conwert Immobilien Invest SE

EANS-Adhoc: conwert Immobilien Invest SE
conwert with positive 9-month results: good business development and significant increase in earnings

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9-month report

24.11.2010

conwert with positive 9-month results: good business development and significant increase in earnings

+ Good operating business development: increase in rents and high margins on sales + Initial consolidation after takeover of ECO leads to positive net effect on earnings of EUR 36.2 million.

Vienna, 24 November 2010. conwert Immobilien Invest SE, which is listed on the Vienna Stock Exchange, concluded the first three quarters of 2010 with very positive interim results. The good development of operating business led to an increase in rental income and high profit margins on sales. The initial consolidation of ECO had a positive net effect on earnings of 36.2 million. Earnings before interest and taxes (EBIT) therefore rose by 51% to EUR 110.7 million compared to the prior-year period, profit after tax to EUR 45.4 million (1-9/2009: EUR 21.4 million). Consequently, the residential property group expects a profit for the whole year 2010 which enables a dividend payout.

Positive development in all segments

The residential property markets in conwert´s core markets Austria and Germany showed a sustained dynamic development in the period under review. High demand and low supply in inner-city metropolitan regions led to significant price increases in the high-quality segment of apartments and apartment buildings.

In the first three quarters of 2010, conwert raised rental income to EUR 131.3 million, up 10% on the prior-year figure. Organic growth of rental income (on a like-for-like basis for an unchanged portfolio without acquisitions) amounted to 5%, which was primarily due to a substantial reduction of vacancies in all regions.

In the sales segment, conwert increased the profit margins noticeably in comparison with the prior-year period. Based on IFRS values, the profit margins rose from 10% in the first three quarters of 2009 to 15% in 2010. The cash profit margin (based on acquisition costs) was raised from 15% to 19%. The operating result generated by the sales business was increased by 7% to EUR 16.7 million despite a decline in sales volume (EUR 210.4 million vs. EUR 268.5 million). Sales volume was lower because of the dissolution of a joint venture in the previous year, which resulted in the sale of properties totalling EUR 70 million.

conwert increased service revenues from EUR 50.7 million to EUR 55.5 million in the first nine months of 2010. Third-party business remained stable at EUR 26.3 million, as the expansion of the service business for external customers was contrasted by the reclassification of the ECO revenues from external to internal service revenues.

Due to the one-off effect in the sale of properties segment last year, total revenues, at EUR 386.0 million, fell short of the figure of the prior-year reference period (1-9/2009: EUR 414.5 million).

Positive earnings figures and cash earnings

The good operating development and the contribution to earnings from the initial consolidation of ECO led to stable earnings before interest, taxes, depreciation and amortisation (EBITDA) of EUR 77.2 million in the first three quarters of 2010 after EUR 80.7 million in the reference period of the previous year, despite higher personnel and material costs marked by one-off effects. The revaluation result was slightly positive at EUR 1.3 million in the reporting period 1-9/2010 (1-9/2009: EUR 0.2 million). Earnings before interest and tax (EBIT) rose by 51% to EUR 110.7 million in particular due to positive effects from the consolidation of ECO, and more than compensated the negative effects on the result from impairment losses at subsidiaries. The financial result deteriorated from EUR -46.4 million to EUR -67.6 million, which was primarily attributable to effects of the consolidation of ECO. Nevertheless, earnings before tax increased significantly from EUR 26.8 million to EUR 43.0 million. Profit after tax soared by 112% to EUR 45.4 million. Basic earnings per share rose to EUR 0.37, versus EUR 0.26 in the prior-year period.

In the first nine months the operating cash key figures also showed positive values. Net rental income (NRI), a key figure which reflects the management efficiency of the rental portfolio, increased in comparison with the prior-year period to EUR 75.6 million (1-9/2009: EUR 70.7 million). Due to lower earnings effects from the buyback of convertible bonds, a slightly weaker sales volume as well as extraordinary expenses, funds from operations (FFO), at EUR 35.7 million in the first nine months of 2010, fell short of the figure of the prior-year period of EUR 51.4 million.

Property portfolio grows to EUR 3.3 billion

The value of the property portfolio increased to EUR 3.3 billion, above all due to the takeover of ECO, compared with EUR 2.5 billion at the beginning of the year. Total usable space expanded to 2.5 million sqm (12/2009: 2.0 million sqm). As a result of the integration of the office and commercial properties of ECO, the portion of residential properties fell to roughly 57% of the portfolio. The regional focus remained unchanged, with Austria and Germany accounting for 96%.

