Quarterly Report • Nov 7, 2016
Quarterly Report
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REPORT FOR THE FIRST NINE MONTHS JANUARY TO SEPTEMBER 2016
| in EUR '000 | 9 months 2016 | 9 months 2015 |
|---|---|---|
| 01.01. – 30.09.2016 | 01.01. – 30.09.2015 | |
| Revenues | 656,358 | 237,567 |
| Total operating performance | 457,385 | 163,368 |
| EBITDA | 308,289 | 126,395 |
| EBIT | 303,490 | 121,035 |
| EBT | 292,762 | 109,627 |
| Operating income1 | 252,522 | 112,159 |
| Net profit for the period | 238,357 | 92,372 |
| in EUR '000 | 30.09.2016 | 31.12.2015 |
|---|---|---|
| Non-current assets | 252,551 | 255,243 |
| Current assets | 801,022 | 1,376,588 |
| Equity | 769,192 | 539,791 |
| Equity ratio (excl. minorities) | 69.5% | 32.0% |
| Non-current liabilities | 67,662 | 105,202 |
| Current liabilities | 216,719 | 986,838 |
| Total assets | 1,053,573 | 1,631,831 |
| ISIN | DE000PAT1AG3 |
|---|---|
| SIN (Security Identification Number) | PAT1AG |
| Code | P1Z |
| Share capital as at 30 September 2016 | EUR 83,955,887 |
| No. of shares outstanding as at 30 September 2016 | 83,955,887 |
| Third quarter 2016/9 months 2016 high2 | EUR 23.69/EUR 27.00 |
| Third quarter 2016/9 months 2016 low2 | EUR 19.29/EUR 19.29 |
| Closing price as at 30 September 20162 | EUR 19.49 |
| Share price performance | –28% |
| Market capitalisation as at 30 September 2016 | EUR 1.6 billion |
| Average trading volume per day (9 months 2016)3 | 117,100 shares |
| Indices | SDAX, GEX, DIMAX |
1 For the definition of operating income, please refer to page10.
2 Closing price Xetra-trading
3 All German stock exchanges
FOR THE FIRST NINE MONTHS OF 2016
PATRIZIA concluded the first nine months of 2016 delivering an operating income of EUR 252.5m, up 125.1% on the same period in 2015 which saw operating income of EUR 112.2m. Excluding the income from the sale of the Harald Portfolio and the performance fee for the disposal of SÜDEWO, operating profit was EUR 43.9m (nine months of 2015: EUR 24.1m).
Assets under Management (AuM) increased to EUR 17.7bn, a rise of EUR 1.1bn or 6.6% from EUR 16.6bn at the 2015 year end. The Harald Portfolio disposal (EUR 1.1bn) as well as other sales of EUR 0.4bn were more than offset by EUR 2.1bn of completed acquisitions. In addition, acquisition contracts of EUR 2.1bn were concluded, and it is expected that acquisitions of EUR 1.1bn will be completed by years end 2016.
Due to the strong pipeline of already signed transactions that are expected to be completed prior to the year end, the management confirms the AuM guidance with a net increase of around EUR 2.0bn to about EUR 18.6bn. Based on a strong operating development of PATRIZIA's business, the management of PATRIZIA lifts the full year 2016 guidance for operating income from at least EUR 250m to at least EUR 265m.
The Annual General Meeting on 16 June 2016 approved the management's proposal to carry forward the entire earnings for 2015 to new accounts and approved a capital increase from the company's funds to issue bonus shares at a ratio of 10:1. After the capital increase was entered into the Commercial Register on 12 August 2016, the new shares were issued after the close of trading on 26 August 2016, with the first day of trading on 29 August 2016. PATRIZIA's share capital now totals EUR 83,955,887.
The sale of the Harald Portfolio was largely completed in the first half of 2016 and contributed an operating income of EUR 208.6m after transaction-related taxes and minority shares. Reference to this is made in the half year report 2016.
(Link: www.patrizia.ag/en/investor-relations/financial-reports/quarterly-reports/)
As previously advised, PATRIZIA has made a strategic decision to focus on its core investment management activities and services which create a higher value for PATRIZIA's clients and their investments. Following this decision, PATRIZIA has selected an external service provider for property management services, and subsequently disposed its existing division to a strategic buyer. On 17 October 2016, PATRIZIA announced the sale of its property management division to Deutsche Immobilien Management Group (DIM). DIM will take over the complete German property management operations of all PATRIZIA's existing portfolio as well as almost all related employees as of January 2017. The financial impact of this transaction is consistent with what was guided by the company in April 2016.
The reorganisation process has incurred one-off expenses of EUR 13.7m in the first nine months of 2016 which PATRIZIA expects to be recouped through savings within the next two to three financial years.
On 23 June 2016, the United Kingdom undertook a referendum and voted to exit the European Union. At this stage, the impact for PATRIZIA's business in the UK and in Europe remains unclear. Negotiations about the procedure to exit the EU are expected to start as early as 2017. The UK is among the largest and most liquid property markets in Europe and PATRIZIA remains committed to the country where it believes there are still strong investment opportunities for clients.
As of reporting date, PATRIZIA's Assets under Management in the UK amounted to EUR 1.7bn, and PATRIZIA had invested EUR 65.9m of equity.
For 2017 PATRIZIA expects the Assets under Management again to grow by EUR 2bn net, assuming a transaction volume of about EUR 4bn. Based on that, the management expects the operating income 2017 to be at least EUR 55m. Further upside potential for the operating income derives from a higher transaction volume, higher performance fees, as well as income from the deployment of the EUR 300m available cash.
As of 30 September 2016, PATRIZIA had real estate AuM of EUR 17.7bn, a total increase of EUR 1.1bn or 6.6% from EUR 16.6bn at the end of 2015. EUR 11.7bn of this was attributable to Germany and EUR 6.0bn to the rest of Europe.
Principal Investments Co-Investments Third Party Business
In the first nine months of 2016, operating income increased to EUR 252.5m (nine months of 2015: EUR 112.2m, up 125.1%). The adjusted operating income without the contribution from the disposal of the Harald Portfolio and the performance fee for the SÜDEWO sale increased significantly from EUR 24.1m in the first nine months of 2015 to EUR 43.9m.
Operating income before tax is a key performance indicator for PATRIZIA. It is calculated based on EBT in accordance with IFRS, adjusted by non-cash effects from the valuation of investment properties and unrealised currency exposure, the amortisation of fund management contracts and reorganisation expenses. It includes realised valuation gains from the sale of real estate assets held as investment property as well as realised currency changes.
Adjusted Operating Income Contribution from Performance Fee SÜDEWO (2015) and Operating Income Harald (2016)
Development of supplemental performance parameters:
In the first nine months of 2016 income from management services decreased by 35.6% to EUR 122.3m, from EUR 190.0m in the first nine months of 2015. Excluding the performance fee for the sale of SÜDEWO of EUR 85.4m, the income from management services increases by 16.9%.
PATRIZIA collects contractual base fees for the management of its real estate assets. The base fee relates to the property, asset, fund and portfolio management. Moreover, PATRIZIA generates transaction fees for acquisitions and sales and further performance-based fee for when defined target returns are exceeded.
In the first nine months of 2016 investment income was EUR 222.7m, including EUR 208.6m from the sale of the Harald Portfolio. Excluding Harald, the underlying investment income was EUR 14.1m compared to EUR 14.9m in the first nine months of 2015.
The segment investments comprises principal investments – investments on PATRIZIA's own account – and co-investments. Income from principle investments includes sales profits as well as rental income from these investments. Income from co-investments is treated as income from participations.
In the first nine months of 2016 acquisitions of EUR 2.1bn and sales of EUR 1.5bn were completed. The disposals include the sale of the Harald Portfolio of EUR 1.1bn. Principal investments like Harald incur no transaction fees and the proceeds are fully included in the investment income. Compared to the same period in the previous year, the transaction volume decreased from EUR 5.2bn to EUR 3.6bn. The prior year's transaction volume was strongly influenced by two transactions: the EUR 1.9bn sale of the SÜDEWO and the EUR 0.9bn acquisition of
In the period under review EUR 1.5bn of equity for investments was raised with institutional and retail clients compared to EUR 1.0bn in the same period of the previous year.
PATRIZIA's core business is the investment management of real estate assets and portfolios throughout Europe for institutional and retail clients. PATRIZIA generates management fees for its services and investment income from co-investments and principal investments, which can be split into three categories:
With third party business, special funds are placed and managed for institutional and retail clients through the Group's three regulated investment management arms. PATRIZIA generates stable and recurring income through the management of assets for its clients. There is no equity investment by PATRIZIA in the third party business. In total, the third party business accounts for EUR 10.6bn AuM as of 30 September 2016.
In the first nine moths of 2016, PARTIZIA's retail funds division, PATRIZIA GrundInvest Kapitalverwaltungsgesellschaft mbH, raised its first fund with retail clients after only four months of marketing with a value of EUR 45.6m. Following this, three further retail funds were launched, investing in a modern mixed use urban quarter in the city centre of Stuttgart, a residential project in The Hague, and a residential project in Copenhagen, respectively. The pipeline comprises one further fund with commercial assets located in Munich.
PATRIZIA additionally manages single asset mandates with AuM totalling EUR 920m. In the period under review, the Astro-Tower in Brussels was acquired for a consortium of Korean investors. In September 2016, the Commerzbank Tower in Frankfurt, which is Germany's tallest building, was signed on behalf of Korean investor Samsung SRA Asset Management, with completion expected mid 2017. In both cases, PATRIZIA is acting as asset and investment manager on behalf of the investors.
| in EUR million | Assets under Management |
Equity commit ments |
of which already inves ted equity |
of which outstanding |
Number of vehicles |
|---|---|---|---|---|---|
| PATRIZIA WohnInvest KVG mbH | 1,490 | 1,632 | 1,002 | 6311 | 9 |
| Pool funds | 967 | 1,063 | 647 | 4161 | 5 |
| Individual funds | 523 | 569 | 355 | 2151 | 4 |
| PATRIZIA GewerbeInvest KVG mbH | 7,587 | 5,721 | 4,631 | 1,089 | 23 |
| Pool funds | 4,202 | 3,064 | 2,419 | 645 | 11 |
| Individual funds | 1,209 | 1,373 | 932 | 440 | 10 |
| Label funds | 2,176 | 1,284 | 1,280 | 4 | 2 |
| PATRIZIA Real Estate Investment Management S.á r.l. (REIM)2 |
491 | 226 | 226 | 0 | 2 |
| Single asset mandates | 920 | 455 | 455 | 0 | 10 |
| PATRIZIA GrundInvest KVG mbH | 150 | 0 | 67 | 0 | 3 |
| THIRD PARTY BUSINESS | 10,638 | 8,034 | 6,381 | 1,720 | 47 |
1 Without project developments secured through purchase agreements
2 PATRIZIA Nordic Cities SCS SICAV-FIS
PATRIZIA participates in a number of co-investment mandates together with its clients, where PATRIZIA co-invests up to a maximum of 10%. In addition to illustrating its commitment to the client and the transaction, PATRIZIA generates third party management fees and additional investment income from the investment, while PATRIZIA's shareholders benefit from investments in a pan-European, diversified and attractive real estate portfolio. As of 30 September 2016, co-investments contributed EUR 6.8bn to PATRIZIA's AuM. PATRIZIA has invested EUR 0.2bn of equity in co-investments.
