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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25.08.2009

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

Further inquiry note:
ECO Business-Immobilien AG
Friedrich Scheck, CEO
Tel.: +43(1)580 88 12
mailto:[email protected]

Peter Pechar
Head of Investor Relations
Tel.: +43(1)580 88 35
mailto:[email protected]

Hochegger Financials
Roland Mayrl
Tel.: +43(1) 504 69 87-331
mailto:[email protected]

end of announcement euro adhoc
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emitter: ECO Business-Immobilien AG
Opernring 1
A-1010 Wien
phone: 580 88
FAX: 580 88 - 88
mail: [email protected]
WWW: www.eco-immo.at
sector: Real Estate
ISIN: AT0000617907
indexes: Prime.market
stockmarkets: Regulated free trade: Wien
language: English

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