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CBo Territoria
Earnings Release • Sep 12, 2023
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Earnings Release
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Press release –2023 half-year results
Sainte-Marie, September 12, 2023, 7:45p.m.
HALF-YEAR RESULTS 2023
An intense and solid first semester 2023
• Confirmed performance in the Property Investment division
- o Net commercial rental income (including equity affiliates) up +7.4% to €12.1 million1
- o Recurring net income up +21.0% to €6.0 million
- o Combani: forthcoming deliveries of shopping center (Q4) and Pôle emploi (Q1 2024)
- o Galabé: building permit obtained and appeals period expired, work to start early next year
• Dynamic Property Development division and High margin
- o Revenues from Property development (residential and commercial) up +36.7% to €28.5 million
- o Success of Pinel and Block sales in 2022
- o Delivery of the EPSMR2 program in March 2023 and disposal of the last commercial plot at Le Portail
- o Property development margin: €4.7 million (16.6% of revenues) due to changes in product mix
• Growth in earnings and strong financial position
- o Revenues: €41.7 million (+25.2%)
- o Operating income: €12.6 million (+8.6%)
- o Net income Group share: €9.8 million (+17.1%)
- o Restated net assets: €238.6 million (+4.6% over 12 months, +0.5% over 6 months)
- o Net financial debt of €155.8 million (vs. €156.3 million at year-end 2022)
- o Cash position of €21.0 million (post bond redemption and Ornane 2023 issue)
- o Loan to value (excluding transfer taxes): 36.3% (37.2% excluding valuation of hedging instruments)
- Ongoing strategy and solid medium-term outlook
- o 2023 guidance raised: growth in commercial rental revenues3 now expected at +3.5% (vs. +1%), given first-half momentum.
- o Good progress in the commercial property pipeline4 : €106 million of projects under development, including €26 million under construction in Mayotte and €26 million to be launched within 12 months in La Réunion.
- o Property development: sound visibility over the next 18 months, with a backlog of €46.2 million at the end of June 2023.
"This semester, CBo Territoriareported excellent first-half results for its two primary businesses. Our Property Investment division reported strong operating and sales momentum in advance of deliveries to Mayotte, which will contribute to the expansion of the Group's portfolio and rental income in the coming months. Due to the island nature of our territory, our residential Property development division remains robust. Most of the numerous programs launched last year and presently under development have been commercialized. In addition, we are preparing to initiate the sale of new retail and block programs to bolster our portfolio against a backdrop of widely divergent interest rates. According to Géraldine Neyret, Chief Executive Officer of CBo Territoria, "We are confidently pursuing our growth strategy thanks to our agile, expert team, which is committed to the responsible growth of our region."
1 Including €1.7 million from equity affiliates
2 "Établissement Public de Santé Mentale de la Réunion" (Réunion Public Mental Health Facility).
3 Including equity affiliates. Gross rental income from commercial properties of €11.1 million as of June 30, 2023 (including €1.8 m from equity affiliates).
4 Projects under construction, projects to be launched within the next 12 months and projects identified on controlled land in the medium term.
The Board of Directors of CBo Territoria (ISIN: FR0010193979 - CBOT), a leading real estate player in La Réunion for nearly two decades, met on Monday, September 11, 2023, to ratify the interim consolidated financial statements for the six months ended June 30, 2023. The Statutory Auditors' review report on the half-year financial information was issued today without reservation.
CHANGES IN ECONOMIC PORTFOLIO
CBo Territoria is pursuing its strategy of real estate development in the commercial sector and, as of June 30, 2023, held a diversified portfolio of commercial properties5 with solid underlying performances:
- Valuation of €300.8 million (81% of total assets6 ) for 133,000 m2 , stable over six months,
- Occupancy rate of 97%, (vs. 98% as of December 31, 2022), confirming the quality of assets held,
- Gross annualized rental income of €24.5 million (including equity affiliates) vs. €23.8 million at year-end 2022),
- Gross yield of 7.7% including transfer taxes (vs. 7.4% at year-end 2022).
At the end of June 2023, the Group also owned 214 housing units, which will be sold in the medium term.