No significant changes in PATRIZIA's co-investments occurred in the first nine months of 2016. Reference to these are made in PATRIZIA's annual report 2015, p. 60.
PATRIZIA acquires both portfolios and single assets opportunistically and on a very selective basis for its own account as principal investments. The objective of this strategy is to acquire long term investments where PATRIZIA can use its asset management skills to enhance the value of the property and then dispose it or place it with existing client's funds. Principal investments as of 30 September 2016 amounted to EUR 0.3bn.
In the period under review there were changes in the following principle investments:
An undeveloped area known as Plot 5 was transferred to a joint venture with the Greater Manchester Pension Fund. PATRIZIA received EUR 11.2m as well as retained a minority stake in the joint venture, and will carry out any project management in the future with plans in place to develop an office complex.
In early October 2016, following the reporting date PATRIZIA completed the sale of the Company's largest single principal investment No. 1 First Street, Manchester to an institutional British investor.
The sale of the Harald Portfolio has been completed and is recognised in the income statement.
PATRIZIA completed the acquisition of Wildrosenweg in Munich, in the first quarter 2016, with the purchase price having already been paid at the end of 2015. The individual condo sale of the property has already commenced.
In mid-June 2016, PATRIZIA acquired a Build To Rent asset in the increasingly popular London district of Barking. A project development for around 200 residential apartments is planned.
For the income impact of the principal investments, please refer to the economic position under item 1.2.
For reasons of transparency and clarity the performance of PATRIZIA is shown with and without the effects of the sale of the Harald Portfolio and the sale of SÜDEWO ("adjusted") compared to the same period in the previous year. The discussion and analysis of the Group's earnings performance is described as "adjusted" only.
Operating income is the Group's key performance indicator as it includes the total of all operating items of the income statement, adjusted by the below mentioned cash and non-cash items. In the first nine months of 2016, operating income increased to EUR 252.5m, up 125.1% from EUR 112.2m in the same period of the prior year. Adjusted for the contribution from the sale of Harald and the performance fee for the sale of SÜDEWO, operating income almost doubled to EUR 43.9m, after EUR 24.1m in the first nine months of 2015. The increase in operating income compared with the prior year period is shown in the following table:
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| EBITDA | 34,047 | 24,620 | 38.3% | 308,289 | 126,395 | 143.9% |
| Amortisation of fund manage ment contracts2 , depreciation |
||||||
| of software and fixed assets | –4,799 | –5,360 | –10.5% | –4,799 | –5,360 | –10.5% |
| EBIT | 29,248 | 19,260 | 51.9% | 303,490 | 121,035 | 150.7% |
| Financial result (interest result) | –3,225 | –3,748 | –14.0% | –4,894 | –11,166 | –56.2% |
| Gains/losses from currency translation |
–6,721 | 1,041 | – | –5,834 | –242 | – |
| EBT | 19,302 | 16,553 | 16.6% | 292,762 | 109,627 | 167.1% |
| Change in value of derivatives | 0 | 0 | – | 0 | –1,846 | – |
| + Amortisation of fund management contracts2 |
1,476 | 1,476 | – | 1,476 | 1,476 | – |
| Harald – transaction-related taxes and minorities |
0 | 0 | – | –64,957 | –3,844 | – |
| Net realised valuation gains from the sale of investment |
||||||
| property | 1,315 | 6,058 | –78.3% | 1,315 | 6,058 | –78.3% |
| Reorganisation expenses | 13,732 | 0 | – | 13,732 | 0 | – |
| Expenses/income from unrealised currency translation |
8,088 | –23 | – | 8,194 | 688 | – |
| OPERATING INCOME | 43,913 | 24,064 | 82.5% | 252,522 | 112,159 | 125.1% |
1 adjusted = without SÜDEWO, Harald
2 Fund management contracts that have been transferred in the course of the acquisition of PATRIZIA GewerbeInvest KVG mbH.
The items leading to the operating income are shown below in accordance with their position in the consolidated income statement.
In the first nine months of 2016 adjusted consolidated revenues decreased to EUR 163.9m, down 22.2% from EUR 210.7m in the prior year period, as a result of lower sales proceeds from principal investments. Almost all other items of the consolidated revenues and in particular increased revenues from management services contributed positively and are explained below.
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| Sales proceeds from principal investments |
31,703 | 106,050 | –70.1% | 517,797 | 106,050 | 388.3% |
| Rental revenues | 9,953 | 5,336 | 86.5% | 16,254 | 24,826 | –34.5% |
| Revenues from management services |
115,282 | 93,919 | 22.7% | 115,282 | 93,919 | 22.7% |
| Revenues from ancillary costs | 3,829 | 1,371 | 179.3% | 3,857 | 8,746 | –55.9% |
| Miscellaneous | 3,168 | 4,026 | –21.3% | 3,168 | 4,026 | –21.3% |
| CONSOLIDATED REVENUES | 163,935 | 210,702 | –22.2% | 656,358 | 237,567 | 176.3% |
1 adjusted = without SÜDEWO, Harald
PATRIZIA's revenues only partly reflect the Group's total operating performance. For a more comprehensive view on the overall performance the items below the revenue line have to be considered as well.
Sales proceeds from principal investments decreased in the first nine months of 2016 by 70.1% to EUR 31.7m from EUR 106.1m in the prior year period in line with the stronger strategic focus on investment management services and hence lower volume of principal investments. 2015 includes the completion of a large residential development project and 2016 the proceeds from the sale of Plot 5 in Manchester. The proceeds from the completed disposal of the office building No.1 First Street in Manchester will be realised in the fourth quarter of 2016.
Rental revenues have almost doubled from EUR 5.3m in the prior year to EUR 10.0m in the first nine months of 2016. Principal investments as well as properties temporarily acquired for retail funds to be subsequently placed with retail clients have overcompensated the decrease in rents caused by sales.
The strategic expansion of the service business continues and is reflected in an increase of revenues by 22.7% to EUR 115.3m in the first nine months of 2016 from EUR 93.9m in the prior year period. This includes an increase of 21.0% to EUR 59.7m from management services (nine months of 2015: EUR 49.4m), an increase of 18.3% to EUR 48.6m from transaction-based fees (nine months of 2015: EUR 41.1m) and EUR 6.9m in performance-based fees (nine month of 2015: EUR 3.5m).
Revenues from ancillary costs amounted to EUR 3.8m (nine months of 2015: EUR 1.4m) and include revenues from the allocation of recoverable ancillary rental costs that increased in line with rental growth. Miscellaneous items include transaction expenses which are charged to the corresponding investment vehicles. In the first nine months of 2016, these decreased by 21.3% to EUR 3.2m from EUR 4.0m year-on-year.
Total operating performance reflects PATRIZIA's performance more comprehensively than revenues. Although revenues have decreased, total operating performance in the first nine months of 2016 has increased by 18.4% year-on-year to EUR 154.5m, from EUR 130.5m in the prior year period.
| TOTAL OPERATING PERFORMANCE – 9 MONTHS | ||
|---|---|---|
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| Revenues | 163,935 | 210,702 | –22.2% | 656,358 | 237,567 | 176.3% |
| Income from the sale of investment property |
1,153 | 4,051 | –71.5% | 1,153 | 4,051 | –71.5% |
| Changes in inventories | –20,617 | –93,042 | –77.8% | –407,502 | –93,042 | 338.0% |
| Other operating income | 6,330 | 8,754 | –27.7% | 10,446 | 9,515 | 9.8% |
| Income from the deconsolidation of subsidiaries |
3,691 | 0 | – | 196,930 | 5,277 | – |
| TOTAL OPERATING PERFORMANCE |
154,492 | 130,465 | 18.4% | 457,385 | 163,368 | 180.0% |
1 adjusted = without SÜDEWO, Harald
Income from the sale of investment property, including properties that had been held by PATRIZIA for a long period of time, contributed a net income of EUR 1.2m in the first nine months of 2016 compared to EUR 4.1m in the first nine months of 2015. Positive value changes of EUR 1.3m were realised with the sale of the assets in the first nine months of 2016.
In the first nine months of 2016, changes in inventories of EUR –20.6m (nine months of 2015: EUR –93.0m; –77.8%) were recognised. Book value disposals of the assets sold from inventories reduced the existing stock by EUR 26.2m (nine months of 2015: EUR –106.8m). The most significant change to the inventory in the period is the sale of the principal investment Plot 5 in Manchester into a joint venture with the Greater Manchester Pension Fund. Capitalisations of EUR 5.6m (nine months of 2015: EUR 13.7m) increased inventories and are mainly attributable to maintenance measures and development projects in the UK.
Other operating income decreased by 27.7% to EUR 6.3m (nine months of 2015: EUR 8.8m) and mainly include income from expired obligations (EUR 3.5m) and income from an arbitration procedure (EUR 1.0m).
The income from deconsolidation relates to assets held temporarily on PATRIZIA's balance sheet for subsequent placement with retail funds of PATRIZIA GrundInvest KVG.
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| Total operating performance | 154,492 | 130,465 | 18.4% | 457,385 | 163,368 | 180.0% |
| Cost of materials | –15,737 | –22,336 | –29.5% | –20,479 | –32,433 | –36.9% |
| Cost of purchased services | –10,762 | –11,287 | –4.7% | –10,762 | –11,287 | –4.7% |
| Staff costs | –62,642 | –63,903 | –2.0% | –76,651 | –63,903 | 19.9% |
| Other operating expenses | –31,764 | –36,956 | –14.0% | –41,664 | –43,340 | –3,9% |
| Income from participations | 10,256 | 24,407 | –58.0% | 10,256 | 109,760 | –90.7% |
| Earnings from companies accounted for using the |
||||||
| equity method | 3,936 | 4,230 | –7.0% | 3,936 | 4,230 | –7.0% |
| EBITDAR | 47,779 | 24,620 | 94.1% | 322,021 | 126,395 | 154.8% |
| Reorganisation expenses | –13,732 | 0 | – | –13,732 | 0 | – |
| EBITDA | 34,047 | 24,620 | 38.3% | 308,289 | 126,395 | 143.9% |
1 adjusted = without SÜDEWO, Harald
Cost of materials includes construction and maintenance measures for own assets, which are usually capitalised. Year-on-year, the cost of materials decreased by 29.5% from EUR 22.3m to EUR 15.7m in the first nine months of 2016, in line with the significantly reduced level of own stock and development activity. It comprises the following items:
Cost of purchased services largely include expenditure for the white labelled funds of PATRIZIA GewerbeInvest, for which PATRIZIA acts as service provider only. The costs for purchased services remained stable at EUR 10.8m in the first nine months of 2016, compared to EUR 11.3m in the previous year. Management income from white labelled funds decreased by 6.8% to EUR 11.4m (nine months of 2015: EUR 12.3m) compared to respective costs of 8.9% to EUR 9.4m (nine months of 2015: EUR 10.3m).
