1 NAV CHF as at CHF as at before deferred taxes securities no SWX symbol SPSN No. 12, March 2005, with figures for the year SWISS PRIME NEWS Annual report as at page 6 7 Maag Tower: quantum leap in Zurich West page 3 Acquisition of Maag Holding AG page 4 5 Purchases and sales page 8 Swiss Prime Site AG in the 2004 financial year To new heights Swiss Prime Site AG again continued its successful development in the 2004 financial year. The real estate portfolio rose by 46.56% to CHF 3.3 billion. The net rental income grew by 17.21% to CHF million, despite the continuous drop in demand for office space. The net profit (after revaluation effects) increased by 4.89% to CHF 49.3 million. Without revaluation effects, the net profit amounted to CHF 60.7 million, and therefore was up on the previous year by 27.79%. At the General Assembly of Shareholders on 27 April 2005, the Board of Directors will propose a distribution in the form of a reduction of nominal value in the amount of CHF (previous year CHF 12.00) per share. This represents a cash yield of 4.40% (at annual closing price). The Net Asset Value (NAV before deferred taxes) rose by 2.83% to CHF in the year under review. In December, Swiss Prime Site took a quantum leap with the announcement of the acquisition of Maag Holding AG. of Switzerland is just slightly under the 10% mark. Whole office buildings on second- and third-class sites are unoccupied. Their lessors can only hope for a soon and large-scale Stefan Mächler, Chairman of the Board of Directors of Swiss Prime Site AG. The office premises market, in which Swiss Prime Site is mainly active, is very much affected by a surplus, as it has been for the last two years. The proportion of vacancies in the whole economic upturn. Even in this case, they would probably have to wait at least two years before finding solvent tenants who are willing to pay for their properties. Swiss Prime Site is far from being in such a situation. As predicted, the income failure rate as at the end of December 2004 amounted to 5.00%. The adverse market environment has encouraged Swiss Prime Site to continue with its picking strategy. The properties purchased in 2004 are, without exception, on firstclass urban sites in the cities of Baden, Geneva, St. Gallen and Zurich. Swiss Prime Site was able to purchase a second property on Zurich s Bahnhofstrasse with house no. 106 (main tenant Merkur Confiserie AG). Prime Site of the Maag portfolio: Talacker 21 23, Zurich.
2 Continuously strong earning performance The uncompromising focus on firstclass sites, structurally-sound buildings and userfriendly premises has enabled the net rent income to rise by 17.21% to CHF million. The company has naturally maintained its traditional streamlined cost structure and therefore created conditions for a further increase of the operating profit (EBIT) of 13.79% to CHF million. Without revaluation effects, the EBIT rose by 21.49% to CHF 99.5 million, giving an EBIT margin of 76.07% (previous year 74.16%). At CHF 49.3 million, net profit was 4.89% up on last year. Average borrowing costs fell to 3.09% in the year under review (end of 2003: 3.35%) with an average residual term of 3.0 as at the end of 2004 (2.8 years). Taking account of the Maag Group s credits, these values as at were 3.56% for the interest rate and 2.95 years for the average residual term. Swiss Prime Site rearranged the Maag Group s unfavourable credits in February, leading to a substantial improvement of borrowed capital costs and of the maturity structure. Acquisition of the Maag Group has been initiated The most important event in the year under review and, in fact, in Swiss Prime Site s almost six-year history, was undoubtedly the acquisition of Maag Holding AG, which began in December. Since then, it has progressed according to plan. Together with the shares tendered as part of the public tender offer, Swiss Prime Site holds 85.94% of all Maag Holding AG s shares at the end of the additional acceptance period of the public tender offer ( ). The complete acquisition of the Maag Group should be finalised with a merger resolution at the next General Assemblies of Shareholders of the two companies. With the transfer of the 80 Maag properties and the Maag Areal to the Swiss Prime Site portfolio, its real estate assets increased by more than CHF 1 billion to around CHF 3.3 billion, making the company the secondlargest real estate investment company in Switzerland. This position will be maintained even after the middleterm divestments of properties that do not correspond with Swiss Prime Site s picking