Dr. Iosif Baka­leynik, Chair­man / CEO

Letter to our shareholders 

Roland Friederich, CFO

Dear Shareholders

In a sta­ble mar­ket envi­ron­ment, Züblin Immo­bilien Hold­ing AG (Züblin) increased rental income by 0.7% to CHF 8.1 mil­lion in the 2017/18 finan­cial year. Pos­i­tive reval­u­a­tion effects of CHF 1.5 mil­lion, effi­cien­cy gains and addi­tion­al cost sav­ings con­tributed sig­nif­i­cant­ly to the oper­at­ing result. The com­pa­ny gen­er­at­ed EBIT of CHF 4.4 mil­lion, while adjust­ed earn­ings amount­ed to CHF 6.6 mil­lion. As of 31 March 2018, equi­ty increased to CHF 128.9 mil­lion, cor­re­spond­ing to an equi­ty ratio of 61.6%. With this sol­id foun­da­tion, Züblin is well equipped to take advan­tage of mar­ket oppor­tu­ni­ties that may arise.

Good earnings situation

Züblin can look back on a sol­id 2017/18 finan­cial year. The results were dri­ven by high­er rental income in Switzer­land, pos­i­tive val­u­a­tion effects and the prof­itable sale of the Ger­man port­fo­lio. The tech­ni­cal loss of CHF 29.3 mil­lion report­ed in accor­dance with IFRS account­ing rules is of lit­tle sig­nif­i­cance oper­a­tional­ly. It was due to the one-off effect of reclas­si­fi­ca­tions of CHF 35.9 mil­lion of reserves for cash flow hedges and dis­con­tin­ued oper­a­tions in Ger­many, as these reserves had to be removed from equi­ty and recy­cled through the income state­ment. There­fore only the adjust­ed result of CHF 6.6 mil­lion, which is free from the effects of these reclas­si­fi­ca­tions, gives an accu­rate pic­ture of the oper­at­ing per­for­mance of the company.

Value realized by sale of properties in Germany

As pre­vi­ous­ly com­mu­ni­cat­ed, Züblin real­ized share­hold­er val­ue by sell­ing its Ger­man port­fo­lio. The sale of twelve office prop­er­ties to CLS Hold­ing plc was suc­cess­ful­ly com­plet­ed in sum­mer 2017 for an attrac­tive price of EUR 152 mil­lion. The trans­ac­tion led to an over­all cash inflow CHF 59 mil­lion for Züblin.

Market value of portfolio passes CHF 200 million mark

After the sale of the prop­er­ties in Ger­many, Züblin now exclu­sive­ly owns prop­er­ties in Switzer­land. The prop­er­ties are locat­ed in good to very good loca­tions and have an attrac­tive ten­ant struc­ture. Exclud­ing the Arco West prop­er­ty in Berne, which con­tin­ues to have an above-aver­age vacan­cy rate, the occu­pan­cy rate is very high at 99%. The total val­ue of the Swiss port­fo­lio at the end of the finan­cial year as of 31 March 2018 increased by CHF 1.5 mil­lion com­pared to the pre­vi­ous year to CHF 200.1 million.

Solid financial position to enable selective expansion of portfolio

In autumn 2017, Züblin con­clud­ed a five-year revolv­ing financ­ing facil­i­ty of CHF 118 mil­lion for the Swiss real estate port­fo­lio. This loan agree­ment with a Swiss can­ton­al bank replaces the pre­vi­ous syn­di­cat­ed loan for the same amount. Züblin has used funds from the sale of the Ger­man port­fo­lio to reduce debt, and has so far drawn only CHF 66 mil­lion from the new cred­it line. With the new cred­it facil­i­ty, Züblin is in a posi­tion to invest in care­ful­ly select­ed invest­ment oppor­tu­ni­ties that would ben­e­fit its port­fo­lio. The cred­it line allows port­fo­lio expan­sion up to an LTV (loan to val­ue) of 60%. Cur­rent­ly, this ratio is at 32.8%.

Dividend of CHF 1.00 per share proposed

Based on the prof­itable oper­at­ing result achieved in 2017/18 and sta­ble finan­cial posi­tion, the Board of Direc­tors will pro­pose to the Annu­al Gen­er­al Meet­ing the dis­tri­b­u­tion of CHF 1.00 per reg­is­tered share (Name­nak­tie) from cap­i­tal reserves. All mem­bers of the Board of Direc­tors will stand for re-elec­tion for a one-year term of office.

Outlook for fiscal year 2018/19

With a small but prof­itable port­fo­lio and the new cred­it facil­i­ty in Switzer­land, Züblin has the flex­i­bil­i­ty to act on new invest­ment oppor­tu­ni­ties. In the cur­rent sta­ble mar­ket with con­tin­ued low inter­est rates, the com­pa­ny is well placed to take advan­tage of selec­tive growth oppor­tu­ni­ties in order to cre­ate share­hold­er value.

Dr Iosif Bakaleynik

Chair­man and Chief Exec­u­tive Officer

Roland Friederich

Chief Finan­cial Officer