Earnings Release • Sep 3, 2015
Earnings Release
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3 September 2015 – After closing of markets Under embargo until 17:40 CET
Public limited liability company Public regulated real estate company under Belgian law Registered office: avenue Louise 331-333, 1050 Brussels Enterprise number: 0877.248.501 (RLE Brussels) (the "Company")
Aedifica's investment strategy is built on two underlying demographic trends, namely population ageing in Western Europe and population growth in Belgium's main cities. These trends have contributed to the market's confidence in Aedifica, confidence which has continued to grow over the course of its tenth financial year (2014/2015) as demonstrated by:
Aedifica has recently realised an impressive series of new investments, exclusively in the senior housing segment, which has become the Company's principal development pillar. No less than 17 buildings entered into Aedifica's Belgian and German portfolio during the 2014/2015 financial year (not to mention various extensions, redevelopments, etc.). With these acquisitions, the number of senior housing sites has grown to approx. 70. The fair value of investment properties rose well above €1 billion during 2014/2015 to reach €1,005 million by 30 June 2015. This marks an increase of €220 million (or 28 %) in just one year.
Given the low consolidated debt-to-assets ratio (37 %), a result of the successful June 2015 capital increase, the Company is well-positioned to maintain its momentum and continue its growth trajectory at a pace that shareholders come to enjoy over the Company's first ten financial years. New investment opportunities are currently under consideration, both in Belgium and in Germany and preliminary contacts have been established in other neighbouring countries. These potential investments are fully aligned with Aedifica's strategy which is highly favoured by the market. Even before considering new opportunities, future growth is also assured for the Company given its existing commitments to acquire, renovate, extend, and/or redevelop multiple sites. These projects fit perfectly with Aedifica's strategy which, in the senior housing segment, aims to improve existing sites and to develop new projects in partnership with tenants/operators. The current pipeline for these types of projects represents a total committed budget of €138 million, to be invested over a four-year period. This strategy allows Aedifica to maintain a portfolio of high-quality buildings that generate attractive net yields.
Not only interested in investing, Aedifica also strives for optimal management of its real estate portfolio amid today's unstable economic climate. The Company's portfolio consists of:
Aedifica continues to improve its portfolio management, which translates into excellent and increasing rental incomes (+23 %), an increasing EBIT margin (78 %), and well controlled financing costs. Profit (excluding non-cash elements arising from application of accounting standards on financial instruments and investment properties) has reached €25.5 million (30 June 2014: €20.3 million), an increase of 26 %, i.e. €2.39 per share (30 June 2014: €2.05 per share). This result (absolute and per share) is ahead of the initial budget for the 2014/2015 financial year as published in the Annual Financial Report 2013/2014 and is perfectly in line with the forecast for the 2014/2015 financial year as published in the Securities Note regarding the capital increase of June 2015.
Of the items that have had no effect on the level of the proposed dividend, only the change in the fair value of investment properties (as valued by independent experts) can be observed in € million and warrants mention here: it gave rise to unrealised capital gains (non-cash) for which more than €19 million has been recognised in the income statement.
Taking this item into account, Aedifica's total profit amounts to €45 million (30 June 2014: €21 million).
Given the Company's strong performance during the 1st half of the financial year, recent investments, the Group's forecasts and the prevailing market conditions, the Board of Directors increased its dividend forecast for the current financial year on the occasion of the Half Year Financial Report in February 2015 to set a revised expectation of €2.00 gross per share (initially €1.93 per share). This was subsequently confirmed in the Securities Note regarding the capital increase of June 2015. Consequently, the coupon representing the dividend was detached on 10 June 2015. Taking into account the consistency of the forecast and Aedifica's actual performance over the whole financial year, the Board of Directors will propose to the Annual General Meeting to distribute a gross dividend of €2.00 per share, an increase of 5 % compared to that distributed for previous financial year.
Despite the instable environment that continues to unfold around the world, the Board of Directors expects a higher dividend for 2015/2016, at €2.05 gross per share, as detailed in the abovementioned Securities Note.
3 September 2015 – After closing of markets Under embargo until 17:40 CET
To mark the occasion of the Aedifica's 10th anniversary, and highlight the Company's future potential, the Board of Directors is excited to unveil Aedifica's new logo and corporate slogan in this press release. The skyline of the original logo has been refreshed and the slogan "The urban way to live" has been changed to "Housing with care" to better reflect Aedifica's strategy and strength: the combination of housing and care services.
3 September 2015 – After closing of markets Under embargo until 17:40 CET
The most noteworthy event of 2014/2015 is without a doubt the capital increase carried out at the end of the financial year. On 11 June 2015, Aedifica launched a capital increase, in cash and with priority allocation rights to raise a gross amount of €153 million. The primary aim of this capital increase was to increase the equity in order to raise new financial resources that will enable the Company to continue to pursue its growth strategy with respect to its property portfolio, while maintaining an appropriate debtto-assets ratio in the range of 50 to 55 %. On 29 June 2015, the REIT issued 3,121,318 new shares at an issue price of €49.00 per share, for a total of €152,944,582 (including share premium). These new shares were admitted into trading the same day and will share in the result of the 2015/2016 financial year.
After the closing of markets on 30 June 2015, the Company's market capitalisation amounted to approx. €706 million (as compared to €508 million on 30 June 2014).
In the short period following the capital increase, Aedifica has already announced two new investments in the senior housing segment (see section 2.2 below).
The investments of the financial year are detailed below in sections 2.1.1, 2.1.2. and 2.1.3.
Residentie Sporenpark
3 September 2015 – After closing of markets Under embargo until 17:40 CET
On 12 June 2014, Aedifica announced an agreement in principle for the acquisition of 5 new rest homes in the Province of Flemish Brabant, including the Binkom site, which was acquired on the same date.
