Beni Stabili Siiq: Board approves results for H1 2011

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Mervyn Lyons
6 years ago
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1 Beni Stabili Siiq: Board approves results for H Key Performance Indicators at 30 June 2011 Group net profit of 37.6m up 17% on 32.0m on H Group recurring cash result 1 of 44.4m up on 23.8m of H Total carrying amount of property portfolio: 4,370.2m compared with 4,323.5m of 31 December 2010 Diluted NNNAV of per share (based on total NNNAV of 2,206.3m), compared with of 31 December 2010 (based on total NNNAV of 2,174.7m) Net debt of 2,214.9m, compared with 2,084.7m of 31 December 2010 LTV of 50.7% (48.2% at 31 December 2010) Significant events and transactions during the period The Company s operations proceeded according to plan during the first half of 2011, with the primary focus on leasing activity, the development of new buildings and asset management via portfolio rotation. The rental business saw a solid and improved performance, with new or renewed contracts accounting for over 16,000sqm and representing approximately 4m yearly in new rental income when fully implemented 2. Lease contracts and preliminary lease agreements were signed, covering a further 18,000sqm ( 2.5m yearly in new rental income once fully implemented), and will come into effect over the coming months. In execution of the preliminary agreements entered into in 2010 and their subsequent modifications, lease contracts for the Galleria del Corso shopping centre in Milan were entered into with Coin and Oviesse in May. Work on the complex has been substantially completed within budget and on time. 1 Beni Stabili Siiq uses recurring cash result as an alternative performance indicator and defines it as the net cash profit earned from ordinary activities, after adjusting the net result for material extraordinary and non-recurring items, including property sales, and for valuation adjustments and non-cash items, including changes in the fair value of property assets on appraisal by independent experts. 2 Including around 6,000 sqm of lease renewals for 0,1m differential between old rent and new rent.

2 Property sales during the first half primarily related to properties in the ImSer 60 portfolio, resulting in a total sale price of approximately 21.4m (a 4.0% exit yield) and a capital gain of approximately 0.8m. Preliminary further sale agreements with a value of 42.0m are also in place at 30 June 2011 at prices in line with carrying amounts as at 31 December Purchases included the execution of the preliminary agreement signed in December 2010 for the property located in Via Pergolesi, Milan at a cost of 25.0m (in addition to transaction costs and taxes). From a financial viewpoint, the most important event during the first half regarded the restructuring of the Company s hedging instruments via the early unwinding of cash flow hedges with a value of approximately 560m and an average maturity of 2.5 years. At the same time, the Company entered into new hedges with a value of approximately 460m, a maturity of five years and an average swap rate of 2.56%, taking advantage of favourable market conditions. We have achieved a satisfactory first-half performance, beating our expectations and according to plan. This was achieved within a demanding market environment, commented Aldo Mazzocco, CEO of Beni Stabili Siiq. Milan, 21 July 2011 The Board of Directors of Beni Stabili SpA Siiq has approved the Company s consolidated results for the six months ended 30 June 2011 (H1 2011). Key figures P&L H H % Net rental income ( m) % Net revenues from sales ( m) Net service revenues ( m) Group recurring cash result ( m) % Group net profit ( m) % Basic earnings per share ( ) % Diluted earnings per share ( ) % Key figures B/S H YE 2010 % Carrying amount of property portfolio ( m) 4, , % Diluted EPRA NNNAV ( m) 2, , % Diluted EPRA NNNAV per share ( ) % Group LTV ratio (%) 50.7% 48.2% 5.1%

