AFFINE (EPA:IML) Affine - 1H11 - Sharp increase in net earnings

Transparency directive : regulatory news

29/08/2011 18:00

Paris, 29 August 2011, 6:00 p.m.

                    2011 consolidated half-year results

                 SHARP INCREASE IN NET EARNINGS (EUR26.5M)
              IMPROVEMENT IN CURRENT OPERATING PROFITS (+16%)
                         INCREASE IN NAV (+3.7%)

KEY FIGURES

(EURm)                           H1 2010      2010   H1 2011
Gross rental income                 36.1      70.6      35.7
Net rental income                   28.9      59.6      31.2
Current operating profit *          19.2      44.6      22.2
Net operating profit                 7.0      36.2      36.3
Net profit                         (15.9)     10.6      26.5
of which Group share               (11.6)     10.3      21.8
EPRA earnings                        4.9      17.6       7.5
Fair value of assets
(including transfer taxes)       1,078.8   1,059.8   1,065.5
EPRA net asset value
(excl. TT) (EUR)                   273.6     286.0     296.6
EPRA net asset value per share
(excl. TT) (EUR)                   29.67     30.70     29.83

* Excluding the depreciation in 2010 and 2011 of Saint Feliu included in net
operating profit.

The Board of Directors of Affine, meeting on 29 August 2011, approved the
financial statements of 30 June 2011. The financial statements were subject to a
limited audit review.

After two years of losses due to the decline in the fair values of properties,
the return to a profitable situation, announced in 2010, was confirmed in the
first half of 2011.

1) NOTICEABLE IMPROVEMENT IN CURRENT OPERATING PROFIT

The net rental income increased 7.9% benefiting from the decrease in service
charges. This positive change results from diminution of provisions on rents and
the favourable effect of service charges annual settlement.

On a like-for-like basis, gross rental income in the period increased by 1.3%.
After accounting for disposals, whose effects were largely offset by the
acquisitions, gross rental income was down by 1.3%.

The current operating profit, up by 15.7%, benefits from the improvement of the
property development activity (EUR1.3m vs EUR1.0m), excluding depreciation on
inventory, and the 4.0% diminution of operating costs (EUR10.1m vs EUR10.6m),
while continues the natural erosion of revenues from finance lease transactions
(EUR1.0m vs EUR1.2m).

2) NET PROFIT SHARPLY UP

Net profit was up sharply at EUR26.5m compared to a loss of EUR15.9m in the
first half of 2010. The first six months of the year benefited from the strong
upturn of the fair values of properties (+EUR11.7m vs -EUR7.7m) and financial
instruments (+EUR5.3m vs -EUR10.7m), while the cost of debt remained stable at
EUR13.9m.

Adjusted for non-current items such as the change in the fair value and gains
and losses on disposals, EPRA earnings come to EUR7.5m compared to EUR4.9m in
2010.

3) MAJOR GROWTH IN OPERATING CASH FLOW

Operating cash flow reached EUR37.5m over EUR6.4m for the same period in 2010.

As a reminder, in 2010 the switch of some Banimmo buildings to the IAS2
accounting standard had resulted in their reclassification as inventory:
consequently the acquisitions, disposals, and capital expenditure related to
these properties, previously entered as investment cash-flow, are now included
in operating cash flow and lead to its greater volatility.

In 2010, Banimmo conducted no property disposals, thus leading to a sharp change
in WCR, whereas the first half of 2011 saw the amount from the disposal of
Clamart (EUR20m). Corrected for the IAS 2 effects, the operating cash flow would
stand at EUR21.2m over EUR25.7m.

4) SLIGHT RISE IN NET ASSET VALUE

In the first half, the like-for-like fair value of properties increases by 1.2%.
It stood at EUR1.065 billion (including transfer taxes), slightly up (0.5%) over
the end of 2010, disposals (-EUR30m) being more than offset by improvements in
fair value (EUR11.7m) and investments (EUR19.3m).

As a result, the EPRA net asset value (excluding transfer taxes), less the
quasi-equity (perpetual subordinated loan notes) and after restatement of the
fair value of derivative instruments and deferred taxes, increases by EUR10.6m
(+3.7%) over the end of 2010 to reach EUR296.6m at the end of June 2011, i.e.
EUR29.83 per share (excluding treasury shares and after dilution of the
convertible bonds). Transfer fees included, the EPRA NAV is EUR347.1m, or
EUR34.92 per share.

