DIC Asset AG presented its interim report for the first half of the 2008 financial year. DIC Asset AG was once again successful in generating a stable return, in a market environment that remains challenging. Rental income was the main contributor to this result, with another strong (70 per cent) increase, to € 67.7 million.

EBITDA (earnings before interest, income taxes, depreciation and amortisation) rose by 26 per cent, to € 58.6 million (H1 2007: € 46.4 million). Cash flow from operations increased by € 27.7 million to € 62.4 million (H1 2007: € 34.7 million). Cash flow from operating activities (after interest and taxes paid) rose from € 20.3 million to € 23.3 million, up 15 per cent.

FFO (funds from operations, comprising earnings before depreciation taxes and gains on disposals and project development) was up strongly year-on-year, up 38 per cent to € 28.4 million (H1 2007: € 20.6 million). FFO per share increased by 26 per cent to € 0.91 (H1 2007: € 0.72). Operating profit before depreciation and amortisation (EBDA) was down 8 per cent, to € 25.9 million, equivalent to operating profit per share of € 0.83 (H1 2007: € 0.99). Reflecting the development of consolidated net income, earnings per share declined to € 0.37 (H1 2007: € 0.66).

The profit for the period remained below the figure reported for the first half of 2007. As a consequence of the more challenging financing environment and the slower transactions, DIC has adopted a strategy of being more selective with the sales activities. The company's focus on a limited number of selected transactions offering an attractive return was clearly reflected in the proceeds from sales, which were down to € 2.0 million in the first half of 2008 (H1 2007: € 84.6 million). In conjunction with higher financing costs, this resulted in a profit for the period of € 11.8 million (Q1 2007: € 19.2 million).

The lower level of sales also led to a decrease in total revenues for the first six months of 2008, to € 80.6 million (H1 2007: € 132.2 million). In contrast, the strong increase in rental income, to € 67.7 million (H1 2007: € 39.8 million), reflected the expansion in the real estate portfolio as well as successful letting activities. Rentals for a total of 118,300 square metres of floor space were contracted during the first six months of 2008 – up 72 per cent on the first half of 2007, and equivalent to € 11.0 million in annual rental income.

Reflecting the benefits of an efficient business structure and the reduced sales activities, total expenses were down by more than 50 per cent, to € 36.1 million (H1 2007: € 94.8 million). At the same time, the 49 per cent increase in staff and administrative expenses, to around € 7.7 million, was clearly lower than growth in rental income.

DIC Asset AG’s total assets slightly increased, to € 2.2 billion as at 30 June 2008.
Long-term assets rose from € 1.9 billion to € 2.1 billion. DIC Asset AG’s financing is long term secured. Long-term fixed interest rate agreements are in place for close to 90 per cent of financial debt of € 1.6 billion, with around 60 per cent having a maturity of over five years. Amounts due in the next 12 months only amount to approx. € 37.5 million (2 per cent), with approx. € 18.3 million (1 per cent) maturing in the next 1-2 years, approx. € 23.2 million (2 per cent) in the next 2-3 years, and approx. € 136.3 million (9 per cent) in the next 3-4 years.

DIC Asset AG will continue to focus on the asset and property management activities during the second half of 2008, with the objective of a sustained increase in rental income by the year-end. DIC will continue to pursue attractive acquisitions opportunities on a selective basis, to further grow the portfolio, e.g. out of distressed situations, which are expected for the next 18 month. While DIC Asset AG remains confident on the contribution to earnings from recurring rental income and the possibility of selected acquisitions, it is adopting a more conservative view towards the pace of realising gains on sale, also as result of deferred disposals. Taking into account the sales realised to date, and the consciously selective disposal strategy for the rest of the year 2008 adopted by DIC, the company currently expects a net profit at an attractive level of between € 25 million and € 27 million. (An earlier forecast made at the beginning of 2008 had indicated a range of € 39-41 million.) At € 53 million to € 55 million, full-year operating profit before depreciation and amortisation (EBDA) will be in line with the € 55,9 million figure reported in 2007.

Ulrich Höller (Pic. l.), Chairman of the Management Board of DIC Asset AG, said that the company had performed well in a difficult environment, posting respectable results: "Thanks to the size and high quality of our real estate portfolio, we have been able to significantly increase aggregate rental income, thus generating stable additional revenue. The sustainable operating profit underlines the stable business model. Even though we need to adjust our earnings forecast for the sales activities, to bring it into line with the ongoing problems on the investment market, we have maintained our forecast for the full year at a considerable good level."

source : DIC Asset AG