ECO Business-Immobilien AG

EANS-Adhoc: ECO Business-Immobilien AG
Half-year results affected by impairment charges - portfolio optimisation reduces net debt and strengthens balance sheet structure

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ECO Business-Immobilien AG: Half-year results affected by impairment charges - portfolio optimisation reduces net debt and strengthens balance sheet structure

Vienna, 25 August 2009. The development of business at ECO Business-Immobilien AG (Vienna Stock Exchange / Prime Market: ECO) during the first half of 2009 was negatively influenced by the recession and by the effects of the international financial crisis on European business property markets. As a reaction to this difficult operating environment the company focused on the further optimisation of the property portfolio and the strengthening of the balance sheet structure through the sale of selected objects. The sale of 55 properties with a total value of approx. EUR 240 million supported a substantial reduction in net debt and raised the equity ratio to 39.3%. These sales reduced the property portfolio from EUR 1,074.2 million at year-end 2008 to EUR 843.6 million. Accordingly, revenues totalled EUR 31.7 million for the first half of 2009, for a decline versus the comparable prior year period. As a result of market-related impairment charges to the property portfolio (EUR -25.3 mill.), profit after tax fell to EUR -14.6 million (1-6/2008: EUR 5.8 mill.).

Income from the disposal of non-current assets fell to EUR 0.1 million for the first half of 2009 (1-6/2008: EUR 3.3 mill.) because the proceeds from the sale of properties exceeded the latest IFRS carrying values by only a slight amount. The valuation of the property portfolio by independent experts resulted in impairment charges of EUR 25.3 million for the reporting period, which represent approx. 3% of property assets. These charges reflected the difficult operating environment on the business property market as well as a lack of reference transactions. In the first half of 2008 ECO recorded a net gain of EUR 5.4 million from fair value adjustments. The impairment charges were primarily responsible for the decline in earnings before interest and taxes (EBIT) to EUR -8.3 million, compared with EUR 25.8 million for the first half of 2008.

The lower volume of financing and the positive effects of favourable interest rates on existing liabilities supported an improvement in financial results to EUR -11.2 million for the first half of 2009 (1-6/2008: EUR -21.2 mill.). Profit before tax equalled EUR -19.5 million, versus EUR 4.7 million in the comparable prior year period. Profit after tax amounted to EUR -14.7 million (1-6/2008: EUR 3.8 mill.). Funds from operations (FFO after interest and taxes) were negative at EUR -14.0 million (1-6/2008: EUR 6.7 mill.). This shift was caused by the sale of properties at prices below historical acquisition cost as a consequence of the current market climate.

The sale of properties by ECO during the reporting period triggered a decline in the balance sheet total from EUR 1.1 billion at the end of 2008 to EUR 897.4 million as of 30 June 2009. The reduction in liabilities has raised the equity ratio to nearly 40% since the beginning of this year (39.3% vs. 33.7% at year-end 2008) and decreased net debt by 29% to EUR 498.7 million. Non-current liabilities fell from EUR 470.8 million on 31 December 2008 to EUR 394.8 million, and current liabilities dropped from EUR 267.7 million to EUR 150.1 million. The recognition of impairment charges to the property portfolio triggered a decrease in net asset value (NAV) per share from EUR 10.80 at year-end 2008 to EUR 10.27 per share.

After an adjustment for reporting period sales, the ECO portfolio comprised 63 properties with approx. 551,000 m² of rentable space and a total value of EUR 843.6 million at the end of the first half of 2009 (year-end 2008: EUR 1,074 million). The vacancy rate (13.6%, excluding objects under renovation) and average rents (EUR 10.5/m² in the office segment and EUR 9.8/m² in the retail segment) remained generally stable in relation to the levels at year-end 2008.

The continued optimisation of the core segment "investment portfolio" has top priority for ECO during the remainder of 2009. As a consequence of the difficult market situation, no new development projects will be launched this year. In spite of the current recessionary market environment, ECO has set a goal to maintain a stable level of occupancy in its investment properties and thereby hold rental income at a constant level. That should provide the best possible protection for liquidity and support the generation of positive cash earnings from operations. The realisation of opportunities for the sale of properties will provide added liquidity. The Management Board expects a further increase in the equity ratio over the 2008 financial year. In addition, low interest rates and the reduction of liabilities should support an improvement in financial results.

ECO expects a continuation of the tense and challenging market climate despite the latest improvements in economic forecasts and first signs of modest recovery on the capital market. Further impairment charges to the investment portfolio cannot be excluded in this environment.

Selected Company Data in accordance with IFRS

1-6/2009         1-6/2008
Revenues (TEUR)                                          31,734           36,804
 Thereof rental income (TEUR)                            25,825           30,663
Income from the disposal of non-current assets (TEUR)       119            3,312
Net gain/(loss) from changes                            -25,313            5,419
in the fair value of investment properties (TEUR)
Earnings before interest, tax,                           17,034           20,452
depreciation and amortisation (EBITDA) (TEUR)
Operating profit (EBIT) (TEUR)                           -8,299           25,844
Profit before tax (EBT) (TEUR)                          -19,516            4,682
Profit after tax (after minority interests) (TEUR)      -14,552            5,757
Earnings per share (EUR)                                  -0.43             0.17
Weighted average number of shares (Stk.)             34,100,000       34,100,000
FFO (funds from operations) before                       -2,770           27,970
interest and tax, incl. impairment charges1) (TEUR)
Cash earnings (FFO - funds from operations)             -14,010            6,685
after interest and tax2) (TEUR)
NAV per share (EUR)                                       10.27            12.61

1) EBIT + depreciation and amortisation +/- fair value adjustments +/-
impairment charges
2) EBIT + depreciation and amortisation +/- fair value adjustments +/-
impairment charges - financial results - income taxes paid

Balance Sheet Data

Consolidated balance sheet - summary in TEUR         30/06/2009       31/12/2008
Non-current assets                                      855,464        1,085,709
 Thereof investment properties                          807,302          981,890
 Thereof properties under construction                   36,256           40,421
Current assets                                           41,974           27,904
Total assets                                            897,437        1,113,614
Equity and reserves                                     352,489          375,113
 Thereof minority interests                               2,381            6,918
Non-current liabilities                                 394,829          470,846
Current liabilities                                     150,120          267,654
Total equity and liabilities                            897,437        1,113,614

Property Data                                        30/06/2009       30/06/2008
Number of objects                                            63              122
 Thereof investment portfolio                                61               70
 Thereof trading portfolio                                    0               46
 Thereof development projects                                 2                6
Rentable space in m²*                                   551,000          651,400
Garage spaces (number)                                    2,870            3,560
Property assets (in TEUR)                               843,559        1,083,903
 Thereof properties under construction                   36,256           36,457

* Garage spaces were included at 20 m² each / parking areas included 
end of announcement                               euro adhoc

Further inquiry note:

ECO Business-Immobilien AG
Friedrich Scheck, CEO
Tel.: +43(1)580 88 12

Peter Pechar
Head of Investor Relations
Tel.: +43(1)580 88 35

Hochegger Financials
Roland Mayrl
Tel.: +43(1) 504 69 87-331

Branche: Real Estate
ISIN: AT0000617907
Börsen: Wien / Regulated free trade

Original-Content von: ECO Business-Immobilien AG, übermittelt durch news aktuell

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