On 10 July 2014 and 29 August 2014, Aedifica acquired the companies Woon & Zorg Vg Aarschot BVBA and Woon & Zorg Vg Tienen BVBA (which have since been absorbed by Aedifica), owners of the Aarschot site (164 units, including a 120-bed rest home and an 44-apartment assisted-living complex) and the Tienen site (178 units, namely a rest home comprising 129 beds and 49 assisted-living apartments). The gross contractual value of the two sites (works completed in July and August 2014) amounts to approx. €44 million (excluding the plot of land in Tienen, which was acquired on 30 June 2014). The rest homes are operated under a 27-year triple net long lease, while the assistedliving apartments are operated under an agreement for the right of use. The initial triple net yield of the two sites amounts to approx. 6 %. These sites contribute to the result, with a reduced rent extended for the first year ("step rent"). The disposal of assisted-living apartments at the Aarschot and Tienen sites (considered in this case as non-strategic by the Company) began during the first quarter of 2014/2015. As of 30 June 2015, all 44 assisted-living apartments have been sold at the Aarschot site as have 39 assisted-living apartments (out of the initial 49) at the Tienen site. The value of the apartments that remain available for sale amounts to less than €2 million.
De Notelaar (Province of Antwerp) and Overbeke (Province of East Flanders) rest homes On 4 December 2014, Aedifica realised the acquisition of two rest homes (through the partial demerger of La Réserve Invest NV and through the acquisition of the companies Krentzen BVBA, which has since been absorbed by Aedifica, and of Overbeke BVBA). De Notelaar is located in Olen (Province of Antwerp) and comprises 94 units. Overbeke is located in Wetteren (Province of East Flanders) and comprises 113 units. The buildings were completed at the end of 2012 and are operated by the Armonea Group on the basis of 27-year triple net long leases. The contractual value of the two sites amounts to approx. €29 million, which provides for an initial triple net yield of approx. 6 %.
Vulpia portfolio (Province of Antwerp, Province of Limburg and Province of Liège)
On 11 December 2014, Aedifica announced the signing of an agreement in principle for the acquisition of four senior housing sites (existing or under construction), located in three Belgian provinces. Of the four sites, the Halmolen rest home (Halle-Zoersel, Province of Antwerp, 140 units) was acquired on that date and the Villa Temporis site (Hasselt, Province of Limburg, 40 units) and the La Ferme Blanche site (Remicourt, Province of Liège, 61 units) were added to the consolidated portfolio on 18 December 2014 through the acquisition of the companies Villa Temporis SCRL and Michri SA. These sites are operated under 27-year triple net long leases. The contractual value of the three sites amounts to approx. €27 million, which provides for an initial triple net yield estimated at less than 6 %. Extension and renovation projects are planned for the sites Villa Temporis and La Ferme Blanche to bring their capacity to 103 and 90 units, respectively.
The fourth site is the object of an agreement signed on 18 December 2014 (subject to certain conditions which remain outstanding) for the future acquisition (together with its subsidiary, Aedifica Invest SA) of 100 % of the shares of the company RL Invest SA. RL Invest SA is the current owner of the Leopoldspark assisted-living apartment building (under construction) and rest home (Leopoldsburg, Province of Limburg), which will comprise a combined total of 150 units. The total contractual value of the site will
amount to approx. €20 million, which provides for an initial triple net yield estimated at less than 6 %.
Overall, this portfolio will comprise 483 residential units upon completion of the planned development projects (current capacity of 241 units).
Service-Residenz Schloss Bensberg
On 16 December 2014, Aedifica acquired the control of three companies (Aedifica Luxemburg I, II and III SARL), owners of eight rest homes located in North Rhine-Westphalia and in Lower Saxony (Germany) which comprise a total of 642 beds. All rest homes are recent constructions built between 2009 and 2011. The contracts in place for these establishments are irrevocable long-term leases with 25-year lease maturities. These are contracts with double net structure, meaning the repair and maintenance of the roof, structure and facades of the building will remain the responsibility of the owner. Aedifica benefits from a triple net 10-year warranty for the maintenance of the buildings. The contractual value amounts to more than €60 million, which provides for an initial gross rental yield (double net) of approx. 7 %. The eight sites contribute to the result, with a reduced rent extended for the first year ("step rent").
On 17 December 2014, Aedifica announced the signing of the purchase agreement for an assistedliving apartment complex in North Rhine-Westphalia, Germany. This agreement signed in front of the
notary was subject to the usual conditions in Germany, mainly of administrative nature. Having met all conditions in 2015, the purchase price (€15 million) was paid and the property and full use of the buildings was automatically acquired effective 1 March 2015. The transaction was financed using Aedifica's credit facilities.
The acquired complex comprises 87 apartments and 8 commercial spaces, as well as a swimming pool and 99 underground parking spaces.
Aedifica entered into two leases for the buildings, namely:
The contractual value of the complex amounts to approx. €14 million, which provides for an initial gross rental yield of approx. 6 %.
Extension and renovation works at the Eyckenborch rest home in Gooik were completed during the first quarter of 2014/2015. The site has now a capacity of 142 residents, compared to 78 before the works began.
Klein Veldeken assisted-living apartment building (Province of Flemish Brabant, Belgium) Extension works at the Klein Veldeken assisted-living apartment building in Asse were completed during the second quarter of 2014/2015. Operations have been transferred to a specialised operator at the site, which has now a capacity of 58 units, compared to 41 before the works began.
Residentie Sporenpark rest home (province of Limburg, Belgium)
On 28 April 2015, Aedifica announced the completion of the new Residentie Sporenpark rest home, located in Beringen (province of Limburg).
Residentie Sporenpark comprises 110 beds and 17 assisted-living apartments. The site is operated by Senior Living Group (a subsidiary of the Korian – Medica group and major player in the European senior care market) on the basis of a 27-year triple net long lease. The investment amounts to approx. €17 million (including plot of land) and generates an initial triple net rental yield of approx. 6 %.
The construction of Residentie Sporenpark began in 2013, as announced in the press release of 18 December 2012 is part of a broader project, called be-MINE, located on the former mining site in Beringen-Mijn. The objective of this project is to redevelop the touristic and recreational aspects of the
site by evenly intertwining urban functions such as living, working and shopping. The Houtpark residential project brings together various accommodations: single-family dwellings, apartments, a rest home and assisted-living apartments. Aedifica is delighted to have played a part in this ambitious project through the development of Residentie Sporenpark.
