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Peach Property Group AG reports increased earnings and income for 2013 according to final figures and issues positive outlook

03-13-2014 06:46 PM CET | Industry, Real Estate & Construction

Press release from: Peach Property Group AG

• Operating income rose by 25 percent to just under CHF 62 million in 2013
• Earnings before taxes grew CHF 1 million to approximately CHF 2.9 million
• Acquisition of Gretag AG raises target rental income by 63 percent
• New record sales volume with property worth CHF 86.3 million authenticated
• Market value of portfolio up 37 percent to CHF 541 million

Zurich, 13 March 2014 – Peach Property Group AG, a leading property investor and developer of high-quality residential real estate, grew earnings before taxes from CHF 1.9 million in 2012 to CHF 2.9 million in the 2013 financial year based on the audited annual consolidated financial statements. This was despite one-off extraordinary charges amounting to more than CHF 13 million. The Group is optimistic about the 2014 financial year.

A key event in the reporting period was the takeover of property company Gretag AG in September 2013. This move greatly expanded Peach Property Group's portfolio in Switzerland and lifted target rental income by around CHF 3.4 million, or 63 percent, an effect that will come to bear fully in financial year 2014. This further stabilised the Group’s earnings base. In addition, the acquisition has secured substantial potential for value appreciation for Peach Property Group, since Gretag AG owns extensive land that Peach Property Group intends to develop in the coming years.

Following the insolvency filings of the general contractors Peter Holthausen GmbH & Co. KG in Hamburg in May 2013 and BSS Beton-Schalungsbau GmbH in Berlin in July 2013, Peach Property Group took over the direct coordination of construction activities for the "yoo Berlin" and "Am Zirkus 1" projects in Berlin and the "H36" site in Hamburg. This resulted in one-off extraordinary charges of some CHF 19 million, CHF 13.9 million of which were charged to profit and loss in the 2013 financial year.

As planned, Peach Property Group was able to implement its efficiency programme in financial year 2013 and, despite integrating both Primogon AG and Gretag AG, reduce operating costs substantially year-on-year – by nearly 20 percent or CHF 2.7 million.

Based on an independent appraisal by Wüest & Partner, the market value of Peach Property Group's entire property portfolio was up a healthy 37 percent to CHF 541 million in the 2013 reporting period. The market value of the investment properties more than doubled year-on-year to CHF 138 million, mainly due to the acquisition of Gretag with a volume of CHF 58 million. The market value of the development properties rose by roughly 22 percent to CHF 403 million.

NAV at CHF 25.88 per share
The Net Asset Value (NAV) of Peach Property Group at market values reached CHF 126.4 million as at 31 December 2013 based on the portfolio appraisal by Wüest & Partner. This corresponds to CHF 25.88 per share.

Operating income rose by about 25 percent to just under CHF 62 million in the 2013 financial year. A contributing factor here was the increase in rental income from investment properties by around 30 percent to CHF 5.7 million. Effects from the initial valuation of properties following the takeover of Gretag, the reclassification of the “Mews” and “Gardens” properties in Wädenswil to investment properties, the initial application of IFRS 13, and the operational progress made on the properties in Dortmund, Munster and Erkrath resulted in an increase in value of CHF 25.2 million (2012: CHF 10.9 million). As expected, income from property development fell substantially to just under CHF 6 million, because no projects were completed in the reporting period.

Despite the aforementioned extraordinary charges, earnings before taxes were up 52 percent to CHF 2.9 million in financial year 2013. Net profit for the period after taxes grew to CHF 1.4 million from CHF 0.9 million in the prior year. This resulted in earnings per share of CHF 0.28 (previous year: CHF 0.19).

New sales record
Peach Property Group was particularly successful in selling its properties in 2013. Purchase agreements for apartments including authentication by a notary public totalled to CHF 86.3 million and marked a new record for the Group, exceeding the high level of the previous year (CHF 85 million).

The ongoing construction activity and takeover of Gretag AG caused total assets to increase sharply to CHF 510 million. With equity at market values remaining mostly steady at CHF 126.4 million, the equity ratio temporarily dropped to 23 percent as at 31 December 2013 (previous year: 34 percent). After the sale of development properties following their completion, the equity ratio will, however, again reach the long-term target of 40 percent with total assets reduced.

On 11 March 2014, Peach Property Group received a decision from the Federal Supreme Court of Switzerland that resulted in the construction permit for the "Aquatica" project on the peninsula in Wädenswil being revoked. However, this decision does not affect the annual financial statements for 2013. Advanced alternative planning taking into account all of the decisions handed down previously by the administrative court has already been discussed with the applicable commissions responsible for architectural conservation, historical preservation and the protection of cultural heritage, and the Group's initial analysis indicates no notable effects on its further course of business.

Outlook for 2014
Peach Property Group is optimistic about the current financial year. In the first six months of 2014, the Group will complete three major projects in Hamburg and Berlin. Additionally, the Group will further reinforce its current income with higher rental income. The primary factor in achieving this aim will be the planned repositioning of the Gretag site in Switzerland with apartment construction in Regensdorf and partial renovation of the existing buildings. Ultimately, the Group plans to relaunch the "yoo wollerau", "Dockside" and "Aquatica" projects on the Peninsula in Wädenswil in 2014 based on advanced alternative plans. Peach Property Group expects this to increase the value of the properties considerably.

Dr Thomas Wolfensberger, CEO of Peach Property Group AG, said: “In the 2013 financial year, the positive outweighed the negative in the end. These positive trends underpin the long-term success of our business model. In particular, we took important steps toward further consolidating our market position with the takeovers of the development service provider Primogon AG and the property company Gretag AG. We will clearly profit from these acquisitions as early as financial year 2014, enabling us to further expand our activities in Switzerland.”

Peach Property Group AG will hold a press conference on the 2013 results in Zurich today at 10:30 am.

The 2013 Annual Report is available on the company's website at
www.peachproperty.com/GB2013

About Peach Property Group
Peach Property Group AG one of the leading developers in the field of top-quality residential property in the German-speaking region of Europe. Its activities cover the entire prime property development value chain, from site evaluation to project planning, implementation and marketing. Peach Property Group focuses on city and holiday residences in exceptional locations and featuring highest-quality fittings for a discerning clientele. The company’s integrated corporate strategy encompasses not only the development of exclusive residential properties, but also the management of investment properties for the purpose of generating consistent annual revenues.

Peach Property Group AG is headquartered in Zurich and also has a branch office in Cologne. The company’s shares are listed on SIX Swiss Exchange (PEAN, ISIN CH0118530366).

Visit www.peachproperty.com for more information.

Contacts
Media, investors and analysts
Dr. Thomas Wolfensberger, Chief Executive Officer and
Dr. Marcel Kucher, Chief Financial Officer
+41 (0) 44 485 50 00 | investors@peachproperty.com

Media Germany:
edicto GmbH, Axel Mühlhaus
+49 (0) 69 90 55 05 52 | amuehlhaus@edicto.de

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