CPI Europe AG — Earnings Release 2014

Sep 23, 2014

News Details

Corporate | 23 September 2014 18:52

IMMOFINANZ confirms results: First quarter 2014/15 with solid operational performance, but negatively affected by FX-related revaluations

DGAP-News: IMMOFINANZ AG / Key word(s): Real Estate/Quarter Results

23.09.2014 / 18:52

---

KEY FIGURES (in MEUR) // 1 May 2014 - 31 July 2014 // Δ in % // 1 May 2013
- 31 July 2013

Rental income // 117.6 // -6.8% // 126.1
Results of asset management // 95.4 // -13.5% // 110.3
Results of property sales // 7.3 // n.a. // -0.9
Results of property development // -2.0 // n.a. // 3.3
Expenses not directly attributable // -13.2 // -30.9% // -19.0
Results of operations // 90.9 // -6.5% // 97.2
Operating profit (EBIT) // 11.9 // -92.3% // 155.3
Net profit // -14.0 // n.a. // 119.8
Cashflow from operating activities // 73.3 // 12.9% // 64.9

IMMOFINANZ Group generated solid results of operations amounting to EUR
90.9 million in the first quarter of the 2014/15 financial year. The
year-on-year decline of 6.5% (Q1 2013/14: EUR 97.2 million) resulted, above
all, from the planned sale of properties in the previous financial year.
Rental income remained generally stable in like-for-like comparison during
2013/14 (-1.3%), but the first quarter of 2014/15 saw an increase of 1.4%
(versus Q4 2013/14). These figures confirm the preliminary data for Q1
2014/15 that were announced by IMMOFINANZ on 19 September.

In spite of this solid operating performance, net profit for the first
quarter of 2014/15 was negative at EUR -14.0 million (Q1 2013/14: EUR 119.8
million). This development resulted primarily from negative effects caused
by the foreign exchange-based revaluation of investment properties, which
reflected the increase in the value of the Ruble versus the Euro and US
Dollar from the beginning of May to the end of July 2014. These foreign
exchange-based revaluation results of EUR -75.9 million reduced net profit,
but have no effect on cash. The foreign exchange-adjusted revaluation
results did not have a significant effect on net profit and amounted to EUR
-2.7 million for the first quarter.

The development of the Ruble since the beginning of August 2014 points to a
reversal of this effect during the second quarter of 2014/15. In other
words, positive foreign exchange-based results from the revaluation of the
investment properties are to be expected from the current point of view.

"In 2013/14, which saw a substantial decline in the value of the Ruble
versus the Euro and US Dollar, the foreign exchange-based revaluation of
investment properties made a positive contribution of EUR 311.0 million to
Group net profit. The fluctuations in the Ruble exchange rate cause high
volatility in our income statement from time to time. However, it is
important to note that these are non-cash positions", explained Eduard
Zehetner, CEO of IMMOFINANZ Group.

Excluding the negative non-cash effects from exchange rates and
derivatives, Group net profit for the first quarter of 2014/15 equals EUR
47.6 million. This represents a 3.7% increase over the first quarter of
2013/14 (EUR 45.9 million).

Recurring free cash flow (FFO) amounted to EUR 47.7 million for the
reporting period, which represents an annualised FFO yield after tax of
11.4%.*

An additional factor is that the proportional share of quarterly results
for the BUWOG Group, in which IMMOFINANZ holds an investment of 49%, are
not included in first quarter earnings because BUWOG announces its
quarterly results after IMMOFINANZ Group. This timing difference in the
preparation of financial statements will lead to a one quarter shift in the
inclusion of BUWOG's quarterly results in IMMOFINANZ Group's earnings.
Therefore, the initial inclusion will take place in the second quarter of
2014/15, when the proportional share of BUWOG results for the first quarter
of 2014/15 is taken into account.

Rental income declined to EUR 117.6 million during the first quarter of
2014/15 (Q1 2013/14: EUR 126.1 million) following the sale of properties.
The results of property sales improved from EUR -0.9 million in the
previous year to EUR 7.3 million. The results of property development
declined from EUR 3.3 million to EUR -2.0 million. Accordingly, the results
of operations fell by 6.5% to EUR 90.9 million (Q1 2013/14: EUR 97.2
million).

