The Board of Directors approves the Half-year Financial Report at 30 June 2017, the launch of the activity aimed to support liquidity of IGD shares and co-option of independent Director Matteo Cidonio
The main results:
- Group net profit: €48.9 million (+84.6%)
- Recurring net income (FFO): €31.9 million, (+17.8%); outlook FY2017 revised upward: +20% vs FY2016
- Core business revenue: €71.6 million, +6.0% (LFL Italy +1.5%, Romania +7.0%)
- Sales of retailers in Italian malls +1.3%; significant upside on renewed leases (Italy +4.7%; Romania +2.5%)
- Loan-to-value 48.5%; average cost of debt 2.9%
- Market value of the portfolio: €2,210.4 million; LFL +0.7%
- EPRA NAV per share: €1.38 (+1.0%); EPRA NNNAV per share: €1.31 (+1.6%)
- Co-option of independent director Matteo Cidonio
- Launch to the activity aimed to support liquidity of IGD shares
Today the Board of Directors of IGD – Immobiliare Grande Distribuzione SIIQ S.p.A. (“IGD”or the “Company”), one of the main players in Italy’s retail real estate market and listed on the STAR segment of the Italian Stock Exchange examined and approved the Half-Year Financial Report at 30 June 2017 during a meeting chaired by Elio Gasperoni.
“With this half-year report we are halfway through our 2016-2018 Business Plan which contains ambitious growth targets. The figures that were just approved, with which we are very satisfied, show that we are in line with and, in some instances, have exceeded the plan targets.This has allowed us to revise the guidance for the year-end 2017 Fund from Operations upward to +20%” stated IGD – Claudio Albertini, Immobiliare Grande Distribuzione SIIQ S.p.A.’s Chief Executive Officer.
SOLID OPERATING PERFORMANCE IN A POSITIVE RETAIL ENVIRONMENT
In the first six months of 2017 sales of mall retailers grew further, including compared to what was an already strong 2016. Sales for retailers in Italian malls rose 1.3% (including the ESP extension inaugurated on 1 June 2017, +0.5% excluding it), while footfalls fell 0.8% compared to the prior year and were affected, in particular, by the first two months of the year, as well as an unfavorable calendar effect.
Footfalls in Romania were also down (-1.8%) due to the opening of new shopping centers, as well as internal fit-outs. Consumer and retail trends in the country continue to be particularly positive, however, as indicated by the further increase in the occupancy rate (96.9%) and the upside on renewals (+2.5%).
In Italy the positive trend in pre-letting reported in prior quarters also continued: 74 contracts, renewals and turnover, were signed with an average upside of +4.7%; while the average occupancy (malls and hyper) came to 97.2%.
FINANCIAL RESULTS ACCELERATE (FFO +17.8%)
Total consolidated revenue amounted to around €75.7 million, up 11% compared to the same period of the prior year.
More in detail,rental income rose 5.2% to €68.4 millionexplained by:
- for around €0.9 million,like-for-like growth (+1.5%) in Italy. Malls were up (+2.1%) as a result of the pre-letting carried out between year-end 2016 and the current half, as well as lower discounts; the impact of inflation continues to be marginal;
- for around €2.4 million, higher revenue not like-for-like (Centro Maremà in Grosseto inaugurated at the end of October 2016 and the opening of the ESP extension on 1 June 2017);
- for around €0.3 million,higher revenue like-for-like in Romania (+7.0%)linked to pre-letting and renegotiations.
Growth was also recorded in revenue from services (+26.1%) which amounted to €3.2 million. Most of this revenue comes from the facility management business, which was up against the prior period due mainly to new management mandates. This figure also includes the revenue generated by agency and pilotage, related to the opening of the ESP extension.
The Porta a Mare project generated revenue from trading of around €4 million as a result of the sale of 14 residential units and 14 garages. At the approval date of this half-year report 2 other sales had closed and preliminary agreements for an additional 8 residential units have been signed; the total of the units sold/pledged has, therefore, reached 78% of the total saleable area.
Core business Ebitda came to€50 million, an increase 6.9 % compared to 30 June 2016. Operating costs fell further as a percentage of core business revenue causing the core business Ebitda Margin to rise by 60 basis points against the prior year to 69.8%. The freehold Ebitda margin came to 79.5%, an increase of 90 basis points with respect to June 2016.
Financial expense fell 10.7% to €17.5 million,despite the increase in average debt linked to the investments made in the period (ESP extension in early June): the result is attributable to the recent liability management activities, as well as the decrease in the notional amount of a few IRS. The downward path of the average cost of debt was confirmed (2.9% vs 3.3% at 31 December 2016).
The Group’s portion of net profit amounted to €48.9 million, an increase compared to the €26.5 million posted in the same period 2016 (+84.6%).
Funds from Operations (FFO) rose 17.8% against the first six months of 2016 to €31.9 million.