As of 30 September 2016 PATRIZIA employed 821 permanent employees (30 September 2015: 812 employees). The staff costs are as following:
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| Fixed salaries | 38,156 | 35,775 | 6.7% | 38,163 | 35,775 | 6.7% |
| Variable salaries | 14,090 | 12,680 | 11.1% | 28,090 | 12,680 | 121.5% |
| Sales commissions | 2,822 | 4,061 | –30.5% | 2,822 | 4,061 | –30.5% |
| Social security contributions | 7,640 | 6,869 | 11.2% | 7,641 | 6,869 | 11.2% |
| Effect of long-term variable compensation2 |
–1,698 | 2,976 | – | –1,698 | 2,976 | – |
| Miscellaneous | 1,632 | 1,542 | 5.8% | 1,633 | 1,542 | 5.9% |
| TOTAL | 62,642 | 63,903 | –2.0% | 76,651 | 63,903 | 19.9% |
1 adjusted = without SÜDEWO, Harald 2 Valuation changes of the long-term variable remuneration due to change in the share price.
Staff costs decreased slightly by 2.0% to EUR 62.6m (nine months of 2015: EUR 63.9m). The fixed salaries of staff grew by 6.7% to EUR 38.2m from EUR 35.8m in the prior year period due to an increase in the number of employees over the past 12 months. In the context of the European expansion, certain employees and executive staff were recruited with a higher variable salary portion. Variable salaries rose from EUR 12.7m in the prior year period by 11.1% to EUR 14.1m in the first nine months of 2016. Sales and distribution commissions decreased by 30.5% from EUR 4.1m in the prior year period to EUR 2.8m in the first nine months of 2016 due to the reduced volume of residential unit sales in the prior year period. Due to a lower share price, the long-term variable compensation contributed a positive effect of EUR 1.7m, after costs of EUR 3.0m in the prior year period. Any miscellaneous items mainly refer to payments in kind.
Other operating expenses decreased by 14.0% from EUR 37.0m in the prior year period to EUR 31.8m in the first nine month of 2016. The specific composition is shown below:
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| Operating expenses | 11,450 | 11,056 | 3.6% | 12,321 | 12,477 | –1.3% |
| Administrative expenses | 9,403 | 10,436 | –9.9% | 9,510 | 11,297 | –15.8% |
| Selling expenses | 6,821 | 7,704 | –11.5% | 6,937 | 7,917 | –12.4% |
| Other expenses | 4,090 | 7,760 | –47.3% | 12,896 | 11,649 | 10.7% |
| TOTAL | 31,764 | 36,956 | –14.0% | 41,664 | 43,340 | –3.9% |
1 adjusted = without SÜDEWO, Harald
Operating expenses increased slightly by 3.6% to EUR 11.5m in the first nine months of 2016, from EUR 11.1m in the prior year period and includes mainly rents for business premises and corresponding ancillary costs, as well as IT and maintenance costs.
Administrative expenses decreased by 9.9% to EUR 9.4m in the first nine months of 2016, compared to EUR 10.4m year-on-year largely due to lower transaction-related costs for due diligence, legal and consultancy costs of EUR 2.8m (nine months of 2015: EUR 4.2m). The costs for insurance and other contributions increased only marginally to EUR 0.9m (nine months of 2015: EUR 0.8m). Transaction-based costs for due diligence as well as legal and consultancy costs are charged to the respective investment vehicles and shown as cost reimbursement under the revenue item.
Selling expenses decreased by 11.5% to EUR 6.8m in the first nine months of 2016, from EUR 7.7m in the prior year period. These largely include the costs for PATRIZIA's sales activities and supporting marketing services, which decreased in line with a reduced volume of properties sold.
Other expenses almost halved in the first nine months of 2016 to EUR 4.1m, down from EUR 7.8m year-on-year. The largest expense included is consultancy services for transactions, which decreased to EUR 2.4m from EUR 4.5m in the prior year period.
The adjusted income from participations decreased to EUR 10.3m in the first nine months of 2016 after EUR 24.4m in previous year's period. The decrease reflects the loss of income from SÜDEWO following its disposal. The co-investment GBW generated EUR 7.1m, the same as in the prior year period, from services provided as shareholders' contribution and a return on capital employed of EUR 2.4m. The co-investment WohnModul I generated an income of EUR 3.9m, a slight decrease from EUR 4.2m in the first nine months of 2015, which is recognised as earnings from companies accounted for using the equity method.
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| GBW | 9,528 | 9,476 | 0.5% | 9,528 | 9,476 | 0.5% |
| SÜDEWO | 0 | 14,695 | – | 0 | 100,048 | – |
| Other | 728 | 236 | 208.5% | 728 | 236 | 208.5% |
| Income from participations | 10,256 | 24,407 | –58.0% | 10,256 | 109,760 | –90.7% |
| Earnings from companies accounted for using the |
||||||
| equity method | 3,936 | 4,230 | –7.0% | 3,936 | 4,230 | –7.0% |
| TOTAL | 14,192 | 28,637 | –50.4% | 14,192 | 113,990 | –87.5% |
1 adjusted for the performance fee for SÜDEWO
As a result of the reorganisation process which includes the sale of the property management, the number of employees is being reduced by approximately 200 employees over the coming months. In the first nine months of 2016, one-off reorganisation expenses of EUR 13.7m were incurred (nine months of 2015: EUR 0m).
| in EUR '000 | 01.01. – 30.09.2016 |
|---|---|
| Expenses for advisors | 2,060 |
| Severance payments | 11,672 |
| TOTAL | 13,732 |
PATRIZIA's adjusted net profit for the period decreased to EUR 10.8m (nine months of 2015: EUR 13.8m).
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| EBITDA | 34,047 | 24,620 | 38.3% | 308,289 | 126,395 | 143.9% |
| Amortisation of fund manage ment contracts, depreciation |
||||||
| of software and fixed assets | –4,799 | –5,360 | –10.5% | –4,799 | –5,360 | –10.5% |
| EBIT | 29,248 | 19,260 | 51.9% | 303,490 | 121,035 | 150.7% |
| Financial income | 1,458 | 669 | 117.9% | 1,952 | 3,142 | –37.9% |
| Financial expenses | –4,683 | –4,417 | 6.0% | –6,846 | –14,308 | –52.2% |
| Financial result | –3,225 | –3,748 | –14.0% | –4,894 | –11,166 | –56.2% |
| Gains/losses from currency translation |
–6,721 | 1,041 | – | –5,834 | –242 | – |
| EBT | 19,302 | 16,553 | 16.6% | 292,762 | 109,627 | 167.1% |
| Income taxes | –8,467 | –2,748 | 208.1% | –54,405 | –17,255 | 215.3% |
| NET PROFIT FOR THE PERIOD | 10,835 | 13,805 | –21.5% | 238,357 | 92,372 | 158.0% |
1 adjusted = without SÜDEWO, Harald
Amortisation of fund management contracts, the depreciation of software and fixed assets decreased to EUR 4.8m (nine months of 2015: EUR 5.4m; –10.5%). The largest single positions are the amortisation of fund management contracts of EUR 1.5m (unchanged year-on-year) and the depreciation of software/equipment of EUR 3.3m (nine months of 2015: EUR 3.9m; –14.4%).
The negative financial result improved by 14.0% to EUR 3.2m, compared with EUR 3.7m in the prior year period. Financial income increased to EUR 1.5m after EUR 0.7m year-on-year and includes interest income on delayed purchase price receipts as well as interest income from shareholder loans to co-investments. Financial expenses of EUR 4.7m (nine months of 2015: EUR 4.4m; +6.0%) increased slightly.
As of 30 September 2016 the currency result amounted to EUR –6.7m (30 September 2015: EUR 1.0m). This includes realised currency gains of EUR 1.4m, as well as EUR 8.1m non-realised and non-cash effective temporary currency losses of equity invested or loans granted in GBP. The operating result has been adjusted for unrealised currency gains and losses.
Income taxes increased to EUR 8.5m in the first nine month of 2016. Largest single positions are taxes for the disposal of the First Street assets in Manchester of EUR 3.6m was well as subsequent payment of taxes of EUR 1.1m. Prior years income tax of EUR 2.7m includes a positive effect of EUR 1.9m from the reduction of deferred tax liabilities.
| 30.09.2016 in EUR '000 |
31.12.2015 in EUR '000 |
Change | |
|---|---|---|---|
| Total Assets | 1,053,573 | 1,631,831 | –35.4% |
| Equity (excl. minorities) | 731,983 | 521,601 | 40.3% |
| Equity Ratio | 69.5% | 32.0% | 37.5 PP |
| + Bank Loans | 21,175 | 821,828 | –97.4% |
| + Bonded Loans | 27,000 | 67,000 | –59.7% |
| – Cash and Cash Equivalents | 434,620 | 179,141 | 142.6% |
| = Net cash (–)/net debt (+) | –386,445 | 709,687 | –154.5% |
| Net Equity Ratio1 | 72.8% | 35.9% | 36.9 PP |
1 Shareholders equity (excl. minorities) divided by net assets (total assets less total debt covered by incremental cash) PP = percentage points
The Group's total assets in the period under review were reduced to EUR 1.1bn, down from EUR 1.6bn at the end of 2015. The significant decrease is mainly due to the sale of the Harald Portfolio. For PATRIZIA GrundInvest KVG, one asset in The Hague was temporarily acquired and added to the balance sheet.
In the consolidated financial statements, PATRIZIA's real estate assets amount to EUR 267.2m (31 December 2015: EUR 1.1bn; –75.2%):
| 30.09.2016 in EUR '000 |
31.12.2015 in EUR '000 |
Change | |
|---|---|---|---|
| Investment property | 13,722 | 20,802 | –34.0% |
| Inventories | 253,450 | 1,057,942 | –76.0% |
| Principal Investments | 267,172 | 1,078,744 | –75.2% |
Of this, EUR 13.7m was attributable to investment property. EUR 253.5m are inventories and include principal investments such as the remainder of the Manchester portfolio and the properties in Munich held for residential unit sales. All principal investments are intended to generate rental income prior to their sale.
The capital allocation table provides an overview of all participations, assets under management as well as PATRIZIA's invested capital.
| Assets under Management in EUR million |
Investment capital in EUR million |
Investment in % |
|
|---|---|---|---|
| Third Party Business | 10,638 | – | – |
| Co-Investments | 6,766 | 174.4 | |
| Residential | 5,277 | 136.9 | |
| GBW GmbH | 3,557 | 54.6 | 5.1 |
| WohnModul I SICAV-FIS | 1,676 | 80.2 | 10.1 |
| Other | 44 | 2.1 | 10.0 |
| Commercial Germany | 446 | 17.8 | |
| PATRoffice | 207 | 5.6 | 6.3 |
| Seneca | 181 | 4.9 | 5.1 |
| sono west | 58 | 7.3 | 30.0 |
| Commercial International | 1,043 | 19.7 | |
| Aviemore Topco (UK) | 509 | 8.6 | 10.0 |
| Citruz Holdings LP (UK) | 93 | 2.7 | 10.0 |
| Plymouth Sound Holdings LP (UK) | 59 | 2.7 | 10.0 |
| Winnersh Holdings LP (UK) | 382 | 5.7 | 5.0 |
| Principal Investments | 248 | 195.3 | |
| Harald | 0 | 10.8 | 94.9 |
| Other | 248 | 179.0 | 100 |
| Operating companies | – | 41.7 | 100 |
| Investment capital employed | 17,652 | 411.4 | – |
| Available bank balances and cash | – | 353.0 | – |
| Total investment capital | 758.9 | – | |
| Of which external capital (bonded loans) |
– | 27.0 | – |
| Of which PATRIZIA equity excl. minorities |
– | 731.9 | – |
In accordance with the decrease of the total assets, the liabilities were also significantly reduced at the reporting date.