Extension and renovation works at the 't Hoge rest home in Kortrijk were completed during the last quarter of 2014/2015. The site has now a capacity of 79 residents, compared to 62 before the works began.
The following development projects are in progress:
In terms of financing, the following transactions took place since the beginning of the 2014/2015 financial year:
Taking into account the abovementioned financing arrangements, the timetable showing the maturity of Aedifica's current credit facilities is as follows (in € million):
| Credit facilities on 30 June 2015: | 550 |
|---|---|
| > 2022/2023 : | 14 |
| 2021/2022 : | 25 |
| 2020/2021 : | 2 |
| 2019/2020 : | 80 |
| 2018/2019 : | 102 |
| 2017/2018 : | 92 |
| 2016/2017 : | 150 |
| 2015/2016 : | 85 |
Establishment of these credit facilities demonstrates the strong and durable relationship Aedifica maintains with its banks.
On 12 February 2015, the semi-industrial building Bara, presented among the assets classified as "held for sale" as of 31 December 2014, has been disposed of for approx. €0.6 million. This sale generated a net gain on disposal of more than 50 % as compared to its most recent fair value determined by the Company's independent expert.
On 1 September 2014, the FSMA (Financial Services and Markets Authority) authorised Aedifica to become a public Regulated Real Estate Company ("public RREC") in accordance with the Act of 12 May 2014 on Regulated Real Estate Companies ("RREC Act"), subject to certain conditions.
The Extraordinary General Meeting of Aedifica's shareholders held on 17 October 2014 approved, with unanimity, the change of status from a Real Estate Investment Company into a public RREC in accordance with the RREC Act.
As no exit rights were exercised, and given that all conditions to which the modification of the Articles of Association and the authorisation by the FSMA were subject were fulfilled, Aedifica converted to public RREC status as from 17 October 2014.
Aedifica is pleased to take advantage of this new status, which permits the Company to continue to carry out present activities in its own best interests, as well as those of its shareholders and other stakeholders.
In order to support the Company's growth, Aedifica has added the positions of Chief Operating Officer ("COO") and Chief Legal Officer ("CLO").
As from 1 January 2015, Aedifica holds a German subsidiary: Aedifica Asset Management GmbH. This subsidiary advises and supports Aedifica in the growth and management of its real estate portfolio in Germany. Through this new subsidiary Aedifica has expanded both its operational capacity and its corporate presence in the German market.
For the first time, Aedifica's Board of Directors decided to offer shareholders the possibility to contribute their 2013/2014 net dividend entitlement back into the capital of the Company in exchange for new shares. Shareholders were given the option to subscribe for one new share at an issue price of €48.45 per 30 No. 12 coupons (valued at €1.6150 net each) contributed. Aedifica's shareholders opted to contribute approximately 64% of their net dividend entitlement back into the capital of the Company in exchange for new shares (i.e. instead of cash dividend payment). This resulted in a capital increase of approx. €11 million for Aedifica.
On 4 December 2014, the Extraordinary General Meeting approved the partial demerger of SA La Réserve Invest by way of a transfer of part of its net assets to Aedifica. This lead to a capital increase of approx. €23 million and to the addition of two rest homes, located in Olen and in Wetteren, to the Company's portfolio (see section 2.1.1. above).
At the request of their holder, the shares created on this occasion were consequently the object of a quick private placement amongst Belgian and international investors, with a discount of 3.1 % compared to the closing price on 4 December 2014.
3 September 2015 – After closing of markets Under embargo until 17:40 CET
On 2 July 2015, Aedifica announced the acquisition (together with its subsidiary, Aedifica Invest SA) of 100 % of the shares of the limited liability company La Croix Huart SA. La Croix Huart is the owner of the plot of land on which the Résidence de la Houssière rest home is located in Braine-le-Comte, Belgium. The Résidence de la Houssière rest home is well located in a green area, near the centre of Braine-le-Comte, a municipality of approx. 20,000 inhabitants, situated approx. 20 kilometres from Mons (Province of Hainaut, Belgium). The rest home currently comprises 94 beds. The initial building, which dates from the late 1990s, was completed in 2006 with the construction of a new wing. The site also includes a land reserve of approx. 1.5 ha, which presents potential for an extension project. The site is operated by the limited liability company Résidence de la Houssière SA, a local player that has been present on the senior care market for more than 20 years. The contractual value of the site (including plot of land) amounts to approx. €10 million. The initial triple net yield amounts to approx. 6 %. The Aedifica Group will receive this yield based on a 27-year triple net long lease which will be granted to Résidence de la Houssière SA. This transaction was structured for execution in two phases:
On 9 July 2015, Aedifica acquired 100 % of the shares of the limited liability companies Senior Hotel Flandria NV and Patrimoniale Flandria NV. Senior Hotel Flandria NV is the owner of the Senior Flandria assisted-living apartment building located in Bruges (Province of West-Flanders, Belgium). Patrimoniale Flandria NV is the owner of the plot of land on which the assisted-living apartment building is located. The Senior Flandria assisted-living apartment building is well located in a residential area, close to the centre of Bruges. This city of 117,000 inhabitants is the capital city of the province of West Flanders, Belgium. The building, which dates from 1991, currently comprises 108 one-bedroom apartments and common areas (total surface of approx. 6,500 m²). The building is very well maintained and has undergone some renovation works (such as the bathrooms). The building is a recognised assisted-living apartment building intended for senior housing, and offers various facilities (concierge, anti-intruder system, call system, restaurant, fitness, bar,…), services (animation, hairdresser, handyman services, cleaning services) and health-care services (physiotherapy, care, home nursing). The contractual value of the site (including plot of land) amounts to approx. €10 million. The site is operated by the BVBA Happy Old People (controlled by the Armonea group) on the basis of a triple net long lease for which the remaining maturity is approx. 20 years. The initial triple net yield amounts to approx. 6 %.
