Deutsche Euroshop Newsroom

Corporate News

20.04.2007

Deutsche EuroShop: Profit doubled in FY 2006

  • Revenue: Euro 92.6 million (+29%), EBIT: Euro 86.3 million (+50%)
  • Profit: Euro 100.3 million (+106%)
  • Tax-free dividend increased to Euro 2.10 Euro per share (+5%)
  • Net Asset Value per share: Euro 51.05 Euro (+10%)
  • Forecast: increase of revenue and net profit of approx. 20% until 2008

Deutsche EuroShop AG today disclosed the results for FY 2006 – record earnings – on its annual earnings press and analysts' conference in Hamburg.

 

Consolidated revenue up by 29%

Consolidated revenue was up by 29% from Euro 72.1 million to Euro 92.9 million in financial year 2006. Both the opening of the shopping center in Austria and the acquisition of the Rathaus-Center in Dessau made a positive contribution to the Group’s revenue in that year. In addition, the Main-Taunus-Zentrum was included in the consolidated financial statements on a proportionate basis for the first time. Equally, Forum Wetzlar contributed full-year operations to revenue for the first time.

Although German retail sales rose by 0.8% in nominal terms in 2006, the tenants of DES shopping centers achieved a 3.3% increase in revenue on a same-store basis. If the international properties are included in this comparison, then DES tenants generated space-adjusted revenue growth of 4.7%.

 

Vacancy rate unchanged at under 1%

As in the previous year, the vacancy rate was under 1%. The need for write-downs for rent losses was around Euro 0.3 million (2005: Euro 0.2 million), or 0.3% of revenue, as in the previous year.

 

Other operating income includes disposal proceeds

Other operating income amounted to Euro 16.0 million (previous year: Euro 2.3 million) and primarily includes gains of Euro 14.8 million from the sale of the shopping centers in France and Italy.

 

Net finance costs widen due to investments

Net finance costs deteriorated by Euro 1.7 million to Euro -41.0 million, after Euro -39.3 million in 2005. For the first time, those components of minority interests in profit or loss to be reported as debt in accordance with IAS 32 are presented in this item. Prior-year figures have been adjusted accordingly.

Increased investment activity and the newly opened shopping centers pushed borrowing costs up Euro 5.3 million to Euro 38.9 million. There was no significant change in interest income amounting to Euro 2.3 million compared to the previous year (Euro 2.2 million). Income from investments declined from Euro 5.0 million to Euro 1.9 million, because the previous year’s figure had included the income from Main-Taunus-Zentrum. On the other hand the profit attributable to limited partners decreased by Euro 6.6 million to Euro 6.4 million.

 

Measurement gains climb to record level

The measurement gains and losses item rose year-on-year by Euro 22.4 million from Euro 49.9 million to Euro 72.3 million. The newly opened center in Klagenfurt and the Rathaus-Center in Dessau acquired as at 1 January 2006 were recognised at their market values for the first time. This resulted in the recognition of measurement gains amounting to Euro 22.7 million. The revaluation of existing properties also led to materially higher Group income. These properties recorded increases in value of Euro 47.2 million. The expenses of Euro 3.4 million associated with investment in these properties incurred in the year under review are deducted from this amount.

 

Consolidated profit up +106% – minority interests reported differently

In the year under review, earnings before income and taxes (EBIT) increased by 50% from Euro 57.5 million to Euro 86.3 million, while EBT (profit before taxes) grew by 73% from Euro 68.1 million to Euro 117.7 million. In accordance with IAS 32, minority interests are treated as debt in the balance sheet, which means that the profit attributable to minority interests is reported under net finance costs and therefore results in a decline in EBT. The comparable prior-year figure has been adjusted accordingly. After adjustment for income taxes of Euro 17.4 million, consolidated profit amounted to Euro 100.3 million (2005: Euro 48.7 million), an increase of 106%.

 

Earnings per share increased

Earnings per share (basic) amounted to Euro 5.84 compared with Euro 3.09 in the previous year. Of this amount, Euro 1.53 per share (2005: Euro 1.24) is attributable to operations (+23%) and Euro 2.98 (2005: Euro 1.85) to measurement gains (+61%). The disposal gains on the shopping centers in Italy and France resulted in additional earnings per share attributable to operations of Euro 1.33.