One of the two bonded loans amounting to EUR 35.0m was repaid at maturity in June 2016. The other bonded loan amounting to EUR 27.0m is due in June 2018.
The Group has short-term bank loans of EUR 21.2m as at 30 September 2016 (31 December 2015: EUR 821.8m). The loans are fully attributable to an entity of PATRIZIA GrundInvest KVG and bridge finance assets that are expected to be placed through retail funds within the next 12 to 18 months. The decrease in bank loans compared to year end 2015 results from the disposal of the Harald Portfolio, following which PATRIZIA used available cash to redeem loans.
The development of the financial liabilities is shown in the following table:
| 30.09.2016 in EUR '000 |
31.12.2015 in EUR '000 |
Change | |
|---|---|---|---|
| Long-term bonded loans | 27,000 | 32,000 | –15.6% |
| Short-term bonded loans | 0 | 35,000 | – |
| Short-term bank loans | 21,175 | 821,828 | –97.4% |
| Total financial liabilities | 48,175 | 888,828 | –94.6% |
For a detailed schedule of maturities please refer to item 12 of the Notes.
As of 30 September 2016, PATRIZIA holds a cash position of EUR 434.6m.
| in EUR '000 | 30.09.2016 |
|---|---|
| Bank balances and cash | 434,620 |
| – Transaction-based liabilities Harald | –41,531 |
| – Shares of non-controlling shareholders | –30,900 |
| – Regulatory reserve KVG | –9,150 |
| = Available cash | 353,039 |
The cash position of the Group is not freely available in its entirety. Through the sale of the Harald Portfolio, remaining transaction-based liabilities of EUR 41.5m as well as payments to non-controlling shareholders of EUR 30.9m have to be made, but were not due until the reporting date. In addition, a cash reserve of EUR 9.2m has to be permanently held and available for the regulated investment management companies (KVG's) due to regulatory requirements. Finally, the cash position includes the proceeds of the sale of an office building in Manchester, which was due on 1 October 2016, but received already in September 2016 (please refer to the supplementary report). Hence, the available free cash balance amounts to EUR 353.0m.
In early October 2016, PATRIZIA completed the sale of No. 1 First Street, Manchester, the Company's largest single principal investment, to an institutional British investor.
PATRIZIA has made a strategic decision to focus on its core investment management activities and services which create a higher value for PATRIZIA's clients and their investments. The main outcome of this decision was the selection of an external service provider to continue the property management service previously performed by PATRIZIA, and subsequently dispose of its existing division to a strategic buyer. On 17 October 2016, PATRIZIA announced the sale of the property management division to Deutsche Immobilien Management Group (DIM). DIM will take over the complete property management operations as well as almost all related employees as of January 2017. The financial impact of this transaction is consistent with what was guided by the company in April 2016.
PATRIZIA is exposed to both opportunities as well as risks in the course of its business activities. The Group has the necessary measures and processes in place to identify negative influences and risks in a timely manner in order to be able to respond accordingly. No significant new opportunities or risks have been identified by the Group since the annual statements for the 2015 financial year. The assessment of probabilities and potential extent of damage has also not led to any significant changes in the assessment of risks and opportunities.
The outcome of the referendum vote in the United Kingdom to exit the European Union bears potential for future opportunities and risks, i.e. with respect to demand and supply of the property market or the currency translation. The management observes the development very carefully in order to be able to act accordingly. With regard to current principal- and co-investments, the assessment of risks remains unchanged.
The statements in the risk report of the 2015 Annual Report still apply. Please therefore refer to the risk report on pages 83 et seq. of the 2015 Annual Report of PATRIZIA Immobilien AG. No other risks are currently known to the Managing Board of PATRIZIA Immobilien AG.
Due to the strong pipeline of already signed transactions that are expected to be completed prior to the year end, the AuM guidance remains unchanged with a net increase of around EUR 2.0bn to about EUR 18.6bn. Based on the strong operating development of PATRIZIA's business, the management of PATRIZIA lifts the full year 2016 guidance for operating income from at least EUR 250m to at least EUR 265m.
Augsburg, 8 November 2016
Wolfgang Egger Karim Bohn Klaus Schmitt CEO CFO COO
This report contains specific forward-looking statements that relate in particular to the business development of PATRIZIA and the general economic and regulatory environment and other factors to which PATRIZIA is exposed. These forward-looking statements are based on current estimates and assumptions by the Company made in good faith, and are subject to various risks and uncertainties that could render a forward-looking estimate or statement inaccurate or cause actual results to differ from the results currently expected.
| in EUR '000 | 30.09.2016 | 31.12.2015 |
|---|---|---|
| A. Non-current assets | ||
| Goodwill | 610 | 610 |
| Other intangible assets | 35,914 | 37,417 |
| Software | 10,203 | 9,225 |
| Investment property | 13,722 | 20,802 |
| Equipment | 4,154 | 5,015 |
| Participations in associated companies | 80,189 | 88,179 |
| Participations | 101,471 | 81,406 |
| Loans | 5,808 | 5,498 |
| Long-term tax assets | 35 | 78 |
| Deferred taxes | 445 | 7,013 |
| Total non-current assets | 252,551 | 255,243 |
| B. Current assets | ||
| Inventories | 253,450 | 1,057,942 |
| Securities | 44 | 54 |
| Short-term tax assets | 13,401 | 8,280 |
| Current receivables and other current assets | 99,507 | 131,171 |
| Bank balances and cash | 434,620 | 179,141 |
| Total current assets | 801,022 | 1,376,588 |
| TOTAL ASSETS | 1,053,573 | 1,631,831 |
| in EUR '000 | 30.09.2016 | 31.12.2015 | |
|---|---|---|---|
| A. Equity | |||
| Share capital | 83,956 | 76,324 | |
| Capital reserve | 184,005 | 191,637 | |
| Retained earnings | |||
| Legal reserves | 505 | 505 | |
| Non-controlling shareholders | 37,209 | 18,190 | |
| Currency translation differences | –9,526 | –869 | |
| Consolidated unappropriated profit | 473,043 | 254,004 | |
| Total equity | 769,192 | 539,791 | |
| B. Liabilities | |||
| NON-CURRENT LIABILITIES | |||
| Deferred tax liabilities | 35,059 | 63,253 | |
| Retirement benefit obligations | 687 | 687 | |
| Bonded loan | 27,000 | 32,000 | |
| Non-current liabilities | 4,916 | 9,262 | |
| Total non-current liabilities | 67,662 | 105,202 | |
| CURRENT LIABILITIES | |||
| Short-term bank loans | 21,175 | 821,828 | |
| Bonded loan | 0 | 35,000 | |
| Short-term financial derivatives | 0 | 3,677 | |
| Other accruals | 14,830 | 6,740 | |
| Current liabilities | 143,312 | 95,288 | |
| Tax liabilities | 37,402 | 24,305 | |
| Total current liabilities | 216,719 | 986,838 | |
| TOTAL EQUITY AND LIABILITIES | 1,053,573 | 1,631,831 |
| in EUR '000 | 3rd quarter 2016 | 3rd quarter 2015 | 9 months 2016 | 9 months 2015 |
|---|---|---|---|---|
| 01.07. – 30.09.2016 |
01.07. – 30.09.2015 |
01.01. – 30.09.2016 |
01.01. – 30.09.2015 |
|
| Revenues | 77,123 | 134,760 | 656,358 | 237,567 |
| Income from the sale of investment property | 252 | 1,082 | 1,153 | 4,051 |
| Changes in inventories | –20,385 | –70,823 | –407,502 | –93,042 |
| Other operating income | 4,067 | 2,436 | 10,446 | 9,515 |
| Income from the deconsolidation of subsidiaries |
0 | 0 | 196,930 | 5,277 |
| Total operating performance | 61,057 | 67,455 | 457,385 | 163,368 |
| Cost of materials | –9,651 | –13,966 | –20,479 | –32,433 |
| Cost of purchased services | –409 | –4,142 | –10,762 | –11,287 |
| Staff costs | –20,402 | –20,423 | –76,651 | –63,903 |
| Other operating expenses | –13,945 | –22,217 | –41,664 | –43,340 |
| Income from participations | 3,417 | 99,797 | 10,256 | 109,760 |
| Earnings from companies accounted for using the equity method |
683 | 1,212 | 3,936 | 4,230 |
| EBITDAR | 20,750 | 107,716 | 322,021 | 126,395 |
| Reorganisation expenses | –2,419 | 0 | –13,732 | 0 |
| EBITDA | 18,331 | 107,716 | 308,289 | 126,395 |
| Amortisation of fund management contracts, depreciation of software and fixed assets |
–1,506 | –1,891 | –4,799 | –5,360 |
| Earnings before finance income and income taxes (EBIT) |
16,825 | 105,825 | 303,490 | 121,035 |
| Financial income | 797 | 1,512 | 1,952 | 3,142 |
| Financial costs | –661 | –9,123 | –6,846 | –14,308 |
| Losses from currency translation | –1,596 | –235 | –5,834 | –242 |
| Earnings before income taxes (EBT) | 15,365 | 97,979 | 292,762 | 109,627 |
| Income tax | –7,566 | –15,754 | –54,405 | –17,255 |
| Net profit for the period | 7,799 | 82,225 | 238,357 | 92,372 |
| Earnings per share (undiluted) in EUR | 0.09 | 0.77 | 2.61 | 0.87 |
| The net profit for the period is allocated to: | ||||
| Shareholders of the parent company | 7,766 | 64,306 | 219,039 | 72,989 |
| Non-controlling shareholders | 33 | 17,919 | 19,318 | 19,383 |
| 7,799 | 82,225 | 238,357 | 92,372 |
| in EUR '000 | 3rd quarter 2016 | 3rd quarter 2015 | 9 months 2016 | 9 months 2015 |
|---|---|---|---|---|
| 01.07. – 30.09.2016 |
01.07. – 30.09.2015 |
01.01. – 30.09.2016 |
01.01. – 30.09.2015 |
|
| Net profit for the period | 7,799 | 82,225 | 238,357 | 92,372 |
| Items of other comprehensive income with reclassification to net profit/loss for the period |
||||
| Profit/loss from the translation of financial statements of international business units |
–1,479 | –1,831 | –8,657 | –853 |
| Cash flow hedges | ||||
| Amounts recorded during the reporting period |
0 | 0 | 0 | 0 |
| Reclassification of amounts that were recorded |
0 | 0 | 0 | 0 |
| Total result for the reporting period | 6,320 | 80,394 | 229,700 | 91,519 |
| The total result is allocated to: | ||||
| Shareholders of the parent company | 6,287 | 62,475 | 210,382 | 72,136 |
| Non-controlling shareholders | 33 | 17,919 | 19,318 | 19,383 |
| 6,320 | 80,394 | 229,700 | 91,519 |
| in EUR '000 | 01.01. – 30.09.2016 |
01.01. – 30.09.2015 |
|---|---|---|
| Net profit for the period | 238,357 | 92,372 |
| Income taxes recognised through profit or loss | 54,405 | 17,255 |
| Financial costs through profit or loss | 6,846 | 14,308 |
| Financial income through profit or loss | –1,952 | –3,142 |
| Income from divestments of participations, recognised through profit or loss | 0 | –11,157 |
| Amortisation of fund management contracts, software and equipment | 4,799 | 5,360 |
| Income from the sale of investment property | –1,153 | –4,051 |
| Income from the deconsolidation of subsidiaries | –196,930 | –5,277 |
| Other non-cash items | 11,861 | –8,820 |
| Changes in inventories, receivables and other assets that are not attributable | ||
| to investment activities | 374,271 | 18,882 |
| Changes in liabilities that are not attributable to financing activities | 56,489 | –37,784 |
| Interest paid | –6,473 | –8,022 |
| Interest received | 1,564 | 346 |
| Income tax payments | –40,387 | –3,558 |
| Cash inflow from operating activities | 501,697 | 66,712 |