strategy. Coveted convertible bond In January 2005, Swiss Prime Site issued a convertible bond in the amount of CHF 170 million (including overallotment option) with a maturity of five years and a coupon of 2%. The attractiveness of this bond for investors was demonstrated with tenfold oversubscription. In this way, Swiss Prime Site has ensured an extremely favourable financing. The revenue will be used, among others, for the refinancing of debts as well as for the release of credit capacity. Valuation The result of the revaluation of the real estate portfolio, carried out by Wüest & Partner, once again indicates the quality of the individual properties. In line with last year, a small revaluation gain was made. It amounts to CHF 1.2 million, which can be considered as an excellent value in this market environment, and represents the balance of the following changes: 30 properties recorded thanks to new leasing contracts, higher rent returns and value-enhancing investments a revaluation gain of CHF 13.6 million, the value of 37 properties had to be lowered by CHF 12.4 million in order to adjust it to the market situation. Projects for the future Swiss Prime Site also enhances its income potential by dynamically engaging in projects. Work at Sihlcity, the urban centre in the south of Zurich, is progressing according to plan. At the Opus construction in Zug, which consists of a total of eight business premises, Swiss Prime Site gave the go-ahead in the second half of 2004 for the construction of the remaining three buildings. Two of the three buildings are 100% leased and will be handed over to the users in autumn The final building will be completed in spring In future, Swiss Prime Site will also be responsible for another major project with noteworthy potential. This is the Maag Tower in Zurich West. The commercial building, designed by architects Gigon/Guyer, will be constructed on the Maag Areal and, at its 126 metres, will take Swiss building construction to new heights (see article on page 3). Front runner for distribution yield Overall, the share price developed above average in the year under review. With a total return of 29.14%, the reference index SWX IG Real Estate TR ( %) was clearly exceeded and the SPI Swiss Performance Index (+ 6.89%) was obviously outperformed. The distribution will rise by CHF 0.50 as against the previous year to CHF (previous year CHF 12.00) per share. In addition, the payout is made in the form of a reduction of nominal value, which has attractive tax benefits for private investors. This results in a cash yield of 4.40% (at the closing price on ). Confidence in the future Although the tense situation on the business premises market will continue in the current year, Swiss Prime Site remains optimistic. The proven strategy of real estate picking and the successful business model, based on intensive co-operation with outsourcing partners, will be continued even after the integration of the Maag Group. Many thanks to Stefan Mächler Thomas A. Wetzel, Vice-Chairman of the Board of Directors of Swiss Prime Site AG. Due to a change of his professional field, Stefan Mächler, Chairman of the Board of Directors of Swiss Prime Site AG, will not be standing for re-election on the General Assembly of Shareholders to be held on 27 April Swiss Prime Site is indebted to Stefan Mächler for his active and conscientious chairmanship, under which Swiss Prime Site has developed into a leading listed real estate investment company with a market capitalisation of CHF 1.2 billion and a real estate portfolio in the value of CHF 3.3 billion. When Swiss Prime Site AG went public on 5 April 2000, its portfolio had 21 properties with a market value of CHF 0.7 billion. Our plan then was to reach CHF 2 billion worth of assets by This value was already achieved in the 2002 financial year. Already in the financial year 2004, Swiss Prime Site, together with the real estate of the acquired Maag Group, has broken through the market value of CHF 3 billion. This impressive growth has not, in any way, been at the cost of profits. On the contrary, Swiss Prime Site AG s performance on the capital market is well over average. In just 2004, the shares rose by 29.14% (total return), clearly outperforming the SMI (+ 5.4%). Swiss Prime Site was also extremely successful on the capital market. The most recent example of this is the issue of a convertible bond of CHF 170 million, for which there was tenfold oversubscription. Credit for this goes to Stefan Mächler. Together with his colleagues in the Board of Directors and in the Management, he