5) FINANCIAL DEBT REDUCED

The Group signed nearly EUR43m in new financing during the period. The average
cost of net debt in the first half of 2011 is 2.9%, and 4.1% including hedging.
Excluding Banimmo, the average duration of debt is 5.4 years. No significant
maturity needs to be refinanced before 2016.

The Group's net financial debt totalled EUR698m at 30 June 2011 (compared to
EUR718m at 31 December 2010), representing 1.6 time total equity. For the
property business strictly speaking, the LTV ratio (net bank debt/market value
of properties including transfer taxes, excluding property sales not yet
completed, plus the value of companies consolidated under the equity method)
declines slightly to 57.2%. For Affine alone (excluding AffiParis and Banimmo),
the ratio is 53.2%.

6) DISTRIBUTION POLICY

In compliance with the distribution obligations attached to the SIIC (REIT)
status, Affine paid, for the year 2010, a dividend of EUR2.43 per share (for a
total of EUR20.6m) with the option to be paid either in cash or in new shares
based on a share price of EUR19.00. Taking into consideration the particularly
high amount of this distribution, and contrary to previous years, no interim
dividend will be paid in October.

The option to be paid in shares was used by 54.2% of shareholders, including
Holdaffine. The number of shares went from 8,487,966 to 9,002,042.

7) OUTLOOK

The French property market, in slight recovery since the crisis of 2008-2009,
remains however subject to the uncertainties of a long-term financial crisis
with multiple rebounds.

In this environment, the Group's policy of prudence for the last three years
remains valid. It is still however pursuing its strategy aimed at strengthening
its profitability, enhancing the occupation of its buildings, simplifying its
structure (specifically through studying Affine/AffiParis getting closer),
improving the readability of its financial statements, and focusing its
portfolio on the assets that best meet its criteria for size, risk and
returns.

It will continue to invest in new assets or in improving its portfolio of
properties, and Affine will continue to examine all opportunities for external
growth or alliances.

8) SCHEDULE

* 15 November 2011: Third quarter revenues

* February 2012: 2011 Full-year revenues and results

NB: Henceforth, the Affine Group will present its financial statements in
accordance with EPRA recommendations. In addition to the income statement
prepared in accordance with IFRS standards (first table), this presentation
includes earnings calculated according to EPRA recommendations (second table)
and which represent the current net profit from the property activity
exclusively (i.e. net profit - group share excluding changes in fair value,
gains or losses on sales and other non-current items). For comparative purposes,
the classification previously used by the Affine Group, which was based on the
operating margin of the businesses, is provided pro forma for 2010 in the last
table.

CONSOLIDATED EARNINGS - NEW PRESENTATION

(EURm)(1)                                 H1 2010(5)     2010   H1 2011
Gross rental income                             36.1     70.6      35.7
Net rental income                               28.9     59.6      31.2
Other income                                     1.0      5.6       1.3
Corporate expenses                             (10.6)   (20.3)    (10.1)
Current EBITDA(2)                               19.4     44.9      22.3
Current operating profit                        19.2     44.6      22.2
Other incomes and expenses                      (3.2)    (5.1)     (2.1)
Net profit or loss on disposal                  (1.3)    (0.4)      4.5
Operating profit before value adjustment        14.8     39.0      24.6
Net balance of value adjustments                (7.7)    (2.8)     11.7
Net operating profit(3)                          7.0     36.2      36.3
Net financial cost                             (13.9)   (27.6)    (13.9)
Fair value adjustments of hedging instr.       (10.7)    (2.9)      5.3
Taxes                                            0.6      0.6      (2.8)
Miscellaneous(4)                                 1.1      4.4       1.6
Net profit                                     (15.9)    10.6      26.5
Net profit - Group share                       (11.6)    10.3      21.8

(1) Based on IFRS statements for corporate presentation and EPRA
recommendations.
(2) The current EBIDTA is the current operating profits excluding costs of
current depreciations and impairments. This amount does not include, in H1 2010,
2010 and H1 2011 the depreciation of Saint Feliu of respectively EUR4.0m,
EUR5.2m, and EUR2.0m, present in the other income and expenses.
(3) Net operating profit is the current profit after ta king account of changes
in values, including changes in goodwill adjustments contrary to previous
years.
(4) Share of companies consolidated under the equity method, net income from
activities discontinued or being sold, other income and financial expenses.
(5) Restated for the impacts of IAS 2.