Particularly due to the takeover of the ECO properties the balance sheet total of conwert increased from EUR 2,962.5 at 31.12.2009 to EUR 3,679.9 million at 30.09.2010. On the liabilities side, equity rose from 1,279.9 million at year-end 2009 to EUR 1,338.9 million now. The equity ratio declined to 36.4% as a result of the takeover of ECO (12/2009: 43.2%). In contrast, the net asset value per share (NAV/share) increased slightly from EUR 15.20 at 30.06.2010 to EUR 15.33.

Positive Outlook

The economic recovery in Europe is likely to continue in the remaining part of the financial year 2010. Therefore conwert expects the positive development to continue for the residential and commercial property markets in Austria and Germany. Especially metropolitan regions should benefit from the expected economic upturn and the continuous population growth. As there is a deficit in supply and new construction activities are still low, prices and rents are expected to increase further, especially in good locations. In addition, demand for high-quality residential properties as an inflation-protected form of investment continues to be strong.

In rental business conwert expects further growth. In the sale of properties segment, the previous target of EUR 275 million in the whole year will be exceeded. The margins on the sale of properties are expected to match the historic levels reached (10-15% IFRS profit margin). In the property service segment, the focus is placed on a further expansion of third-party business. Above all in the area of asset management for foreign funds conwert sees further growth opportunities.

Provided that the capital market and the real economy show a stable development as expected, conwert expects the company´s positive operating development to continue. The positive earnings development of the year 2009 should therefore be surpassed in the 2010 financial year, leading to a profit that enables a dividend payout.

The Interim Report 1-9/2010 of conwert Immobilien Invest SE is available on the website www.conwert.at.

@@start.t2@@Earnings indicators
                                                        1-9/2010        1-9/2009        Change      1-12/2009
Rental income EUR mill.                        131.3            119.6          +10%            162.3
Proceeds sale of properties EUR mill. 210.4            268.5          -22%            361.3
Service revenues EUR mill.                    26.3              26.3                -              36.6
Total revenues EUR mill.                      368.0            414.5          -11%            560.1
EBITDA EUR mill.                                    77.2              80.7            -4%            105.0
EBIT EUR mill.                                      110.7              73.2          +51%              94.9
FFO 1) EUR mill.                                    35.7              51.4          -30%              72.6
Net Rental Income (NRI) EUR mill.         75.6              70.7            +7%              94.6
Cash Profit 2) EUR mill.                        34.8              50.5          -31%              68.0
Basic earnings/share EUR                        0.37              0.26          +42%              0.29
Diluted earnings/share EUR                    0.37              0.26          +42%              0.29
Funds from Operations/share EUR            0.44              0.63          -30%              0.90@@end@@

@@start.t3@@Balance sheet indicators
                                                          9/2010          9/2009        Change         12/2009
Balance sheet total EUR mill.          3,679.9         2,957.6          +24%         2,962.5
Non-current loans&borrowings mill.  1,258.3            944.5          +33%            968.3
Current loans & borrowings EUR mill.  502.5            336.1          +50%            320.8
Equity EUR mill.                                1,338.9         1,274.1            +5%         1,279.9
Equity ratio %                                        36.4              43.1                -              43.2
Gearing %                                              158.0            116.8                -            115.0
Book value (NAV)/share EUR                  15.33            15.57            -1%            15.68@@end@@

@@start.t4@@Property indicators
                                                          9/2010          9/2009        Change         12/2009
Number of objects No.                          1,857            1,721            +8%            1,752
Rental units No.                                 27,194          24,986            +9%          24,548
Total usable space sqm                  2,514,742      2,020,014          +24%      2,018,254
Property assets EUR mill.                 3,315.7         2,523.6          +31%         2,517.4@@end@@

1) FFO: Earnings before tax (EBT) minus the net gain from fair value adjustments + difference between cash gains on sale and IFRS gains on sale + depreciation + non-cash parts of financial result 2) Cash Profit: FFO minus actual income taxes paid

This report contains forward-looking estimates and statements that were made on the basis of the information available at this time. Forward-looking statements reflect the point of view at the time they are made. We would like to point out that the actual circumstances and, consequently, the actual results realised at a later date may differ from the forecasts presented in this report for a variety of reasons.

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Further inquiry note: conwert Immobilien Invest SE Peter Sidlo, Head of Corporate Communications - Investor Relations T +43 / 1 / 521 45-250 E sidlo@conwert.at

Branche: Real Estate
ISIN:      AT0000697750
WKN:        069775
Index:    WBI
Börsen:  Wien / official market



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