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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good morning ladies and gentlemen. This is the Chorus Call conference operator. Welcome to the Immoeast AG second quarter conference call. The presentation for today's conference call is available at http://www.immoeast.com/presentations. As a reminder all participants are in listen-only mode and the conference is being recorded. After the presentation there will an opportunity to ask questions. (OPERATOR INSTRUCTIONS).
At this time I would like to turn the conference over to Mr. Karl Petrikovics, CEO. Please go ahead.
KARL PETRIKOVICS, CEO, IMMOEAST AG: Well good morning to everyone. I'm here with Miss Hermentin, our Head of Investor Relations, and Mr. Thornton, our CFO. And just let's get started with the presentation. I hope you have it in front of you; I'm starting on page two.
The first half of business year 2007/2008 was based on strong improvement of earnings and an ongoing steady growth. The experience in especially the CEE markets slightly declining yields in Class A property, but in any case substantially rising rents. Therefore rental income increased of Immoeast and the average rent per square meter. Because of our long-term experience in Western Europe and 17 years' experience we were able to use our asset management capabilities and use the existing structure to improve rental income. And the high equity ratio [we are running] and which was always our target in the given credit situation is quite a substantial advantage to us.
IMMOFINANZ. The majority shareholder IMMOFINANZ increased its stake to 53.24% as of end of October and 54% as of end of November. We started our sales process in Central and Eastern Europe and of the six figure investment program which was the basis for the equity raising in May, EUR3.4 billion has already been closed and completed. And what you will see, we further increased the stake of developments in our portfolio.
If we move on to page three, in total property value is EUR10.9 billion in 15 countries, mostly invested in Class A property, in total 448 properties with approximately 5.7 million square meters of lettable space. And the like-for-like rental increase was 4.4% compared to last year. Vacancy rates are 6.8% in CEE market, 2.4% in SEE market and 0.2% in CIS market.
On page four, summary of the important financial numbers and figures. Revenues increased by 73.4% to EUR136 million, operating profit more or less doubled to EUR218 million, earnings before tax increased by 121% to EUR298.9 million and the total equity increased by 78% to EUR7.9 billion. Earnings per share, also we increased the number of shares substantially, increased by 26% to EUR0.29 a share and total amount of fair value of properties increased more or less doubled to EUR10.851 billion or EUR10.53 a share; that's an increase of 19.5%. Book value, meaning not considering impact from developments, increased by 18.5% to EUR9.46 a share. Loan to value is 42.7% as mentioned a number of properties 244 and lettable space is 5.7 million square meters.
On the next few pages we have details on the numbers, but we are moving on to page 16 that provides an overview of the breakdown of the portfolio. In sectors 33% is offices; 29.5% is retail; logistics and residential [for sales] is roughly 14.5% each and the rest is split between leisure 2.5% and parking 5.7%. Regions, 49.4% invested in CEE markets, 41% in SEE markets and 9.6% in CIS markets in square meter terms.
If we look at euro terms out of the EUR10.9 billion property value of 30.8% is invested in Romania, 15.2% in Czech republic, 14.9% in Russia, 13.3% in Hungary, 12.4% in Poland and the rest is split between Slovakia, Bulgaria and Ukraine, and Lithuania, Bosnia and former Yugoslavia. 41% of the portfolio is standing investments and 58.9% is under development or in various stages of development at the moment.
If we move on to page 18, as already mentioned we are focusing on the whole region, CEE, SEE, CIS; in sectors we are focusing on office, retail, logistics and residential. Mostly done in partnerships and entering early in projects to use and take benefit of difference between development needs and market needs and one of our top priorities based on our long-term experiences, asset management, increasing value and income of properties, and we started our sales process in the amount of EUR1 billion to EUR1.5 billion which should completed within the next 12 to 18 months.
Let's move on to page 19. What are the important factors in Central and Eastern Europe? GDP growth is still promising and increasing, and constant increase in purchasing powers, therefore the region is an expansion target for Western retailers to take benefit of their rising standard of living and the high brand awareness of people in Eastern Europe. And based on increasing income and improving standard of living there is an increased demand for high standard apartments foreseen.
But our drivers for business, first of all asset management, based on a long-term experience and our focus on customers, and refurbish and redevelopment opportunities. Rent increase which we experienced especially in the CEE markets, further yield compression in Class A whereas in B and C property we see slightly increasing yields, and
finally using the opportunities and capturing the spreads to market in developments.
On page 21, just a quick overview and to give an idea of potential in Eastern Europe. Vienna, a 1.7 billion people city, there's an office stock of roughly 10 million square meters. If you add up Bucharest, Warsaw, Budapest, Prague, Sofia and Belgrade, the important capitals in the region, in total their office stock is slightly below 10 million square meters and our experience in Vienna is based on a 10 million -- Vienna is overstocked in office but [they are in a better situation] therefore that...
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