has built up Swiss Prime Site AG into a leading real estate investment company in just a few years. His profound knowledge of the capital market, his familiarity with real estate market mechanisms, his international experience in marketing and sales, as well as his healthy ambition have had a lasting effect on the development of our company. The Board of Directors and the Management of Swiss Prime Site AG are very sorry to hear of Stefan Mächler s resignation and would like to thank him for his constant commitment, his proverbial colleagueship and his exemplary loyalty. We sincerely wish Stefan Mächler all the best for his future professional endeavours. Thomas A. Wetzel on behalf of the Board of Directors and the Management of Swiss Prime Site AG 2
3 Maag Tower Quantum leap in Zurich West With the acquisition of Maag Holding AG, both the Maag Areal and the responsibility for its development are transferred into the hands of Swiss Prime Site. One highlight, in the truest sense of the word, is the Maag Tower, which, with its planned 126 metres, will distinctly tower above the Basel Messeturm, also developed by Swiss Prime Site. The Maag Tower is "a symbol of the quantum leap in Zurich West", stated Kathrin Martelli in January 2005 at the private viewing of the exhibition on the Maag Areal. The city councillor and chairwoman of the building construction department is delighted that the Zurich West development plan, which was started in 1996, is slowly but surely taking shape. The shape, which is the focus of the private exhibition, is 126 metres high, has an irregular octagonal outline, and is decorated in a greenish, slightly watery, colour. It is the winning project of a design competition that seven renowned architectural firms were invited to enter, and bears the signature of the Zurich architects Annette Gigon and Mike Guyer. A jury of twelve, led by Prof. Thomas Sievert, Bonn, selected the Gigon/ Guyer project. Although the entries of the other six participants were also truly outstanding examples of highrise architecture and revealed striking originality, the Gigon/Guyer masterpiece is based on a concept that best meets the extremely complex demands. Annette Gigon was born in Herisau in1959. She received her degree from the ETH Zurich in Before she became self-employed in 1987, she worked for the architectural practices Marbach & Rüegg in Zurich and Herzog & De Meuron in Basel. Since 1989, she has run an architectural firm with Mike Guyer. Annette Gigon is a visiting lecturer at the EPFL in Lausanne and lives in Zurich. Mike Guyer was born in Columbus, Ohio, in He received his degree from the ETH Zurich in 1984 and was later employed by the OMA architectural office of Rem Koolhaas in Rotterdam. From 1987 to 1988 he was an assistant to Hans Kollhoff at the ETH Zurich. In 1987, Mike Guyer established his own architectural firm. Since 1989 he has run an architectural firm with Annette Gigon. In 2002, Mike Guyer was a visiting lecturer at the EPFL in Lausanne. Mike Guyer is married with two children and lives in Zurich. Height leaves free space on the ground "From the very beginning, we were convinced that we have to create new flexible options for free space and public facilities at the Maag Areal by compactly building upwards," explaines Samuel Gartmann, Chairman of the Board of Directors of Maag Holding AG, flashing back to the past. The Maag Tower is to be the widely visible symbol of the beginning of a new dimension in town planning in Zurich West. Legal regulations provide special building specifications for the Maag Areal Plus, which consists of an area of 110,000 m 2, integrated into the planning consortium of Maag, Coop, Welti-Furrer and the City of Zurich as a Public Private Partnership. The City of Zurich local council approved the special building specifications on 15 December Swiss Prime Site s acquisition of Maag Holding AG also improves the financial conditions for carrying out the project. As Samuel Gartmann states: "The basis for the planned development of the Maag Areal has been strengthened by Swiss Prime Site." KEY DATA Maag Tower project by Gigon/Guyer Location Maag Areal Plus, Zurich West Access directly on Hardbrücke S-Bahn station Construction 2006 to 2009 (estimation) Site area 8,670 m 2 SIA volume 248,000 m 3 Storeys 36 Rentable area 43,700 m 2 Total investment expenditure incl. land (estimation) approx. CHF 260 million to CHF 275 million 3
