Investis saw its business activities perform positively as planned in the first half of 2017. Major developments in the first six months included the purchase of further residential properties in the Lake Geneva region, the acquisition of facility management company Hauswartprofis with effect from 1 January 2017, and the measures taken to enhance the profitability of the Real Estate Services segment. As well as bolstering income, the Group achieved a long-term improvement on the costs side thanks to further optimisation of its funding structure. These activities resulted in pleasing interim results.
Jump in profits thanks to revenue growth and lower financing costs
Investis recorded consolidated revenue of CHF 94 million for the first half of 2017 – a 18% increase on the previous year’s CHF 79 million. This result was a combination of organic growth in both segments – Properties and Real Estate Services – additional investment properties and the acquisition of Hauswartprofis, as well as the cessation of Construction Management activities as general contractor. Investis generated EBITDA before revaluations and income from disposals of CHF 17.6 million (PY: CHF 13.0 million). Valuation gains on the property portfolio stood at CHF 17.2 million (PY: CHF 16.7 million) and the operating profit (EBIT) increased by a healthy 16% to CHF 34.3 million (PY: CHF 29.7 million).
Investis made targeted use of attractive conditions on the capital market to optimise its funding structure. Following the CHF 100 million bond issue launched in October 2016, a second issue was placed in February 2017 in order to redeem mortgages; worth CHF 140 million, it has a coupon of 0.25% and a tenor of 2 years. The average interest rate for the first half of the year was 0.7% (PY: 2.0%).
Tax expense decreased to CHF 5.2 million despite the higher pre-tax profit. Investis benefits from slightly lower cantonal tax rates, which led to a partial reversal of deferred taxes in the amount of CHF 1.5 million.
Overall, Investis Group achieved a significant 40% increase in net profit to CHF 27.7 million (PY: CHF 19.7 million).
Founder and CEO Stéphane Bonvin commented on the 2017 interims as following: “Thanks to the successful implementation of its strategy, Investis continues to gain momentum and improve its operational power. The interim results also confirm that the measures we’ve taken to increase the profitability of both the Property Management and Facility Management sides of our Real Estate Services business are paying off. At the same time, we were able to increase our share of the real estate services market. Our portfolio of residential property in the attractive Lake Geneva region guarantees a sustainable income base that we have gradually built upon. Also we are leveraging digitalisation for further growth opportunities in the Real Estate Services segment.”
Rental income rises 16% while costs remain constant in the Properties segment
At the mid-year point, the property portfolio included 138 properties and 2,354 residential units. Over the course of the first six months of the year, the value of the portfolio went above the billion-franc mark for the first time in the company’s history, rising to CHF 1,036 million (compared with CHF 981 million at the end of 2016). Net revaluation gains came to CHF 17.2 million (PY: CHF 16.7 million). CHF 47 million was invested in the portfolio in the first half of 2017. This includes purchases of additional investment properties with a gross yield of over 5%. The vacancy rate of 3.3% remains low by industry comparison. Annualised full occupancy property rent as at 30 June 2017 was up to CHF 48.9 million.
Rental income rose 16% to CHF 23.3 million (PY: CHF 20.2 million). On a like-for-like basis, rental income went up 2.0%. Thanks to successful cost optimisations, property expenditure was held at practically the same level as a year earlier – CHF 7.1 million compared with the previous year’s CHF 7.0 million. The Properties segment achieved an 11% rise in operating profit (EBIT) to CHF 33.1 million (PY: CHF 29.8 million).
Higher profitability at Real Estate Services segment
Investis generated revenue of CHF 73 million (PY: CHF 69 million) through its real estate services in the first half of 2017, an increase of 6%. This rise was due to organic growth in both – Property- and Facility Management, the acquisition of Hauswartprofis, and the discontinuation of the Construction Management activity as a general contracting service. The latter reduced revenue by CHF 9 million. Property Management and Facility Management are currently contributing an even share of revenue and both have an excellent market position.
The acquisition of Hauswartprofis also led to a much higher headcount at the Real Estate Services segment and therefore to higher personnel expenses, with employee numbers rising to 1,416 from 1,112 a year ago.
Operating profit (EBIT) was more than doubled to CHF 3.7 million (PY: CHF 1.5 million), with an EBIT margin of 5% (PY: 2.1%). This rise can be attributed to the further development of high quality services and to the initiatives taken to increase profitability in the Real Estate Services segment. The total integration costs of CHF 1.0 million in the Facility Management business will mainly fall in the second half of the year.
Thanks to new mandates, rents under management by the Property Management business increased to CHF 1.64 billion (CHF 1.58 billion at end of 2016).
Financial stability thanks to a comfortable equity base
Total assets stood at CHF 1.2 billion, which represents an increase of 5%. Around 90% of this is tied up in the property portfolio. The loan-to-value (LTV) ratio is unchanged on the previous year at 38%. Deferred taxes came to CHF 152 million on the balance sheet date (CHF 146 million as at 31.12.2016). At CHF 540 million, the equity base remains comfortable. The equity ratio fell to 46.8% during the period under review as a consequence of charging the goodwill from the Hauswartprofis acquisition against retained earnings.
Investis will continue to pursue its growth strategy, and expects EBITDA for the full financial year 2017 (before revaluations and income from disposals) to be at least 10% higher than the prior year. Investis has purchased seven further properties for a total of CHF 53 million since 1 July 2017. These acquisitions will push annualised full occupancy property rent at the Properties segment up to CHF 51.7 million. The Group plans to further decrease its mortgage debt in the course of 2017.
Investis confirms its medium-term targets for 2019:
- Properties: annualised rental income > CHF 50 million
- Real Estate Services: high-single-digit EBIT margin
- Financing: through unsecured senior debt
The 2017 Half-Year Report is available at https://reports.investisgroup.com/17/hyrand on our website at www.investisgroup.com/en under Investors / Reporting.
There will be a conference call on the half-year results for media and analysts (in English) today at 10 a.m. Following the presentation of the half-year results, Stéphane Bonvin (CEO) and René Hasler (CFO) will be available to answer questions.
The dial-in numbers are as follows:
+41 (0)58 310 50 00 (Europe)
+44 (0)203 059 58 62 (UK)
+1 (1)631 570 5613 (USA)
Please dial in 5 minutes prior to the start of the conference call. The accompanying presentation is also available on our website from 7 a.m. under Investors / Reporting (https://www.investisgroup.com/nc/en/investors/).
21 March 2018
Publication of 2017 results
20 April 2018
2018 Annual General Meeting