AFFINE (EPA:IML) Affine - 1H10 - Continued refocusing
Transparency directive : regulatory news
09/09/2010 18:00
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Paris, 9 September 2010, 6:00 p.m.
2010 consolidated half-year results
CONTINUED REFOCUSING
- DOWNTURN IN CURRENT PROFIT
- IMPROVEMENT IN THE P&L
- FAIR VALUE VIRTUALLY UNCHANGED
KEY FIGURES
EURm 30/06/2009 30/06/2010
Net rental income 34.0 28.4
Current profit (excluding sales) 16.4 6.4
Net loss (27.6) (16.4)
Operating cash flow 39.5 23.3
EURm 31/12/2009 30/06/2010
Fair value of assets
(including transfer taxes) 1 089 1 079
Net asset value per share
(excl. transfer taxes) (EUR) 29.7 27.4
The Board of Directors of Affine meeting on 8 September 2010 approved the
semi-annual consolidated financial statements as at 30 June 2010. These
financial statements were subject to a restricted audit by the statutory
auditors.
In a difficult market environment, the Affine Group continued its policy of
refocusing on its property business and rebalancing its portfolio in favour of
retail properties. In particular, it continued to develop two retail
operations in Nevers and Arcachon, acquired a shopping complex in Rouen and
proceeded to sell eight small or mature properties.
1) CURRENT PROFIT DOWN, NET INCOME UP
Current profit was EUR6.4m, a marked decline over the first half of 2009, due
to a nearly 10% drop in rental income (EUR36.1m versus EUR40.4m) and the
absence of the income generated last year by the repayment of the carry-back
receivable (EUR4.3m).
The economic crisis continued to impact the financial situation of some of our
tenants who reduced their operating surface area and renegotiated the terms of
their lease:
The decline in net rental income was the cumulative result of an increase in
the vacancy rate (11.6% at the end of June 2010 as opposed to 8.4% at the end
of June 2009); benefits granted to some tenants in exchange for extending the
leases and scheduled departures during refurbishment. The impact of the
disposals made in the second half of 2009 was in large part offset by the
acquisitions made.
Unlike last year, this first half does not have either the benefit of the
non-recurring income from the repayment of the carry-back nor the Altaréa
dividend (Affine's stake was sold in late 2009). On the other hand, the income
statement shows a drop in operating expenses (-EUR2.0m) which benefit from a
strong reserve write-back.
After taking into account disposals, made at a price slightly lower than their
fair value at the end of 2009 (-EUR1.1m), current profit was EUR5.2m, as
opposed to EUR18.1m in the first half of 2009.
Despite another negative impact of the change in fair value of investment
properties (-EUR8.8 m) and in particular financial instruments (-EUR10.7 m),
net income went up sharply (-EUR16.4 m versus -EUR27.6 m in the first half
of 2009).
2) SPECIFIC DOWNTURN IN OPERATING CASH-FLOW
Related to the decline in current profit, the Group's funds from operations
(excluding cost of indebtedness) fell by 28.2% to EUR21.7m. The significant
change in working capital requirements, which were exceptionally positive
in 2009 due to the disposal of the Azuqueca operation (EUR14.5m), led to
operating cash flow of EUR23.3m versus EUR39.5m in the first half of 2009.
3) VALUE OF PORTFOLIO VIRTUALLY UNCHANGED
The fair value of the property portfolio was 1.079 billion euros (including
transfer taxes), very slightly down (-0.9%) over the end of 2009, disposals
(-EUR26.9m) being offset by investments (EUR27.5m). On a like-for-like basis,
the drop in fair value was also 0.9%, or
EUR8.8m.
As a result, Net Asset Value (excluding transfer taxes), less quasi-equity
(convertible bonds (ORA) and perpetual subordinated loan notes (TSDI)), fell
by EUR19.2m (-8.0%) over the end of 2009, to EUR221.9m at the end of June 2010,
or EUR27.4m per share. The Affine share (EUR17.07), up 5.0% since the start of
the year, still showed a major discount to NAV (37.6%) as at 30 June 2010.
Including transfer taxes, net asset value per share was EUR33.5.
Using the EPRA calculation method, which in the case of Affine leads to the
adjustment of the fair value of the derivatives and deferred taxes net, NAV
excluding transfer taxes and including transfer taxes were EUR29.9 and EUR36.1
respectively.
4) LOW COST OF FINANCING
The group has set up over EUR95m in new financing during the six months in
question on terms that enable it to sustain its growth. Its average cost of
debt in 2010 is 3.6% (including hedging for the debt in its entirety) with an
average term of 5.4 years.
The Group's net financial debt totalled EUR687m as at 30 June 2010 (versus
EUR693m at 31 December 2009), representing 1.7 times total equity. For the
property business itself, the LTV ratio (net bank debt/market value of
properties, including transfer taxes, excluding sales of property not yet
completed, plus companies consolidated under the equity method) was 59.0%
(versus 58.1% as at 31 December 2009), due to the small decrease in the value
of the properties and despite the reduction in financial debt.
