Earnings Release • Feb 13, 2014
Earnings Release
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Regulated information Brussels, 13 February 2014 :7.45 AM
Significant negative accounting adjustment on certain assets, in particular, the City Mall participation (€ -14.5 Mio).
The operational result amounts to € 7.2 Mio versus € 10.2 Mio in 2012.
The net current result amounts to € -4.2 Mio versus € 2.2 Mio en 2012.
The intrinsic net value1 decreases from € 15.08 per share to € 12.31. This decease is attributable to non recurrent adjustments.
As of 31 December 2013, net rental income reaches € 9.9 Mio versus € 10.7 Mio on 31 December 2012. The decrease of the net rental income is mainly attributable to the sale of the assets Prins B. and Eragny at the end of the first quarter of 2013. Those two assets generated in 2012 a net rental income of € 1,784 K.
The sale of others assets as well as the acquisition of an office building (Antwerp) had no impact on the consolidated accounts, these operations being concluded during the last days of 2013. The remaining of the decrease is attributable to the renewal of leases for the Diamond and Corvettes buildings but at lower financial terms and conditions (€ 325 K/year).
1 Intrinsic value : not audited figure – see definition page 7
The total amount of new leases accounts for 5,164 sqm, mostly retail occupancy in France. Thus, the retail project located in Suresnes and Secrétan (Paris) are almost entirely rented before the delivery date of the premises.
In Belgium, the occupation rate for the Alma Court asset amounts to 77%, and the situation for the Diamond and Arts 27 building has improved.
Two significant departures have been recorded : one tenant for a total surface of 1,240 sqm in the H5 asset (Evere) and a second one for a total surface of 3,895 sqm in the Athena Business Center (Vilvoorde). This last asset will be reconverted in the future into a residential building. Moreover, existing tenants covering a total surface of 15,036 sqm have been granted a lease renewal and, therefore, the income resulting from this asset has been secured.
Banimmo has finalized 5 sales operations, mainly on retail assets located in France. As a result, it has fulfilled the announced objective with a total sales amount of € 75 Mio.
The liquidity of Banimmo's assets has improved due to the gradual rebalancing of the portfolio towards retail assets, as well as « built to suit » projects rented for a long term to major companies. In this respect and in spite of a real estate and economic negative context, Banimmo has sold for € 114 Mio of assets during the last three years. Banimmo has managed to reach a rotation rate of 44 % of its average portfolio during the considered period (not including joint-ventures). As a result, the quality of the intrinsic value confines the negative context of the real estate market.
Banimmo has sold a completely rented office building in Antwerp for € 9.1 Mio, three retail assets located in Paris and Rouen for € 40.4 Mio and 50% of the joint venture "les Jardins des Quais" in Bordeaux for a total value of € 51 Mio.
The assets under development have experienced important improvements.
In Belgium and, in particular, in Ghent, Banimmo has concluded a "built-to-suit" operation on Field 5 of The Loop site for a total surface of 7,500 sqm where the regional office of Deloitte will be constructed.
Still in Ghent, Banimmo, in partnership with McArthurGlen group (the European leader in Outlet Center development and management) has reached an agreement with the City on the construction of a future center of 52,800 sqm. This agreement is subject to several conditions precedent of which some must have been achieved before the end of the first semester 2014.
In Brussels, the construction of the future headquarters of the multinational « Marsh & Mc Lennan » continues. The delivery is expected at the end of 2014.
In France, the development in Suresnes and Secrétan evolve normally with an opening of the retail gallery in Suresnes in March 2014.
The "Marché Saint Germain" has experienced many positive developments. First of all, an agreement has been reached over a "program of works" with a leading company in its sector which will occupy two third of the surface.
The Authorities of the city of Paris and the City Hall have given their agreement in principle on the reconversion project of the current galleries. The "CDAC" has been granted.
In Rocquencourt (Versailles), Banimmo has shortlisted two hotel operators to run a hotel located on the future site on the basis of a long term lease contract. A decision will be taken early 2014.
As far as the City Mall project is concerned, a regular monitoring of the progress of the retail shopping mall projects has been carried out. Banimmo has also reinforced the control procedure and manages now some of the operational aspects of these projects.
The 2 retail gallery projects evolve as follows :
In Charleroi, a new mixed program is discussed with the local authorities. At the same time, City Mall is now negotiating a sales transaction of this site based on a different mixed program encompassing retail – offices – residential.
During the last years, Banimmo had decided to give priority to an investment policy based on both a geographical and typed building diversification.
