amortisation||-5.7||-6.6|
|Results from property valuation||45.8||68.2|
|Operating result (EBIT)||102.9||133.0|
|Participating certificates result||0||-3.5|
|Net income before tax (EBT)||95.4||93.3|
|Taxes on income||-15.7||-16.2|
|Consolidated net income for the period||79.7||77.0|
|of which attributable to shareholders in parent company||79.6||73.8|
|of which attributable to non-controlling interests||0.7||3.2|
|Earnings per share in EUR||1.20||1.12|
|Key data on properties||30.09.2018|
|Total space||millions of m2||1.2|
|Gross rental yield||%||6.1|