EPIC Suisse AG achieves strong operating performance for 2023

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

Zurich, 25 March 2024

EPIC Suisse AG achieves strong operating performance for 2023

• Rental income grew by 6.3% to CHF 65.3 million in 2023 versus CHF 61.5 million in 2022
• Vacancy rate further reduced to 4.6% for the year ended 31 December 2023 (5.8% for the year ended 31 December 2022)
• Long WAULT of 8.1 years as at 31 December 2023 (8.2 years as at 31 December 2022)
• Moderate revaluation variation of -0.6% of the portfolio, with net unrealised revaluation loss of CHF 9.7 million in 2023 mainly due to higher real discount rates (gain of CHF 0.9 million in 2022)
• EBITDA excluding revaluation on properties amounted to CHF 52.4 million in 2023 (CHF 48.9 million excluding revaluation on properties and CHF 5.9 million one-off IPO costs in 2022)
• Value of real estate portfolio increased by 2.2% to CHF 1’535.5 million primarily due to the advancement of the ongoing development projects (CHF 1’501.9 million as at 31 December 2022)
• Solid equity ratio at 51.0%
• 3.3% dividend increase to CHF 3.10 per registered share to be proposed to the AGM 2024

EPIC Suisse AG (SIX: EPIC) (the “Company” or “EPIC Suisse”) published today significant growth and a strong operating performance for the fiscal year 2023. The main driver behind the operating results is a notable increase in rental income, while keeping control of the costs. Based on the results, the Board of Directors will propose a gross dividend of CHF 3.10 per registered share to the Annual General Meeting (AGM) on 25 April 2024.

Higher rental income and lower vacancies

Rental income from real estate properties increased by 6.3% to CHF 65.3 million for 2023 (CHF 61.5 million for 2022) or by 6.0% on a like-for-like basis, excluding the Tolochenaz add-on acquisition made in December 2022. This increase was driven by additional rent due to indexation, a decrease of rent-free periods granted, and a further reduction of the vacancy rate to 4.6% in 2023 (5.8% in 2022). The lower vacancy represents a second consecutive year-on-year reduction in the reported vacancy rate, which was 7.6% during 2021. The net rental income yield for properties in operation reached 4.5% for 2023 (4.2% for 2022).

Real estate portfolio valued at CHF 1’535.5 million

The value of the total real estate portfolio rose by 2.2% to CHF 1’535.5 million (CHF 1’501.9 million as at 31 December 2022) essentially due to the advancement of the ongoing development projects and despite a net unrealised revaluation loss of CHF 9.7 million, which considering the size of our portfolio reflects a moderate revaluation variation of -0.6%. The weighted average real discount rate applied by the independent real estate valuer was 3.39% as at 31 December 2023 compared to 3.31% at the end of 2022. The WAULT remained stable at 8.1 years as at 31 December 2023 (8.2 years as at 31 December 2022).

Capital expenditures reached CHF 43.4 million and were mainly focused on the development projects with total investments of CHF 37.4 million, of which CHF 32.2 million related to project PULSE in Cheseaux-sur-Lausanne and CHF 5.2 million to the construction of Building C (Campus Leman) in Morges, which started in April 2023.

Profitability

EBITDA (including revaluation of properties) for 2023 amounted to CHF 42.7 million (CHF 44.0 million for 2022). When excluding the unrealised revaluation loss on properties as well as the one-off IPO costs of CHF 5.9 million incurred in the first half of 2022, the adjusted EBITDA improved by 7.0% to CHF 52.4 million (compared to CHF 48.9 million for 2022), mostly as a result of the topline growth.

The financial result for 2023 displayed a net expense of CHF 22.7 million (net income of CHF 20.8 million for 2022) and is mostly caused by the revaluation of the hedging instruments (interest rate and cross currency swaps) which resulted in a net unrealised loss of CHF 20.3 million in 2023 (net unrealised gain of CHF 27.9 million in 2022). The periodical revaluation of the swaps does not impact the group’s operations, cash flows or dividend distributions, as already mentioned in earlier financial reports. The swaps’ unrealised revaluation gains or losses will unwind over their contract duration.

Profit (including revaluation effects) reached CHF 17.6 million for 2023 versus CHF 56.4 million for 2022. After adjusting for the revaluation effects (of the properties and derivatives including any related foreign exchange effects) and the above-mentioned one-off IPO costs incurred during H1 2022, the adjusted profit amounts to CHF 40.9 million for 2023, showing a 6.3% increase compared to CHF 38.4 million for 2022.

Sound capital base

As at 31 December 2023, equity totalled CHF 804.9 million with a solid equity ratio of 51.0% (CHF 818.4 million and 52.4% as at 31 December 2022). A dividend of CHF 3.00 per share was distributed to the shareholders on 4 May 2023. The net asset value per share stood at CHF 77.92 as at 31 December 2023 (CHF 79.23 as at 31 December 2022).

The weighted average interest rate on mortgage-secured bank loans stayed low at 1.3% as at 31 December 2023, while their weighted average residual maturity stood at 4.5 years (1.0% and 4.1 years as at 31 December 2022, respectively).

Increased dividend of CHF 3.10 per share proposed to the Annual General Meeting 2024

Based on the enhanced performance in 2023, the funds from operations (FFO) equalled to CHF 40.1 million. The Board of Directors will therefore propose to the Annual General Meeting, to be held on 25 April 2024, to distribute a gross dividend of CHF 3.10 per share or a total of CHF 32.0 million, which represents an increase of 3.3% compared to last year’s dividend and reflects a dividend yield of 4.7% based on the closing price of the registered shares at the end of 2023.

Expanded Sustainability Report

The Board of Directors and the Group Executive Management are strongly committed to social responsibilities and to the environmental sustainability of the real estate portfolio. The Sustainability Report 2023, prepared in accordance with GRI standards, contains a forecasted decarbonisation pathway to 2050 and carbon emissions information of the portfolio for the reporting period 1 July 2022 to 30 June 2023, which is primarily based on measured data (compared to modelling data in the 2022 report). The Company also decided to voluntarily publish its first TCFD Report to further enhance transparency on climate-related risks and opportunities for its business and the corresponding measures it is taking. For further information see both reports as part of the Annual Report 2023.

Outlook

The Swiss economy is still forecasted to grow in 2024 despite a troubled and uncertain geopolitical environment. Assuming no materially adverse changes on our operations, our net rental income for 2024 is expected to remain robust and in line with 2023. We forecast significant rental increases to come with the future lettings of our developments in accordance with our planned construction timeline.

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For selected key figures, please refer to the appendix of this press release as well as to the Annual Report 2023 for further information and a glossary of alternative performance measures (on page 159 of the report).

Contact information

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

Reporting

The Annual Report 2023 is available on the Company’s 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. EPIC’s 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

1. Rental income from real estate properties plus other income less direct expenses related to properties
2. 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
3. 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
4. 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
5. Ratio of net debt to the market value of total real estate properties including the right-of-use of the land
6. Reported vacancy rate adjusted for absorption and strategic vacancy in certain properties in operation (i.e. Zänti Volketswil, Biopôle Serine)

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 Accounting Standards, 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 Group’s consolidated financial results based on IFRS Accounting Standards. 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 159 of the Company's Annual Report 2023.