During the 2014/2015 financial year (1 July 2014 – 30 June 2015), Aedifica increased its portfolio of marketable investment properties by €218 million, from a fair value of €766 million to €983 million (€1,005 million for the total portfolio, including development projects of €22 million and assets classified as held for sale of €2 million). This 28 % growth comes mainly from net acquisitions (see sections 2.1.1. and 2.1.2. above), completion of development projects (see section 2.1.3. above) and changes in the fair value of marketable investment properties recognised in income (+€14.5 million, or +1.5 %). The fair value of marketable investment properties, as assessed by independent experts, is broken down as follows:
As of 30 June 2015, Aedifica has 153 marketable investment properties, with a total surface area of approx. 479,000 m2 , consisting mainly of:
The breakdown by sector is as follows (in terms of fair value):
The geographical breakdown is as follows (in terms of fair value):
The occupancy rate1 of the total unfurnished portion of the portfolio (representing 93 % of the fair value of marketable investment properties) amounts to 97.9 % as of 30 June 2015. This is an increase as compared to the record level reached at the end of the previous financial year (30 June 2014: 97.6 %).
The occupancy rate of the furnished portion of the portfolio (representing only 7 % of the fair value of marketable investment properties) reached 78.3 % for the year ended 30 June 2015. This is a slight increase as compared to the occupancy rate realised in the previous financial year (78.0 %) and the last
1 The occupancy rate is calculated as follows:
- For the total portfolio (excluding the furnished apartments): (contractual rents + guaranteed income) / (contractual rents + estimated rental value (ERV) on vacant areas of the property portfolio). We note that this occupancy rate includes the investment properties for which units are in renovation and hence temporarily not rentable.
- For the furnished apartments: % rented days during the financial year. This occupancy rate can thus not be compared to the one calculated on the rest of the portfolio, as the methodology is specific to this segment.
published occupancy rate (76.8 % as of 31 March 2015). The performance of the furnished portion of the portfolio is commented upon in section 3.2 below.
The overall occupancy rate2 of the total portfolio reached 98 % for the year ending 30 June 2015.
The average remaining lease maturity for all buildings in the Company's portfolio is 20 years, an increase as compared to 30 June 2014 (19 years). According to the "Belgian RREC Overview", published each month by Bank Degroof, Aedifica is significantly ahead of the industry average in terms of its average remaining lease maturity. This impressive aggregate performance is explained by the large proportion of long-term contracts (such as long leases) in the Company's portfolio.
| 30 June 2015 | ||||||
|---|---|---|---|---|---|---|
| Investment properties (x €1,000) |
Senior housing |
Apartment buildings |
Hotels and other |
Marketable investment properties |
Development projects |
Investment properties*** |
| Fair value | 696.272 | 214.461 | 72.696 | 983.429 | 21.734 | 1.005.163 |
| Annual contractual rents * |
41.038 | 11.866 | * 4.538 |
57.442 | - | - |
| Gross yield (%) ** | 5,9% | 5,4% | 6,2% | 5,8% | - | - |
| 30 June 2014 | ||||||
|---|---|---|---|---|---|---|
| Investment properties (x €1,000) |
Senior housing |
Apartment buildings |
Hotels and other |
Marketable investment properties |
Development projects |
Investment properties |
| Fair value | 482.401 | 210.128 | 73.260 | 765.789 | 19.191 | 784.980 |
| Annual contractual rents * |
28.725 | 12.425 | * 4.564 |
45.714 | - | - |
| Gross yield (%) ** | 6,0% | 5,8% | 6,2% | 5,9% | - | - |
* The amounts related to the furnished apartments correspond to the annualised rental income excl. VAT.
** Based on the fair value (re-assessed every 3 months, increased with the goodwill and the furniture for the furnished apartments. In the senior housing segment, the gross yield and the net yield are generally equal ("triple net" contracts), the operating charges, the maintenance costs and the rents on empty spaces related to the operations being, in Belgium, supported by the operator. It goes the same for the hotels.
*** Including assets classified as held for sale.
2 The global occupancy rate is calculated following EPRA methodology.
The following sections analyse the consolidated financial statements using an analytical framework that is aligned with the Company's internal reporting structure.
| Consolidated income statement - analytical format | 30 June 2015 | 30 June 2014 |
|---|---|---|
| (x €1,000) | ||
| Rental income | 49.903 | 40.675 |
| Rental-related charges | -50 | -62 |
| Net rental income | 49.853 | 40.613 |
| Operating charges* | -10.831 | -9.192 |
| Operating result before result on portfolio | 39.022 | 31.421 |
| EBIT margin** % | 78% | 77% |
| Financial result excl. IAS 39 | -13.148 | -10.965 |
| Corporate tax | -376 | -141 |
| Profit excl. IAS 39 and IAS 40 | 25.498 | 20.315 |
| Denominator (IAS 33) | 10.658.981 | 9.917.093 |
| Earnings per share excl. IAS 39 and IAS 40 (€/share) | 2,39 | 2,05 |
| Profit excl. IAS 39 and IAS 40 | 25.498 | 20.315 |
| IAS 39 impact: changes in fair value of financial assets and liabilities | 374 | -2.990 |
| IAS 40 impact: Changes in fair value of investment properties | 19.259 | 3.816 |
| Impact IAS 40: gains on disposals of investment properties | 428 | 0 |
| Impact IAS 40: deferred taxes | -395 | 244 |
| Roundings | 1 | 0 |
| Profit (owners of the parent) | 45.165 | 21.385 |
| Denominator (IAS 33) | 10.658.981 | 9.917.093 |
| Earnings per share (owners of the parent - IAS 33 - €/share) | 4,24 | 2,16 |
* Items IV to XV of the income statement.
** Operating result before result on portfolio divided by the net rental income.
The consolidated turnover (consolidated rental income) for the year amounts to €49.9 million, an increase of 23 % compared to the prior year. This is in line with the forecast published in the Securities Note regarding the capital increase of June 2015.
Changes in total consolidated rental income (+ €9.2 million, i.e. +22.7 %, or -0.8 % on a like-for-like basis) are presented below by segment:
The evolution of rental income in the senior housing segment (+38.7 % and +0.5 % on a like-for-like basis) demonstrates the relevance of Aedifica's investment strategy in this segment, which now generates more than 68 % of the Company's turnover and almost 87 % of its operating result before result on portfolio.