3 Group recurring cash result 1 amounts to 44.4m, marking growth of 87% compared with the 23.8m for the first half of This primarily reflects a reduction in current tax expense following the adoption of the SIIQ regime. Recurring cash result per share is up from to (from to on a diluted basis), marking an increase of 79%. Group net profit for the first half of 2011 amounts to 37.6m, compared with the 32.0m for the same period in the previous year. Diluted EPS is up 12.5% from to Positive operating performance Gross rental income for the first half is 108.4m 3 ( 108.6m for the first half of 2010) despite sales. This performance, which is substantially in line with the previous first half, primarily reflects: new leases derived from purchases, totalling 5.3m; the renegotiation of new contracts, accounting for 4.0m; reductions in rental income due to property sales, totalling 2.8m; reductions in rental income due to the expiry/termination of leases (primarily in the case of properties to be renovated), totalling 6.8m. On a like-for-like basis, accounting gross rental income is down approximately 0.5% 4 (with the Core portfolio alone registering a decline of 0.2%). This mainly reflects the vacation of a property during the first half of 2011 in preparation for its redevelopment by the Company s own development division. After stripping out the impact of this project, like-for-like accounting gross rental income is up 1.9% (up 2.5% for the Core portfolio alone). Net rental income of 100.2m is in line with the 100.1m for the first half of Net service revenues of 6.0m ( 5.2m for the first half of 2010) are up 16%, due primarily to the launch of new funds during At 30 June 2011 Beni Stabili Gestioni SGR managed 11 funds with total assets of 1,655.5m. In a market environment that remains difficult, the Company sold properties worth 21.4m during the first half of 2011, registering net revenues from sales, after transaction costs, of 0.8m, 3 Excluding 1.3m of revenues due to anticipated termination of leases. 4 Like-for-like growth on rental income is calculated on rents related to the stabilised portfolio, that is the growth rate from 1) indexation to CPI, 2) vacancy impact on the portfolio, except for development assets already pre-let, 3) the re-negotiation of expiring leases or new leases. We consider the stabilised portfolio as the portfolio adjusted by sales and reclustering.

4 compared to 0.2m for the first half of For the purposes of comparison, it should be noted that the profit of 3.2m from the sale of the investment in Torino Zerocinque Trading SpA, accounted for in net profit from associates, should be added to the figure for the first half of At 30 June 2011 preliminary sale agreements have a total carrying amount of 42.0m. Close attention to cost control We have continued to keep a tight rein on costs, with operating costs of 14.0m ( 14.2m in the first half of 2010). Staff costs of 5.7m are in line with the 5.6m for the first half of 2010, whilst overheads are down from 8.6m in the first half of 2010 to 8.4m in the same period of Net other operating costs of 1.1m compare with net other operating income of 23.4m in the first half of 2010, primarily reflecting the recognition of advance payments received under preliminary agreements for uncompleted sales (for around 20m). The net change in the value of the property portfolio, based on the appraisals carried out by CB Richard Ellis and REAG on 30 June 2011, out of a total carrying amount of 4,370.2m is an increase of 10.2m (a decline of 2.9m in the first half of 2010). Net finance costs are down 4.3m from the 62.8m for the first half of 2010 to 58.5m in the first six months of The reduction reflects an increase in finance income realised during the period on the investment of available liquidity and a reduction in finance costs on mortgage loans, bonds and other borrowings due both to the early unwinding of cash flow hedges and to increased capitalisation of interest on non-specific borrowings on properties undergoing development in accordance with IAS 23. The fair value changes on derivatives instruments are substantially compensated in the P&L by the release of the fair value related to the early unwinding of cash flow hedges. Tax expenses for the period are down from 19.7m for the first half of 2010 to 5.5m for the first half of 2011 (including a 1.5m reduction in deferred tax expense). This reduction reflects the full adoption of the SIIQ regime. Carrying amount of property portfolio totals 4,370.2m In compliance with CONSOB ruling no. DEM/ of 26 February 2009, the following information on the property portfolio is provided. At 30 June 2011 the total value of the Group s property assets amounts to 4,370.2m, compared with 4,323.5m at 31 December The Group s property portfolio breaks down into the following three categories: Core portfolio, amounting to approximately 3,663.3m (84% of the total portfolio) with an occupancy rate of around 98%. Approximately 91% of the Core portfolio consists of properties

5 mainly for office use, with the remainder mainly for retail and hotel purposes; the average annual rental yield is currently around 5.6%, rising to 5.8% if the annual rents from new leases are taken into account; Development portfolio, amounting to approximately 370.1m (8% of the total portfolio) and including properties and/or land to be renovated, converted and developed to produce commercial and retail properties for lease; Dynamic portfolio, amounting to approximately 336.8m (8% of the total portfolio) and managed with a view to extracting value and/or sale. 30 June 2011 No. properties GLA (m 2 ) (excluding land) Carrying amount ( m) % of total Market value ( m) Gross yield 5 (%) Occupancy rate (%) Toppedup yield 6 (%) Core portfolio 238 1,806,925 3, % 3, % 97.8% 5.8% Development portfolio 7 39, % Dynamic portfolio , % % 50.4% TOTAL 305 2,040,096 4, % 4, % 91.4% Value of assets grows The market value of the property portfolio, based on the appraisals carried out by CB Richard Ellis and REAG on 30 June 2011, amounts to 4,378.2m On a like-for-like basis, the market value of the portfolio is stable compared to 31 December 2010 (up 0.2%). Diluted NAV, calculated according to EPRA guidelines and based on appraisals of the Group s entire property portfolio at 30 June 2011, is 2,451.7m ( per share) and compares with a NAV of 2,495.8m at 31 December 2010 ( per share). Diluted NNNAV (Triple NAV) (NAV after stripping out deferred taxes attributable to the portfolio and adjusting for the marking to market of interest rate derivatives and fixed-rate debt after the related taxation), calculated according to EPRA guidelines, is 2,206.3m ( per share), compared with a NNNAV of 2,174.7m at 31 December 2010 ( per share). 5 Calculated on the basis of annual gross rental income collectible at the end of the period and the matching market value of the assets. 6 Calculated on the basis of annual gross rental income collectible at the end of the period, taking account of the expiry of rent free leases or other rental incentives (step-ups), and the matching market value of the assets.

