AFFINE (EPA:IML) Affine - FY12 - Increase in EPRA earnings (+7.7%)

Transparency directive : regulatory news

27/02/2013 18:00

Paris, 27 February 2013, 18h00

                      2012 annual consolidated earnings

                      INCREASE IN EPRA EARNINGS (+7.7%)

INCREASE IN EPRA EARNINGS: +7.7% TO EUR19.9M

* Stability of rental income on a like-for-like basis (+0.1%)
* Reduction of corporate expenses (-8.9%)
* Drop in financial costs (-7.0%)
* Sharp increase in property development margin

IMPROVEMENT IN LTV RATIO: 45.5% VS 50.8%

DIVIDEND MAINTAINED AT EUR1.2 PER SHARE

ACTIVE MANAGEMENT OF THE PORTFOLIO

* EUR18m in investments: Lille + Capex
* EUR120m from disposals: Paul Baudry + 7 small-sized assets
* 35 new leases signed (EUR1.2m)

SLIGHT DROP IN EPRA NAV PER SHARE (-2.6%)

* Fair value decrease on a like-for-like basis (-1.3%)
* Increase in the number of shares owing to the Affine/AffiParis merger (+3.1%)

ENHANCED CLARITY

* Simplification of Affine: Merger by absorption of AffiParis
* Recognition of the sector's reporting standards: EPRA Bronze award winner

(EURm)                                              2010       2011      2012
Net rental income                                   42.6       43.1      41.3
Current operating profit                            34.4       34.6      34.5
EPRA earnings (4)                                   16.0       18.5      19.9
Fair value of assets (incl. taxes)                 725.0      709.0     580.4
EPRA net asset value per share
(excl. taxes) (EUR)                                 30.3       29.0      28.2

Since 1 October 2011, the Banimmo sub-group and Jardins des Quais are fully
consolidated in Affine's accounts instead of through the equity method. To
facilitate the readability of the financial statements and their comparability
with previous periods, in the consolidated financial statements below, we
present proforma statements for 2010 and 2011, in which Banimmo and Jardins des
Quais are consolidated through the equity method over the full financial year.
Banimmo's financial statements are currently under audit review.

The Board of Directors of Affine, meeting on 26 February 2013, approved the
individual and consolidated financial statements for the period ending
31 December 2012. The audit procedures are in the process of finalisation.

1) ACTIVITIES

Over the year, Affine signed 35 new leases covering a total surface area of
7,800 sqm and an annual lease of EUR1.2m. On the other hand, 14 tenants
cancelled their leases, representing a total surface area of 9,700 sqm and
annual rent of EUR1.2m. Lastly, 17 tenants renegotiated their rents for an
amount of EUR4.4m.

In May, the company acquired 6,250 sqm of offices in the Lilleurope tower.
Located at the heart of Euralille, the third largest business district in France
after La Défense (Paris) and La Part-Dieu (Lyon), and overlooking the
international TGV (high-speed train) station, the tower stands on one of the
city's prime locations. As Affine already owns 10 of the 20 floors of this
building, acquiring 5 more floors strengthens its presence in the iconic
building. The building is fully leased to various blue-chip tenants such as the
SNCF and Tereos.

The building located rue Paul Baudry in Paris (8th) was sold on 4 December at a
net seller price of EUR96m (EUR101.8m transfer taxes included). This transaction
is the final step in a sale process that began at the end of 2011 with the goal
of disposing of a top-quality asset, but representing an overly large portion
(nearly 15%) of the group's total assets. The disposal of this building led to a
capital loss of EUR8.9m in the consolidated financial statements.

As part of its property portfolio streamlining process, Affine also disposed of
7 mature buildings or buildings with a very modest value during the same period.
Aside from the building located rue Paul Baudry, the disposals were made
globally at a price corresponding to the fair value at the end of 2011
(+EUR11k).

The tower located rue Traversière, which is fully leased to SNCF until 2021,
obtained the BREEAM label after its eco-renovation. To further the building's
improvement process, work complying with regulations for disabled persons is
currently underway.

At the same time, the company has begun important refurbishment works in Paris,
first on the rue Auber building and secondly on the rue Réaumur building for
the purpose of partially reconverting it into residential property.

In late September, Affine and AffiParis, which was 87.7% owned by Affine,
announced the procedures and terms for the merger by absorption of AffiParis by
Affine. This transaction was in line with the group's efforts to streamline its
structure and cut operating costs, and has allowed the minority shareholders of
AffiParis to swap their securities for Affine shares which are more high
profile, more liquid and generate higher returns. After obtaining the approval
from the French Financial markets authority, the AMF, that the transaction would
be exempted from the prior implementation of a buy-out offer, the extraordinary
general meetings of the two companies approved the merger on 7 December on the
basis of 0.46 Affine share for one AffiParis share.

