The Board of Directoros approves the draft separate and consolidated financial statements at 31 December 2013
Despite the particularly critical global market conditions, the IGD Group was able to close FY 2013 with the following results:
- Total revenue: €127.0 million, +3.0%
- Core business revenue: €120.7 million (€123.3 million at 31 December 2012)
- Core business EBITDA: €82.8 million (€85.8 million at31 December 2012)
- Group net profit: €5 million (€11.3 million at 31 December 2012), as a result primarily of the drop in Ebitda and the negative change in fair value
- Core business Funds from Operations (FFO): €35.5 million, -4.8% with respect to 31 December 2012 (€37.2 million)
With regard to the financial indicators:
- Market Value of the freehold real estate portfolio: €1,891.3 million (basically in line with respect to €1,906.6 million posted at 31 December 2012)
- Net financial debt: €1,084.9 million (down with respect to the €1,089.6 million reported at 31 December 2012)
- Gearing ratio: 1.38, unchanged with respect to 31 December 2012
- Dividend of €0.065 per share proposed (in line with the payout policy outlined in the 2014-2016 Strategic Plan), higher than the mandatory amount under the SIIQ regime, with shares going ex-div on 19 May 2014 and payable as of 22 May 2014
- the proposed capital increase excluding pre-emption rights reserved exclusively for shareholders entitled to receive the 2013 dividend (the Dividend Reinvestment Option) was approved
- other proposed resolutions: authorization for the purchase and disposal of treasury shares
- the annual Report on Corporate Governance and Ownership Structure, as well as the Board of Directors’ Compensation Report, were also approved
Today the Board of Directors of IGD – Immobiliare Grande Distribuzione SIIQ S.p.A.(“IGD”or the “Company”), listed on the STAR segment of the Italian Stock Exchange, in a meeting chaired by Gilberto Coffari, examined and approved the draft separate and consolidated financial statements at 31 December 2013.
“We are closing 2013 with core business EBITDA of €82.8 million, a net profit of €5 million and core business FFO of €35.5 million. These results demonstrate that we were able to limit the pressure on revenue and keep operating costs under control while also stabilizing the net financial debt and maintaining our asset quality high and the value largely stable” Claudio Albertini, Chief Executive Officer of IGD – Immobiliare Grande Distribuzione SIIQ S.p.A. stated. “In 2013 we followed the strategic guidelines of our Business Plan which focuses on the medium/long term sustainability of revenue and the cost of capital, as well as the preservation of our portfolio’s fair value”.
Principal consolidated results at 31 December 2013
The IGD Group’s total revenue reached €127.0 million at 31 December 2013, an increase of 3.0% inclusive of €6.2 million in revenue from trading following the sale of properties pertaining to the Porta a Mare Project.
Core business revenue amounted €120.7 million, versus €123.3 million in 2012.
Rental income fell with respect to 2012 by 1.9%. Like-for-like revenue in Italy fell by 1.2% due to a higher vacancy rate, in part related to fit-out work which helped to improve occupancy beginning already in the latter part of the year, and the continuation of the policy to support tenants. In Romania like-for-like revenue fell by 9.9% as a result of greater vacancies and increased pressure on rents.
The core business rental income was accompanied by the €97 thousand in revenue generated by the Porta a Mare Project (a unit in Palazzo Orlando was rented).
The direct costs pertaining to the core business (including personnel expenses) amounted to €28.01 million at 31 December 2013, a slight increase of 1.0% with respect to the prior year. This increase is primarily attributable to the increase in costs relating to IMU which represents approximately 27% of the total direct costs (versus approximately 26% in 2012), as well as the increase in condominium fees as a result of the increased vacancies. Provisions decreased, as did the costs relating to technical consultancies and maintenance. These costs amounted to 23.2% of core business revenue, an increase with respect to the 22.5% recorded in the prior year. The direct costs pertaining to the Porta a Mare Project, which amounted to €0.4 million, refer primarily to the property tax, IMU.General expenses(including payroll costs at headquarters), reached €9.9 million, in line with the €9.7 million posted at 31 December 2012, and 8.2% as a percentage of revenue. With regard to the Porta a Mare Project, general expenses increased also a result of the steps taken to strengthen the sales network.