3 The income statement covers the 12-month period from 1 July 2014 to 30 June 2015. Acquisitions are accounted for on the date of the effective transfer of control. Therefore, these operations present different impacts on the income statement, depending on whether they took place at the beginning, during, or at the end of the period.
The slight negative change in rental income in the apartments segment can be attributed to the furnished apartments, which have experienced amplified seasonality arising from the economic climate (as already noted in previous publications), and to internal factors such as:
In the hotel segment, as mentioned in previous publications, the negative growth can be attributed to rent reductions granted to certain tenants in prior financial years in order to preserve their rent to EBITDAR ratios, and therefore their cash flows and asset values.
After deducting rental-related charges, the net rental income for the year ended 30 June 2015 amounts to €49.9 million (+23 % as compared to 30 June 2014).
The property result is €48.3 million (30 June 2014: €39.1 million). This result, less other direct costs, provides a property operating result of €44.1 million (30 June 2014: €35.6 million), which represents an operating margin of 89 % (30 June 2014: 88 %).
After deducting overheads of €5.4 million (30 June 2014: €4.2 million) and taking into account other operating income and charges, the operating result before result on portfolio has increased by 24 % to reach €39.0 million (30 June 2014: €31.4 million). This result represents an EBIT margin of 78 % (30 June 2014: 77 %). Both the operating result before result on portfolio and the EBIT margin are in line with the forecast which was published in the Securities Note regarding the capital increase of June 2015.
The new IFRIC 21 interpretation "Levies" which entered into force for the Group on 1 July 2014 had an effect in the income statement during the period through recognition of a net non-recurrent charge of €0.4 million (additional charge of €0.2 million under line "VII. Rental charges and taxes normally paid by tenants on let properties", additional income of €0.2 million under line "V. Recovery of rental charges and taxes normally paid by tenants on let properties", additional charge of €0.4 million under line "XIII. Other property charges"). This is the result of the recognition of property taxes which were previously spread over time (i.e. taken pro rata temporis over the financial year) and which are now recognised at once for the full calendar year. Since the Company's financial year straddles two calendar years, the 2014/2015 income statement exceptionally includes the net effect of 18 months property taxes (6 months for the 2014 calendar year and 12 months for 2015 calendar year).
3 September 2015 – After closing of markets Under embargo until 17:40 CET
The share of each segment in the operating result before result on portfolio (constituting the segment result under IFRS 8) is detailed below:
| 30 June 2015 | |||||||
|---|---|---|---|---|---|---|---|
| Segment result (x €1,000) | Senior housing | Apartment buildings |
Hotels en other |
Non-allocated and inter segment |
Total | ||
| Rental income | 34.082 | 11.949 | 3.986 | -114 | 49.903 | ||
| Net rental income | 34.081 | 11.900 | 3.986 | -114 | 49.853 | ||
| Operating result before result on portfolio |
33.870 | 6.944 | 3.949 | -5.741 | 39.022 |
| 30 June 2014 | |||||||
|---|---|---|---|---|---|---|---|
| Segment result (x €1,000) | Senior housing | Apartment buildings |
Hotels en other |
Non-allocated and inter segment |
Total | ||
| Rental income | 24.566 | 12.084 | 4.132 | -107 | 40.675 | ||
| Net rental income | 24.565 | 12.024 | 4.132 | -108 | 40.613 | ||
| Operating result before result on portfolio |
24.546 | 7.136 | 4.092 | -4.353 | 31.421 |
After taking into account the cash flows generated by hedging instruments (described below), Aedifica's net interest charges amount to €12.8 million (30 June 2014: €11.1 million). The average effective interest rate (3.0 % before capitalising interest on development projects) is well below that reported in 2013/2014 (4.0 %). Taking into account other income and charges of a financial nature (including non-recurrent income of €0.4 million4 , and excluding the net impact of the revaluation of hedging instruments to their fair value (non-cash movements accounted for in accordance with IAS 39 are not included in the profit excluding IAS 39 and IAS 40 as explained below), the financial result excluding IAS 39 represents a net charge of €13.1 million (30 June 2014: €11.0 million, including non-recurrent income of €0.6 million5 , in line with the forecast published in the Securities Note regarding the capital increase of June 2015.
Corporate taxes are composed of current taxes and deferred taxes. In conformity with the Company's legal status (i.e. as a RREC), current taxes (charge of €0.4 million; 30 June 2014: charge of €0.1 million) consist primarily of Belgian tax on the Company's non-deductible expenditures, tax on the result generated abroad by Aedifica and tax on the result of consolidated subsidiaries. These taxes are in line with the forecast published in the Securities Note regarding the capital increase of June 2015. Deferred taxes are described below.
Profit excluding IAS 39 and IAS 40 reached €25.5 million (30 June 2014: €20.3 million), or €2.39 per share, based on the weighted average number of shares outstanding (30 June 2014: €2.05 per share). Profit excluding IAS 39 and IAS 40 is in line with the forecast published in the Securities Note regarding the capital increase of June 2015 and exceeds the 2014/2015 budget initially established in the 2013/2014 Consolidated Board of Director's Report by 15 %.
4 This amount represents the fee paid to Aedifica at the time of the partial demerger on 4 December 2014 as compensation for the allocation of full dividend rights for the 2014/2015 financial year to the new shares issued that day.
5 This amount resulted from two contributions in kind on 12 and 30 June 2014, which were paid to Aedifica when the contributor assumed the expected dividend which accrued over the period 1 July 2013 up to the day before the date of contributions.
The income statement also includes elements with no monetary impact (that is to say, non-cash) which vary as a function of market parameters. These consist of (1) the changes in the fair value of investment properties (accounted for in accordance with IAS 40), (2) changes in the fair value of financial assets and liabilities (accounted for in accordance with IAS 39) and (3) deferred taxes (arising from IAS 40):
Given the non-monetary elements described above, the profit (attributable to owners of the parent) amounts to €45.2 million (30 June 2014: €21.4 million). The earnings per share (basic earnings per share, as defined in IAS 33 is €4.24 (30 June 2014: €2.16).
