Peach Property Group AG

EQS-Adhoc: Peach Property Group publishes 2014 financial statements

EQS Group-Ad-hoc: Peach Property Group AG / Key word(s): Final Results
Peach Property Group publishes 2014 financial statements

10.03.2015 / 07:02
Release of an ad hoc announcement pursuant to Art. 53 KR.
The issuer is solely responsible for the content of this announcement.

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Press release

Peach Property Group publishes 2014 financial statements

  - Rental income up by 34 percent to CHF 7.7 million

  - Market value of investment properties up 32 percent to CHF 183 million

  - Reduction of financing liabilities by CHF 77 million

  - Consolidated net loss of CHF 10.4 million due to extraordinary charges
    from major projects

  - The projects affected have mostly been completed; the majority of the
    apartments sold have been handed over and the sale of "Am Zirkus 1" has
    closed

  - Strengthening of operational effectiveness with the creation a COO/Head
    of Asset Management position with direct reporting lines to the group
    management board

Zurich, 10 March 2015 - Peach Property Group, a leading investor for
residential and commercial real estate, has more than tripled its operating
income in 2014 according to its final figures. This figure has lifted to
CHF 196.6 million compared to CHF 61.6 million in the previous year. In
particular the income generated from handing over apartments in the
developments had a positive impact, as did value appreciations of the
investment properties and increased rental income.

However, during the period under review there were unfavourable
extraordinary effects from major projects in the luxury segment to be
completed shortly, which had a negative impact of around CHF 16 million on
earnings. Including these one-off expenses, the group had to book a loss of
CHF 10.4 million after profits in the previous year of CHF 1.4 million.
Downstream tax effects of CHF 2.0 million caused the net loss in the final
figures for 2014 to be slightly lower than had been forecast when the
preliminary figures were presented.

The extraordinary charges resulted from defective services provided by
individual companies that had been engaged in the major projects "yoo
berlin", "Am Zirkus 1" and "H36". These issues came to light during the
final inspections of the properties and in preparations for their
handovers. Peach Property Group has already initiated legal action against
the companies responsible in order to obtain a refund for the extraordinary
additional costs.

The affected projects in Germany have now mostly been completed as
compensatory activities have been put in place, and the majority of the
apartments sold have been handed over to their buyers. The sale of the "Am
Zirkus 1" property to a special-purpose fund run by KanAm Grund has now
also been closed.

Handing over apartments to buyers from the now mostly completed major
projects resulted in a substantial income from development properties in
the amount of CHF 126.7 million after CHF 5.7 million in the previous year.
Our portfolio of investment properties also exhibited significant growth:
Rental income was up by around 34 percent from CHF 5.7 million to CHF 7.7
million. At the same time, the annual target rents passed the CHF 10
million mark at the end of 2014 with the acquisition of a residential
portfolio in North Hesse and a hotel in Bad Reichenhall. The vacancy rate
was cut once again and totalled 12.2 percent, down 2.3 percentage points
year-on-year.

These two purchases and the operating and development progress in the two
existing investment properties caused the income from the revaluation of
investment properties to increase to CHF 30.4 million (net) compared to CHF
25.2 million in 2013. As a result of the value appreciation and
acquisitions the market value of the investment portfolio increased by
around 32 percent, up to CHF 183 million. The entire Peach investment
portfolio recorded a gross return of almost 7 percent at the end of 2014,
based on the revaluations.

The increases in value and the acquisitions for the Group's investment
properties also meant that the share of the investment portfolio within the
total portfolio increased from 26 to 38 percent, in line with strategy. The
Group is expecting a further increase in the current year 2015. This
proportion has increased to a current total of around 46 percent purely as
a result of the sale of the "Am Zirkus 1" project in Berlin, which has now
been sold.

Development and construction management services also made a positive
contribution to earnings. Income from this area was up year-on-year by 52
percent to CHF 24.9 million. The majority of this was due to the "Peninsula
Beach House" project in Switzerland. Construction work for this project was
completed at the end of 2014, on schedule, and all of the apartments that
had been sold were handed over to their buyers.

As part of the completion work and handovers, total debt (mortgages,
construction loans as well as current and non-current financing
liabilities) were cut, as planned, by almost 27 percent to CHF 214 million
(previous year: CHF 291 million).  In particular it was possible to reduce
financing liabilities, which bear interest of over 7 percent, by around 42
percent (from CHF 23.8 to CHF 13.8 million). This process has continued at
the start of 2015.  The average interest rate in 2014 was 3 percent for
construction loans for development properties, 2.3 percent for mortgages
for investment properties, and 7 percent for financing liabilities.

As a result of the consolidated net loss, the Peach Property Group's equity
fell to CHF 84.7 million (IFRS) at the end of 2014 or CHF 100.1 at market
value (compared to CHF 95.8 million and CHF 126.4 million on 31 December
2013). At the same time, handovers of completed apartments to buyers also
reduced total assets by a substantial amount. As a result, the equity ratio
was on a par with the previous year. According to IFRS, this totalled 20
percent at the end of 2014, and 23 percent according to market values.