 

Dividend proposal: Euro 2.10 per share

Due to the successful financial year, the Executive Board and Supervisory Board will propose to the shareholders at the Annual General Meeting on June 21, 2007 in Hamburg that a higher dividend of Euro 2.10 per share be distributed for financial year 2006.

 

Net asset value rises by 10%

Net asset value as at 31 December 2006 was Euro 877.4 million (Euro 51.05 per share) compared with Euro 794.5 million (Euro 46.22 per share) in the previous year.

 

Forecast

Three shopping centers to open in 2007 and 2008

The construction measures for the three shopping centers Stadt-Galerie Hameln, Stadtgalerie Passau and Galeria Baltycka in Gdansk, Poland are progressing as planned. Galeria Baltycka is already fully let and will open in autumn 2007. The property should therefore at least partially offset reductions in rental income in financial year 2007 resulting from the sale of the French and Italian shopping centers. The opening of Stadt-Galerie Hameln in spring 2008 and Stadtgalerie Passau in fall 2008 will also contribute to the Deutsche EuroShop Group’s results of operations.

The two shopping centers are over 75% and 70% let, respectively, although it is still approximately twelve months and one and a half years, respectively, until they open their doors. In addition, financial year 2008 will be the first full year of operation for Galeria Baltycka – which will lead to a corresponding increase in rental income to the Group.

 

2007 revenue similar to previous year, 2008 revenue expected to rise approximately 18%

Deutsche EuroShop anticipates revenue in financial year 2007 to remain on a level with the previous year (between Euro 92 million and Euro 94 million) as a result of the sales in the previous year. It is expected that the Galeria Baltycka, which will open in fall 2007, will be able to partially offset the revenue losses caused by the sale of the two shopping centers (4.2% of 2006 revenue).

Beginning in 2008, the shopping centers in Hameln and Passau will contribute to revenue and earnings for the first time. In addition, Galeria Baltycka will be in operation for its first full financial year. The Executive Board therefore expects revenue to climb to between Euro 108 million and Euro 112 million in 2008.

 

Clear earnings growth anticipated in 2008

Adjusted for one-time proceeds from the disposal of the two shopping centers, earnings before income and taxes (EBIT) amounted to Euro 73.6 million in 2006. According to the forecast, EBIT will amount to between Euro 71 million and Euro 73 million in the current financial year. In 2008, once all properties currently under construction have opened, this is expected to increase to between Euro 87 million and Euro 90 million.

Earnings before tax (EBT) adjusted for proceeds from disposals and excluding measurement gains and losses amounted to Euro 32.7 million during the year under review. The Executive Board expects the corresponding figure to be between Euro 30 million and Euro 32 million for financial year 2007 and between Euro 42 million and Euro 44 million for financial year 2008.

 

Webcast of the conference call

Deutsche EuroShop will webcast its English conference call on Friday, 20 April 2007, at 03:00 p.m. CET live on the Internet. The webcast can be accessed at the Company's website at http://www.deutsche-euroshop.com/ir.


Key Data of Deutsche EuroShop (IFRS)

 

in Euro million

2006

2005

+/-

Revenue

92.9

 

72.1

29%

EBIT

86.3

 

57.5

50%

Income from investments

1.9

 

5.0

-62%

Net interest expense

-41.0

-39.3

 

-4%

EBT

117.7

68.1

 

73%

Consolidated profit

100.3

48.7

106%

Earnings per share (Euro) 1)

5.84

3.09

89%

Equity

796.3

724.7

10%

Minorities

101.6

62.8

62%

Liabilities

797.3

724.7

10%

Total assets

1,796.2

 

1,543.6

16%

Equity ratio (%) 2)

50.0

51.0

 

Gearing (%)

100

96

 

Net asset value

877.4

 

794.5

10%

Net asset value per share (Euro)

51.05

 

46.22

10%

Number of shares

 

17,187,499 

17,187,499

 

Cash and cash equivalents

96.9

197.2

-51%

Dividend per share (Euro)

2.10 3) 

2.00

5%

1) undiluted 2) incl. minorities 3) proposal

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