Despite the negative results recorded for the first quarter, net asset
value per share rose slightly to EUR 4.57 as of 31 July 2014 (30 April
2014: EUR 4.56). The book value per share equalled EUR 4.21 as of 31 July
2014 (30 April 2014: EUR 4.19).

OUTLOOK:

"Our plans for 2014/15 include the repayment of the financing with treasury
shares (approx. EUR 150.0 million) as well as the so-called equity bridge
(EUR 260.0 million), which represents the financing we concluded for the
full subscription of the BUWOG convertible bond", indicated Eduard
Zehetner, CEO of IMMOFINANZ. "That will lead to a substantial reduction in
financing costs. The repayment of the financing that involved the use of
treasury shares as collateral will also allow for the cancellation of these
shares." With respect to the BUWOG convertible bond that was subscribed by
IMMOFINANZ, BUWOG is entitled to call and repay the bond in full by the end
of January 2015. BUWOG management has already announced that it will most
probably exercise this option.

Furthermore, the Executive Board of IMMOFINANZ plans to resume dividend
payments for the 2014/15 financial year. The dividend (including a possible
share buyback) should range from EUR 0.15 to EUR 0.20 per share.

IMMOFINANZ Group expects an ongoing positive development in the region's
core markets, which should benefit from a gradual economic recovery.
However, the geopolitical tensions in Ukraine and the threatening expansion
of the sanctions against Russia represent uncertainty factors. The
Organisation for Economic Cooperation and Development (OECD) reacted to
this situation by issuing a downward revision to its economic forecasts in
mid-September 2014. The exact effects of the Ukraine crisis on the
commercial development of the IMMOFINANZ core markets, above all Russia,
are impossible to estimate at the present time.

The rental income from the Russian portfolio is generally denominated in
Euros or US Dollars, but an ongoing decline in the Ruble would have a
negative effect on tenants' cost structures. As indicated in the 2013/14
annual report, short-term arrangements were concluded with a number of
tenants in the Moscow shopping centers to reduce the currency-related
pressure on rental costs and thereby support their economic viability. This
also proved to be a sustainable procedure during the 2008/09 financial
crisis.

IMMOFINANZ Group expects an increase in the value of the company during the
2014/15 financial year based on the further optimisation of the portfolio,
the planned increase in occupancy, cost reductions after the spin-off of
the residential property subsidiary BUWOG and the steady pursuit of
successful property sales as well as increased development activities with
a focus on Germany, Poland, Russia and Romania.

DEVELOPMENTS IN DETAIL:

Results of asset management

IMMOFINANZ Group recorded rental income of EUR 117.6 million in the first
quarter of 2014/15. This represents a decline of 6.8% compared with the
first quarter of the previous year (EUR 126.1 million) and resulted from
the planned sale of properties.

The results of asset management declined by 13.5% to EUR 95.4 million (Q1
2013/14: EUR 110.3 million), also due to a year-on-year increase in
expenses from investment properties.

Results of property sales

Property sales generated results of EUR 7.3 million (Q1 2013/14: EUR -0.9
million). The portfolio optimisation included the sale of smaller
properties as well as two logistics properties in Poland and the Czech
Republic.

Results of property development

The sale of real estate inventories and the valuation of active development
projects generated results of property development of EUR -2.0 million
during the reporting period (Q1 2013/14: EUR 3.3 million). The results of
property development were negative in the first quarter of 2014/15 because
no development projects were completed or opened.

Administrative expenses

Administrative expenses that are not directly attributable (overhead costs
and personnel expenses) fell from EUR -19.0 million in the first quarter of
the prior year to EUR -13.2 million. This decline resulted from a reduction
in legal, auditing and consulting costs as well as the release of
provisions.

Results of operations, EBIT, EBT and net profit

The results of operations declined 6.5% year-on-year to EUR 90.9 million
due to the successful and scheduled sale of properties (Q1 2013/14: EUR
97.2 million).

Valuation results adjusted for foreign exchange effects amounted to EUR
-2.7 million (Q1 2013/14: EUR -7.9 million). Valuation results resulting
from foreign exchange effects were clearly negative at EUR -75.9 million
(Q1 2013/14: EUR 66.0 million) due to the increase in the value of the
Ruble versus the Euro during the reporting period. Therefore, EBIT declined
substantially from EUR 155.3 million in the prior year to EUR 11.9 million.

