AFFINE (EPA:IML) 1H14 - Results consistent with strategic repositioning

Transparency directive : regulatory news

30/07/2014 18:00

Paris, 30 July 2014, 06:00 p.m.

2014 consolidated half-year results

RESULTS CONSISTENT WITH STRATEGIC REPOSITIONING

EPRA EARNINGS UP

* (+) Increase in gross rental income resulting from 100% integration of
Bordeaux complex and logistics developments
* (-) Negative contribution from Banimmo

LTV OF 48.3 %
AND COST OF DEBT DOWN TO 3.1 %

CHANGE IN PORTFOLIO
* Hike in occupancy rate (91.5 %)
* EUR10.9m in improvements and developments
* EUR12.2m disposals
* New investments currently in advanced negotiations

EPRA NAV PER SHARE OF EUR23.7
* (-) Net earnings of -EUR6.4m due to fair value adjustments
* (-) Dividend distribution (EUR8.1m)

The Board of Directors of Affine, meeting on 29 July 2014, approved the
condensed consolidated half-year financial statements as at 30 June 2014. The
limited audit review is currently under process.

1) EARNINGS

EPRA earnings, a measurement of the company's consolidated recurring earnings,
were EUR7.9m compared to EUR6.8m in the first half of 2013 (+16.3%).

This change is due to:

* an increase in net rental income (+EUR3.5m or 20.5%) mainly resulting from
  100% integration of Jardins des Quais (Bordeaux) as well as from the initial
  leasing of buildings completed by Concerto European Developer and a lag in
  accounting of services charges,

* the decline in income deriving from the property development business (EUR0.1m
  vs EUR0.9m) caused particularly by the end of the residential development
  programmes,

* the continued reduction in corporate expenses (-1.9%),

* a drop in the contribution from associates (including Banimmo) from -EUR0.2m
  to -EUR2.2m. The loss deriving from Banimmo is due to the increased provisions
  on City Mall receivables.

The Group also made the following value adjustments:

* Affine posted a EUR9.4m decline in fair value of buildings (as opposed to
  -EUR9.8m in H1 2013) and a EUR2.3m decline in fair value of financial
  instruments (versus +EUR3.7m);

* Banimmo's negative contribution was EUR0.6m for the fair value of buildings
(versus -EUR2.7m) and EUR0.5m for the fair value of financial instruments
(versus +EUR1.1m) offset by EUR0.5m in capital gains on disposals; in addition,
  the company made a significant provision on its equity investment in City Mall
(impact: -EUR2.0m).

Consequently the net consolidated earnings came to a loss of EUR6.4 versus a
loss of EUR0.2m in the first half of 2013.

Funds from operation went up from EUR8.0m to EUR11.9m in connection with change
in rental income. As a result of the markedly negative change in WCR (-EUR11.2m
vs EUR2.2m) mainly due to payment of an amount of VAT collected at the end of
2013, operating cash-flow went from EUR16.2m in 2013 to EUR5.7m in 2014.

2) ACTIVITY

EPRA occupancy rate rose significantly to 91.5% versus 90.9% at the end of 2013.

In terms of rentals, Affine signed 9 new leases covering a total surface area of
19,800 sqm and total annual rent of EUR0.9m. Furthermore, 7 tenants cancelled
their leases, representing a total surface area of 4,800 sqm and annual rents of
EUR0.7m. Lastly, 19 leases were renegotiated for an amount of EUR2.1m.

During the first half of 2014 the company implemented the strategy announced for
the next three years i.e. resuming investment within the framework of balanced
development between Paris/Paris region and the major regional cities; at the
same time, it continued to work to increase the quality of its properties
(EUR10.9m) and the sale of mature or undersized assets (4 properties for a total
amount of EUR12.2m, corresponding to their fair value).

The gross yield on headline rents thus amounts to 7.5%.

Total revenues in H1 2014 amounted to EUR22.5m versus EUR19.5m.

3) NET ASSET VALUE

At the end of June 2014, the fair value of investment properties was EUR583m
(excluding transfer taxes), down 1.9 % on a like-for-like basis versus the end
of 2013.