EPRA EARNINGS

(EURm)                                          H1 2010    2010    H1 2011

Net profit - Group share                         (11.6)    10.3       21.8
Adjustment to value of investment properties       7.7      2.8      (11.7)
Profit from asset disposals                        1.3      0.4       (4.5)
Adjustment to Goodwill                              -        -          -
Adjustment to value of financial instruments      10.7      2.9       (5.3)
Companies consolidated under the equity method    (0.3)    (3.1)      (0.6)
Net profit or loss after tax from discontinued
activities                                        (1.5)    (1.2)        -
Non-current, deferred taxes, and exit tax         (0.8)    (1.0)       1.9
Other non-current items                            3.9      5.0        1.1
Minority interests of the above items             (4.4)     1.4        4.8
EPRA earnings (6)                                  4.9     17.6        7.5

(6) In October 2010, the EPRA, a trade association of listed European property
companies, updated its guide on performance measurement. As explained in the
note on EPRA restatements, the EPRA earnings exclude changes in fair value,
capital gains or losses on disposals and other non-current items.

CONSOLIDATED EARNINGS - PREVIOUS PRESENTATION

(EURm)(1)                                      H1 2010(7)    2010    H1 2011
Investment properties                             28.9       59.6       31.2
Finance lease                                      1.2        2.9        1.0
Property development(2)                           (4.2)      (2.8)      (1.7)
Miscellaneous                                      1.0        1.0        0.4
Operating margin(3)                               26.9       60.7       30.9
Financial income(4)                              (14.6)     (27.5)     (12.9)
Operating and miscellaneous expenses             (10.9)     (21.3)     (10.7)
Corporate income taxes                             0.4        0.3       (0.7)
Current profit                                     1.8       12.2        6.5
Net capital gains on property sales               (1.3)      (0.4)       4.5
Current profit after property sales                0.5       11.8       11.0
Change in fair value of properties(5)             (7.7)      (2.8)      11.7
Change in fair value of financial instruments    (10.7)      (2.9)       5.3
Miscellaneous(6)                                   1.8        4.3        0.6
Deferred tax net of exit tax                       0.2        0.3       (2.1)
Net profit                                       (15.9)      10.6       26.5
Of which Group share                             (11.6)      10.3       21.8

(1) Based on IFRS accounting standards for corporations. (2) Excluding change in
value of Saint Feliu. (3) Excluding changes in fair value. (4) Excluding profit
from dilution and change in fair value (5) Including change in value of Saint
Feliu. (6) Share in companies consolidated using the equity method, changes in
goodwill, net profit from businesses that have been discontinued or are being
sold. (7) Restated for the impacts of IAS 2.

About the Affine Group
A diversified property company specialising in commercial property, the Affine
Group's portfolio at 30 June 2011 comprised 98 properties worth EUR1,065m with a
total area covering 754,000 sqm. The group mostly owns office properties (58%),
commercial properties (20%) and warehouses (16%).

Its activity is split between Affine (53%), active in French regions outside
Paris, AffiParis (21%), a SIIC (French REIT) specialising in Paris property, and
Banimmo (26%), a Belgian property repositioning company located in Belgium,
France and Luxembourg.

The Affine group also includes Concerto Développement, a subsidiary specialised
in managing development and investment transactions in logistics properties in
Europe.

In 2003, Affine opted for the tax treatment applicable to French real estate
investment trusts (SIIC). The Affine share is listed on NYSE Euronext Paris
(Ticker: IML FP/BTTP.PA; ISIN code: FR0000036105) and admitted to the deferred
settlement system (long only). The Affine share is included in the CAC
Mid&Small, SIIC IEIF and EPRA indices. AffiParis and Banimmo are also listed on
NYSE Euronext. www.affine.fr

Contact
INVESTOR RELATIONS                          PRESS RELATIONS
Frank Lutz Citigate                        Dewe Rogerson - Agnès Villeret
+33 (0) 1 44 90 43 53 -                     +33 (0)1 53 32 78 95 -
frank.lutz@affine.fr                        agnes.villeret@citigate.fr

  A French société anonyme with share capital of EUR53,100,000 - Head Office:
                         5, Rue Saint-Georges - 75009 Paris
             Tel: 33 (0)1 44 90 43 00 - Fax: 33 (0)1 44 90 01 48 -
                         E-mail address: info@affine.fr
712 048 735 Paris Trade Register - Intra-community VAT no. FR92712048735

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