Core business EBITDAamounted to €82.8 million in 2013, a drop of 3.5% with respect to the €85.8 million reported in the prior year, while total EBITDA came to €82.9 million (€85.7 million at the end of 2012).
The IGD Group’s core business EBITDA Margin dropped 1% with respect to 2012 to 68.6% at 31 December 2013.
The IGD Group’s EBIT at 31 December 2013 amounted to €48 million,down with respect to the €53.4 million recorded at 31 December 2012. The change is explained primarily by the impact of property writedowns and fair value adjustments which came to €33.5 million.
A positive trend was posted infinancial charges which fell 2.5% against 2012.
The Group’s portion ofnet profitat 31 December 2013 came to €5million(versus €11.3 million in 2012).
More significant is the trend in Funds from Operations (“FFO”) which at 31 December 2013 amounted to €35.5 million, a drop of 4.8% with respect to the €37.3 million in reported in 2012.
At the end of 2013 the gearing ratio came to1.38, unchanged with respect to 31 December 2012.
The IGD Group’s net debt at 31 December 2013 amounted to €1,084.9 million, an improvement with respect to the €1,089.6 million recorded at 31 December 2012.
Of note, particularly in a year in which loans to businesses fell in Italy, it the fact that the Group was able to gather €309 million in new financial resources in 2013 and maintain the cost of debt low at 3.94%.
The Real Estate Portfolio at 31 December 2013
Based on CB Richard Ellis’s and Reag’s independent appraisals, the market value at 31 December 2013 of the Igd Group’s real estate portfolio reached €1,891.3 million, basically in line with the €1,906.6 million recorded at 31 December 2012.
The figure reflects the increase of 1.1% in hypermarkets and the drop of 3.2% in the Italian malls – explained by both the planned vacancies needed to complete restyling and revise space in order to accommodate different types of merchandise, as well as the reduced forecast for growth in rents – and of 2.5% relative to the Romanian subsidiary Winmarkt, once again as a result of the planned vacancies necessary to complete the work underway designed to attract high profile international retailers, as well as increased pressure on rents.
The average financial occupancy rate in Italy came to 97.4%, a significant number in a general environment of declining consumption.
The footfalls at the Italian shopping centers increased 0.9% in 2013 with respect to 2012 with more than 66 million visitors during the year, testimony to the validity of the shopping center’s format and the choices made by IGD as both operator and manager.
The market value at 31 December 2013 of the Romanian real estate portfolio reached €173.4 million (- 2%). The financial occupancy rate came to 84.46%.
Other resolutions – Calling of the Annual General Meeting
IGD’s Board of Directors also resolved to convene the Company’s Annual General Meeting in ordinary and extraordinary sessions on 15 April 2014, at 10:00 a.m., at the Company’s headquarters in Bologna, in first call and, if necessary, in second call on 16 April 2013, same time and place.
In light of the quality of the results achieved despite the particularly difficult environment, IGD’s Board of Directors will propose that the shareholders, meeting in ordinary session, approve a dividend of €0.065 per share, in line with the payout policy outlined in the 2014-20156 Business Plan. The dividend yield for those who purchased IGD shares at the end of 2012 (at a price of €0.82) will reach 7.9% and should be even higher for those who, in June 2013, took advantage of the Dividend Reinvestment Option and used the 2012 dividend to subscribe new shares at a price of €0.75, with a yield that reached 8.7%.
The dividend will be payable as of 22 May 2014, with shares going ex-div on 19 May 2014. Pursuant to Art. 83-terdecies of Legislative Decree n.58 of 24 February 1998 n. 58, the shareholders of IGD at the record date (21 May 2014) will be entitled to receive the dividend.