The FY 2017 growth targets for FFO were revised upward by the Group from the +18/19% announced in February to +20%.
NAV ALSO ON THE RISE
The EPRA NNNAV reached €1,061.2 million or €1.31 per share, an increase of 1.6% compared to the €1.29 per share recorded in 2016 despite the payment of €36.6 million in dividends, recognized in full in the half.
The market value of theIGD Group’s real estate portfolio reached €2,210.4 million, an increase of 1.5%compared to 31 December 2016: the main change is linked to the extension of the ESP Shopping Center in Ravenna.
Value also rose on a like-for-like basis in Italy (+0.7%): Malls were 1.1% higher (+€12.6 million, €5.8 million of which pertains to the 7 key malls) and the gross initial yield came to 6.30%; hypermarkets increased slightly by 0.54% (+€3.5 million) and the gross initial yield came to 6.19%. In Romania the value of the real estate portfolio reached €162.7 million at 30 June 2017, down slightly compared to the €164.9 million posted at 31/12/2016, while the gross initial yield came to 6.55%.
The IGD Group’s net financial debt came to €1,076.8 million at 30 June 2017, up with respect to December 2016 (€21.4 million) as a result of the investments made and the payment of dividends mentioned above. At the same time the gearing ratio and the loan-to-value came to 0.98x and 48.5%, respectively, fully in line with the Business Plan targets.
Co-option of independent director Matteo Cidonio
Based on the proposal of the Nominations and Compensation Committee, the Board of Directors resolved to substitute Matthew David Lentz, who resigned in June 2017, byco-opting Matteo Cidonioto act as an independent non-executive director of the Board of Directors pursuant to Art. 2386 of the Italian Civil Code.
More in detail, during the meeting held on 26 July 2017 the Nominations and Compensation Committee assessed the professional qualifications and experience, including managerial, of Matteo Cidonio, while also verifying compliance with all legal requirements and independent status, in accordance with Art. 148, paragraph 3, of Legislative Decree n. 58/1998, of the Corporate Governance Code promoted by the Italian Stock Exchange and Art. 37 of Consob Regulation n. 16191 of 29 October 2007, in light of the declarations received and the relative curriculum vitae.
Matteo Cidonio was also appointed as a new member of the Committee for Related Party Transactions, in substitution of director Matthew David Lentz.
Mr. Cidonio will remain in office through the end of the current Board of Directors’ term, namely through the date on which the Annual General Meeting is convened to approve the financial statements at 31 December 2017.
IGD’s Board of Directors will be able to count on the consolidated expertise of Mr. Cidonio (currently managing partner of GWM Group) matured in his over 25 years of experience in real estate and finance.
Matteo Cidonio’s curriculum vitae is available on the Company’s website at www.gruppoigd.it/Governance/Board-of-Directors.
To date, Matteo Cidonio does not own any shares of IGD.
Launch to the activity aimed to support liquidity of IGD shares
The Board of Directors of IGD, in accordance with the resolution taken by the shareholders meeting on 12 April 2017 in relation to the authorization to purchase and dispose of treasury shares, resolved to launch a program aimed at enhancing liquidity of its ordinary shares in order to support regular trading and avoid price fluctuations not in line with market trends.
The duration of the activity aimed at enhancing liquidity is one year and will commence on 4 September 2017. Such activity will be conducted in accordance with the accepted market practice No.1, introduced by Consob resolution n. 16839 of 19 March 2009.
The Company appointed Kepler Cheuvreux, with registered office in 112 avenue Kléber, 75116 Paris and dealer code 1 008 (the “Intermediary”) as independent intermediary for the execution of the activity aimed at enhancing the liquidity on the Mercato Telematico Azionario – Segmento STAR (“MTA”).
Execution of the program
Pursuant to the agreement entered with the Intermediary:
- the Intermediary will purchase and sell shares on behalf of and with risk to IGD and, in order to allow such activity, the Company will make available to the Intermediary a fund of Euro 2 million;
- the number of IGD shares bought or sold by the Intermediary in each trading day shall not exceed 25% of the average daily volume of the shares traded on the same market in the previous 20 trading days;
- the maximum limits for bought or sold open positions shall not exceed respectively 2% and 2% of the shares issued by IGD.
Price of the purchase and sell of the shares
Pursuant to the agreement entered with the Intermediary:
a) the price of trading orders placed on the buy-side shall not exceed the highest price between the price of the last independent transaction and the current price of the highest independent trading order to buy available on MTA;
b) the price of the trading orders placed on the sell-side shall not be lower than the lowest price between the price of the last independent transaction and the current price of the lowest independent trading order to sell available on MTA and, in any case, such price shall not be lower than 90% of the reference trading price in the preceding trading session on the MTA.
The transactions executed in accordance with the program will be communicated to the market in accordance with applicable legal and regulatory framework.
Any change to the program will be promptly disclosed to the public by the Company.