5) PAYMENT OF ADDITIONAL DIVIDEND
On 28 September 2010, an Annual General Meeting of shareholders will be
proposed to pay an additional dividend of EUR4.7m (i.e. EUR0.58 per share) from
retained earnings. This exceptional dividend will allow the company to ensure
for 2008 and 2009 that the mandatory distributions are made resulting from its
dual status as a listed real estate investment trust (SIIC) and as a lease
finance company (former SICOMI). This will be in addition to the EUR9.7m
dividend already approved by the Annual General Meeting of 23 April 2010 and
distributed on 17 May 2010, thus bringing the total dividend distributed in
2010 to EUR14.5m (or EUR1.78 per share), representing a 10.4% return on the
Affine stock over the 30 June 2010 price.
6) OUTLOOK
The second half of 2010 could be the turning point the markets are waiting for.
Overall, "fair values" are ceasing their downward spiral and stabilising, and
the best locations had already started to recover since the latter part
of 2009.
Continuing to sell non-strategic assets should help to strengthen the financial
structure.
The Group will step up its efforts to improve the quality and profitability of
its portfolio, in particular by undertaking major renovation work, in an
environment where there is a scarcity of worthwhile investment opportunities.
7) SCHEDULE
* 29 October 2010: Payment of additional dividend (EUR0.58)
* 15 November 2010: 3rd quarter revenues
* March 2011: 2010 annual results
CONSOLIDATED PROFIT
(EURm)(1) H1 2009(6) 2009(6) H1 2010
Investment properties 34.0 62.8 28.4
Finance lease 2.1 3.8 1.2
Property development(2) (0.1) 0.0 (0.2)
Miscellaneous 0.3 0.6 1.1
Operating margin(3) 36.3 67.3 30.6
Financial income(3) (12.7) (31.2) (14.6)
Operating and
miscellaneous (11.9) (24.5) (10.0)
Corporate income taxes 4.7 5.1 0.4
Current profit 16.4 16.7 6.4
Capital gains on disposal 1.7 24.8 (1.2)
Current profit after
disposals 18.1 41.5 5.2
Change in fair value of
properties(4) (38.8) (43.7) (12.8)
Change in fair value
of financial instruments (5.5) (7.6) (10.7)
Miscellaneous(5) (4.1) 0.2 1.1
Deferred tax net of
Exit Tax 2.7 6.9 0.8
Net loss (27.6) (2.7) (16.4)
Of which Group share (18.9) (5.7) (11.9)
(1) Based on IFRS accounting standards for corporations.
(2) Excluding change in value of Sant Feliu. (3) Excluding changes in fair
value.
(4) Including change in value of Sant Feliu (-EUR4.0m).
(5) Share of companies consolidated under the equity method, change in
goodwill, net income from businesses discontinued or being disposed of, in 2009
a capital gain of EUR9.00 m from the sale of Altaréa stock.
(6) To better reflect the elements in the income and its growth, working
capital requirement contribution only appears under the heading "Net income
from businesses discontinued or being disposed of" or "Miscellaneous" in this
presentation.
About the Affine Group:
A diversified property company specialising in commercial property, the Affine
Group's portfolio as at 30 June 2010 comprised 107 properties worth EUR1,079m
spread over a total area extending to 829,000 m². The Group's main business is
offices (54 %), commercial property (21 %) and warehouses (19 %).
Its business is split between Affine (56%), which has operations in the regions
of France excluding Paris, AffiParis (20 %), an SIIC specialising in
Paris-based property, and Banimmo (24 %),a Belgian repositioning property
company with operations in Belgium, France and Luxembourg.
The Affine Group also includes Concerto Développement, a subsidiary
specialising in setting up development and investment operations in logistics
properties in Europe.
As of 2003, Affine opted for listed real estate investment trust (SIIC) status.
The Affine share is listed on NYSE Euronext Paris (Ticker: IML FP /
BTTP.PA ; ISIN code : FR0000036105) and admitted to DSO (long only). The
Affine share is included in the SBF 250 (CAC Small 90), SIIC IEIF and EPRA
indices. AffiParis and Banimmo are also listed on NYSE Euronext.
www.affine.fr
Contact
INVESTOR RELATIONS
Frank Lutz
+33 (0)1 44 90 43 53 - frank.lutz@affine.fr
PRESS RELATIONS
Citigate Dewe Rogerson - Agnès Villeret
+33 (0)1 53 32 78 95 - agnes.villeret@citigate.fr
A French société anonyme with share capital of 47,800,000 Registered Office:
4 square Edouard VII, 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 RCS Paris Intracommunity VAT no. FR92712048735