The shareholders, meeting in ordinary session, will first be called upon to approve the financial statements at 31 December 2013 and the allocation of the earnings for the year.
The Shareholders will also be called upon to resolve on the authorization to purchase and dispose of treasury shares as follows:
– Motivation: to carry out (i) trading and hedging transactions and (ii) invest liquidity and allow for the use of the treasury shares in transactions pertaining to operating activities and business projects consistent with the Company’s strategic guidelines, in relation to which it is beneficial to trade, swap, contribute, or otherwise dispose of the shares;
– Maximum number of treasury shares which may be purchased: the purchases may be made on one or more occasions up to the maximum allowed under the law.
– Expiration of the shareholders’ authorization; the authorization to purchase treasury shares is requested for a period of eighteen months as from the date of today’s resolution; there is no time limit on the authorization to dispose of the shares.
– Methods and purchase price of the treasury shares: the purchases shall be made in accordance with Art. 132 of Legislative Decree 58/1998, Art. 144-bisof the Regulations for Issuers and all other applicable laws and regulations, as well as the accepted market practices recognized by Consob and must be purchased at prices satisfying the provisions of Art. 5(1) of European Commission Regulation EC 2273/2003 of 22 December 2003.
– Treasury shares held by IGD: to date IGD holds 10,976,592 treasury shares or 3.154% of the share capital.
The shareholders, meeting in extraordinary session, will also be called upon to resolve on a capital increase of up to 10% of the Company’s pre-existing share capital, pursuant to Art. 2441, paragraph 4(2) of the Italian Civil Code, without pre-emption rights, reserved exclusively for shareholders entitled to receive the 2013 dividend. The shareholders who decide to subscribe will be offered the possibility to reinvest a part, not to exceed 80%, of their dividend.
In greater detail, the transaction to be submitted for the shareholders’ approval, referred to as the Dividend Reinvestment Option, will be structured as follows:
- shareholders holding IGD shares on the above mentioned record date will be given the option to participate in the offering of IGD shares;
- the capital increase will be for a maximum total of 80% of the distributable dividends for 2013.
- each shareholder may subscribe to a number of shares, the amount of which does not exceed 80% of their dividend;
- during the Annual General Meeting shareholders will determine the criteria to be used to establish the subscription price of the new shares on the basis of the BoD’s proposal, market practices for similar transactions, and in light of the average stock price during eight trading sessions prior to the date on which the price is set, less the amount of the 2013 cash dividend and a discount of a maximum of 10%. The issue price of the new shares, however, may not be below €0.69 (the official average closing price of IGD shares in the six months prior to 27 February 2014 less the amount of the 2013 cash dividend and a discount of 15%). The BoD will subsequently resolve on the final subscription price on the basis of the criteria established during the Annual General Meeting close to the offer launch date.
The details of the transaction will be disclosed to the market after the Annual General Meeting and before the transaction’s launch.
The purpose of this transaction, which is in line with the best practices adopted by a number of European REITs, is to give 2013 dividend recipients the possibility to reinvest in IGD and IGD to recapitalize itself. The Company intends to launch the capital increase, subject to approval by the authorities, on the date as of which the 2013 dividend is payable and, at any rate, by the deadline of 30 September 2014.
[The Board of Directors, in accordance with the standards outlined in Borsa Italiana’s Corporate Governance Code, also confirmed whether or not the independent directors still qualified as independent based on the information provided by the independent directors themselves.]
Corporate Governance and Compensation Reports
IGD’s Board of Directors approved the Annual Report on Corporate Governance and Ownership Structure, which forms an integral part of the annual report, as well as the Board of Director’s Compensation Report the first section of which, pursuant to Art. 123-ter, par. 6 of Legislative Decree. 58/98, will be voted on by shareholders during the next Shareholders’ Meeting.