DIC Asset AG exceeds expectations
DIC Asset AG / Key word(s): Final Results/Capital Increase
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DIC Asset AG (German Securities ID 509840 / ISIN DE0005098404) today presented its financial statements for the 2010 financial year. As the real estate industry entered 2010, conditions were still challenging. Towards the end of the year, however, the market environment increasingly improved, backed by the economic recovery. DIC Asset AG also benefited from this development.
FFO (funds from operations, comprising earnings before depreciation and taxes and before profits from disposals and development projects) of EUR 44.0 million exceeded the last-projected range of EUR 41-43 million, and was close to the figure of EUR 47.6 million achieved in 2009. As a particularly positive aspect, the decline in rental income (due to disposals of properties and fund placement) was largely offset by reduced interest expenses and enhanced property management efficiency. FFO per share amounted to EUR 1.18, primarily reflecting the increased number of shares caused by the capital increase in March 2010 (2009: EUR 1.47).
With a profit for the period of EUR 16.5 million (up 2 per cent on the 2009 figure of EUR 16.1 million), the Company's results for 2010 were above expectations. Whilst rental income was lower, the decline was more than compensated for by positive factors: in this context, the most important contributors were higher profits on the disposal of properties (EUR 5.1 million), lower operating expenditure, and lower financing costs. Based on the higher number of shares outstanding following the capital increase, earnings per share declined to EUR 0.44 (2009: EUR 0.49). Given these positive results, the Company intends to raise distributions. The Management Board and Supervisory Board will propose to the Annual General Meeting to pay a dividend of EUR 0.35 per share - a 17 per cent increase over the EUR 0.30 per share paid for the 2009 financial year.
Detailed review of results:
DIC Asset AG's total revenues for the 2010 financial year went up strongly, to EUR 228.8 million (2009: EUR 171.3 million). The marked 34 per cent increase was due primarily to proceeds from the sale of properties, which rose from EUR 15.2 million to EUR 81.2 million. At EUR 124.9 million, gross rental income remained a reliable source of income. The 7 per cent year-on-year decline is largely in line with the sale of properties already mentioned, and also reflects the inclusion of five properties in the first DIC special fund during the fourth quarter.
Despite a business environment that continued to be challenging for the letting of real estate, at 256,600 qm letting volume rose once again - by 5 per cent (2009: 245,500 qm). In this context, renewals were up strongly, to around 153,400 qm (2009: 136,700 qm), whilst new rental agreements covering 103,200 qm, were close to the previous year's level of 108,800 qm. Total new rentals in 2010 were equivalent to annualised rental income of EUR 27.0 million (2009: EUR 24.8 million).
At the end of 2010, DIC Asset AG's real estate portfolio comprised 288 properties with a rental space of 1.2 million qm and a market value of EUR 2.0 billion. The Company exploited the recovery in the market environment to successfully place 29 properties, generating aggregate proceeds of EUR 132 million: on average, the prices achieved exceeded the most recent market valuations by 6 per cent. Market values, which are reviewed by independent experts each year, increased by 1.1 per cent. This recovery reflected the successful rental activity, and the start of the wider recovery of the market generally. At EUR 15.27, net asset value (NAV) per share for 2010 exceeded the previous year's figure (2009: EUR 13.87 after the capital increase in 2010).
Overall, operating costs declined significantly, to EUR 17.4 million (2009: EUR 18.2 million). At EUR 8.0 million, administrative expenses were down considerably year-on-year (2009: EUR 9.0 million). At the same time, personnel expenses of EUR 9.4 million were virtually in line with the previous year's figure of EUR 9.2 million. Both items reflect the Company's success in its efforts to reduce expenditure. Despite lower income, the ratio of operating expenses to gross rental income (adjusted for real estate management income) thus remained stable at 11 per cent.
DIC Asset AG's total assets stood at EUR 2.0 billion as at 31 December 2010 (2009: EUR 2.2 billion), reflecting the sales of properties. Financial debt stood at just under EUR 1.4 billion at the year-end 2010, approximately EUR 200 million less than the year before. Long-term fixed interest rate agreements or hedges are in place for close to 81 per cent of financial debt, with 69 per cent having a maturity of over three years. Only 7 per cent will require refinancing during 2011. During 2010, DIC Asset AG renewed four portfolio financings with an aggregate volume of approximately EUR 370 million, which improved the maturity structure and lowered financing costs. Interest expenses declined to EUR 70.4 million (2009: EUR 74.6 million), reflecting loan renewals at lower interest rates and the reduction in liabilities. The average interest rate paid on all liabilities fell to 4.30 per cent - 30 basis points below the previous year (2009: 4.60 per cent). The average term of liabilities is approximately four years.
