Immofinanz Posts Lower Net Income

Published: August 2, 2013; 20:53 · (Vindobona)

The Austrian real estate company has published the results for the financial year 2012/13. Property sales at record high, net profit lower due to decline in positive valuation effects.

Immofinanz Posts Lower Net Income / Picture: © Vindobona.org

In 2012/13 IMMOFINANZ Group confirmed the positive operating trend from the past year despite weaker growth in the core markets. Results of operations for the 2012/13 financial year totalled EUR 542.1 million, which represents an increase of 15.3% or EUR 71.9 million.

Rental income rose substantially year-on-year by EUR 70.2 million or 12.0%. Revenues rose by 11.2% to EUR 869.2 million in 2012/13. Results of asset management were 15.1% higher at EUR 513.0 million. Results of property sales rose by an impressive 108.3% year-on-year to EUR 110.8 million. Results of property development amounted to EUR -18.4 million (2011/12: EUR 30.1 million), above all due to delays in the GOODZONE project in Russia.

“The 2012/13 financial year was characterised by a concentration on the operating business – and we generated more than solid growth rates. Gross cash flow rose by 8.0% to EUR 408.5 million, and sustainable cash flow (FFO) increased by 27.1% to EUR 341.0 million or from EUR 0.27 to EUR 0.33 per share“, commented Eduard Zehetner, CEO of IMMOFINANZ Group. “The decline of EUR 160.4 million in net profit resulted primarily from lower positive effects from property valuation which, after an adjustment for foreign exchange effects, fell by EUR 170.7 million to EUR 37.9 million“, added Zehetner.

“Our real estate machine gained significant speed during the past year. This is true, above all, for our sales activities, where we set a new record since the beginning of our sales programme with a volume of approx. EUR 661.3 million. With these results, we exceeded our target of EUR 1.5 billion by EUR 153.2 million or 10.2% after three years. This figure does not include properties with a carrying value of EUR 583.4 million that were classified as held for sale on the balance sheet as of 30 April 2013. Many of these transactions have closed or the contract has already been signed.“

Negative other valuation results of EUR -33.2 million (incl. foreign exchange effects) led to a decline in operating profit to EUR 508.9 million (2011/12: EUR 692.9 million). This decline is attributable to the year-on-year drop of approx. EUR 170.7 million in positive effects from the foreign exchange adjusted revaluation of properties (from EUR 208.7 million to EUR 37.9 million) and a negative non-recurring effect (EUR -106.4 million) from the adjustment of the purchase price liability for the acquisition of the Golden Babylon Rostokino shopping center in Moscow. The final purchase price for this shopping center, which was opened together with a joint venture partner in November 2009 and taken over in full during May 2012, is dependent on the net operating income (NOI) generated in the 2013 calendar year. This NOI has risen significantly in recent months because the Golden Babylon Rostokino is almost fully rented. Consequently, the fair value of the property rose by EUR 135.0 million in 2012/13 and will offset the additional costs from the purchase price adjustment.

Net profit for the 2012/13 financial year equalled EUR 110.8 million (2011/12: EUR 271.2 million). The substantial increase in the tax rate to 43.2% (2011/12: 14.9%) resulted primarily from unusually high, non-recurring non-cash effects related to deferred taxes.

Sustainable cash flow per share rose from EUR 0.27 in 2011/12 to EUR 0.33 for the reporting year and reflects the sound improvement in the development of the operating business.

The EUR 0.15 dividend for the 2012/13 financial year is confirmed, subject to the approval of the annual general meeting on 2 October 2013. The net asset value (NAV) per share rose by 4.9% to EUR 5.51.

The most important goals for the 2013/14 financial year are to significantly increase development activities and generate sound contributions to earnings, but to also create the requirements to raise the real estate machine to a new activity level. “For 2014 we plan to separate the residential property management and development activities in Germany and Austria that are bundled in BUWOG from IMMOFINANZ Group and transfer this business to a separate company. This will take place through an initial public offering (IPO) or a spin-off, depending on the relevant market environment at that time. Both options will be designed to establish a fair balance between the interests of the company and shareholders, above all with a view to the potential effects of the individual alternatives on liquidity“, indicated Eduard Zehetner.

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