4 Acquisition of Maag Holding AG Renaissance of Maag real estate Swiss Prime Site s acquisition of Maag Holding AG, announced in December 2004, results in a real estate investment company with a property portfolio worth CHF 3.3 billion. Nevertheless, the decisive factor for the acquisition was not an ambition for size, but it was due to the quality, compatibility and the potential of Maag real estate. The generation of lasting and risk-optimised returns for shareholders remains our top priority. The integration of Maag real estate Picking character maintained (including projects and the Maag Although the portfolio that Swiss Areal) triggers a quantum leap for Prime Site acquires from the Maag Swiss Prime Site AG. The number of Group is not built up according to the properties jumps from 70 to 151, the real estate picking strategy, most of rentable area increases by 57.35% the properties are compatible with to 806,977 m 2 and the declared rental revenue of both groups of com- and maintain the proven picking char- Swiss Prime Site s investment criteria panies represent CHF million acter. As the accompanying charts ( %). The portfolio is now illustrate, the composition of the portfolio, with regard to both regions worth CHF 3.3 billion. Because, as announced, Swiss Prime Site plans to and use types, is only marginally sell properties in the value of between changed. CHF 250 million and CHF 300 million in the medium term, the growth ratio The Maag Group currently has 80 will drop slightly. After the adjustment, properties and the industrial area Swiss Prime Site will have a real estate Maag Areal Plus in Zurich. In terms of portfolio of around CHF 3 billion. value, around 57% of the properties are in the Zurich region and around 16% are in Northwestern Switzerland. With respect to use, offices and retail are predominant with a share of around 57%. Some of the most important Maag Group properties are: the business house at Flurstrasse 55 in Zurich, the business premises at Talacker 21/23 and Stadelhoferstrasse 22 in the centre of Zurich, Freie Strasse 68 in Basel and Schwarztorstrasse 48 in Bern. Those Maag properties that do not meet the demanding investment criteria of Swiss Prime Site will be sold in the medium term. The value of the properties to be divested is in the order of CHF 250 million to CHF 300 million. First-class tenants The merger of the two portfolios results in some changes to the ranking of our largest tenants. Measured by rental income, UBS takes the lead with 19.89%, followed by Swisscom with 10.63%, Credit Suisse Group Samuel Gartmann, Chairman of the Board of Directors of Maag Holding AG "We have found the ideal partner" Samuel Gartmann "There is barely another real estate investment company with a history of success like that of Swiss Prime Site or a structure that allows the integration in such a simple and efficient manner." Mr Gartmann, could Maag have had a future as an independent company? I doubt that very much, as our group was in a difficult position. The nonexistent strategic commitment of the two foreign major shareholders, the low equity ratio and the extremely expensive outside financing are just some of the reasons I could mention. What caused the Maag Board of Directors to favour an acquisition by Swiss Prime Site AG? For a long time, I searched for a solution that would ensure that our commitment to the further development of the Maag Group had been worthwhile. In Swiss Prime Site we have found the ideal partner, who meets this principle requirement. Swiss Prime Site is experienced, financially strong, and successful. It was also in the interests of the Maag Group and its stakeholders to find a Swiss solution. A Swiss solution would also have been possible with other companies. That is true. However, there is barely another real estate investment company with a comparable history of success or a structure that allows the integration in such a simple and efficient manner. After all, the Maag Group owns 80 properties and the Maag Areal, one of the largest development areas in Switzerland. Those involved in the integration of such a portfolio need profound knowledge and many years experience of real estate. Furthermore, we would only consider a financially strong partner. What do you think about the price offered by Swiss Prime Site of CHF per share? The price is reasonable and fair, as it roughly corresponds to the NAV after valuation adjustments and provisions decided by the Maag Board of Directors just in December. What is more, we requested a fairness opinion from Bank Vontobel AG, which considered Swiss Prime Site s offer to be financially reasonable in all relevant aspects. Is the Swiss Prime Site business model, which practically runs without any direct