Operating profit before depreciation and amortisation (EBDA) increased to EUR 47.3 million (2009: EUR 46.6 million). Cash flow from operating activities (after interest and taxes paid) was down slightly year-on-year, to EUR 37.7 million (2009: EUR 38.7 million). Cash and cash equivalents of EUR 117.3 million were up strongly, exceeding the previous year-end level by EUR 78.5 million.
Forecast for 2011
Backed by its stable operating performance, DIC Asset AG has embarked upon the new year with ambitious targets. DIC's projections are based on the expectation that the recovery of the overall economy will give a continued boost to the real estate sector. The Company anticipates growth potential across all investment segments, and intends to use further attractive opportunities for acquiring real estate assets during the coming months. Stronger demand will provide the potential for new rental contracts at more attractive terms. Thanks to the sound preparations for its two major developments - the 'MainTor' project in Frankfurt/Main, and the 'Opera Offices' project in Hamburg - DIC Asset AG is well-positioned and sufficiently flexible to capitalise on the accelerating market dynamics, and to begin to implement the projects at short notice. DIC Asset AG aims to match the previous year's results during the 2011 financial year. Based on the existing portfolio and together with acquisitions the Company expects rental income to amount to between EUR 112 and EUR 115 million, with operating profit (FFO) in a range from EUR 40 million to EUR 42 million.
Capital increase to support further acquisitions
Through the issue of up to 6,531,249 new shares, DIC Asset AG is to increase its share capital to up to 45,718,747 shares. The proceeds from the issue will give the Company more room to manoeuvre and is to be used to exploit additional opportunities for acquisitions. The new shares are to be offered for subscription to shareholders at a price of EUR 8.00 and a ratio of 6:1. This represents an increase of up to 17 per cent in current share capital. In this process, the company is to make use of part of the authorised capital on which the Annual General Meeting passed a resolution on 5 July 2010 and intends to receive proceeds of up to approx. EUR 52.2 million from the issue.
The subscription period for the new shares runs from 17 March 2011 to 30 March 2011. As early as the 2010 financial year, the new shares will participate in full in the proposed dividend of EUR 0.35. The subscription offer is exclusively open to existing holders of shares in the company. No trading of subscription rights is envisaged. Any new shares not subscribed to on the basis of the subscription offer may only be acquired by existing shareholders, likewise at the subscription price, by way of an oversubscription. Binding offers for such an oversubscription may be submitted during the subscription period.
Of the principal shareholders, DIC - Deutsche Immobilien Chancen-Group (Deutsche Immobilien Chancen AG & Co. KGaA and subsidiaries as well as affiliates), Frankfurt/Main, covenants to exercise all subscription rights vested for them, and to subscribe to a total of 2,558,296 new shares within the framework of the rights issue, at the issue price.
Commerzbank and Berenberg Bank have been commissioned to act as joint managing banks.
This document is not an offer of securities for sale nor the solicitation of an offer to purchase securities in the United States or in any other jurisdiction where such offer may be restricted. Securities may not be offered or sold in the United States unless they are registered under the US Securities Act of 1933, as amended (the 'US Securities Act'), or exempt from registration. The securities of DIC Asset AG referred to in this press release have not been, and are not being, registered under the US Securities Act, and DIC Asset AG will not make a public offer of such securities in the United States. There will be no public offering of securities in the United States or anywhere else.
This communication is directed only at persons who: (i) are qualified investors within the meaning of the Financial Services and Markets Act 2000 (as amended) and any relevant implementing measures; and/or (ii) are outside the United Kingdom; and/or (iii) have professional experience in matters relating to investments who fall within the definition of 'investment professionals' contained in article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the 'Order'), or are persons falling within article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc) of the Order, or fall within another exemption to the Order (all such persons referred to in (i) to (iii) above together being referred to as 'Relevant Persons'). Any person who is not a Relevant Person must not act or rely on this communication or any of its contents. Any investment or investment activity to which this communication relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.
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Company: DIC Asset AG
Eschersheimer Landstr. 223
Phone: +49 69 9454858-0
Fax: +49 69 9454858-99
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart
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