The Group's total economic assets6 are valued at €372.9 million excluding transfer duties, stable compared with year-end 2022 (€373.0 million). Commercial properties account for 81% of this total. The portfolio's aggregate value, excluding transfer taxes (including ongoing commercial projects), stood at €395.1 million as of June 30, 2023 (vs. €388.1 million at year-end 2022).
HALF-YEAR 2023 FINANCIAL PERFORMANCE
Property Investment: Net Recurring Revenues (€6.0 million, +21%)
At the end of June 2023, gross rental revenues from commercial property rose by 9.5% to €12.9 million (including €1.8 million share of equity affiliates), and gross rental income from commercial property excluding equity affiliates by 8.9%. The net commercial rental revenues rose by +7.4% to €12.1 million (+6.7% excluding equity affiliates of €1.7 million). The increase breaks down into +1.3% scope effect, +4.5% indexation, +1.6% other effects (variable rents).
Because of disposals during the period, residential and agricultural assets generated €1.4 million in gross rental income in the first half of 2023, compared to €1.6 million as of June 30, 2022.
The Property Investment division's net recurring revenues increased by 21.0% year-over-year to €6.0 million.
Property Development: Development margin (€4.7 million, -8.9%)
In the first half of 2023, CBo Territoria recorded reservations (order book) of €19.0 million for residential programs only (compared to €35.4 million in H1 2022, which included €5.3 million for commercial programs), of which €7.6 million (31 lots) were reserved by individuals and €11.0 million (65 lots) were reserved for building plots. After the high level of investment in 2022, demand remains robust pending the launch of new programs presently on the market (Pinel, Bloc, approximately 200 building plots). Thus, the supply of residential units at the end of June was €22.2 million (compared to €29 million as of June 30, 2022), and visibility remains high with a backlog of €46.2 million in residential units at the end of June 2023 (compared to €33.9 million as of June 30, 2022).
As of June 2023, Property Development revenues reached €28.5 million, an increase of 36.7% year-over-year. Residential sales accounted for 88% of the total, with an increase of 36.8% to €25.0 million, propelled by a doubling of block sales (€10.6 million) and Pinel programs (€8.0 million) compared to H1 2022. Thus, the product mix has changed considerably over the past year. For the record, 46% of H1 2022 sales were made up of plot sales in the western tourist zone, generating particularly high margins.
Revenues from commercial property development, an opportunistic activity, increased by 36% to €3.5 million during the first semester, reflecting the progress made on the ESPMR premises, which were delivered in March, and the sale of the last available commercial lot in the Portail economic zone.
Overall, the margin rate remains high given the change in product mix, at 16.6% (vs. 24.9% in H1 2022), with a development margin of €4.7 million (-8.9%).
5 The economic commercial portfolio comprises investment assets (excluding residential and land assets) and the share of assets held by the equity method.
6 The entire economic portfolio consists of 100%-owned CBo Territoria assets (commercial, land, and residential) in addition to the proportion of partnership-held commercial assets.
Earnings from operations €12.6 million (+8.6%) and net income Group share €9.8 million (+17.1%)
As a result, operating income, of which 70% consists of net rental income from the Property Investment division, increased by 8.6% to €12.6 million as of June 30, 2023.
Net income Group share increased by +17.1% year-over-year to €9.8 million, or €0.27/share (vs. €0.23 as of June 30, 2022) after taking into account a change in fair value of €1.0 million related to the progress of the Combani project in Mayotte (compared with €-0.3 million as of June 30, 2022), and a one-off reduction in the cost of net debt of €0.9m at €2.0m (compared with €2.9m at 30 June 2022). This decline was mainly due to the increase in financial costs capitalised (expense transfer) in connection with the Combani projects, amounting to €1.1m (compared with €0.4m at 30 June 2022).
Restated net assets: €238.6 million (+0.5% vs. year-end 2022 and +4.6% over 12 months)
As of June 30, 2023, restated net assets totaled €238.6 million, up from €228.2 million as of June 30, 2022 (+4.6%) and €237.5 million as of December 31, 2022 (+0.5%). Half-year earnings counterbalance the distribution of the €8.6 million dividend in 2022. On a per-share basis, the restated net asset value rose by +4.6% over 12 months to €6.66 (vs. €6.37 as of June 30, 2022).