employees, an advantage or a disadvantage for the acquisition? I have observed that the integration of acquired companies is often hindered by different cultures, which makes me think that the streamlined structure of Swiss Prime Site is a big plus. It promotes a culture that brings issues to the fore. The issue here is the further development of real estate with the aim of long-term value enhancement. What will happen to employees of the Maag Group? From the very beginning, Swiss Prime Site has made it clear that they are interested in our employees knowledge and expertise. However, Swiss Prime Site does not have any direct employees, but obtains their services from specialised external partners. These are the predestined employers of Maag employees. The contact talks that have been held to date have had the aim of jointly finding individual solutions as quickly as possible. It goes without saying that Swiss Prime Site will respect all current employment contracts on all accounts. Mr Gartmann, which duties will you continue to carry out for the Maag Group? I am at the disposal of both Maag and Swiss Prime Site during the integration phase. We have achieved a great deal and we still have various plans. I would like to hand this over to Swiss Prime Site in an orderly fashion. 4
5 with 10.61%, Coop with 6.09% and Charles Vögele Mode AG with 2.34%. Therefore, the creditworthiness of the lessees remains firstclass. The maturity structure also continues to be attractive after the integration of Maag real estate. Leases that run for six years or more amount to 42.57% (previously 49.30%) of the total rental income. Furthermore, the number of leases with a short residual term of less than one year only amounts to 12.40% (previously 13.78%) in the merged portfolio. Portfolio before the integration of Maag (CHF 2.2 billion) according to regions Basis: market value as at Bern 13% Geneva 12% Central Switzerland 10% Northwestern Switzerland 17% Eastern Switzerland 6% Southern Switzerland 0% Western Switzerland 1% Zurich 41% PORTFOLIO ACCORDING TO REGIONS Portfolio after the integration of Maag (CHF 3.3 billion) according to regions Basis: market value as at Bern 11% Geneva 9% Central Switzerland 8% Northwestern Switzerland 17% Eastern Switzerland 7% Southern Switzerland 1% Western Switzerland 2% Zurich 45% PORTFOLIO ACCORDING TO USE TYPES New in the Swiss Prime Site portfolio: the Maag property at Flurstrasse 55 in Zurich. Portfolio before the integration of Maag according to use types Basis: net rental income as at Office 59% Cinema/restaurant 5% Storage 5% Parking 4% Other 2% Retail 23% Residential 2% Portfolio after the integration of Maag according to use types Basis: net rental income as at Office 56% Cinema/restaurant 5% Storage 7% Parking 5% Other 5% Retail 20% Residential 2% Markus Graf, CEO of Swiss Prime Site AG "Completely new vistas will be opened up" Mr Graf, why has Swiss Prime Site What are the advantages of a tional to the income from rent. We will known Maag Areal, which has not taken the initiative to acquire Maag acquisition for the share- also activate potential for an increase yet been brought to the market. Maag Holding AG? holders of Swiss Prime Site? in value, which the Maag Group However, it is true that properties to For quite some time now, the Board From the acquisition of the Maag would not have been able to do alone. the value of approximately CHF 250 of Directors of Maag Holding AG has Group, Swiss Prime Site gains an in- Furthermore, thanks to our financial million to CHF 300 million do not been assessing different options for teresting portfolio with development capacity, the costs of financing will be correspond with the Swiss Prime Site the future. Last year, it finally decided potential at a fair price. As you are lower. By working with Swiss Prime strategy. These properties will be sold that the best solution was to sell. As a aware, demand for real estate has Site, completely new vistas will be in the medium term. Therefore, Swiss financially-sound real estate invest- greatly increased in recent times. Cor- opened up for Maag real estate. Prime Site will continue to live up to ment company that pursues ambi- respondingly, the range of real estate its reputation as real estate picker. tious growth, we were contacted in available at reasonable prices has re- Where is the synergy in a Maag- this regard. We acted quickly and duced. In this light, we believed and Swiss Prime Site merger? Econo- Which properties do you intend to made a binding offer, which, as we all continue to believe that Maag is an mies