Financial results improved to EUR -30.4 million (Q1 2013/14: EUR -40.1
million). This position includes non-cash foreign exchange accounting
effects of EUR 17.1 million (Q1 2013/14: EUR -15.4 million). Other
financial results (EUR -5.2 million; Q1 2013/14: EUR 13.8 million) were
negatively affected, among others by the non-cash valuation of derivatives
that are held to hedge interest rate risk. These factors reduced earnings
before tax from EUR 115.2 million in the first quarter of the previous year
to EUR -18.5 million for the reporting period.

Net profit for the first quarter of 2014/15 was negative at EUR -14.0
million (Q1 2013/14: EUR 119.8 million) due to the negative non-cash
effects from exchange rates, the valuation of derivatives and the initial
inclusion of the proportional share of BUWOG results staring in the next
quarter.

Cash flow (excl. BUWOG)

Gross cash flow declined from EUR 99.0 million in the first quarter of the
previous year to EUR 80.9 million, above all due to the planned sale of
properties and the initial inclusion of the proportional share of cash flow
from the BUWOG Group starting in the next quarter. Cash flow from operating
activities rose from EUR 64.9 million to EUR 73.3 million. Cash flow from
investing activities fell to EUR -203.7 million (Q1 2013/14: EUR 18.7
million), and cash flow from financing activities increased from EUR -210.2
million to EUR 150.6 million. The purchase of the BUWOG convertible bond is
included under cash flow from investing activities as an investment, while
the funds borrowed to finance the bond purchase are included in cash flow
from financing activities.

The report on the first quarter of IMMOFINANZ AG as of 31 July 2014 can be
reviewed on the company's website under
http://www.immofinanz.com/en/investor-relations/financial-reports/ starting
on 24 September 2014.

* Recurring cash flow (excl. BUWOG): Gross cash flow (EUR 80.9 million) +
interest received on financial investments (EUR 1.3 million) - interest
paid (EUR 36.5 million) - cash outflows for derivative transactions (EUR
5.4 million) + results of property sales (EUR 7.3 million) based on market
capitalisation as of 18 September 2014 (share price: EUR 2.37), excl.
treasury shares and market capitalisation of the BUWOG shares held (EUR
731.7 million based on a share price of EUR 14.99 as of 18 September 2014).

On IMMOFINANZ Group
IMMOFINANZ Group is one of the leading listed property companies in Europe.
The company is included in the leading ATX index of the Vienna Stock
Exchange and also trades on the Warsaw Stock Exchange. Since its founding
in 1990, the company has compiled a high-quality property portfolio that
now comprises more than 470 investment properties with a carrying amount of
approx. EUR 6.9 billion. As a "real estate machine" the company
concentrates on linking its three core business areas: the development of
sustainable, specially designed prime properties in premium locations, the
professional management of these properties and cycle-optimised sales.
IMMOFINANZ Group concentrates its activities in the retail, office and
logistics segments of eight regional core markets: Austria, Germany, Czech
Republic, Slovakia, Hungary, Romania, Poland and Russia.
Further information under: http://www.immofinanz.com |
http://blog.immofinanz.com | http://properties.immofinanz.com

For additional information please contact:

MEDIA INQUIRIES
Bettina Schragl
Head of Corporate Communications | Press Spokesperson
IMMOFINANZ Group
T +43 (0)1 88 090 2290
M +43 (0)699 1685 7290
communications@immofinanz.com

INVESTOR RELATIONS
Stefan Schönauer
Head of Corporate Finance & Investor Relations
IMMOFINANZ Group
T +43 (0)1 88 090 2312
M +43 (0)699 1685 7312
investor@immofinanz.com

---

23.09.2014 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

The DGAP Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

---

Language: English
Company: IMMOFINANZ AG
Wienerbergstraße 11
1100 Wien
Austria
Phone: +43 (0) 1 88090 - 2291
Fax: +43 (0) 1 88090 - 8291
E-mail: investor@immofinanz.com
Internet: http://www.immofinanz.com
ISIN: AT0000809058
WKN: 911064
Listed: Freiverkehr in Berlin, München, Stuttgart; Frankfurt in
Open Market ; Wien (Amtlicher Handel / Official Market)

End of News DGAP News-Service

288348 23.09.2014