When the properties of the associates, that is, Banimmo and its subsidiaries,
are included in the consolidation, the fair value (including transfer taxes) of
total group assets at the end of June 2014 stood at EUR973m.

EPRA Net Asset Value (excluding transfer taxes), after deducting quasi-equity
(PSL: perpetual subordinated loan notes) and after adjustments to the fair value
of derivatives and deferred taxes, was down 5.2 % to EUR242.8m due to the
negative earnings for the year and the 2013 related distribution (dividends and
payment of the BRS [bonds redeemable in shares] and PSL). NAV per share
(excluding treasury shares and after dilution due to BRS) went from EUR25.0 to
EUR23.7.

Finally, EPRA triple net NAV (excluding transfer taxes), including the fair
value of hedging instruments, deferred tax and the difference between the
accounting value and discounted value of the debt (excluding Banimmo), amounted
to EUR26.4 per share versus EUR28.2.

4) FINANCING

EUR9.9m in new loans were set up during the period and the company paid off a
total of EUR18.0m.

At 30 June 2014, the financial debt, net of cash, remained stable at EUR347m. As
regards the property business, the LTV ratio (net bank debt/market value of
buildings including transfer taxes, plus property inventories, plus net position
of associates) was 48.3% versus 46.8 % at the end of 2013.

The average cost of debt in the first half of 2014 was 2.0 % (or 3.1 % including
hedging costs, versus 3.3 % in H1 2013). The company took advantage of the
particularly low rates to optimise hedging on its debt by entering into new
swaps in June (EUR15m) and caps (EUR60m) on very attractive terms. The average
term of debt was 5.5 years. There are no significant debts maturing in the next
few years.

5) OUTLOOK

Following the acquisition of Jardins des Quais in Bordeaux in December 2013, the
company has focused on new investments. Although no acquisitions were finalised
as of 30 June, Affine is well positioned in a number of negotiations that should
lead to the emergence of some projects in the second half of the year.

This policy of selective investment, which in certain cases could be implemented
in partnerships, aims to restore rents to the volume of previous years while at
the same time maintaining LTV at a safe level.

At the same time, Affine is continuing its policy of improving its portfolio by
disposing of assets no longer consistent with its investment criteria.

6) CALENDAR

* 22 October 2014: Third quarter revenues

* February 2015: 2014 Full-year revenues and results

* April 2015: First-quarter revenues

* April 2015: Annual General Meeting

* May 2015: Dividend payment

CONSOLIDATED EARNINGS

(EURm)(1)                                           H1 2013     2013   H1 2014

Gross rental income                                    19.5     40.2     22.5
Net rental income                                      17.1     34.8     20.7
Other income                                            1.5      1.9      0.5
Operating expenses                                     (5.2)   (10.0)    (5.1)
Current EBITDA (2)                                     13.4     26.7     16.0
Current operating profit                               13.3     26.5     16.0
Other income and expenses                              (0.9)    (2.7)    (0.2)
Net profit or loss on disposals                        (0.2)    (0.1)     0.2
Operating profit (before value adjustments)            12.2     23.7     15.9
Net balance of value adjustments                       (9.8)   (18.4)    (9.4)
Net operating profit                                    2.4      5.4      6.5
Net financial cost                                     (5.6)   (11.5)    (5.7)
Fair value adjustments of financial instr.              3.7      4.0     (2.3)
Taxes                                                  (0.8)    (1.4)    (0.6)
Associates                                             (0.1)    (5.3)    (4.1)
Miscellaneous(3)                                        0.1     (0.1)    (0.1)
Net profit                                             (0.2)    (8.8)    (6.4)
Net profit - Group share                               (0.2)    (8.8)    (6.4)

(1) Based on IFRS financial statements and EPRA recommendations.
(2) Current EBITDA represents the current operating profit excluding current
depreciation and amortisation costs. This amount does not include in H1 2013,
2013 and H1 2014 impairments on development activity, for respectively EUR0.5m,
EUR1.2m and EUR0.4m, stated in the other revenues and expenses.
(3) Net profit from activities that have been discontinued or are being sold,
other financial income and expenses.