Solid financial structure and cash position - Diversified, secure debt profile
CBo Territoria issued again an Ornane7 maturing in June 2028 via private placement in June 2023 for €15.1 million, replacing the Ornane issued in 2018 (for €30 million) and maturing in July 2024. This transaction allows the Group to diversify its sources of financing and confirms the confidence of institutional investors (the majority of whom had already subscribed to the previous issue) in its development model in a more challenging economic climate for publicly traded real estate stocks.
The Group repaid roughly €32.1 million in loans during the first semester, including €22.6 million in Ornane 2018. The Group's gross financial debt thus decreased to €180.4 million as of June 30, 2023, from €195.4 million at the end of December 2022. Approximately 85% of the Group's gross financial debt consisted of mortgage financing, while the remaining 15% consisted of outstanding Ornane stock and the PGE (state-guaranteed loan), which is presently being amortized. After these transactions, CBo Territoria's cash position remains solid at €21.0 million.
After accounting for hedging instruments, 84% of financial debt is at a fixed interest rate. The average cost of debt is 3.4% (compared to 2.9% as of December 31, 2022), with a maturity of 8 years and 5 months (+4 months compared to year-end 2022).
The loan-to-value ratio (LTV) excluding transfer taxes was 36.3% at the end of June, compared to 36.8% at the end of 2022 and 41.5% at the end of June 2022. It stood at 37.2% excluding the valuation of hedging instruments. The interest coverage ratio (ICR) increased to 5.1x from 3.5x at the end of 2022, while the net debt-to-EBITDA ratio remained high at 5.5x.
OUTLOOK 2023
Given the momentum seen in the first half of 2023, the Group is increasing its growth objective for gross rental revenues from commercial properties (including equity affiliates) from 1% to 3.5% for the entire year.
In the residential property development sector, the Group has solid visibility on built-up areas, especially given the proportion of block sales, but less visibility on building lots, which are taking longer to sell due to buyers' difficulties to access credit.
As to the Property Investment business, the pipeline8 of commercial property projects under development as of June 30, 2023, represents €106 million in investments, including:
- €26 million in Mayotte, corresponding to the Ylang Ylang shopping center in Combani, which will be delivered soon, and the Pôle Emploi offices (early 2024), which will contribute to the growth in the rental revenues next year,
- and €26 million in La Réunion, with construction scheduled to start within 12 months, depending on progress in their commercialization. Among these, the Galabé project in the Savanna commercial hub, for which the building
7 See press release issued on June 27, 2023, available on the finance section of the company's website.
8 Projects under construction, projects to be launched within the next 12 months and projects identified on controlled land in the medium term.
permit was validated since the end of June 2023, comprises two buildings with a total surface area of 4,260 m2 . Construction is due to start in the first half of 2024, with completion scheduled for the end of 2025.
The half-yearly financial report was filed with the AMF today and is available on Cboterritoria.com in the Finance / Financial documents section.
A presentation accompanying this press release will be posted online at 9:00 a.m. on September 13 on Cboterritoria.com in the Finance / Financial Documents section.
2024 financial calendar: 2023 annual results - Tuesday, February 6, 2024
About CBo Territoria (FR0010193979, CBOT)
CBo Territoria has been a major real estate operator in La Réunion for nearly 20 years and has evolved into a multi-regional property developer specializing in tertiary assets (€300.6 million at the end of December, representing 81% of total assets in value at year- end 2022). The Group is pursuing its expansion through the exploitation of its land reserves or through land acquisition, as it is involved in the full real estate value chain (property developer, property investor, and real estate company). CBo Territoria can finance its development through its activities as a residential developer (apartment buildings or sale of land plots) and, secondarily, as a service provider, as well as through the planned transfer of its residual residential properties to SHLMR.
