EPIC Suisse AG: EPIC Suisse AG reports strong operating performance for the 1st half-year 2023

Media release - Ad hoc announcement pursuant to Art. 53 LR

Zurich, 21 August 2023

 

EPIC Suisse AG reports strong operating performance for the 1^st half-year 2023

• Rental income grew by 7.2% to CHF 32.9 million in H1 2023 versus CHF 30.7 million in H1 2022
• Vacancy rate further reduced to 4.4% for H1 2023 compared to 6.5% for H1 2022
• Continued long WAULT of 8.1 years as at 30 June 2023 (8.2 years as at 31 December 2022)
• Net unrealised revaluation loss of CHF 5.9 million in H1 2023 mainly due to higher real discount rates resulting from the changed interest rate environment and associated higher yield expectations (gain of CHF 5.3 million in H1 2022)
• EBITDA excluding revaluation on properties amounted to CHF 26.5 million in H1 2023 versus CHF 25.0 million in H1 2022 (when adjusted for the one-off IPO costs of CHF 5.9 million in H1 2022)
• Value of the real estate portfolio increased by 0.9% to CHF 1514.7 million primarily due to the advancement of the ongoing development projects (CHF 1501.9 million as at 31 December 2022)
• Solid equity ratio at 50.8%

EPIC Suisse AG (SIX: EPIC) (the Company or EPIC Suisse) published today significant growth and a strong operating performance for the first half-year 2023. The results were achieved despite a challenging market environment and are a testimony to the quality of the Companys real estate portfolio and to its successful long-term Buy-Build-Hold strategy.

Higher rental income, vacancies further reduced

Rental income from real estate properties was CHF 32.9 million in the first half of 2023, representing a substantial increase of 7.2% compared to CHF 30.7 million in the first half-year 2022. The increase was driven by additional rent due to indexation, a reduction in vacancies to 4.4% (6.5% in H1 2022) as well as the expiry of rent-free periods granted. Accordingly, the net annualised rental income yield of properties in operation reached 4.6% for the first half of 2023 (4.2% in H1 2022). 

Value of the real estate portfolio remains steady at CHF 1.5 billion

The value of the real estate portfolio increased by 0.9% to CHF 1514.7 million as at 30 June 2023 (CHF 1501.9 million as at 31 December 2022), primarily due to the advancement of the ongoing development projects and despite a net unrealised revaluation loss of CHF 5.9 million mainly as a result of higher real discount rates applied by the independent real estate valuer. The weighted average real discount rate increased by 5 basis points to 3.36% as at the end of June 2023 (3.31% end of December 2022). The WAULT remained stable and at a long duration of 8.1 years as at 30 June 2023 (8.2 years as at 31 December 2022).

During the first half of 2023, the capital expenditures amounted to CHF 18.7 million and were mainly focused on the development projects with total investments of CHF 15.7 million, of which CHF 13.3 million related to project PULSE in Cheseaux-sur-Lausanne and CHF 2.4 million to the construction of building C (Campus Leman) in Morges, which started in April 2023.

Profitability

EBITDA (including revaluation of properties) amounted to CHF 20.7 million for the first half of 2023 (CHF 24.4 million for H1 2022). Excluding the unrealised revaluation loss on properties of CHF 5.9 million in H1 2023 and for the prior half-year period the revaluation gain of CHF 5.3 million as well as excluding the one-off IPO costs of 5.9 million in H1 2022, the adjusted EBITDA amounts to CHF 26.5 million and CHF 25.0 million for H1 2023 and H1 2022 respectively. This reflects a progression of 6.1% mainly as a result of the top line growth.

The financial result for the first half of 2023 displayed a net expense of CHF 7.9 million versus a net income of CHF 19.1 million in H1 2022. The latter included an unrealised revaluation gain from hedging instruments (interest rate swaps) in the amount of CHF 23.1 million. The periodical revaluation of the swaps (negative effect of CHF 4.5 million by the end of June 2023) does not impact the groups operations, cash flows or dividend distributions, as already mentioned in previous financial reports. Net bank charges remained stable at CHF 3.5 million in the first half of 2023 (CHF 3.4 million in H1 2022), principally due to a lower amount of bank debt during H1 2023.

Profit (including revaluation effects) came to CHF 11.2 million for the first half-year 2023 versus CHF 38.7 million for the previous comparable period. After adjusting for the revaluation effects as well as the above-mentioned one-off IPO costs incurred during H1 2022, the net profit rose by 7.4% to CHF 20.9 million compared to CHF 19.4 million for H1 2022. 