2) CLEAR IMPROVEMENT IN EPRA EARNINGS

EPRA earnings were up +7.7% compared to 2011 and amounted to EUR19.9m. It was
boosted in particular by the 7.0% cut in the cost of debt (EUR16.9m vs EUR18.2m)
and 8.9% cut in corporate expenses (EUR10.9m vs EUR12.0m), as well as the sharp
increase in margin generated by property development (EUR3.2m vs EUR1.3m,
excluding impairment of inventories).

These changes contributed to the stability of current operating profit (-0.2%)
despite the plummeting of revenues from the finance lease activity (EUR1.1m vs
EUR2.4m) and the loss of rental income due to disposals. Gross rental income
stayed at the same level as the previous year on a like-for-like basis (+0.1%).

After recognition in particular of the capital loss from the sale of the Paul
Baudry building (-EUR8.9m), the unfavourable change in the fair value of
buildings (-EUR5.2m vs +EUR1.7m) and the earnings of associates (EUR3.4m vs
EUR1.3m), net income amounted to EUR4.6m (vs EUR16.6m).

Funds from operations dropped by EUR1.8m to EUR17.9m mainly due to the
contraction of rental income due to disposals; excluding the cost of debt and
tax expenses, funds from operations fell by 14.2% to EUR33.3m.

The change in WCR was highly negative (-EUR16.4m vs EUR10.1m) primarily due to
the financing of development projects for subsidiaries, such as Concerto
(EUR11.0m of additional trade receivables), VAT movements (VAT claim of EUR1.5m
vs collection of EUR6.7m) and a shareholder loan of EUR4.6m to subsidiaries
(versus a repayment of EUR2.9m). Operating cash-flow therefore stood at EUR16.8m
versus EUR48.3m for the same period in 2011.

3) SLIGHT FALL IN NET ASSET VALUE PER SHARE

In 2012, the fair value of investment properties amounted to EUR580m (transfer
taxes included), down by 18% compared to year end 2011, primarily due to the
large volume of disposals (-EUR120m) to be compared with the investment volume
of EUR18m; on a like-for-like basis, fair value dropped slightly by 1.3%.

EPRA Net Asset Value (excluding transfer taxes), after deducting quasi-equity
(perpetual subordinated loan notes), and after restating the fair value of
derivatives and deferred taxes, remained stable at EUR288.8m at year end 2012
(+0.4%). NAV per share (excluding treasury shares and after dilution of
convertible bonds) fell by 2.6% from EUR29.0 to EUR28.2 given that the number of
shares increased by +3.1% owing to the merger by absorption of AffiParis by
Affine. EPRA NAV, transfer taxes included, stood at EUR324.0m or EUR31.6 per
share.

4) IMPROVEMENT OF LTV RATIO:

The group arranged for EUR35.9m of new loans during the fiscal year and paid off
EUR123.8m.

At 31 December 2012, the group's net financial debt amounted to EUR334m (versus
EUR435m at the end of 2011). For the actual real estate activity, the LTV ratio
(net bank debt/market value of buildings transfer taxes included, excluding
pre-construction sales, plus property inventories, plus net position of
companies consolidated under the equity method) fell significantly and settled
at 45.5% versus 50.8% at the end of 2011.

The average cost of debt for 2012 was 2.5% (3.8% cost of hedging included). The
average term of debts was 5.7 years. Affine is not expecting any significant
debt to mature in upcoming years.

5) DIVIDEND

The company has decided to maintain dividend at its 2011 level and will
therefore propose to the general meeting a total dividend payout of EUR10.8m, or
EUR1.2 per share. This corresponds to a yield of 9.5% on the last quoted price
in 2012.

6) OUTLOOK

In a context still marked by sluggish economic activity, the weakening of a
large number of companies and persistent uncertainties about the global
financial situation, Affine has decided to strengthen its risk analysis
resources and has adopted a prudent policy which it intends to continue in 2013.

The disposal of the Paul Baudry building has given Affine the resources to renew
its selective investment policy, which has become necessary to compensate for
the loss of rent caused by this disposal. Combined with the continued decline of
overheads, Affine should be able to report robust performance for its EPRA
earnings (current net profit - group share). Furthermore, change in net profit
will depend on the value of properties, which is also directly linked to the
economic and financial environment.

In this uncertain context, Affine will focus on improving the quality of its
assets by investing in extensive refurbishments, closely managing customer
relations, while maintaining a sound financial position.

