INCITY CLOSES 2019 SLIGHTLY ABOVE FORECAST AND ANTICIPATES SIGNIFICANT PROFIT FOR FISCAL YEAR 2020
- InCity publishes annual report for 2019 and makes forecast for fiscal year 2020
- Consolidated net loss for the year 2019, but result somewhat above expectations; slight net income at single-entity level at the upper end of expectations
- Net income between EUR 1.8 m and EUR 2.3 m expected at Group level for 2020 due to the sale of a portfolio property; net income between EUR 4.1 m and EUR 4.6 m expected at single-entity annual financial statement level
Frankfurt am Main, 30 April 2020. Today, InCity Immobilien AG ("InCity") published its annual report for fiscal year 2019. The net loss at Group level amounted to EUR -1,882 k, but was slightly above the original forecast (between EUR -2.1 m and EUR -2.4 m). The net income at single-entity financial statement level was positive at EUR 39 k and was at the upper end of the initially submitted planning range (between EUR -0.3 m and EUR +0.1 m). The improved result compared to the initial planning results, among other things, from an unplanned capital gain on the sale of a smaller portfolio property ("Jacobsohnstrasse 27" in Berlin) in 2019. For fiscal year 2020, InCity forecasts profit at single-entity annual financial statement level between EUR 4.1 m and EUR 4.6 m and profit at Group level between EUR 1.8 m and EUR 2.3 m, in particular due to the disposal of the portfolio property at "Brönnerstrasse 13/15" in Frankfurt am Main as part of a share deal, which was realised in January 2020. "Our goal continues to be the further expansion of our property portfolio," says Michael Freund, CEO of InCity. "Nevertheless, we will continue to take advantage of sales opportunities. Thanks to the quality of our property portfolio, we are very well positioned to weather the economic downturn due to the COVID-19 virus pandemic.
In fiscal year 2019, one property was acquired by InCity and one property was sold. In March 2019, the change of ownership and transfer of risks and rewards took place for the portfolio property purchased by InCity in November 2018 located at "Leipziger Platz 8" in Berlin-Mitte. In April 2019, InCity sold 100% of shares in IC Objekt10 Berlin GmbH, including the property located at "Jacobsohnstrasse 27" in Berlin. Book profit at Group level of around EUR 261 k was realised in this transaction. In autumn 2019, the renovation measures in the commercial areas of the portfolio property at "Jägerstrasse 54/55" in Berlin-Mitte were completed. As of fiscal year 2020, the full year effect of this alone will generate more than EUR 700 k of additional sales revenue.
On 15 November 2019, InCity sold its wholly owned subsidiary IC Objekt1 Frankfurt GmbH, including the medical centre located at "Brönnerstrasse 13/15" in Frankfurt am Main purchased in July 2014. The change of ownership and transfer of risks and rewards, and thus the realisation of profits, took place on 3 January 2020 and is therefore not included in the results of the fiscal year 2019. Since then, the Group's number of portfolio properties has amounted to eight.
The consolidated net loss for fiscal year 2019 continued at EUR -1.882 k (prior year: EUR - 446 k), but was slightly above the initial forecast. The Group's EBITDA (earnings before interest, taxes, depreciation and amortisation) of EUR 1.9 m was lower compared to the prior year (EUR 3.2 m). Compared to the prior year, a lower amount of around EUR 0.6 m was generated from property sales. In addition, no profit distribution (before taxes) for the project participation "Rhein VII" (2018: EUR 1.0 m) was received in 2019. Valuation allowances on receivables in the total amount of almost EUR 0.5 m impact the past fiscal year's EBITDA and represent a special effect; just as one-off broker commissions in the amount of EUR 0.2 m impact the EBITDA. The results at single-entity financial statement level were positive at EUR 39 k (prior year: EUR 707 k). Overall, the operating expenses remained constant at around EUR 2.3 m compared to the prior year. In addition, the year-on-year increase in asset management fees and higher interest income, both due to the growing property portfolio, more than offset the increased interest expenses due to the bond 2018/2023 issued in December 2018. In contrast, the investment result in the single-entity financial statements fell by around EUR 0.8 m year-on-year; the figure for the same period of the prior year included profit transfers from the sale of a portfolio property (EUR 0.5 m) and profit transfers as part of the distribution of profits from the "Rhein VII" project and from "Haus 6" in Düsseldorf (around EUR 0.8 m in total).
"When evaluating the fiscal year's figures, it must still be taken into consideration that HGB accounting does not reflect the positive performance of our portfolio," says Helge H. Hehl, CFO of InCity. "The portfolio properties are carried at amortised cost, while at the same time, scheduled depreciation of the property portfolio in the past fiscal year reduced the consolidated results by around EUR 1.7 m." By contrast, InCity's positive development can be seen in its third-party market valuation: Based on the last market valuation by a third-party as of 31 December 2019 and taking into account the other Group balance sheet items, a net asset value of EUR 1.62 per share results (31 March 2019: EUR 1.47 per share). This clearly shows the result of the positive performance of the portfolio properties, in contrast to the book values resulting from the accounting according to the German Commercial Code (HGB).
The net result in fiscal year 2020, both at single-entity annual financial statement level of InCity AG and in the consolidated financial statements, will be influenced primarily by the sale of the portfolio property at "Brönnerstrasse 13/15" in Frankfurt am Main as part of a share deal on 3 January 2020. This effect on earnings is approximately EUR 4.6 m (before taxes) at single-entity annual financial statement level; at Group level, it is around EUR 4.4 m (before taxes) due to deconsolidation effects. Therefore, the Management Board currently projects a consolidated net profit for the year between EUR 1.8 m and EUR 2.3 m for the InCity Group and a net income for the year at single-entity annual financial statement level between EUR 4.1 m and EUR 4.6 m for InCity AG without considering positive earnings contributions from further potential future acquisitions or sales.
During the preparation of this annual report, the impact of the COVID-19 virus pandemic on the economic situation was not yet predictable or quantifiable. However, based on the solid and secured financing and on the quality of the property portfolio, which mainly includes properties in prime locations, InCity believes that it is very well positioned for an economic downturn, the duration and intensity of which still cannot be predicted.
The annual report is available on the company's homepage (www.incity.ag) and printed versions can be sent upon request. Details on the portfolio properties can be found in the updated company presentation, which can also be viewed on the website.
Contacts for enquiries:
InCity Immobilien AG Press Investor relations
Beethovenstrasse 71 Thomas Luber Helge H. Hehl, CFA
60325 Frankfurt am Main Tel.: +49 (0)69 7191889 66 Tel.: +49 (0)69 7191889 55
www.incity.ag email@example.com firstname.lastname@example.org
About InCity Immobilien AG
As a multi-disciplinary real estate company, InCity Immobilien AG (referred to in the following as InCity AG) is dedicated to creating and increasing the value of real estate and operates in the fields of asset management and project development. For its property portfolio, InCity AG focuses on the real estate markets of the two major cities Berlin and Frankfurt am Main and pursues a sustainable investment strategy. The decisive factors here are location, property quality and long-term value stability. Accordingly, the portfolio consists of high quality core properties with value stability in Berlin as well as properties in locations in Frankfurt that are attractive in the long term which range in value between EUR 5 m and EUR 50 m. In addition, InCity AG assumes comprehensive and individually developed asset management contracts for third parties that are adjusted to meet the needs of the respective property or portfolio. Visit the website for further information about the company: www.incity.ag
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