of scale become completely divest and when? know, was accepted. opportunity that we simply had to irrelevant from a certain minimum They are primarily smaller or non- take for both market considerations size. strategic properties, which we will sell and strategic reasons. Thanks to its streamlined structure, in the next few years. Swiss Prime Site has an extremely at- How was the price of CHF tractive cost ratio. This is also the re- Will Swiss Prime Site adhere to the per Maag share calculated? sult of our constantly high EBIT mar- Gigon/Guyer Maag Tower project? The public tender offer price of CHF gin (76.07% as at 31 December We believe that the Maag Tower is an , which the major sharehol- 2004). We aim to apply this advan- interesting project. As you are aware, ders have also received, is 15% above tageous cost structure to the Maag Swiss Prime Site AG has gained a the average price paid during the last Group. Furthermore, our expertise great deal of useful experience as the 30 trading days before the planned and our comprehensive market developer of the Basel Messeturm acquisition was announced on 6 De- knowledge will have a favourable ef- and of other large projects. This cember This premium reflects fect on the development of the Maag knowledge can also be used for the the advantages resulting from the portfolio. Maag Tower. Maag Group s integration in Swiss Markus Graf "We will activate potential for an Prime Site. Swiss Prime Site has always posi- increase in value, which the Maag Group would tioned itself as a real estate picker. not have been able to do alone." Which advantages do you mean? How does that fit in with the We will be able to make considerable planned purchase of a portfolio cost savings, even in the short term. based on other criteria? The cost of managing Maag real The Maag Group has excellent pro- estate will be greatly underpropor- perties as well as the attractive, widely- 5
6 in CHF 1, Rental income from investment properties 128, ,761 Other operating income 2, Total operating income 130, ,391 Direct operating expenses 17,674 17,575 Change in fair market value of investment properties (increase), net (1,200) (6,604) Personnel costs Other operating expenses 10,642 10,613 Depreciation on other tangible fixed assets 2 Goodwill value adjustment (impairment) 2,068 Total operating expenses 30,083 21,922 Operating profit (EBIT) 100,663 88,469 Financial expenses 38,866 33,944 Financial income Profit before income taxes 62,124 54,540 Current income taxes Deferred income taxes 12,532 7,098 Profit for the period under review 49,345 47,032 Earnings per share for the period under review, CHF Consolidated balance sheet in CHF 1, Assets Current assets Cash and other liquid assets 25,458 8,000 Securities 7,338 6,585 Receivables from deliveries and services 14,223 13,692 Other receivables 1,898 5,156 Accrued income and prepaid expenses 17,144 7,774 Total current assets 66,061 41,207 Fixed assets Long-term financial assets 1,517 Investments in associates 2,269 Other tangible fixed assets Investment properties 3,272,486 2,232,940 Total fixed assets 3,276,272 2,232,940 Total assets 3,342,333 2,274,147 Liabilities Short-term liabilities Accounts payable 22, Other short-term liabilities 1,843 1,318 Advance payments 16,692 18,721 Accrued expenses and deferred income 70,840 15,466 Total short-term liabilities 112,125 35,980 Long-term liabilities Long-term financial liabilities 1,946,210 1,143,515 Deferred tax liabilities 80,922 50,584 Provisions 1, Total long-term liabilities 2,028,702 1,194,869 Total liabilities 2,140,827 1,230,849 Minority interests 153,463 Shareholders equity Share capital 683, ,032 Capital reserves 146, ,349 Retained earnings 218, ,917 Total shareholders equity 1,048,043 1,043,298 Total liabilities and shareholders equity 3,342,333 2,274,147 Extract of annual reportconsolidated income statement Consolidated cash flow statement in CHF 1, Profit for the period under review 49,345 47,032 Adjustments for: Change in fair market value of investment properties (increase), net (1,200) (6,604) Transaction profit from the acquisition of the Frey Group (192) Transaction profit from the disposal of investment properties (2) Depreciation on other tangible fixed assets 2 Goodwill value adjustment (impairment) 2,068 Financial expenses 38,756 33,944 Financial income (18) (15) Income taxes Changes in working capital: Decrease in securities portfolio 6,486 Decrease/increase in receivables from deliveries and services 176 (3,211) Decrease in other receivables 3,578 5,295 Increase/decrease in accrued income and prepaid