| Capital investments software and equipment | –2,381 | –3,336 |
| Payments received from the disposal of intangible assets and equipment | 45 | 0 |
| Payments received from the sale of investment property | 8,491 | 36,492 |
| Payments for the development of investment property | –321 | –1,073 |
| Payments for the acquisition of participations | –1,190 | 0 |
| Payments received from the equity reduction of participations | 0 | 1,459 |
| Payments received from the sale of participations | 0 | 25,989 |
| Payments for investments in companies accounted for using the equity method | 0 | –15,450 |
| Payment received through distributions of companies accounted for using the equity method |
5,361 | 0 |
| Payments received from the repayment of shares of companies accounted for | ||
| using the equity method | 6,565 | 0 |
| Payments for loans to companies in which participating interests are held | –1,137 | 0 |
| Payments received from the disposal of consolidated companies and other business units |
333,695 | 0 |
| Payments for the acquisition of consolidated companies and other business units | –42,366 | –266,196 |
| Cash inflow/outflow from investment/divestment activities | 306,762 | –222,115 |
| Borrowing of loans | 96,675 | 244,423 |
| Repayment of loans | –646,961 | –42,757 |
| Payments to non-controlling shareholders | –299 | –17,497 |
| Cash outflow/inflow from financing activities | –550,585 | 184,169 |
| Changes in cash | 257,874 | 28,766 |
| Cash 1 January | 179,141 | 145,361 |
| Effect of changes in exchange rates on cash | –2,395 | 0 |
| Cash 30 September | 434,620 | 174,127 |
| in EUR '000 | Share capital |
Capital reserve |
Retained earnings (legal reserve) |
Currency transla tion dif ference |
Consoli dated unappro priated profit |
Thereof at tributable to the share holders of the parent company |
Thereof at tributable to non controlling share holders |
Total |
|---|---|---|---|---|---|---|---|---|
| Balance 1 January 2015 | 69,385 | 198,576 | 505 | 1,030 | 139,743 | 409,239 | 809 | 410,048 |
| Net amount recognised directly in equity, where ap plicable less income taxes |
–853 | –853 | –853 | |||||
| Issue of bonus shares | 6,939 | –6,939 | ||||||
| Non-controlling interests arising from the inclusion of new companies |
101,631 | 101,631 | ||||||
| Purchases of shares of non-controlling shareholders |
2,062 | –74,359 | –72,297 | |||||
| Payout of profit shares to non-controlling shareholders |
–17,497 | –17,497 | ||||||
| Disposal of shares of non-controlling shareholders |
546 | –2,031 | –1,485 | |||||
| Net profit/loss for the period | 72,989 | 72,989 | 19,383 | 92,372 | ||||
| Balance 30 September 2015 | 76,324 | 191,637 | 505 | 177 | 215,340 | 481,375 | 27,936 | 511,919 |
| Balance 1 January 2016 | 76,324 | 191,637 | 505 | –869 | 254,004 | 518,099 | 18,190 | 539,791 |
| Net amount recognised directly in equity, where ap plicable less income taxes |
–8,657 | –8,657 | –8,657 | |||||
| Issue of bonus shares | 7,632 | –7,632 | ||||||
| Payout of profit shares to non-controlling shareholders |
–299 | –299 | ||||||
| Net profit/loss for the period | 219,039 | 219,039 | 19,318 | 238,357 | ||||
| BALANCE 30 SEPTEMBER 2016 |
83,956 | 184,005 | 505 | –9,526 | 473,043 | 728,481 | 37,209 | 769,192 |
AS OF 30 SEPTEMBER 2016 (FIRST NINE MONTHS OF 2016)
PATRIZIA Immobilien AG ("PATRIZIA", "Company" or "Group") is a listed German stock corporation. The Company's headquarter is located at Fuggerstrasse 26 in 86150 Augsburg, Germany. PATRIZIA has been active as an investor and investment manager in the real estate market for more than 30 years and operates in 15 countries across Europe. As an investment manager, PATRIZIA's services include asset and portfolio management, acquisitions and sales and fund management mainly through its regulated investment platforms. As one of the leading real estate investment companies in Europe, the Company operates European-wide for large institutional as well as for retail clients. Currently, the Company manages assets with a value of EUR 17.7 billion, mainly for insurance companies, pension fund institutions, sovereign wealth funds and savings banks.
The interim consolidated financial statements of PATRIZIA Immobilien AG for the first nine months of 2016 (1 January 2016 to 30 September 2016) were prepared in accordance with Article 37 (3) of the Wertpapierhandelsgesetz (WpHG – German Securities Trading Act) in conjunction with Article 37w (2) WpHG in line with IFRS and in compliance with the provisions of German commercial law additionally applicable as per Article 315a (1) of the Handelsgesetzbuch (HGB – German Commercial Code). All compulsory official announcements of the International Accounting Standards Board (IASB) that have been adopted by the EU in the context of the endorsement process (i.e. published in the Official Journal of the EU) have been applied.
From the perspective of the Company's management, the present unaudited interim consolidated financial statements for the period ended 30 September 2016 contain all of the information necessary to provide a true and fair view of the course of business and the earnings situation in the period under review. Earnings generated in the first nine months of 2016 are not necessarily an indication of future earnings or of the expected total earnings for the fiscal year 2016.
When preparing the consolidated financial statements for the interim report in line with IAS 34 "Interim Financial Reporting", the Managing Board of PATRIZIA Immobilien AG must make assessments and estimates as well as assumptions that affect the application of accounting standards in the Group and the reporting of assets and liabilities as well as income and expenses. Actual amounts may differ from these estimates.
These interim consolidated financial statements have been prepared in accordance with the same accounting and assessment policies as the consolidated financial statements for the fiscal year 2015. For a detailed description of the principles applied in preparing the interim consolidated financial statements and the accounting methods used, please refer to the notes to the IFRS consolidated financial statements for the year ending 31 December 2015, which are contained in the Company's 2015 Annual Report.
The term "Harald" used in these interim consolidated financial statements relates to a principal investment acquired in the previous year. All real estate assets hereof were sold in the period under review.
The interim consolidated financial statements are prepared in Euros. The amounts, including the previous year's figures, are stated in EUR thousands unless specified otherwise. Please note that small differences can arise in rounded amounts and percentages due to commercial rounding of figures.
All of the Company's subsidiaries are included in the consolidated financial statements of PATRIZIA Immobilien AG. The subsidiaries include all companies controlled by PATRIZIA Immobilien AG. In addition to the parent company, the scope of consolidation comprises 114 subsidiaries. They are included in the consolidated financial statements in line with the rules of full consolidation.
In addition to this, one participating interest in a SICAV is accounted for at equity in the consolidated financial statements. The SICAV is a stock corporation with variable equity in accordance with the laws of Luxembourg.
Furthermore, 28.3% of the limited liability capital is held in one project development company (in the form of a GmbH & Co. KG), while 30% is held in the associated general partner. A significant influence cannot be executed due to provisions in the partnership agreement meaning that management cannot be exercised, that a significant influence cannot be exerted on the management and that there is no entitlement to appoint members of the managing boards. Shares in this development company are accounted for at acquisition cost.
On the balance sheet date, two companies were not included in the scope of consolidation as they have only small or no business operations ongoing and are of subordinate importance for the Group and for the presentation of a true and fair view of the assets, liabilities, financial position and profit and loss of the Group.
As of 1 January 2016 the acquisition of the portfolio of buildings named "Stuttgart Südtor" was made indirectly through the acquisition of 94.9% of the shares in TAG Stuttgart-Südtor Projektleitungs GmbH & Co. KG, whose change of name to PATRIZIA GrundInvest Objekt Stuttgart Südtor GmbH & Co. KG was entered into the land register on 19 January 2016.
The acquisition of PATRIZIA GrundInvest Objekt Stuttgart Südtor GmbH & Co. KG in the first quarter of 2016 was accounted for as an acquisition of assets as no business operation according to and as described in IFRS 3.3 had been acquired. The purchase price was allocated on the individually identified assets and liabilities based on their fair values as of the acquisition date. As the shares of PATRIZIA GrundInvest Stuttgart Südtor GmbH & Co. geschlossene Investment-KG have been successfully placed with third parties (see also Company Sales), the company has been deconsolidated and is excluded from the scope of consolidation.
Pursuant to a notarial deed of incorporation dated 5 May 2016, PATRIZIA Investment Management HoldCo S.à r.l. and PATRIZIA Investment Management S.C.S., both part of the scope of consolidation of PATRIZIA Immobilien AG, established PATRIZIA Trocoll House GP Limited with a share capital of GBP 100. The Company acts as general partner of the PATRIZIA Trocoll House LP.
Pursuant to a notarial deed of incorporation dated 26 May 2016, PATRIZIA Investment Management HoldCo S.à r.l. and PATRIZIA Investment Management S.C.S., both part of the scope of consolidation of PATRIZIA Immobilien AG, established PATRIZIA Trocoll House LP with a share capital of GBP 99. The purpose of the Company is to invest in companies that acquire, own or manage real estate assets.
PATRIZIA GrundInvest Kapitalverwaltungsgesellschaft mbH, part of the scope of consolidation of the PATRIZIA Immobilien AG, acting as limited partner and CB Beteiligungs GmbH acting as general partner established PATRIZIA GrundInvest Den Haag Wohnen GmbH & Co. geschlossene Investment-KG, a closed investment limited partnership pursuant to a notarial deed of incorporation dated 4 February 2016. The share capital is EUR 10,000. The purpose of this company is the investment and management of the company's funds in accordance with a defined investment strategy on collective investment pursuant to Articles 261 to 272 KAGB (Kapitalanlagegesetzbuch – German Investment Code) to the benefit of investors. The investment strategy of the company is the direct investment in long-term leased real estate assets in different locations that shall be sold at the end of the fund's holding period.
Related to the disposal of Harald and under a notarial purchase agreement dated 8 July 2016, PATRIZIA Harald Fund Investment 1 S.à r.l., part of the scope of consolidation of the PATRIZIA Immobilien AG, acquired an entity which is now operating as PATRIZIA Harald Fund Investment AB. The share capital is SEK 50,000. The purpose of the company is management and holding of shares in real estate investment companies.