Peach Property Group is confident that it will record a profit again in the
current fiscal year 2015. For example, the "Living 108" project is
scheduled for completion in the second quarter of 2015 and will contribute
substantially to the annual earnings in 2015. The Group is also expecting
rental income to increase significantly as a result of the recent
acquisitions in the investment portfolio. Finally, as a result of progress
in the development of the two major investment projects "Gretag/Regensdorf"
and "Rheinische Str. 173" in Dortmund, the Group is also expecting further
value appreciation for these projects

The Group is holding to its target of increasing its equity ratio at market
values to 40 percent over the medium term, i.e., in the next two years.
Business activities continue to focus on investment properties. Specific
investments will be made to further increase the value of the investment
properties, and the portfolio will be further expanded. In order to make
optimum use of the potential within its portfolio, the position of Chief
Operation Officer (COO) /Head of Asset Management has been created in the
Managing Board of the Group's German subsidiary Peach Property Group
(Deutschland) AG. A true industry expert has been engaged for this position
- initially on a mandate basis.

Dr. Corinne Billeter-Wohlfahrt, President of the Board of Directors: "The
Board of Directors had cost developments and workflows for our major
projects in Germany reviewed by an independent expert in February 2015.
This review confirmed that the costs estimated at the end of 2014 were
adequate, and that financial controls were effective. In contrast, the
Board of Directors sees potential for improvement with regard to technical
project management on the basis of which the structural changes were
implemented. The newly created COO position in Germany as well as a
partnership with a leading technical company will do this potential
justice. The assessment of the situation further revealed that no further
action is required and, in particular, that the course we started to take
last year is highly promising and is one we should continue to follow. We
plan to continue to reduce the proportion of development projects in our
overall portfolio in favour of investment properties - with a particular
focus on Germany. This will minimise risks and stabilise income."

Dr. Thomas Wolfensberger, Peach Property Group's CEO added: "Purchasing and
revitalising investment portfolios will become an even greater focus for
Peach's activities in the future. That is why we have created the new
position of Chief Operating Officer (COO) / Head of Asset Management in our
Managing Board in Germany. We have been able to fill this position on a
mandate basis with a proven industry executive. We are thus strengthening
operational effectiveness and underlie the importance of asset management
for our business model. The finalization of our major projects in Germany,
together with the planning progress which has been achieved in Wädenswil
have allowed us to eliminate the major project risks which affected us
since going public. We have also laid solid foundations for repeat income,
and have a highly diversified portfolio of properties which promises
constant income and is no longer exposed to the cycles prevalent in the
luxury segment. In addition, implementing this strategy has allowed us to
reduce our expense items and will also continue to do just that in 2015."

Peach Property AG will be hold an Investors' and Analysts' Conference on
its 2014 annual profits today at 1.30pm in Zurich.

The Group's 2014 annual report can be downloaded here:
www.peachproperty.com/GB2014

Contacts:

Media, investors and analysts
Dr. Thomas Wolfensberger, Chief Executive Officer and Dr. Marcel Kucher,
Chief Financial Officer
+41 44 485 50 00 | investors@peachproperty.com


Media Germany
edicto GmbH, Axel Mühlhaus, Peggy Kropmanns
+49 (0) 69 90 55 05 52 | amuehlhaus@edicto.de

About Peach Property Group AG

Peach Property Group AG is a property investor and developer focused on
investments in Switzerland and Germany. The portfolio includes an
increasing number of investment properties that are designed to generate
sustained income as well as attractive residential development properties.
The Group's activities cover the entire value chain, from site evaluation
to project planning, implementation and marketing. In the investment
segment, the Group is focused on properties with a potential for achieving
attractive yields based on active asset management - typically secondary
locations in the catchment area of urban agglomerations. In the development
segment, the Group concentrates on exceptional locations and properties
with high-end specifications and amenities that meet the requirements of a
demanding clientele.

Peach Property Group AG is headquartered in Zurich and has its German Group
headquarters in Cologne. Peach Property Group AG is listed on the SIX Swiss
Exchange (PEAN, ISIN CH0118530366).

For more information, see www.peachproperty.com

End of ad hoc announcement

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Additional features:

Document: http://n.equitystory.com/c/fncls.ssp?u=YGMAUYRXXD
Document title: Press Release

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10.03.2015 News transmitted by EQS Schweiz AG. www.eqs.com - news
archive: http://switzerland.eqs.com/de/News

The issuer is responsible for the contents of the release.

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Language:    English
Company:     Peach Property Group AG
             Seestrasse 346
             8038 Zürich
             Switzerland
Phone:       +41 44 485 50 00
Fax:         +41 44 485 50 11
E-mail:   investors@peachproperty.com
Internet: www.peachproperty.com
ISIN:        CH0118530366
Valor:       A1C8PJ
Listed:      Regulated Unofficial Market in Berlin, Stuttgart; Open
             Market in Frankfurt ; SIX


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331557 10.03.2015
 



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