expenses (7,426) 2,792 Increase/decrease in accounts payable 12,898 (61) Decrease in other short-term liabilities and advance payments (6,012) (1,464) Increase/decrease in accrued expenses and deferred income 1,106 (5,744) Increase in deferred tax liabilities 12,532 7,058 Interest payments made (38,871) (33,797) Interest payments received Payments of income taxes (817) (266) Net cash inflow from operational activity 72,866 45,192 Investments in investment properties (122,159) (68,777) Acquisition of the Frey Group, less liquid assets acquired (71,127) Acquisition of the Maag Group, less liquid assets acquired (22,675) Desinvestments of investment properties 6,496 14,672 Desinvestments of long-term financial assets 515 Net cash outflow from investment activity (138,338) (124,718) Increase in long-term financial liabilities, net 127, ,000 Reduction of nominal value (48,320) (40,267) Sale/purchase of own shares 3,720 (634) Net cash inflow from financing activity 82,930 86,099 Net increase in cash and other liquid assets 17,458 6,573 Cash and other liquid assets at the beginning of the period under review 8,000 1,427 Cash and other liquid assets at the end of the period under review 25,458 8,000 Portfolio by regions Based on the market value as at (incl. Maag Group) Zurich 45% Western Switzerland 2% Eastern Switzerland 7% Portfolio by use types Central Switzerland 8% Northwestern Switzerland 17% Bern 11% Southern Switzerland 1% Geneva 9% Based on net rental income as at (incl. Maag Group) Retail 20% Cinemas/ restaurants 5 % Offices 56% Storage 7% Residential 2% Other 5% Parking 5% 6
7 Market matrix: market assessment of the individual properties (Source: Wüest & Partner) Consolidated statement of changes in shareholders equity Share Capital reserves Retained Total sharein CHF 1,000 capital (premium) earnings holders equity As at , , ,885 1,037,167 bad good PROPERTY QUALITY Question mark Top property III II I Average VI V IV IX VIII VII Problem property Quality defects LOCATION QUALITY bad good SPS properties with a market value of > CHF 20 million SPS properties with a market value of < CHF 20 million Maag properties with a market value of > CHF 20 million Maag properties with a market value of < CHF 20 million Profit distributions Profit for the period 47,032 47,032 Reduction of nominal value as at (40,267) (40,267) Purchase of own shares, net (512) (122) (634) As at , , ,917 1,043,298 Profit distributions Profit for the period 49,345 49,345 Reduction of nominal value as at (48,320) (48,320) Sale of own shares, net 2, ,720 As at , , ,262 1,048,043 Notes to the consolidated annual report Earnings per share The profit applied to determine the earnings per share or diluted earnings per share is the profit for the period reported by Swiss Prime Site Group. The average number of shares amounts to: Financial year Financial year Shares issued (360 days) 4,026,667 4,026,667 Average stock of own shares (360 days) 9,717 12,117 Average weighted number of shares (360 days) 4,016,950 4,014,550 The average weighted earnings per share amount to: Portfolio by end of rental contracts Basis: net rental income (incl. Maag Group) end of contract in number of years Top tenants As at (incl. Maag Group), the five largest tenant groups generate 49.56% (previous year 49.03%) of future rent revenue. The individual tenants have a good credit rating. By name, the groups are as follows: in % UBS AG Swisscom Credit Suisse Group Coop 6.09 Charles Vögele Mode AG % 8.90% 7.22% 7.40% 8.14% 7.74% 0 % 2 % 4 % 6 % 8 % 10 % 12 % 14 % as a percentage of net rental income 10.48% 11.77% 11.79% 10.88% 12.40% 16 % 18 % Earnings per share for the reporting period, CHF There were no diluting effects in the reporting period from No diluted earnings per share have therefore been reported Shareholders equity The General Assembly of Shareholders on adopted a resolution on a reduction of nominal value in the amount of CHF million resulting in CHF million (CHF per share). The reduction of nominal value was effected as of After repayment, nominal value per share amounts to CHF Selected company data As at As at Change Data in in % Group data EBITDA CHF m EBIT CHF m Profit (+) / loss ( ) CHF m Shareholders equity CHF m 1, , Equity ratio % (31.65) Borrowed capital CHF m 2, , Borrowed capital ratio % ROE (weighted) % ROIC (weighted) % (0.80) Data without revaluation effects* Operating profit (EBIT) CHF m EBIT margin % Profit for the period under review CHF m Earnings per share (weighted) CHF ROE (weighted) % * Revaluations (IAS 40) and deferred taxes are not taken into account. Details of property portfolio as at Market value Net rental income Net yield Rent default ratio Lettable space in CHF m in CHF m in % in % in m Zurich 1, , ,514 Central Switzerland ,334 42,933 Eastern Switzerland ,221 29,890 Northwestern Switzerland ,476 91,289 Bern ,836 77,157 Geneva ,355 49,464 Western Switzerland ,608 8,863 Southern Switzerland ,519 Subtotal 3, , , ,110 Land/sites/projects n/a n/a ,345 44,732 Total 3, , n/a n/a , ,842 7
