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

end of announcement euro adhoc
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ots Originaltext: ECO Business-Immobilien AG
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:

ECO Business-Immobilien AG

Friedrich Scheck, CEO

Tel.: +43(1)580 88 12

mailto:scheck@eco-immo.at

Peter Pechar

Head of Investor Relations

Tel.: +43(1)580 88 35

mailto:pechar@eco-immo.at

Hochegger Financials

Roland Mayrl

Tel.: +43(1) 504 69 87-331

mailto:r.mayrl@hochegger.com

Branche: Real Estate
ISIN: AT0000617907
WKN: A0D8RY
Index: Prime.market
Börsen: Wien / Regulated free trade