PATRIZIA GrundInvest Kapitalverwaltungsgesellschaft mbH, part of the scope of consolidation of the PATRIZIA Immobilien AG, acting as limited partner and CB Beteiligungs GmbH acting as general partner established an entity which is now operating as PATRIZIA GrundInvest Augsburg eins GmbH & Co. KG, a limited partnership pursuant to a notarial deed of incorporation dated 23 September 2015. The share capital is EUR 10,000. The purpose of this company is the investment and management of assets, as long as there is no special licence required, especially the acquisition, management and sale of shares in other companies. Before being added to the scope of consolidation in July 2016, the entity was considered being of subordinate importance for the Group and for the presentation of a true and fair view of the assets, liabilities, financial position and profit and loss of the Group and therefore its shares were accounted for as other assets.
With effect from 1 January 2016 PATRIZIA Immobilien AG has disposed of the directly held shares in the following companies in connection with the sale of the Harald Portfolio:
The sale resulted in an income from the deconsolidation in the amount of EUR 193,239k. This income is calculated as follows:
| in EUR '000 | 30.09.2016 |
|---|---|
| Purchase price received | 399,968 |
| Shares remaining in the Group at fair value | 21,495 |
| Disposed net assets | –228,224 |
| INCOME FROM THE DECONSOLIDATION OF SUBSIDIARIES | 193,239 |
In addition, the two following companies have been excluded from the Group due to the lack of an active business operation:
This resulted in an income from the deconsolidation in the amount of EUR 104k.
In the course of the sale of shares of PATRIZIA GrundInvest Campus Aachen GmbH & Co. geschlossene Investment-KG, a closed-end fund of PATRIZIA GrundInvest Kapitalverwaltungsgesellschaft mbH, to third parties, and the accompanying loss of control through the company, an income from the deconsolidation of EUR 177k was generated.
In the course of the sale of shares of PATRIZIA GrundInvest Stuttgart Südtor GmbH & Co. geschlossene Investment-KG, a closed-end fund of PATRIZIA GrundInvest Kapitalverwaltungsgesellschaft mbH, to third parties, and the accompanying loss of control through the Company, an income from deconsolidation of EUR 3,410k was generated. As a consequence, PATRIZIA GrundInvest Objekt Stuttgart Südtor GmbH & Co. KG has also been excluded from the scope of consolidation.
Investment properties are those that are held for the purpose of earning rental income or for the capital appreciation, or both. They are not owner-occupied or held for sale in the ordinary course of business and investment properties are initially measured at cost. Following initial recognition, investment properties are measured at fair value. Any change herein is recognised as affecting net income in the income statement.
For detailed description of the accounting methods used, please refer to the notes to the IFRS consolidated financial statements for the year ending at 31 December 2015, which are contained in the Company's 2015 Annual Report.
Participations in Associated Companies include a 10.1% share in PATRIZIA WohnModul I SICAV-FIS with headquarters in Luxembourg.
The strategy of PATRIZIA WohnModul I is the purchase of different types of real estate assets, including project developments and revitalisation stocks. As an exit strategy, the sales of blocks as well as single units are planned.
Through its participation in PATRIZIA WohnModul I SICAV-FIS, PATRIZIA is subject to the usual real estate specific risks such as market development in the event of single unit sales and project developments, but also to fluctuations in the interest rates.
The Group's share in the profit of PATRIZIA WohnModul I SICAV-FIS for the first nine months of 2016 is EUR 3,936k (30 September 2015: EUR 4,230k).
In the period under review, WohnModul I SICAV-FIS distributed profits with an amount of EUR 5,362k to PATRIZIA Immobilien AG. This distribution was credited against Participations in Associated Companies not effecting the income statement. Furthermore a capital repatriation amounting to EUR 6,565k took place.
Participations include the following main holdings:
Through the sale of 94.9% of shares in Scan Deutsche Real Estate Kiel GmbH, Draaipunt Holding B.V., Promontoria Holding V B.V., and Promontoria Holding X B.V., as described under section 3 "Company Sales", the remaining stake of EUR 21,495k is disclosed as participations.
Inventories include real estate assets that have been acquired with the purpose of resale within the ordinary business cycle. Assessment and qualification of an inventory is carried out at acquisition.
PATRIZIA has defined the operating business cycle as three years as the majority of the units to be disposed are usually sold during this time period. However, inventories remain classified as intended for sale even if the sale is not realised within three years.
Inventories are valued at acquisition or production costs. Acquisition costs comprise the directly attributable purchase and commitment costs. Production costs include the costs directly attributable to the real estate development process.
Cash and Cash Equivalents cover cash and short-term bank deposits that are held by the Group. The net asset value of these assets corresponds to their fair value.
The Company's share capital at the balance sheet date was EUR 83,955,887 (31 December 2015: EUR 76,323,533) and was divided into 83,955,887 (31 December 2015: 76,323,533) no-par value shares (shares with no nominal value). The development of equity is shown in the consolidated statement of changes in equity.
As of 30 September 2016, shares of non-controlling shareholders amounted to EUR 37,209k (31 December 2015: EUR 18,190k).
In the period under review a share in the profit of EUR 19,318k was allocated to non-controlling shareholders. Furthermore, in the first nine months of 2016 a share in the profit amounting to EUR 299k was withdrawn by non-controlling shareholders.
A reorganisation project caused an increase of other accruals considering severance payments and salary obligations in lieu of notice.
Financial Liabilities have the following maturity profile:
| in EUR '000 30.09.2016 |
2016 | 2017 | 2018 | 2019 – 2025 |
2026 | Total | |
|---|---|---|---|---|---|---|---|
| Bank loans | 0 | 0 | 10,800 | 0 | 0 | 10,800 | |
| Mortgage loans | 0 | 0 | 0 | 0 | 10,375 | 10,375 | |
| Bonded loans | 0 | 0 | 27,000 | 0 | 0 | 27,000 | |
| TOTAL FINANCIAL LIABILITIES | 0 | 0 | 37,800 | 0 | 10,375 | 48,175 | |
| in EUR '000 31.12.2015 |
2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Total |
| Bank loans | 197,541 | 0 | 0 | 0 | 0 | 0 | 197,541 |
| of which Harald | 197,541 | 0 | 0 | 0 | 0 | 0 | 197,541 |
| Mortgage loans | 202,150 | 0 | 76,400 | 108,341 | 0 | 236,678 | 623,569 |
| of which Harald | 73,000 | 0 | 76,400 | 108,341 | 0 | 236,678 | 494,419 |
| Bonded loans | 35,000 | 0 | 32,000 | 0 | 0 | 0 | 67,000 |
| Accrued interest and | |||||||
| current account | 718 | 0 | 0 | 0 | 0 | 0 | 718 |
| of which Harald | 252 | 0 | 0 | 0 | 0 | 0 | 252 |
| TOTAL FINANCIAL LIABILITIES | 435,409 | 0 | 108,400 | 108,341 | 0 | 236,678 | 888,828 |
| OF WHICH HARALD | 270,793 | 0 | 76,400 | 108,341 | 0 | 236,678 | 692,212 |
Bank loans are accounted for at amortised cost. As the interest rates are usually floating, the Group is exposed to interest rate risk. All loans are valued in EUR. All mortgage loans (EUR 10,375k) and bank loans (EUR 10,800k) relate to an investment of PATRIZIA GrundInvest Kapitalverwaltungsgesellschaft mbH. Maturities are shown in accordance with the contractually agreed terms of the loan agreements.
As of the balance sheet date, one bonded loan with an amount of EUR 27,000k is shown in the consolidated financial statements as a long-term liability based on its maturity in June 2018.
Long-term Liabilities amount to EUR 4,916k (31 December 2015: EUR 9,262k) and essentially consist of long-term components of the management participation plan, which is described in detail under item 9.2 in the 2015 Annual Report.
Revenues are composed as follows:
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| Sales proceeds from principal investments |
31,703 | 106,050 | –70.1% | 517,797 | 106,050 | 388.3% |
| Rental revenues | 9,953 | 5,336 | 86.5% | 16,254 | 24,826 | –34.5% |
| Revenues from management services |
115,282 | 93,919 | 22.7% | 115,282 | 93,919 | 22.7% |
| Revenues from ancillary costs | 3,829 | 1,371 | 179.3% | 3,857 | 8,746 | –55.9% |
| Miscellaneous | 3,168 | 4,026 | –21.3% | 3,168 | 4,026 | –21.3% |
| CONSOLIDATED REVENUES | 163,935 | 210,702 | –22.2% | 656,358 | 237,567 | 176.3% |
1 adjusted = without SÜDEWO, Harald
The revenues from management services include acquisitions and sales commissions, revenues from asset and fund management as well as portfolio management.
In the period under review, PATRIZIA realised EUR 196,930k (30 September 2015: EUR 5,277k) of income from deconsolidation of subsidiaries, which is described under section "Scope of Consolidation – Company Sales".
Other Operating Income contains:
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| Income from expired obligations | 3,498 | 3,191 | 9.6% | 3,498 | 3,191 | 9.6% |
| Income from payments in kind | 700 | 728 | –3.8% | 700 | 728 | –3.8% |
| Income from the decrease in the general provision |
287 | 233 | 23.2% | 287 | 233 | 23.2% |
| Income from reimbursement of lawyers' fees, court costs and payments of damages |
1,226 | 507 | 141.8% | 1,226 | 507 | 141.8% |
| Insurance compensations | 51 | 96 | –46.9% | 51 | 96 | –46.9% |
| Other | 568 | 3,999 | –85.8% | 4,684 | 4,760 | –1.6% |
| TOTAL | 6,330 | 8,754 | –27.7% | 10,446 | 9,515 | 9.8% |
1 adjusted = without SÜDEWO, Harald
Cost of Materials consist of:
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| Renovation and construction costs |
10,246 | 18,287 | –44.0% | 10,734 | 20,442 | –47.5% |
| Maintenance costs | 639 | 571 | 11.9% | 639 | 571 | 11.9% |
| Ancillary rental costs | 4,852 | 3,478 | 39.5% | 9,106 | 11,420 | –20.3% |
| TOTAL | 15,737 | 22,336 | –29.5% | 20,479 | 32,433 | –36.9% |
1 adjusted = without SÜDEWO, Harald
Other Operating Expenses consist of:
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| Operating expenses | 11,450 | 11,056 | 3.6% | 12,321 | 12,477 | –1.3% |
| Administrative expenses | 9,403 | 10,436 | –9.9% | 9,510 | 11,297 | –15.8% |
| Selling expenses | 6,821 | 7,704 | –11.5% | 6,937 | 7,917 | –12.4% |
| Other expenses | 4,090 | 7,760 | –47.3% | 12,896 | 11,649 | 10.7% |
| TOTAL | 31,764 | 36,956 | –14.0% | 41,664 | 43,340 | –3.9% |
1 adjusted = without SÜDEWO, Harald
For the first nine months of 2016 Income from Participations amounts to EUR 10,256k (30 September 2015: EUR 109,760k) and contains the income from co-investments in GBW, Seneca and Harald (previous year: GBW, SÜDEWO and Seneca) and is composed as follows:
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| Services provided as shareholder contributions |
7,111 | 10,704 | –33.6% | 7,111 | 10,704 | –33.6% |
| Performance-related shareholder compensation |
0 | 0 | – | 0 | 85,353 | – |
| Return on equity employed | 3,145 | 13,703 | –77.0% | 3,145 | 13,703 | –77.0% |
| TOTAL | 10,256 | 24,407 | –58.0% | 10,256 | 109,760 | –90.7% |
1 adjusted for the performance fee for SÜDEWO
This item includes additions to accruals for reorganisation and advisory costs (see also section "Other Accruals").