The two charts below represent this diversification. The presence in France has significantly decreased at the end of 2013, as a result of the sale of 4 assets during the bookyear. However, the weight of assets located in France should increase again in the future.
| ANALYSIS OF THE CONSOLIDATED RESULTS | K€ | K€ |
|---|---|---|
| 12/31/2012 | 12/31/2013 | |
| Recurrent income | 15,173 | 10,441 |
| of which net rental income from investment buildings | 10,717 | 9,884 |
| Gross rental income | 14,035 | 12,407 |
| Rental costs | $-3,318$ | $-2.523$ |
| of which management fees and commissions | 1,417 | 874 |
| of which share in the result of companies accounted by the equity method | 3,039 | $-317$ |
| Other operational costs on buildings | $-326$ | $-314$ |
| Operational and administrative costs | $-7,871$ | $-7,572$ |
| Other income | $\bf{0}$ | |
| Recurring operating result (REBIT) | 6,977 | 2,556 |
| Net result of transfers on real estate operations Net result of transfers on participations of companies accounted by the equity |
3,226 | 4,379 |
| method | 249 | |
| Operating result (EBIT) | 10,203 | 7,184 |
| Net financial costs | $-7,727$ | $-7,144$ |
| Dividends | 30 | 1,725 |
| Result of the other financial assets | $-109$ | |
| Result before taxes | 2,506 | 1,656 |
| Taxes | $-284$ | $-5,877$ |
| Net current result | 2,222 | $-4,221$ |
| Variations of fair value on investment buildings (IAS 40) | 4,128 | $-6,549$ |
| Variations of fair value on hedging instruments (IAS 39) | $-2,011$ | 2,807 |
| Variations of fair value in the result of companies accounted by the equity method | $-2,092$ | $-172$ |
| Profit/loss of value on asset held in stocks (IAS 2) | 368 | $-5,800$ |
| Profit/loss of value on companies accounted by the equity method Result of the reclassification of the participations in companies accounted by the equity |
$-11,293$ | |
| method | 10,503 | |
| Depreciation (allocation/write back) on the participations in companies accounted by the equity method |
$-3,157$ | |
| Deferred taxes | 59 | 3,954 |
| Result of the financial year | 2,674 | $-13,928$ |
| Minority interests | ||
| Result of the financial year-group share | 2,678 | $-13,928$ |
| Weighted average number of shares | 11,356,544 | 11,356,544 |
| KEY FIGURES | 12/31/2012 | 12/31/2013 |
|---|---|---|
| Coverage ratio of recurrent income to operational costs | 1.85 | 1.32 |
| BALANCE SHEET | 12/31/2012 | 12/31/2013 |
| Total Balance Sheet | 403,685 | 356,784 |
| investment buildings fixed assets investments in companies accounted by equity method |
93,954 1,560 60,854 |
83,168 1,825 10,760 |
| long-term financial assets inventory cash |
58,776 166,704 3,998 |
74,590 152,060 4,066 |
| Equity Capital (before allocation) Long-term financial debts Short torm financial dobte |
132,951 231,095 7.100 |
115,651 193,028 G 092 |
The net rental income amounts to € 9,884 K compared with € 10,717 K at 31 December 2012. This variation has been explained under the heading "Leases".
The fees and commissions amount to € 874 K compared with € 1,417 K. The year 2012 saw an important operation : the completion for PMV of a mission of delegated principal regarding the construction of the VMM headquarters in Ghent.
The share in the profits/ losses of companies accounted by the equity method amounts to a loss of € 4,436 K against a profit of € 947 K in 20122 . The contribution of the companies accounted by the equity method for the year 2012 can however not be compared to 2013.
Indeed, in 2013, Banimmo has decided to reduce its presence in the board of Montea to a positioning of institutional financial investor. Banimmo did not participate in the recent capital increases of Montea. Therefore and further to the application of the IFRS norms, the results of Montea are no longer accounted by the equity method.
Henceforth only the dividend of Montea has an impact on the results of Banimmo and is registered as a financial income and no longer as a result of a company accounted by the equity method. For the current bookyear, this dividend amounted to € 1,609 K.
This deconsolidation implies also that Banimmo shall value this participation on the basis of the stock price. On this basis, Banimmo registers an exceptional accounting capital gain of € 10.50 Mio, booked in accordance with the IFRS norms in the result of companies accounted by the equity method.
In City Mall, Banimmo registers a non recurrent value reduction of € 14.5 Mio.
2 This loss corresponds to the aggregate of the following items: "share in the result of companies accounted by the equity method", "variation of fair value in the result of companies accounted by the equity method", "profit/loss of value on companies accounted by the equity method", "result of the reclassification of the participations in companies accounted by the equity method" and "depreciation (allocation/write back) on the participations in companies accounted by the equity method".
From an economic point of view, this charge results mainly from a value reduction of the initial acquisition price of € 19.58 Mio. This value reduction is attributed to the Charleroi site as a result of the less profitable new mixed program (retail – offices – residential) and from a value reduction on the non attributable goodwill of the initial acquisition price as well as the project in Verviers.
As of 30 June 2013, Banimmo had recorded a first decrease of value of € 8.44 Mio. On the basis of the known facts and taking into account the delays accumulated on the Verviers project, Banimmo has decided to attribute an additional value reduction.