Strong capital base

As at 30 June 2023, equity totalled CHF 798.6 million which corresponds to a solid equity ratio of 50.8% (CHF 818.4 million and 52.4% as at 31 December 2022). The Company distributed a dividend of CHF 3.00 per share to the shareholders on 4 May 2023. Accordingly, the net asset value per share equalled CHF 77.31 end of June 2023 (CHF 79.23 as at 31 December 2022).

All short-term mortgage-secured bank loans as at 31 December 2022 were renewed with maturities in 2028 and beyond, which is reflected in the longer weighted average residual maturity of 5.1 years as at 30 June 2023 (4.1 years by 31 December 2022). As anticipated in view of the current interest rate environment, the weighted average interest rate increased to 1.3% as at 30 June 2023 (1.0% as at 31 December 2022).

Outlook

Climate change, energy supply, sustainability, interest rates and inflationary risks remain amongst the key focus areas with potentially high impacts on the economic environment. The war in Ukraine and the stakes involved are unfortunately still part of the geopolitical landscape. Assuming no materially adverse impact on our operations going forward, we are confident of reaching a net rental income growth target of circa 4% to 6% for the full year 2023.

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For selected key figures, please refer to the appendix of this press release as well as to the Half-Year Report 2023 for further information and a glossary of alternative performance measures (on page 50 of the report).

Contact information

Valérie Scholtes, CFO, EPIC Suisse AG, Phone: +41 44 388 81 00, E-mail: investors@epic.ch

Reporting

The Half-Year Report 2023 is available on the Companys website under Media & Investors
Financial Reports: https://ir.epic.ch/en/financial-reports/

About EPIC Suisse AG

EPIC Suisse AG is a Swiss real estate company with a high-quality property portfolio of CHF 1.5 billion in market value. It has a sizeable development pipeline and a strong track record in sourcing, acquiring, (re)developing and actively managing commercial properties in Switzerland. EPICs investment properties are mainly located in Switzerland's major economic hubs, specifically the Lake Geneva Region and the Zurich Economic Area. Listed on SIX Swiss Exchange since May 2022 (SIX ticker symbol EPIC; Swiss Security Number (Valorennummer) 51613168; ISIN number CH0516131684). More information: www.epic.ch

Disclaimer

This publication may contain specific forward-looking statements, e.g. statements including terms like "believe", "assume", "expect", "forecast", "project", "may", "could", "might", "will" or similar expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may result in a substantial divergence between the actual results, financial situation, development or performance of EPIC Suisse AG and those explicitly or implicitly presumed in these statements. Against the background of these uncertainties, readers should not rely on forward-looking statements. EPIC Suisse AG assumes no responsibility to update forward-looking statements or to adapt them to future events or developments.

Alternative performance measures

This media release contains references to operational indicators, such as reported vacancy rate, adjusted vacancy rate and WAULT, and alternative performance measures (APM) that are not defined or specified by IFRS, including EBITDA (incl. revaluation of properties), EBITDA (excl. revaluation of properties), net operating income, return on equity (incl. revaluation effects), return on equity (excl. revaluation effects), profit (excl. revaluation effects), net loan to value (LTV) ratio. These APM should be regarded as complementary information to and not as substitutes of the Groups consolidated financial results based on IFRS. These APM may not be comparable to similarly titled measures disclosed by other companies. For the definitions of the main operational indicators and APM used, including related abbreviations, refer to the section Alternative Performance Measures on page 50 of the Company's Half-Year Report 2023.

1. Rental income from real estate properties plus other income less direct expenses related to properties
2. One-off IPO costs amounted to TCHF 5874 in H1 2022
3. Profit after tax before other comprehensive income excluding revaluation of properties and derivatives and related deferred taxes as well as any related foreign exchange effects
4. Profit after tax before other comprehensive income divided by the average IFRS NAV. The average IFRS NAV corresponds to ½ of the sum of the IFRS NAV at the beginning and at the end of the reporting period
5. Profit after tax before other comprehensive income excluding revaluation of properties and derivatives and related deferred taxes as well as any related foreign exchange effects divided by the average IFRS NAV. The average IFRS NAV corresponds to ½ of the sum of the IFRS NAV at the beginning and at the end of the reporting period
6. Ratio of net debt to the market value of total real estate properties including the right-of-use of the land
7. Reported vacancy rate adjusted for absorption and strategic vacancy in certain properties in operation (i.e. Zänti Volketswil, Biopôle Serine)