6 Net debt at 30 June 2011 amounts to 2,214.9 m, compared with 2,084.7m at 31 December LTV (the book value of net debt divided by the book value of the property portfolio) at 30 June 2011 is approximately 50.7%, compared with 48.2% at 31 December The executive responsible for financial reporting, Luca Lucaroni, declares, pursuant to paragraph 2 of art. 154-bis of the Consolidated Finance Act, that the accounting information contained in this release is consistent with the underlying accounting records. In relation to the 2008 Stock Option plan for the Group employees and recurring consultants, the Board of Directors has approved few changes on operating matters to the Rules and the Prospectus. The income statement, statement of financial position, statement of cash flows and analysis of net debt are attached. For further information contact: Beni Stabili Siiq PMS Media Relations Barbara Pivetta Giancarlo Fre barbara.pivetta@benistabili.it g.fre@pmsgroup.it Founded in 1904, Beni Stabili Siiq is a property company listed on the Milan Stock Exchange (BNS.MI) since 1999 and on the Paris Euronext since We invest in office properties located in major cities in northern and central Italy. Since July 2007 Beni Stabili Siiq has been part of the French group, Foncière des Régions, one of Europe s leading property companies. From January 2011 Beni Stabili Siiq has adopted the SIIQ regime ( the Italian version of the REIT). The Company reported a profit of 79m for 2010, whilst the value of the total property assets managed by Beni Stabili Siiq was 4.3bn at 31 December Through Beni Stabili Gestioni SGR, the Company manages a total of 11 real estate funds with total assets under management of approximately 1.6bn at the end of 2010.

7 CONSOLIDATED FINANCIAL STATEMENTS OF THE BENI STABILI GROUP INCOME STATEMENT ( 000) H H Rental income Property outgoings Net rental income Service revenues Related costs Net service revenues Staff costs Overheads Total operating costs Other operating income Other operating costs Development property sales Cost of sales 109, ,597 (9,468) (8,547) 100, ,050 7,633 6,797 (1,614) (1,616) 6,019 5,181 (5,664) (5,610) (8,378) (8,569) (14,042) (14,179) 2,174 27,629 (3,281) (4,198) (450) - Profit/(Loss) on disposal of development properties - - Investment property sales Cost of sales - 14,450 - (14,289) Profit/(Loss) on disposal of investment properties Sale of properties held for sale Cost of sales Profit/(Loss) on disposal of properties held for sale Trading property sales Cost of sales 20,850 - (20,046) (106) (753) Profit/(Loss) on disposal of trading properties Property revaluations Property write-downs ,701 40,681 (15,485) (43,583) Property revaluations/(write-downs) Operating profit Finance income/(costs) Profit/(Loss) on investments in associates Profit/(Loss) on investments in other companies Profit/(Loss) before taxes Taxation Profit/(Loss) for the period Profit/(Loss) attributable to non-controlling interests 10,216 (2,902) 102, ,766 (58,527) (62,827) (11) 3,150 (45) (18) 43,558 52,071 (5,543) (19,688) 38,015 32,383 (409) (349) PROFIT /(LOSS) ATTRIBUTABLE TO OWNERS OF THE PARENT 37,606 32,034 Earnings per share ( ) - Basic - Diluted