Further to this revision, the value of this participation amounts now to € 4.0 Mio to which must be added the mezzanine financing of € 35 Mio.
Those value adjustments have been accounted according to the IFRS rules in the result of companies accounted by the equity method.
The results of the Grondbank The Loop operation represent a loss of € 116 K.
The company has concluded with Banimmo a predevelopment agreement for Fields 3, 5 and 12. The commercialization of Field 5 has started with the first two developments.
The development of Field 12 is subject to different conditions precedent. As soon as those conditions precedent will be met, the development could start end 2014.
Grondbank The Loop would then be able to start the sale of its site with capital gains.
The joint-venture Conferinvest gathering the two Dolce Hotels registers a negative result of € 115 K compared to the year 2012 where an almost balanced result was reached.
The result of Dolce La Hulpe has improved mainly as a result of the signing of a major agreement with Deloitte EMEA, during 2013, to accommodate the training programs of Deloitte University. This agreement will generate an important and growing income for the years to come.
In Chantilly (France), the results have registered an important decrease due to the negative context and more importantly, the carrying out of an important renovation program for the surfaces in order to comply with the new legal standards. These programs have temporarily limited the hotel capacity in Chantilly.
The operational contribution of the companies accounted by the equity method, without taking into account the value variations, amounts to -317 K.
The structure costs (administrative and operational costs) continue to slightly decrease.
The ratio « recurrent income on operational costs » amounts to 1.32 compared to 1.85 in 2012.
The net financial charge amounts to € 2,721 K versus € 9,708 K in 2012.
The net average financing cost (before the impact of the hedging instruments) amounts to 3.24% versus 3.56% in 2012. Taking into account the existing hedging instruments, this average cost amounts to 4.52 % versus 4.66% in 2012.
The decrease of the financial charges is the result of a value increase (non cash) of € 2.8 Mio of the financial hedging instruments (IAS39) further to the increase of long term interest rates.
The dividend of Montea was, for the first time, recorded in this account. As a result of this recent recording, the financial income increased to € 5,266K.
The net financial debts on the total balance sheet represent 54.7 %, compared to 58 % in 2012.
The net current result amounts to € -4,221 K versus € 2,222 K in 2012.
The fair-value adjustments on the assets (IAS 40) and the assets under inventories (IAS2) have experienced a negative value adjustment of € 12,349 K.
The tax pressure has increased from € 284 K to € 5,877 K. This increase is a result of the tax charges imposed on the profits made for the sales of the assets in France. Indeed, taxes were directly calculated on the assets instead of the shares sale of the real estate company carrying the project.
The deferred taxes of € 3,954 K include a taking back of passive deferred taxes of € 4,387 K on the capital gain tax latency of the asset « Jardins des Quais » which was transferred in 2013. This amount of passive deferred taxes formed a provision on the amount of effective taxes of € 5,877 K of the bookyear.
The consolidated net result (IFRS) of the year amounts to a loss of € 13,928 K compared to a profit of € 2,678 K in 2012.
The intrinsic net value per share amounts to € 12.31 compared to a share price of € 9.00 on December 31. This value is determined by taking on the asset side the investment properties (IAS 40) at fair value, the shares in Montea at stock market value, the conference centres and Grondbank The Loop at the expert's value, City Mall and the assets accounted under inventories (IAS 2) at the lower of either their historical acquisition value or net realizable value if this is lower than the acquisition cost.
The landbank and assets accounted under inventories have a book-value of € 152 Mio.
The financial debt at its nominal value is deducted from these assets. Subsequently, this result is divided by the number of shares in order to obtain the intrinsic net value per share.
Since the last press release of 19 December 2013, no significant element has taken place.
Considering the intrinsic quality of the joint offer of Banimmo and Immo Jacqmain (IVG Group) related to the buildings North Plaza A and B in the framework of a tender procedure launched by Actiris ("Agence Bruxelloise pour l'emploi"), included the renting of a performing building for a total net surface of 27,000 sqm, their bid was shortlisted. Actiris has not notified its final decision yet but seems to have chosen another candidate as "Preferred bidder" for the finalization of the lease agreement.
Banimmo remains confident on its ability to ensure a rotation of its asset portfolio during the bookyear 2014 as well as finding new investment projects.
Considering the negative result of the bookyear, the Board will recommend to the Shareholder's meeting not to distribute a dividend.
The statutory auditor confirmed that his audit of the draft consolidated balance sheet and income statement is substantially completed and has to date not revealed any significant misstatements. The statutory auditors also confirmed that the financial accounting information included in this press release is in all material aspects in accordance with the draft financial statements from which the information is derived.
Banimmo Christian Terlinden Cedric De Laet Lenneke Marelaan 8 CEO CFO 1932 Zaventem Tel. : +32 2 710 53 11 Tel. : +32 2 710 53 11 www.banimmo.be [email protected] [email protected]
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