CBo Territoria is a real estate investment firm listed on Euronext Paris (compartment "C") that is qualified for the PEA PME finance program (small and medium-sized enterprises).
Responsible and committed to a more sustainable real estate since its inception, CBo Territoria has been in the Top 10 of compartment "C" of the Gaïa-Index for the past 6 years, a French benchmark index of the most virtuous small and medium-sized companies in terms of CSR (Corporate Social Responsibility).
More information on cboterritoria.com
INVESTORS Contacts
Caroline Clapier – Director of Finance and Administration - [email protected] Agnès Villeret - Komodo - Tel.: 06 83 28 04 15 - [email protected]
PRESS Contacts
Finance: Agnès Villeret - [email protected] Corporate - Paris: Dina Morin - [email protected] La Réunion : Catherine Galatoire - [email protected]
APPENDIX
OPERATIONS
| CONSOLIDATED REVENUES | H1 2023 | H1 2022 | Change | |
|---|---|---|---|---|
| Gross rental revenues | 12.5 | 11.8 | +59% | |
| incl. Commercial property investment (excluding share in equity affiliates) | 11.1 | 10.2 | +8.9% | |
| Incl. residential properties | 0.9 | 1.1 | -23.4% | |
| Incl. other revenues | 0.5 | 0.5 | +11% | |
| Property development | 28.5 | 20.9 | +36.7% | |
| Other operations | 0.6 | 0.6 | -12.1% | |
| Consolidated revenues (in €M) | 41.7 | 33.3 | +25.2% | |
| PROPERTY DEVELOPMENT REVENUES | H1 2023 | H1 2022 | Change | |
| Residential | 25.0 | 18.3 | +36.8% | |
| Block sales (Intermediate and Social) | 10.6 | 5.3 | +102% | |
| Individual clients (Intermediate – Pinel DOM) | 8.0 | 3.5 | +130% | |
| Sales of building plots | 6.4 | 9.6 | -33% | |
| Commercial | 3.5 | 2.6 | +36% | |
| Commercial buildings | 3.0 | 2.4 | +26% | |
| Sales of building plots and various income | 0.5 | 0.2 | +172% | |
| Total property development revenues (in €M) | 28.5 | 20.9 | +36.7% |
CONSOLIDATED INCOME STATEMENT (IFRS)
| H1 2023 | H1 2022 | Change | |
|---|---|---|---|
| Sales | 41.7 | 33.3 | +25.2% |
| Income from operations | 12.6 | 11.6 | +8.6% |
| Net of fair value adjustments | 1.0 | (0.3) | |
| Gains and losses on disposals of investment property | 0.1 | 0.5 | |
| Other operating income and expenses | (0.0) | 1.1 | |
| Share of results of equity affiliates | 1.1 | 1.0 | |
| Operating profit after equity affiliates9 | 14.7 | 13.8 | +6.7% |
| Net cost of debt and other financial income and expenses | (1.9) | (3.0) | |
| Income tax expense | (3.0) | (2.4) | |
| Net income | 9.8 | 8.4 | |
| Net income Group share | 9.8 | 8.4 | +17.1% |
| Net earnings per share (Group share) (€) | 0.27 | 0.23 | |
| Weighted number of shares | 35,809,032 | 35,827,530 |
1 Operating income after share of net profit of equity affiliates
CHANGES IN PORTFOLIO (EXCLUDING TRANSFER TAXES)
| In €M | |
|---|---|
| Total economic portfolio at 12.31.2022 | 388.1 |
| Built assets under construction | 15.1 |
| Economic portfolio at 12.31.2022 | 373.0 |
| CAPEX | 0.2 |
| Change in fair value | (0.3) |
| Economic portfolio as of June 30.2023 | 372.9 |
| Built assets under construction | 22.1 |
| Total economic portfolio as of June 30.2023 | 395.1 |
BALANCE SHEET (IFRS)