8 CONSOLIDATED FINANCIAL STATEMENTS OF THE BENI STABILI GROUP STATEMENT OF FINANCIAL POSITION ( 000) 30 June December 2010 ASSETS Investment properties 3,615,535 3,655,879 Development properties 370, ,980 Operating properties and other assets 49,462 49,907 Intangible assets 3,710 4,306 Investments in - associates other companies 2,838 2,874 Financial instruments 45,952 46,182 Trade and other debtors 91,027 97,860 Derivative financial instruments 2, Deferred tax assets 20,832 14,958 Total non-current assets 4,202,262 4,141,192 Trading properties 92,269 93,348 Trade and other debtors 76,796 52,913 Cash and cash equivalents 365, ,872 Total current assets 534, ,133 Assets held for sale 244, ,116 Total assets 4,981,464 4,852,441 EQUITY Share capital 191, ,574 Share premium reserve 230, ,980 Other reserves 562, ,365 Retained earnings 1,012,793 1,042,448 Total equity attributable to owners of the Parent 1,997,240 1,978,367 Equity attributable to non-controlling interests 13,087 13,028 Total equity 2,010,327 1,991,395 LIABILITIES Borrowings 1,990,798 2,068,063 Trade and other creditors 56,752 75,732 Derivative financial instruments 133, ,006 Staff termination benefits Deferred tax liabilities 39,751 32,956 Total non-current liabilities 2,221,888 2,356,641 Borrowings 589, ,548 Trade and other creditors 116, ,848 Provisions for liabilities and charges 42,794 43,009 Total current liabilities 749, ,405 Total liabilities 2,971,137 2,861,046 Total equity and liabilities 4,981,464 4,852,441

9 CONSOLIDATED FINANCIAL STATEMENTS OF THE BENI STABILI GROUP STATEMENT OF CASH FLOWS ( 000) H H Profit before taxes 43,558 52,071 Amortisation and write-downs of intangible assets 618 1,572 Depreciation of operating and other assets Property (revaluations)/write-downs (10,216) 2,902 Movement in deferred tax assets and liabilities in other costs/(income) (1,303) (1,788) Revaluations/Write-downs of investments Non-cash finance costs/(income) on derivative instruments and amortised cost 12,180 10,291 Finance costs/(income) from discounting debtors and creditors (13) (535) Fair value of share options Provisions for staff termination benefits Provisions for bad debts and liabilities and charges 69 - Use of provisions for bad debts and liabilities and charges (218) Cash flow from operating activities 46,007 65,488 Current taxes (4,089) (18,212) Cash flow from operating activities after taxes 41,918 47,276 Changes in assets and liabilities Debtors / Creditors deriving from property sales/purchases (19,610) (27,286) Amounts receivable for outstanding tax disputes (4,580) (58,211) Tax expense payable on adoption of SIIQ regime (18,997) - Other assets/other liabilities (14,328) 25,734 Flusso di cassa prima dell'attività di investimento e dell'attività finanziaria (15,597) (12,487) Investing activities Increase in intangible assets (22) (977) Increase in operating and other assets (123) (55) Increase in properties (56,571) (55,588) Purchase of investments and financial instruments / capital increases by investee companies - (5,111) Disposal of properties 20,412 48,698 Sale of treasury shares (after transaction costs) following exercise of share options ,086 Redemption of real estate fund units Financing activities Dividends paid (42,121) (26,697) Contributions / redemptions and attribution of reserves from/to non-controlling interests (353) 13 Capital increase with share premium following exercise of share options Early unwinding of derivative instruments (29,672) (857) New issue of convertible bonds maturing 2015 (after issue costs) - 220,003 Repurchase of convertible bonds maturing 2011 (9,157) (7,394) Other increases/(decreases) in borrowings 191,340 (83,207) Net increase/(decrease) in cash and cash equivalents 58, ,295 Cash and cash equivalents at beginning of period 306, ,751 Cash and cash equivalents at end of period 365, ,046

ANALYSIS OF THE GROUP'S NET DEBT ( 000) 30 June 2011 31 December 2010 Borrowings from banks and financial institutions 1,459,342 1,258,170 of which: - short-term portion 301,646 45,864 -

10 ANALYSIS OF THE GROUP'S NET DEBT ( 000) 30 June December 2010 Borrowings from banks and financial institutions 1,459,342 1,258,170 of which: - short-term portion 301,646 45,864 - medium/long-term portion 1,157,696 1,212,306 Bonds in issue 645, ,050 of which: - short-term portion 20,315 8,028 - long-term portion 625, ,022 Convertible bonds in issue 475, ,391 of which: - short-term portion 267, ,656 - long-term portion 207, ,735 Total borrowings 2,580,481 2,391,611 Cash and cash equivalents (365,606) (306,872) Net debt 2,214,875 2,084,739

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