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 |
9 months 2015 |
|||
|---|---|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
Change | |
| Interest on bank deposits | 48 | 72 | –33.3% | 88 | 77 | 14.3% |
| Other interest | 1,410 | 597 | 136.2% | 1,864 | 3,065 | –39.2% |
| Financial income | 1,458 | 669 | 117.9% | 1,952 | 3,142 | –37.9% |
| Interest on revolving credit facilities and bank loans |
-1,866 | –1,205 | 54.9% | –5,821 | –5,210 | 11.7% |
| Other financial expenses | –2,817 | –3,212 | –12.3% | –1,025 | –9,098 | –88.7% |
| Financial costs | –4,683 | –4,417 | 6.0% | –6,846 | –14,308 | –52.2% |
| FINANCIAL RESULT | –3,225 | –3,748 | –14.0% | –4,894 | –11,166 | –56.2% |
1 adjusted = without SÜDEWO, Harald
Currency differences of EUR –5,834k (30 September 2015: EUR –242k) are shown in the consolidated income statement in the first nine months of 2016. This includes EUR 2,360k of realised currency gains (realised currency losses as of 30 September 2015: EUR –696k).
Applying IAS 33.64, the weighted number of shares for the same period of the previous year (76,323,533) was adjusted, assuming that the weighted number of shares throughout the year for 2015 corresponds to that of 2016.
| 9 months 2016 adjusted1 |
9 months 2015 adjusted1 |
9 months 2016 | 9 months 2015 | |
|---|---|---|---|---|
| 01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
01.01. – 30.09.2016 in EUR '000 |
01.01. – 30.09.2015 in EUR '000 |
|
| Profit attributable to Group's shareholder |
10,536 | 13,805 | 219,039 | 72,989 |
| Number of shares issued | 83,955,887 | 76,323,533 | 83,955,887 | 76,323,533 |
| Weighted number of shares | 83,955,887 | 83,955,887 | 83,955,887 | 83,955,887 |
| TOTAL | 0.13 | 0.16 | 2.61 | 0.87 |
1 adjusted = without SÜDEWO, Harald
Applying IAS 33.64, the weighted number of shares for the same quarter in the previous year (76,323,533) was adjusted, assuming that the weighted number of shares throughout the year for 2015 corresponds to that of 2016.
Segment Reporting categorises the business segments according to whether PATRIZIA acts as investor or as service provider. In line with the Group's reporting for management purposes and in accordance with IFRS 8 "Operating segments", two segments have been identified based on functional criteria: Investments and Management Services. In addition, the operating segments are split in German and International, based on the location of the related property asset. International subsidiaries continue to be reported as a total for the time being due to the still low contribution of the respective national businesses to total revenues and results.
In addition, PATRIZIA Immobilien AG (corporate administration) includes the management of international subsidiaries as Corporate. Corporate does not constitute an operating segment with an obligation to report but is presented separately due to its activity as an internal and transnational service provider.
The elimination of intracompany revenues and interest charges as well as interim results is conducted via the "Consolidation" column. The "Corporate" column thus consolidates all internal services between the Investments and Management Services segments and the Company within a country. It represents the external service provided by the Group in the region. Transnational consolidation is performed in the row "Consolidation".
The Investments segment primarily combines principal investments and participations.
The Management Services segment covers a broad spectrum of real estate services, in particular the acquisition and sales of residential and commercial properties or portfolios (Acquisition and Sales), the management of real estate (Property Management), value-oriented management of real estate portfolios (Asset Management) as well as strategic consulting with regard to investment strategy, portfolio planning and allocation (Portfolio Management) and the execution of complex, non-standard investments (Alternative Investments). Special funds are also established and managed – including separate accounts – via the Group's own investment management companies. Commission revenues generated by services, both from co-investments and from third parties, are reported in the Management Services segment. These also include income from participating interests that are granted as interim profits for asset management of the co-investment GBW.
The range of services provided by the segment Management Services is increasingly required by third parties as PATRIZIA's AuM grow.
PATRIZIA's internal control and reporting measures are primarily based on the principles of accounting under IFRS. The Group measures the success of its segments using segment earnings parameters which, for the purposes of internal control and reporting, are referred to as EBT and operating EBT (operating income).
EBT, the measure of segment earnings, comprises total revenues, income from the sale of investment property, changes in inventories, income from the deconsolidation of subsidiaries, cost of materials and staff costs, other operating income and expenses, reorganisation expenses, changes in the value of investment property, amortisation, as well as earnings from investments, (including investments valued at equity) and the financial result and gains/losses from currency translation.
Certain adjustments are made in the course of determining operating EBT (operating income). Adjustments are made for non-cash effects such as amortisation of other intangible assets (i.e. fund management contracts), unrealised changes in the value of the investment property, gains/losses from currency translation and reorganisation expenses. Cash-effective realised valuation changes from the sale of investment property and realised currency translation effects are added.
Segments generate inter-company revenues and these services are settled at market prices.
Due to the capital intensity of the segment, the assets and liabilities in the investment segment account for the majority of the Group's total assets and liabilities. For this reason, no breakdown of assets and liabilities by individual segments is provided.
The individual segments are set out as follows. The reporting of amounts in EUR thousands can result in rounding differences. However, individual items are calculated on the basis of non-rounded figures.
| in EUR '000 | Investments | Management Services |
Corporate | Consolidation | Group |
|---|---|---|---|---|---|
| Germany | |||||
| Revenues from principal investments | 506,659 | 0 | 0 | 0 | 506,659 |
| Rental revenues | 12,141 | 3 | 0 | –59 | 12,085 |
| Revenues from management services | 0 | 119,729 | 0 | –21,249 | 98,480 |
| Other | 1,437 | 686 | 0 | –44 | 2,079 |
| Revenues | 520,237 | 120,418 | 0 | –21,352 | 619,303 |
| International1 | |||||
| Revenues from principal investments | 11,138 | 0 | 0 | 0 | 11,138 |
| Rental revenues | 4,169 | 0 | 0 | 0 | 4,169 |
| Revenues from management services | 0 | 32,259 | 0 | –1,288 | 30,971 |
| Other | 4,623 | 256 | 0 | 0 | 4,879 |
| Revenues | 19,930 | 32,515 | 0 | –1,288 | 51,157 |
| Corporate | |||||
| Revenues | 0 | 0 | 17,711 | 0 | 17,711 |
| Consolidation | |||||
| Revenues | 0 | –14,362 | 0 | –17,449 | –31,811 |
| Group | |||||
| Revenues from principal investments | 517,797 | 0 | 0 | 0 | 517,797 |
| Rental revenues | 16,310 | 3 | 1 | –59 | 16,254 |
| Revenues from management services | 0 | 137,656 | 17,432 | –39,805 | 115,282 |
| Other | 6,060 | 912 | 278 | –225 | 7,025 |
| Revenues | 540,167 | 138,571 | 17,711 | –40,089 | 656,358 |
| Details | |||||
| Total operating performance | |||||
| Germany | 318,053 | 125,741 | 0 | –21,352 | 422,442 |
| International1 | 15,054 | 33,174 | 0 | –1,288 | 46,940 |
| Corporate | 0 | 0 | 19,926 | 0 | 19,926 |
| Consolidation | 0 | –14,362 | 0 | –17,562 | –31,924 |
| Group | 333,107 | 144,553 | 19,926 | –40,202 | 457,385 |
| Cost of materials and cost of purchased services |
|||||
| Germany | –15,667 | –15,835 | 0 | 344 | –31,158 |
| International1 | –5,145 | –12,072 | 0 | 0 | –17,217 |
| Corporate | 0 | 0 | 0 | 0 | 0 |
| Consolidation | 0 | 14,302 | 0 | 2,832 | 17,134 |
| Group | –20,812 | –13,605 | 0 | 3,176 | –31,241 |
| Staff costs | |||||
| Germany | 0 | –46,023 | 0 | 0 | –46,023 |
| International1 | 0 | –13,629 | 0 | 0 | –13,629 |
| Corporate | 0 | 0 | –16,999 | 0 | –16,999 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | 0 | –59,652 | –16,999 | 0 | –76,651 |
| Other operating expenses | |||||
| Germany | –34,830 | –25,205 | 0 | 21,237 | –38,798 |
| International1 | –1,858 | –5,255 | 0 | 1,288 | –5,825 |
| Corporate | 0 | 0 | –11,758 | 0 | –11,758 |
| Consolidation | 0 | 60 | 0 | 14,655 | 14,715 |
| Group | –36,688 | –30,400 | –11,758 | 37,180 | –41,664 |
| Income from participations and earnings from companies accounted for using the equity method |
|||||
| Germany | 3,321 | 7,117 | 0 | 0 | 10,438 |
| International1 | 3,754 | 0 | 0 | 0 | 3,754 |
| Corporate | 0 | 0 | 1 | 0 | 1 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | 7,075 | 7,117 | 1 | 0 | 14,192 |
1 France, Great Britain, Luxembourg, Netherlands, Scandinavia, Spain
| in EUR '000 | Investments | Management Services |
Corporate | Consolidation | Group |
|---|---|---|---|---|---|
| Reorganisation expenses | |||||
| Germany | 0 | –10,552 | 0 | 0 | –10,552 |
| International1 | 0 | –970 | 0 | 0 | –970 |
| Corporate | 0 | 0 | –2,210 | 0 | –2,210 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | 0 | –11,522 | –2,210 | 0 | –13,732 |
| Amortisation of fund management contracts, software and equipment |
|||||
| Germany | –6 | –1,501 | 0 | 0 | –1,507 |
| International1 | 0 | –102 | 0 | 0 | –102 |
| Corporate | 0 | 0 | –3,190 | 0 | –3,190 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | –6 | –1,603 | –3,190 | 0 | –4,799 |
| Financial Result | |||||