7) AGENDA

* 24 April 2013: Annual General Meeting
* May 2013: First quarter revenues
* May 2013: Dividend payment (EUR1.20)
* July 2013: 2013 half-year revenues and earnings
* November 2013: 3rd quarter revenues

CONSOLIDATED PROFIT

(EURm) (1)                                           2010      2011      2012

Gross rental income                                  50.0      48.3      46.4
Net rental income                                    42.6      43.1      41.3
Other income                                          5.1       3.6       4.3
Corporate expenses                                  (13.1)    (12.0)    (10.9)
Current EBITDA (2)                                   34.6      34.7      34.6
Current operating profit                             34.4      34.6      34.5
Other income and expenses                            (4.2)     (2.6)     (1.6)
Net profit or loss on disposal                       (0.5)      2.9      (8.5)
Operating profit (before value adj.)                 29.7      34.9      24.5
Net balance of value adjustments                     (3.8)      1.7      (5.2)
Net operating profit                                 25.9      36.6      19.2
Net financial cost                                  (19.6)    (18.2)    (16.9)
Fair value adjustments of hedging instr.             (0.1)     (2.3)     (1.5)
Taxes                                                 0.3      (0.4)      0.1
Associates                                            3.0       1.3       3.4
Miscellaneous(3)                                      1.1      (0.4)      0.3
Net profit                                           10.5      16.6       4.6
Net profit - Group share                             10.3      15.3       4.7

(1) Based on IFRS standards and EPRA recommendations.
(2) Current EBITDA represents the current operating profit excluding current
depreciation and amortisation costs. This amount does not include in 2010, 2011
and 2012 impairments on development activity, for respectively EUR5.4m, EUR3.0m
and EUR1.4m, stated in the other income and expenses.
(3) Net profit from discontinued activities or those in the process of being
sold, other financial revenues and expenses.

EPRA EARNINGS

(EURm)                                               2010      2011      2012

Net profit - Group share                             10.3      15.3       4.7
Value adjustments for investment properties           3.8      (1.7)      5.2
Net profit or loss on disposal                        0.5      (2.9)      8.5
Goodwill adjustment                                     -         -         -
Fair value adjustments of hedging instr.              0.1       2.3       1.5
Associates non-cash item                             (1.1)      1.3      (0.9)
Net profit from discontinued operations              (1.2)        -         -
Non-current tax, deferred and exit tax               (0.4)      0.5      (0.2)
Other non-recurring items                             4.3       3.0       1.3
Minority interests in above items above              (0.4)      0.8      (0.2)
EPRA earnings (4)                                    16.0      18.5      19.9

(4) EPRA is a trade association of European real estate companies listed on the
stock market. In September 2011, this association updated a guide on performance
measurement. As explained in the note on EPRA adjustments, EPRA earnings exclude
changes in fair value, capital gains or losses on disposal and other
non-recurrent items.

About Affine Group

Affine is a property company specializing in commercial property. At the end of
2012, Affine owned and managed, 63 properties worth EUR580m, with a total
surface area of 506,000 sqm. The firm owns office properties (59%), retail
properties (14%) and warehouses and industrial premises (26%). Its activity is
distributed more or less equally between Ile-de France and the other French
regions.

Affine is also the reference shareholder of Banimmo, a Belgian property
repositioning company with activities in Belgium and France. The firm owns 24
properties in office and retail properties worth EUR414m. Lastly, its subsidiary
Concerto European Developer is specialized in logistics development.

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). It is included in the CAC Mid&Small, SIIC IEIF
and EPRA indexes. Banimmo is also listed on NYSE Euronext. www.affine.fr

Contact
INVESTOR RELATIONS                  PRESS RELATIONS
Frank Lutz                          Watchowah - Cyril Levy-Pey
+33 (0)1 44 90 43 53 -              +33 (0)6 08 46 41 41 -
frank.lutz@affine.fr                levy-pey@watchowah.com

              SOCIÉTÉ ANONYME WITH CAPITAL OF 53,300,000 EUROS -
                HEAD OFFICE: 5 RUE SAINT-GEORGES, 75009 PARIS
TEL. : +33 (0)1 44 90 43 00 - FAX: +33 (0)1 44 90 01 48 - EMAIL: INFO@AFFINE.FR
        712 048 735 RCS PARIS - INTRACOMMUNITY VAT NUMBER FR92712048735

AFFINE's latest news

14/12/2018 18:00

AFFINE (EPA:IML) Affine - FY12 - Increase in EPRA earnings (+7.7%)

Transparency directive : regulatory news

AFFINE's latest news

Other stories