The adjusted statutory result as defined in the annex to the Royal Decree of 13 July 2014 regarding RRECs, is €25.4 million (30 June 2014: €20.4 million), an increase of 25 %. Taking into account the rights to dividend for the shares issued during the financial year, this represents an amount of €2.33 per share (30 June 2014: €1.99 per share).
| Consolidated balance sheet | 30 June 2015 | 30 June 2014 |
|---|---|---|
| (x €1,000) | ||
| Investment properties (fair value)** | 1.005.163 | 784.980 |
| Other assets included in debt-to-assets ratio | 14.073 | 9.678 |
| Other assets | 1.048 | 65 |
| Total assets | 1.020.284 | 794.723 |
| Equity | ||
| Excl. IAS 39 impact | 636.193 | 435.278 |
| IAS 39 impact* | -37.923 | -38.203 |
| Equity | 598.270 | 397.075 |
| Liabilities included in debt-to-assets ratio | 377.216 | 356.820 |
| Other liabilities | 44.798 | 40.828 |
| Total equity and liabilities | 1.020.284 | 794.723 |
| Debt-to-assets ratio (%) | 37,0% | 44,9% |
* Fair value of hedging instruments.
** Including assets classified as held for sale.
As of 30 June 2015, investment properties represent 99 % (30 June 2014: 99 %) of the assets recognised on Aedifica's balance sheet, valued in accordance with IAS 40 (that is to say, accounted for at their fair value as determined by independent real estate experts) at a value of €1,005 million (30 June 2014: €785 million). This heading includes:
"Other assets included in the debt-to-assets ratio" represent 1 % of the total balance sheet (30 June 2014: 1 %).
Since Aedifica's formation, its capital has increased steadily along with its real estate activities (contributions, mergers, etc.) and thanks to capital increases (in cash) in October 2010, December 2012 and June 2015. It has increased to €371 million as of 30 June 2015 (30 June 2014: €270 million). The share premium amounts to €151 million as of 30 June 2015 (30 June 2014: €65 million). Recall that IFRS requires that the costs incurred to raise capital are recognised as a decrease in the statutory capital reserves. Equity (also called net assets), which represents the intrinsic net value of Aedifica and takes into account the fair value of its investment portfolio, amounts to:
As of 30 June 2015, liabilities included in the debt-to-assets ratio (as defined in the Royal Decree of 13 July 2014 regarding RRECs) reached €377 million (30 June 2014: €357 million), of which €367 million (30 June 2014: €346 million) represent amounts drawn on the Company's credit facilities. The debt-toassets ratio amounts to 37.0 % on a consolidated level (30 June 2014: 44.9 %) and 36.9 % on a statutory level (30 June 2014: 44.6 %). This sharp decrease is due to the capital increase of June 2015. The maximum ratio permitted for Belgian REITs is set at 65 % of total assets, thus, Aedifica maintains an additional consolidated debt capacity of €285 million in constant assets (that is, excluding growth in the real estate portfolio) or €815 million in variable assets (that is, taking into account growth in the real estate portfolio). Conversely, the balance sheet structure permits, other things being equal, the Company to absorb a decrease of up to 43 % in the fair values of its investment properties before reaching the maximum debt-to-assets ratio. Given Aedifica's existing bank commitments, which further limit the maximum debt-to-assets ratio to 60 %, the headroom available amounts to €234 million in constant assets, €585 million in variable assets, and -38 % in the fair value of investment properties.
Other liabilities of €45 million (30 June 2014: €41 million) represent mainly the fair value of hedging instruments (30 June 2015: €38 million; 30 June 2014: €38 million).
The table below presents the change in the net asset value per share.
Excluding the non-monetary impact (that is to say, non-cash) of IAS 39 and after accounting for the payment of the 2013/2014 dividend in November 20146 , the net assets per share based on the fair value of investment properties is €45.29 as of 30 June 2015, as compared to €40.57 per share on 30 June 2014.
To compare the net asset value to the share price, one has to take into account the detachment of coupon No. 14, which took place on 10 June 2015 in the context of the capital increase of 29 June 2015.
| Net asset value per share (in €) | 30 June 2015 | 30 June 2014 |
|---|---|---|
| Based on fair value of investment properties | ||
| Net asset value after deduction of dividend 2013/2014, excl. IAS 39 | 45,29 | 40,57 |
| IAS 39 impact | -2,70 | -3,73 |
| Net asset value after deduction of dividend 2013/2014, excl. IAS 39 | 42,59 | 36,84 |
| Number of share outstanding (excl. treasury shares) | 14.045.931 | 10.249.083 |
| Number of shares | 30 June 2015 | 30 June 2014 |
|---|---|---|
| Number of shares outstanding* | 14.045.931 | 10.249.083 |
| Total number of shares | 14.045.931 | 10.249.117 |
| Total number of shares on the stock market | 14.045.931 | 10.162.165 |
| Weighted average number of shares outstanding (IAS 33) | 10.658.981 | 9.917.093 |
| Number of dividend rights** | 10.924.613 | 10.249.083 |
* After deduction of the treasury shares.
** Based on the rights to the dividend for the shares issued during the year.
6 Recall that IFRS requires the presentation of the annual accounts before appropriation. Net assets in the amount of €38.74 per share as of 30 June 2014 thus included the dividend distributed in November 2014, and should be adjusted by €1.90 per share in order to compare with the value as of 30 June 2015. This amount corresponds to the amount of the total dividend (€19 million) divided by the total number of shares outstanding as of 30 June 2014 (10,249,083).
The Board of Directors continues to pay close attention to the shifting economic and financial context and the associated impacts on the Group's activities.
In the current economic climate, Aedifica's key strengths include the following:
The dividend expectation for the 2015/2016 financial year, as published in the abovementioned Securities Note, remains unchanged at €2.05 gross per share. This is an increase as compared to the dividend proposed by the Board of Directors for the 2014/2015 financial year.