| ASSETS in €M | 06.30.2023 | 12.31.2022 |
|---|---|---|
| Non-current assets | 358.8 | 351.0 |
| Investment properties | 334.7 | 327.4 |
| Investments in equity affiliates | 13.6 | 12.5 |
| Hedging instruments valuation | 3.6 | 3.69 |
| Other non-current assets | 6.9 | 7.1 |
| Current assets | 131.8 | 146.8 |
| Inventories and work in progress | 68.9 | 71.8 |
| Investment properties held for sale | 19.3 | 19.4 |
| Trade and other receivables | 22.5 | 20.3 |
| Cash and cash equivalents | 21.0 | 35.2 |
| LIABILITIES in €M | ||
| Shareholders' equity | 238.7 | 237.6 |
| Group | 238.6 | 237.5 |
| Minority interests | 0.0 | 0.1 |
| Non-current liabilities | 198.3 | 210.4 |
| MT/LT financial debt | 161.7 | 174.1 |
| Deferred taxes | 35.9 | 35.5 |
| Other non-current liabilities | 0.7 | 0.8 |
| Current liabilities | 53.7 | 49.8 |
| Short-term debt (including bonds) | 18.8 | 21.3 |
| Trade and other payables | 34.9 | 28.5 |
| Total Balance Sheet | 490.6 | 497.8 |
9 Operating income after share of net income of companies accounted for by the equity method.
LOAN-TO-VALUE (LTV)
| In €M | 06.30.2023 | 12.31.2022 | |
|---|---|---|---|
| Investment properties | 334.7 | 327.4 | |
| Investment properties held for sale | + | 19.3 | 19.4 |
| Operating property excluding headquarters | + | 5.8 | 6.0 |
| Stocks / development | + | 68.9 | 71.8 |
| Total Assets (A) | = | 428.7 | 424.7 |
| Medium- and long-term debt | 161.7 | 174.1 | |
| Short-term debt | + | 18.8 | 21.3 |
| Other financial assets (effect of hedging instruments) | - | 3.6 | 3.9 |
| Cash position | - | 21.0 | 35.2 |
| Total liabilities (B) | = | 155.8 | 156.3 |
| LTV Excluding taxes (B/A) | 36.3% | 36.8% |
Maturity schedule of gross debt (bank and bond) as of June 30, 2023
GLOSSARY
Restated Net Assets: Restated Net Assets are calculated based on consolidated shareholders' equity, which includes unrealized capital gains and losses on the property portfolio. The property portfolio is valued at market value, determined by an independent appraisal.
Restated net asset value per share: Restated Net Asset's Value (excluding treasury shares)
Backlog: Sales (before tax) from completed residential and commercial property sales (excluding land sales) that have not yet been recognized. Order book: Total sales (before tax) of lots under a reservation agreement at the balance sheet date.
Average cost of debt: Ratio of interest paid over the course of the year prior to capitalization to the average amount of debt outstanding for the year. ICR (interest coverage ratio): Coverage ratio of financial interest to operating income
Net rental income = property investment division's operating margin: Rental income after deducting property expenses and bad debt provisions. LTV - Loan To Value: Outstanding bank debt net of financial assets and cash/market value of investment property excluding transfer duties + net book value of operating property excluding head office + inventories and work-in-progress (consolidated value)
Property development margin: Sales minus cost of sales, selling expenses and net allocations to provisions.
Offer available for sale: Unreserved sales of properties offered for sale.
Economic assets: Investment assets and proportion of assets held by equity affiliates.
Operating results: Property development margins + Net rental income - Net management expenses +/- Other non-recurring items
Net recurring revenue (NRR): IFRS net revenue from recurring operations
Equity affiliates: The equity method is a method of accounting that allows the book value of a company's shares held by a parent company to be substituted with the value of the parent company's share of the entity's equity.
Reservation inventory: Programs sold (reserved) but not completed.
Financial occupancy rate: Ratio between market rent for leased space and rent for total surface area (= actual rent for leased space + market rent for vacant space).
Rate of return on economic assets: Value of gross rental income from leased premises divided by economic assets, including transfer taxes.
Building plots - Property development: Sales of building plots for residential or commercial real estate
Block sales - Property development: Acquisition of an entire building or real estate program by a single buyer.
Retail sales - Property development: Acquisition of a residential unit or lot by an individual client