8 KEY DATA Address Croix-d Or 7, Geneva Built 1974/1985 (1994) Site area 591 m 2 Market value CHF 38.4 million Net target rental income per annum CHF 2.1 million Total floor space 3,546 m 2 Main tenant Parfumerie Douglas SA KEY DATA Address Bahnhofstr. 106, Zurich Built 1958 (1994) Site area 200 m 2 Market value CHF 21.9 million Net target rental income per annum CHF 1.06 million Total floor space 1,208 m 2 Main tenant Merkur Confiserie AG Purchases and sales Prime Time In the second half of 2004, Swiss Prime Site purchased three properties with a market value of approximately CHF 62 million. The outstanding features of the properties, located in Geneva, Zurich and Rapperswil, are their excellent business locations and the creditworthiness of their tenants. Somewhat in the shadow of the A small but beautiful stroke of luck acquisition of the Maag Group, which On what is probably the most internationally famous street in Switzerland, was announced in December 2004, Swiss Prime Site further improved its the Bahnhofstrasse in Zurich, the business house at number 106 is found, lo- portfolio with three gems. We were able to purchase a truly top property cated directly beside the main train station. If ever the expression "small but in Geneva s Center Business District, on Rue de la Croix-d Or 7. The address beautiful" was applicable, it is here. is found on one of the most frequented business streets, on which 1958 and equipped with a new main The building, which was constructed in the highest rents in the retail and façade in 1994, occupies a site area of office sector are obtained. The opportunities to acquire attractive returns in of CHF 21.9 million and an annual tar- just 200 m 2 but boasts a market value such locations are extremely rare, get rental income of more than CHF particularly when they have an ideal 1 million. Further changes to the portfolio have been made with the pur- revenue mix in terms of risk, with 60% retail, 20% offices and 20% chase of a small, centrally located residential. The building, which was property in Rapperswil and the sale of constructed in 1974/1985 and partially renovated in 1994, is nestled in siten. As was the case in sales made two houses in Sursee and Oberbuch- the Rue du Marché and the Rue de during the first half of the year, the sales Rive and has an annual net target prices obtained for the two houses rental income of over CHF 2 million. were slightly over the market value. Share details Share price ( ) As at CHF High CHF Low CHF Market capitalisation Per CHF 1,143.6 million NAV (before deferred taxes) As at CHF As at CHF Change 2.83% NAV (after deferred taxes) As at CHF As at CHF Change 0.08% Earnings per share (weighted) As at CHF As at CHF Share statistics Total registered shares 4,026,667 Securities number ISIN number CH SWX symbol SPSN First day of trading Contacts Company Swiss Prime Site AG Froburgstrasse 15, 4601 Olten Tel Fax Chairman of the Board of Directors Stefan Mächler CEO Markus Graf CFO Peter Wullschleger CIO Peter Lehmann Media inquiries Peter Wullschleger Agenda Development of the SPS share (reinvested) Share price As at CHF High CHF Low CHF SPS TR SPI TR SWX IG Real Estate TR Source: Bloomberg 18 March 2005 Annual report as at with balance sheet media conference 26 April 2005 General Assembly of Maag Holding AG for the 2004 financial year 27 April 2005 General Assembly of Swiss Prime Site AG for the 2004 financial year September 2005 Half-year report as at with balance sheet media conference Impressum Published by Swiss Prime Site AG Concept and implementation ibl und partner ag, Solothurn Disclaimer: The financial data presented and the other reports in Swiss Prime News are selected information. You can request the annual or interim report from the company in writing or by telephone. This information constitutes neither an offer nor a recommendation to buy Swiss Prime Site AG shares. It shall not be disseminated in jurisdictions where it infringes applicable law or regulations. Statements about the future involve uncertainties and risks that may mean that the events that happen to the company in fact differ from the forecast situation. 8