The Board of Directors considers that the key risk factors summarised in pages 7 to 18 of the French Securities Note regarding the capital increase of June 2015 remain relevant for the 2015/2016 financial year. However, a new risk has arisen (which has been reported in the media since 4 August 2015) in relation to a potential increase in the withholding tax (which could be brought from 15 % to 27 %) for dividends that will be distributed in 2016 and the following years, in the context of the fiscal reform (generally baptised "tax shift" by the media) that is currently under preparation by the Belgian government. Moreover, the possible disappearance of the reduced withholding tax of 15% for residential REITs could also be an opportunity for Aedifica, by expanding the potential range of its future investments.
The principal risk factors will of course be updated in the 2014/2015 Annual Financial Report that will be available as from 23 September 2015.
The Auditor confirmed that the financial information contained in this press release requires no reservation on this part and is consistent with the consolidated financial statements for which he has released an unqualified opinion.
3 September 2015 – After closing of markets Under embargo until 17:40 CET
Aedifica is a public Regulated Real Estate Company under Belgian law specialised in residential property. Aedifica has developed a portfolio worth more than €1 billion, focused on two strategic pillars:
Aedifica has been quoted on the Euronext Brussels (continuous market) since 2006 and is identified by the following ticker symbols: AED; AED:BB (Bloomberg); AOO.BR (Reuters).
The Company's market capitalisation was €743 million as of 31 August 2015.
Aedifica is included in the EPRA indices.
This document contains forward-looking information that involves risks and uncertainties, including statements about Aedifica's plans, objectives, expectations and intentions. Readers are cautioned that forward-looking statements include known and unknown risks and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Aedifica. Should one or more of these risks, uncertainties or contingencies materialise, or should any underlying assumptions prove incorrect, actual results could vary materially from those anticipated, expected, estimated or projected. As a result, Aedifica does not assume any responsibility for the accuracy of these forward-looking statements.
| Year ending on 30 June (x €1,000) | 2015 | 2014 | |
|---|---|---|---|
| I. | Rental income | 49.903 | 40.675 |
| II. | Writeback of lease payments sold and discounted | 0 | 0 |
| III. | Rental-related charges | -50 | -62 |
| Net rental income | 49.853 | 40.613 | |
| IV. | Recovery of property charges | 32 | 36 |
| V. | Recovery of rental charges and taxes normally paid by tenants on let properties | 1.811 | 1.096 |
| VI. | Costs payable by the tenant and borne by the landlord on rental damage and repair at end of lease |
0 | 0 |
| VII. | Rental charges and taxes normally paid by tenants on let properties | -1.811 | -1.096 |
| VIII. | Other rental-related income and charges | -1.563 | -1.510 |
| Property result | 48.322 | 39.139 | |
| IX. | Technical costs | -1.071 | -933 |
| X. | Commercial costs | -492 | -549 |
| XI. | Charges and taxes on unlet properties | -131 | -162 |
| XII. | Property management costs | -892 | -717 |
| XIII. | Other property charges | -1.588 | -1.187 |
| Property charges | -4.174 | -3.548 | |
| Property operating result | 44.148 | 35.591 | |
| XIV. | Overheads | -5.355 | -4.202 |
| XV. | Other operating income and charges | 229 | 32 |
| Operating result before result on portfolio | 39.022 | 31.421 | |
| XVI. | Gains and losses on disposals of investment properties | 428 | 0 |
| XVII. | Gains and losses on disposals of other non-financial assets | 0 | 0 |
| XVIII. | Changes in fair value of investment properties | 19.259 | 3.816 |
| Operating result | 58.709 | 35.237 | |
| XX. | Financial income | 478 | 894 |
| XXI. | Net interest charges | -12.833 | -11.128 |
| XXII. | Other financial charges | -792 | -731 |
| XXIII. | Changes in fair value of financial assets and liabilities | 374 | -2.990 |
| Net finance costs | -12.773 | -13.955 | |
| XXIV. | Share in the profit or loss of associates and joint ventures accounted for using the equity method |
0 | 0 |
| Profit before tax (loss) | 45.936 | 21.282 | |
| XXV. | Corporate tax | -771 | 103 |
| XXVI. | Exit tax | 0 | 0 |
| Tax expense | -771 | 103 | |
| Profit (loss) | 45.165 | 21.385 | |
| Attributable to : | |||
| Non-controlling interests | 0 | 0 | |
| Owners of the parent | 45.165 | 21.385 | |
| Basic earnings per share (€) | 4,24 | 2,16 | |
| Diluted earnings per share (€) | 4,24 | 2,16 |
3 September 2015 – After closing of markets Under embargo until 17:40 CET
| Year ending on 30 June (x €1,000) | 2015 | 2014 | |
|---|---|---|---|
| I. Profit (loss) |
45.165 | 21.385 | |
| II. | Other comprehensive income recyclable under the income statement | ||
| A. | Impact on fair value of estimated transaction costs resulting from hypothetical disposal of investment properties |
-7.432 | -3.736 |
| B. | Changes in the effective part of the fair value of authorised cash flow hedge instruments as defined under IFRS |
-181 | -2.710 |
| H. | Other comprehensive income, net of taxes | 0 | 0 |
| Comprehensive income | 37.552 | 14.939 | |
| Attributable to : | |||
| Non-controlling interests | 0 | 0 | |
| Owners of the parent | 37.552 | 14.939 |
| ASSETS | 2015 | 2014 | |
|---|---|---|---|
