Dr. Iosif Bakaleynik, Chairman/CEO
Letter to our shareholders
Roland Friederich, CFO
Ladies and Gentlemen,
Züblin closes the 2018/19 financial year with a profit of CHF 6.2 million. The generally good market development for office properties led to a higher value of the portfolio of CHF 0.6 million in the year under review. Thanks to good liquidity and the solid equity base of CHF 131.7 million, corresponding to an equity ratio of 61.6%, Züblin is well equipped for the targeted growth.
Positive Earnings
In the 2018/19 financial year, Züblin Immobilien Holding AG (Züblin) generated a profit of CHF 6.2 million (previous year: CHF -29.9 million). Net operating income is stable at CHF 7.4 million. Changes in the market value of the investment properties amounting to CHF 0.6 million are again positive however, CHF 0.9 million below the increase of the previous year. This resulted in a decline of CHF 0.8 million in income before financial expenses and income taxes (EBIT) to CHF 3.6 million. Income from continuing operations amounted to CHF 6.2 million, representing an increase of CHF 5.5 million from the prior-year period. This was mainly due to one-off effects in both the current and the prior-year period. Earnings per share stood at CHF 1.87.
Value Increase of the Real Estate Portfolio
The total value of the Züblin property portfolio increased by CHF 0.6 million in the reporting period. As of 31 March 2019, the market value of the five Swiss investment properties amounted to CHF 200.9 million.
The property key figures for the Züblin portfolio convey an overall solid picture in all relevant core values. Despite the high vacancy in Berne, the vacancy rate for the overall portfolio is around 10%; the weighted average lease term (WALT) of around four years underlines the good tenant and letting quality. For the Berne property Arco West, the ongoing repositioning and intensified marketing are showing first progress. In the second half of 2018/19, a lease agreement for around 800 square meters was signed; start of the lease will be in the first quarter of the new 2019/20 financial year. This letting will lower the vacancy rate to around 9%.
Solid Financial Position
As of 31 March 2019, the company's cash and cash equivalents amounted to CHF 6.1 million. The real estate portfolio is financed by a five-year revolving credit facility in the amount of CHF 118 million, of which only a partial amount of CHF 65 million has been drawn down. This results in a loan-to-value ratio (LTV) of 32% for the portfolio.
Dividend of CHF 1.00 per share proposed
On the basis of the operating result achieved in the 2018/19 financial year and the good financial position, the Board of Directors will propose to the Annual General Meeting (AGM) the distribution of CHF 1.00 per registered share (Namenaktie) from capital reserves.
Change in Board of Directors and Management
Dr. Iosif Bakaleynik, has informed the Board of Directors that he will step down as Chairman, and will not stand for re-election at the forthcoming AGM on 18 June 2019. The Board of Directors will propose to the AGM the election of Dr. Wolfgang Zürcher as new Chairman of the Board.
At the same time, Dr. Bakaleynik announced his forthcoming resignation as CEO; he will remain in the office until a successor is found. The succession is expected to take place no later than 30 September 2019.
Events after the balance sheet date
With the purchase of a co-ownership interest in an office and retail property in Zurich-Oerlikon, Züblin was able to close its first real estate acquisition since completion of the restructuring. The signing and the transfer of ownership took place on 15 April. The fully let property is centrally located, in ultimate proximity of the Oerlikon railway station and has a mix of office, retail and gastronomy space. Züblin’s share of 3,243m2 comprises mainly office space as well as 40 of a total of 143 underground parking spaces. The rental income of the acquired share amounts to CHF 1.1 million, which corresponds to around 12% of the rental income of the Züblin portfolio after the acquisition. The parties have agreed not to disclose any details of the transaction.
Outlook
For the new 2019/20 financial year, Züblin is striving to further expand its real estate portfolio. In the light of the persistently challenging market environment with high asset prices, the Board of Directors and Executive Management believe that growth can only be achieved through a strict focus on, and careful selection of investment opportunities, contributing to the creation of sustainable corporate success and long-term added value for Züblin's shareholders.
Dr. Iosif Bakaleynik
Chairman and Chief Executive Officer
Roland Friederich
Chief Financial Officer