| Germany | 3,141 | –704 | 0 | 0 | 2,437 |
| International1 | –259 | 243 | 0 | 0 | –16 |
| Corporate | 0 | 0 | –7,390 | 0 | –7,390 |
| Consolidation | 0 | 0 | 0 | 75 | 75 |
| Group | 2,882 | –461 | –7,390 | 75 | –4,894 |
| Gains/losses from currency translation | |||||
| Germany | 887 | –73 | 0 | 0 | 814 |
| International1 | –3,954 | 12 | 0 | 0 | –3,942 |
| Corporate | 0 | 0 | –2,705 | 0 | –2,705 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | –3,067 | –61 | –2,705 | 0 | –5,834 |
| EBT (IFRS) | |||||
| Germany | 274,899 | 32,965 | 0 | 229 | 308,093 |
| International1 | 7,592 | 1,401 | 0 | 0 | 8,993 |
| Corporate | 0 | 0 | –24,325 | 0 | –24,325 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | 282,491 | 34,366 | –24,325 | 229 | 292,762 |
| Adjustments | |||||
| Germany | 1,420 | 13,143 | 2,210 | 0 | 16,773 |
| Significant non-operating earnings | –105 | –13,143 | –2,210 | 0 | –15,458 |
| Fund agreement amortisation | 0 | –1,476 | 0 | 0 | –1,476 |
| Reorganisation expenses | 0 | –11,522 | –2,210 | 0 | –13,732 |
| Unrealised currency changes | –105 | –145 | 0 | 0 | –250 |
| Realised fair value | 1,315 | 0 | 0 | 0 | 1,315 |
| International1 | 3,791 | –27 | 0 | 0 | 3,763 |
| Significant non-operating earnings | –3,791 | 27 | 0 | 0 | –3,763 |
| Fund agreement amortisation | 0 | 0 | 0 | 0 | 0 |
| Unrealised currency changes | –3,791 | 27 | 0 | 0 | –3,763 |
| Corporate | 0 | 0 | 4,181 | 0 | 4,181 |
| Significant non-operating earnings | 0 | 0 | –4,181 | 0 | –4,181 |
| Unrealised currency changes | 0 | 0 | –4,181 | 0 | –4,181 |
| Group | 5,211 | 13,116 | 6,391 | 0 | 24,717 |
| Operating result (adjusted EBT)2 | |||||
| Germany3 | 276,319 | 46,108 | 2,210 | 229 | 324,866 |
| International1 | 11,383 | 1,374 | 0 | 0 | 12,756 |
| Corporate | 0 | 0 | –20,144 | 0 | –20,144 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | 287,702 | 47,482 | –17,934 | 229 | 317,479 |
1 France, Great Britain, Luxembourg, Netherlands, Scandinavia, Spain
² EUR 252.5m excluding Harald related taxes and minorities
³ EUR 208.6m excluding Harald related taxes of EUR 45.9m and minorities of EUR 19.0m
| in EUR '000 | Investments | Management Services |
Corporate | Consolidation | Group |
|---|---|---|---|---|---|
| Germany | |||||
| Revenues from principal investments | 106,050 | 0 | 0 | 0 | 106,050 |
| Rental revenues | 24,564 | 0 | 0 | –132 | 24,432 |
| Revenues from management services | 0 | 76,190 | 0 | –3,494 | 72,696 |
| Other | 9,533 | 5,049 | 0 | –1,948 | 12,634 |
| Revenues | 140,147 | 81,239 | 0 | –5,574 | 215,812 |
| International1 | |||||
| Revenues from principal investments | 0 | 0 | 0 | 0 | 0 |
| Rental revenues | 394 | 0 | 0 | 0 | 394 |
| Revenues from management services | 0 | 38,500 | 0 | 0 | 38,500 |
| Other | 0 | 179 | 0 | 0 | 179 |
| Revenues | 394 | 38,679 | 0 | 0 | 39,073 |
| Corporate | |||||
| Revenues | 0 | 0 | 18,089 | 0 | 18,089 |
| Consolidation | |||||
| Revenues | 0 | –16,707 | 0 | –18,699 | –35,406 |
| Group | |||||
| Revenues from principal investments | 106,050 | 0 | 0 | 0 | 106,050 |
| Rental revenues | 24,958 | 0 | 1 | –132 | 24,826 |
| Revenues from management services | 0 | 98,047 | 17,293 | –21,421 | 93,919 |
| Other | 9,540 | 5,155 | 829 | –2,754 | 12,772 |
| Revenues | 140,548 | 103,202 | 18,123 | –24,307 | 237,567 |
| Details | |||||
| Total operating performance | |||||
| Germany | 57,680 | 82,604 | 0 | –5,574 | 134,710 |
| International1 | 4,296 | 41,389 | 0 | –67 | 45,618 |
| Corporate | 0 | 0 | 18,715 | 0 | 18,715 |
| Consolidation | –242 | –16,731 | 0 | –18,703 | –35,676 |
| Group | 61,734 | 107,262 | 18,715 | –24,344 | 163,368 |
| Cost of materials and cost of purchased services |
|||||
| Germany | –32,742 | –13,824 | 0 | 311 | –46,255 |
| International1 | 0 | –16,865 | 0 | 0 | –16,865 |
| Corporate | 0 | 0 | 0 | 0 | 0 |
| Consolidation | 0 | 16,609 | 0 | 2,792 | 19,401 |
| Group | –32,742 | –14,080 | 0 | 3,103 | –43,720 |
| Staff costs | |||||
| Germany | 0 | –34,694 | 0 | 0 | –34,694 |
| International1 | 0 | –10,363 | 0 | 0 | –10,363 |
| Corporate | 0 | 0 | –19,248 | 0 | –19,248 |
| Consolidation | 0 | 63 | 0 | 340 | 403 |
| Group | 0 | –44,994 | –19,248 | 340 | –63,903 |
| Other operating expenses | |||||
| Germany | –15,347 | –31,172 | 0 | 5,769 | –40,750 |
| International1 | –403 | –4,655 | 0 | 67 | –4,991 |
| Corporate | 0 | 0 | –13,164 | 0 | –13,164 |
| Consolidation | –50 | 59 | 0 | 15,556 | 15,565 |
| Group | –15,800 | –35,768 | –13,164 | 21,392 | –43,340 |
| Income from participations and earnings from companies accounted for using the equity method |
|||||
| Germany | 15,755 | 96,057 | 0 | 0 | 111,812 |
| International1 | 2,178 | 0 | 0 | 0 | 2,178 |
| Corporate | 0 | 0 | 3 | 0 | 3 |
| Consolidation | 0 | 0 | 0 | –3 | –3 |
| Group | 17,933 | 96,057 | 3 | –3 | 113,990 |
1 France, Great Britain, Luxembourg, Netherlands, Scandinavia, Spain
| in EUR '000 | Investments | Management Services |
Corporate | Consolidation | Group |
|---|---|---|---|---|---|
| Amortisation of fund management contracts, software and equipment |
|||||
| Germany | –16 | –1,518 | 0 | 0 | –1,534 |
| International1 | 0 | –86 | 0 | 0 | –86 |
| Corporate | 0 | 0 | –3,740 | 0 | –3,740 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | –16 | –1,604 | –3,740 | 0 | –5,360 |
| Financial Result | |||||
| Germany | –12,257 | –215 | 0 | 0 | –12,472 |
| International1 | 971 | –88 | 0 | 0 | 883 |
| Corporate | 0 | 0 | 408 | 0 | 408 |
| Consolidation | 0 | 0 | 0 | 15 | 15 |
| Group | –11,286 | –303 | 408 | 15 | –11,166 |
| Gains/losses from currency translation | |||||
| Germany | –1,283 | 39 | 0 | 0 | –1,244 |
| International1 | –57 | 117 | 0 | 0 | 60 |
| Corporate | 0 | 0 | 942 | 0 | 942 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | –1,340 | 156 | 942 | 0 | –242 |
| EBT (IFRS) | |||||
| Germany | 11,790 | 97,277 | 0 | 506 | 109,573 |
| International1 | 6,985 | 9,449 | 0 | 0 | 16,434 |
| Corporate | 0 | 0 | –16,084 | 0 | –16,084 |
| Consolidation | –292 | 0 | 0 | –3 | –295 |
| Group | 18,483 | 106,726 | –16,084 | 503 | 109,627 |
| Adjustments | |||||
| Germany | 3,501 | 1,561 | 0 | 0 | 5,062 |
| Significant non-operating earnings | 2,557 | –1,561 | 0 | 0 | 996 |
| Market valuation income derivatives | 1,832 | 0 | 0 | 0 | 1,832 |
| Market valuation expenditures derivatives | 14 | 0 | 0 | 0 | 14 |
| Fund agreement amortisation | 0 | –1,476 | 0 | 0 | –1,476 |
| Reorganisation expenses | 0 | 0 | 0 | 0 | 0 |
| Unrealised currency changes | 711 | –85 | 0 | 0 | 626 |
| Realised fair value | 6,058 | 0 | 0 | 0 | 6,058 |
| International1 | –539 | –31 | 0 | 0 | –570 |
| Significant non-operating earnings | 539 | 31 | 0 | 0 | 570 |
| Fund agreement amortisation | 0 | 0 | 0 | 0 | 0 |
| Unrealised currency changes | 539 | 31 | 0 | 0 | 570 |
| Corporate | 0 | 0 | 1,883 | 0 | 1,883 |
| Significant non-operating earnings | 0 | 0 | –1,883 | 0 | –1,883 |
| Unrealised currency changes | 0 | 0 | –1,883 | 0 | –1,883 |
| Group | 2,963 | 1,530 | 1,883 | 0 | 6,376 |
| Operating result (adjusted EBT) | |||||
| Germany | 15,291 | 98,838 | 0 | 506 | 114,635 |
| International1 | 6,446 | 9,418 | 0 | 0 | 15,864 |
| Corporate | 0 | 0 | –14,201 | 0 | –14,201 |
| Consolidation | –292 | 0 | 0 | –3 | –295 |
| Group | 21,446 | 108,256 | –14,201 | 503 | 116,003 |
1 France, Great Britain, Luxembourg, Netherlands, Scandinavia, Spain
At the reporting date, the Management Board of PATRIZIA Immobilien AG was not aware of any dealings, contracts or legal transactions with associated or related parties and/or companies for which the Company does not receive appropriate compensation at arm's length consideration. All such transactions are conducted at arm's length and do not differ substantially from transactions with third parties.
The disclosures on related party transactions in section 9.3 of the notes to the consolidated financial statements in the 2015 Annual Report remain valid.
To the best of their knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the legal representatives of PATRIZIA Immobilien AG affirm that the interim consolidated financial statements give a true and fair view of the assets, liabilities and financial position and profit or loss of the Group. The interim management report of the Group includes a fair review of the development and course of business and the position of the Group, as well as a description of the principal opportunities and risks associated with the expected development of the Group for the remaining financial year.
CEO CFO COO
Wolfgang Egger Karim Bohn Klaus Schmitt
| 14 March 2017 | Financial statements 2016 with press conference and investor and analyst conference call |
|---|---|
| 10 May 2017 | Interim report for the first quarter of 2017 with investor and analyst conference call |
| 22 June 2017 | Annual General Meeting, Augsburg |
| 4 August 2017 | Interim report for the first half of 2017 with investor and analyst conference call |
| 7 November 2017 | Interim report for the first nine months of 2017 with investor and analyst conference call |
Fuggerstrasse 26 86150 Augsburg Germany P +49 821 50910-000 F +49 821 50910-999 [email protected] g www.patrizia.ag
Michael Tegeder P +49 821 50910-401 F +49 821 50910-399 [email protected] Verena Schopp de Alvarenga P +49 821 50910-351 F +49 821 50910-399 [email protected]
Andreas Menke P +49 821 50910-655 F +49 821 50910-695 [email protected]
This interim report was published on 8 November 2016. This is a translation of the German interim report. In case of doubt, the German version shall apply. Both versions are available on our website:
www.patrizia.ag/investor-relations/finanzberichte/quartalsberichte www.patrizia.ag/en/investor-relations/financial-reports/quarterly-reports
Fuggerstrasse 26 86150 Augsburg Germany P +49 821 50910-000 F +49 821 50910-999 [email protected] www.patrizia.ag
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