EPRA EARNINGS

(EURm)(1)                                           H1 2013     2013   H1 2014

Net profit - Group share                               (0.2)     (88)    (6.4)
Value adjustments for investment and                   10.3     21.7      9.8
development properties (4)
Net profit or loss on disposals                        0.2      0.1      (0.2)
Goodwill adjustment                                     -        -         -
Fair value adjustment of hedging instruments          (3.7)    (4.0)      2.3
Non-current tax, deferred and exit tax                 0.4      0.9       0.4
Adjustments for associates                            (0.2)     7.2       1.9
Minority interests in respect of the above              -        -         -
EPRA earnings (4)                                      6.8     17.0       7.9

(4) The European Public Real Estate Association (EPRA) issued a guide on
performance measures in September 2011, supplemented in January 2014 by
additional recommendations. As detailed in the EPRA adjustments note, EPRA
earnings essentially exclude the effects of fair value changes and gains or
losses on sales. EPRA earnings for H1 2013 was adjusted by reintegrating other
operational and financial income and expenses.

EPRA EARNINGS (CURRENT/NON-CURRENT PRESENTATION - DIRECT METHOD)

(EUR 000')                                          H1 2013     2013   H1 2014

Gross rental income                                  19,489   40,230    22,544
Net rental income                                    17,138   34,830    20,655
Other income                                          1,466    1,911       531
Corporate expenses                                   (5,240)  (9,993)   (5,142)
Current EBITDA (2)                                   13,364   26,748    16,045
Current operating profit                             13,286   26,480    15,980
Other income and expenses                              (406)     676       133
Net financial cost                                   (5,616) (11,462)   (5,663)
Taxes (current)                                        (325)    (497)     (182)
Associates (current)                                   (223)   1,914    (2,212)
Miscellaneous (current) (3)                              81      (98)     (144)
Net current profit                                    6,796   17,013     7,913
EPRA earnings (Net current profit - Gs(5))            6,796   17,009     7,904

Other income and expenses (non-current)                (538)  (3,332)     (364)
Net profit or loss on disposals                        (169)     (91)      169
Net balance of value adjustments                     (9,762) (18,371)   (9,443)
Fair value adjustments of hedging instr.              3,698    4,032    (2,348)
Taxes (non-current)                                    (426)    (854)     (389)
Associates (non-current)                                153   (7,224)   (1,898)
Miscellaneous (non-current) (3)                           0       (0)        0
Net non-current profit                               (7,043) (25,840)  (14,273)
Net non-current profit - Gs (5))                     (7,043) (25,840)  (14,273)

Net profit                                             (247)  (8,828)   (6,361)
Net profit - group share                               (247)  (8,831)   (6,369)

(5) Gs means Group share

ABOUT AFFINE GROUP

Affine is a real estate company specialised in commercial property. At the end
of June 2014, it directly owned 58 buildings with a total value of EUR583m,
excluding taxes, for a total floor area of 540,200 sqm. The company owns office
properties (52%), retail properties (22%), warehouses and industrial premises
(25%). Its assets are fairly evenly divided between Ile-de-France (Paris
region) and other French regions.

Affine is also the major shareholder (49.5%) of Banimmo, a Belgian property
repositioning company with operations in Belgium and France. At the end of June
2014, Banimmo had total assets of 19 office and commercial buildings, with a
value of EUR355m (taxes included). Finally, the Group also has a 99.6%-owned
subsidiary Concerto European Developer, which specialises in logistics
development.

Total Group assets are EUR973m (taxes included).

In 2003, Affine opted for French real estate investment trust (SIIC) status.
Affine shares are listed on NYSE Euronext Paris (Ticker: IML FP / BTTP.PA; ISIN:
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
FRANK LUTZ
+33 (0)1 44 90 43 53 - FRANK.LUTZ@AFFINE.FR

2014 Half-Year Results

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