| I. | Year ending on 30 June (x €1,000) Non-current assets |
||
| A. | Goodwill | 1.856 | 1.856 |
| B. | Intangible assets | 102 | 21 |
| C. | Investment properties | 1.003.358 | 784.980 |
| D. | Other tangible assets | 1.834 | 1.911 |
| E. | Non-current financial assets | 1.397 | 461 |
| F. | Finance lease receivables | 0 | 0 |
| G. | Trade receivables and other non-current assets | 0 | 0 |
| H. | Deferred tax assets | 110 | 244 |
| I. | Equity-accounted investments | 0 | 0 |
| Total non-current assets | 1.008.657 | 789.473 | |
| II. | Current assets | ||
| A. | Assets classified as held for sale | 1.805 | 0 |
| B. | Current financial assets | 0 | 0 |
| C. | Finance lease receivables | 0 | 0 |
| D. | Trade receivables and other non-current assets | 4.352 | 2.938 |
| E. | Tax receivables and other current assets | 962 | 495 |
| F. | Cash and cash equivalents | 3.598 | 1.156 |
| G. | Deferred charges and accrued income | 910 | 661 |
| Total current assets | 11.627 | 5.250 | |
| TOTAL ASSETS | 1.020.284 | 794.723 |
| Year ending on 30 June (x €1,000) EQUITY I. Issued capital and reserves attribuable to owners of the parent A. Capital 360.633 B. Share premium account 151.388 C. Reserves 41.084 |
264.231 64.729 46.730 0 91.863 -17.582 |
|---|---|
| a. Legal reserve 0 |
|
| b. Reserve for the balance of changes in fair value of investment properties 95.679 |
|
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment -25.015 properties |
|
| d. Reserve for the balance of changes in fair value of authorised hedging instruments -19.667 qualifying for hedge accounting as defined under IFRS |
-19.484 |
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not -18.717 qualifying for hedge accounting as defined under IFRS |
-15.729 |
| h. Reserve for treasury shares 0 |
-56 |
| k. Reserve for deferred taxes on investment properties located abroad 244 |
0 |
| m. Other reserves 0 |
0 |
| n. Result brought forward from previous years 8.560 D. Profit (loss) of the year 45.165 |
7.718 21.385 |
| Equity attribuable to owners of the parent 598.270 |
397.075 |
| II. Non-controlling interests 0 |
0 |
| TOTAL EQUITY 598.270 |
397.075 |
| LIABILITIES | |
| I. Non-current liabilities |
|
| A. Provisions 0 |
0 |
| B. Non-current financial debts |
|
| a. Borrowings 340.752 |
274.955 |
| C. Other non-current financial liabilities 39.320 |
37.774 |
| a. Authorised hedges 38.050 |
37.774 |
| b. Other 1.270 |
0 |
| D. Trade debts and other non-current debts 0 |
0 |
| E. Other non-current liabilities 0 |
0 |
| F. Deferred taxes liabilities 2.435 |
0 |
| Non-current liabilities 382.507 |
312.729 |
| II. Current liabilities |
|
| A. Provisions 0 |
0 |
| B. Current financial debts |
|
| a. Borrowings 25.897 |
70.945 |
| C. Other current financial liabilities 0 |
0 |
| D. Trade debts and other current debts a. Exit tax 813 |
615 |
| b. Other 8.484 |
10.305 |
| E. Other current liabilities 0 |
0 |
| F. Accrued charges and deferred income 4.313 |
3.054 |
| Total current liabilities 39.507 |
84.919 |
| TOTAL LIABILITIES 422.014 |
397.648 |
| TOTAL EQUITY AND LIABILITIES 1.020.284 |
794.723 |
| Projects and | Estimated | Inv. as | Future | Date of | Comments | |
|---|---|---|---|---|---|---|
| renovations | inv. | of 30 June |
inv. | completion | ||
| (in € million) | 2015 | |||||
| I. In progress | ||||||
| Sundry | Sundry | 2 | 2 | 0 | 2015/2016 | Renovation of 2 residential buildings |
| Salve | Brasschaat | 2 | 2 | 0 | 2015/2016 | Renovation and redevelopment of a rest home |
| 't Hoge | Kortrijk | 2 | 0 | 2 | 2015/2016 | Extension and renovation of a rest home |
| Helianthus | Melle | 4 | 1 | 3 | 2015/2016 | Extension of a rest home |
| Pont d'Amour | Dinant | 8 | 7 | 1 | 2015/2016 | Extension of a rest home |
| Marie-Louise | Wemmel | 4 | 1 | 3 | 2015/2016 | Renovation and conversion into assisted living apartments |
| Villa Temporis | Hasselt | 10 | 2 | 8 | 2016/2017 | Construction of a rest home |
| Au Bon Vieux Temps |
Mont-Saint Guibert |
10 | 2 | 8 | 2016/2017 | Construction of a rest home home |
| Op Haanven | Veerle Laakdal |
4 | 1 | 4 | 2016/2017 | Extension and renovation of a rest home |
| La Ferme Blanche | Remicourt | 6 | 0 | 6 | 2016/2017 | Extension and renovation of a rest home |
| Huize Lieve Moenssens |
Dilsen Stokkem |
7 | 0 | 7 | 2016/2017 | Extension and renovation of a rest home |
| Aux Deux Parcs | Jette | 2 | 0 | 2 | 2017/2018 | Extension of a rest home |
| Air du Temps | Chênée | 6 | 0 | 6 | 2017/2018 | Extension and renovation of a rest home |
| Plantijn | Kapellen | 8 | 0 | 7 | 2018/2019 | Extension and renovation of a rest home |
| II. Subject to outstanding conditions | ||||||
| Résidence du Lac | Brussels | 5 | 0 | 5 | 2017/2018 | Construction of an apartment building |
| De Stichel | Vilvoorde | 4 | 0 | 4 | 2017/2018 | Extension of a rest home |
| Oase Binkom | Binkom | 2 | 0 | 2 | 2017/2018 | Extension of a rest home |
| Résidence Cheveux d'Argent |
Spa | 3 | 0 | 3 | 2017/2018 | Extension of a rest home |
| III. Land reserves | ||||||
| Terrain Bois de la Pierre |
Wavre | 2 | 2 | 0 | - | Land reserve |
| Platanes | Brussels | 0 | 0 | 0 | - | Land reserve |
| IV. Acquisitions subject to outstanding conditions | ||||||
| Leopoldspark | Leopoldsburg | 20 | 0 | 20 | 2015/2016 | Construction of a new rest home |
| Oase projects | Aarschot & Glabbeek |
28 | 0 | 28 | 2016-2017 | Construction of 2 new rest homes |
| Total | 138 | 21 | 118 | |||
| Changes in fair value |
- | 1 | - | |||
| On balance sheet | 22 |
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