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Large Losses due to High Devaluations and Writedowns
IMMOEAST AG suffered from strong losses during the first half of the 2008/09 business year (1st May to 31st October 2008). The losses resulted from several main sources: losses from the revaluation of properties, depreciation due to the cancellation or delay of development projects, the depreciation of holdings in associated companies and provisions for onerous contracts.
At the moment, one of IMMOEAST’S bigger challenges is to secure its future liquidity. The cancellation or delay of development projects, the sale of properties and intense dialogues with banks which have indicated their support will help enhance the company’s financing.
Revenues, Cash flow, EBITDA
Key figures for the operative business were comparatively satisfying: EBITDA was largely unchanged (- 3.6% from EUR 63.3 million to EUR 61.0 million), revenues rose by 22.4% to EUR 166.6 million, but cash flow was significantly down at EUR 19.2 million.
EBT and EBIT
Both figures turned sharply into the red with EBIT falling from EUR 209.8 million in the fist half of 2007/08 to EUR -1,549.8 million and EBT from EUR 298.9 million to EUR 1,861.6 million. This massive loss is due to extensive depreciations on investment properties and development projects due to deteriorating market conditions and the delay or cancellation of most development projects due to weak overall market conditions. Further losses occurred due to write-offs on other financial instruments and in shares in associated companies.
NAV per share and book value per share
As a consequence of the depreciations and write-offs NAV per share declined to 7.95, a minus of 24.5% by annual comparison. Book value per share fell from EUR 9.46 to EUR 7.59 (minus 19.7%).
Stop and freeze of development projects
IMMOEAST has stopped most of its development activities in order to secure its future liquidity. 29 projects have been delayed, 51 projects have been totally cancelled.
Sales programme suffers from financial crises
The property sale programme had an intensive start in autumn 2008, but has so suffered so far from the profound financial crises, credit crunch and the limited transactions on the real estate market. When selling, IMMOEAST’s clear goal is to retain the property value as well. Therefore IMMOEAST’s volume of sales within the last months has been limited, while sales revenues were achieved at precisely the appraised value or even above it.
Bank negotiations
The Executive Board of IMMOFINANZ and IMMOEAST presented to the banks a positive prognosis for the continuation of business and a restructuring concept. This was accepted by the banks in a positive and supportive way. Financing talks have started on this basis.
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