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Sonae SGPS — Earnings Release 2010
Nov 10, 2010
1901_10-q_2010-11-10_a806b026-847c-4209-a621-598c709a6a71.pdf
Earnings Release
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Maia, Portugal – November 10th 2010
Results of the third quarter of 2010 Sonae Sierra recorded a Total Net Profit of €14.9 million
- EBITDA grew 13% to €89.9 million
- NAV grew 2% to €1.25 billion
- Portfolio sales grew 6.9% in Europe and 24.6% in Brazil (in Reais)
- Global occupancy levels grew 0.5% to 96.4%
- LeiriaShopping sold to Sierra Portugal Fund for €92 million
Sonae Sierra, the international shopping centre specialist, presented a Total Net Profit of €14.9 million at the end of the third quarter of 2010, an increase of 116% versus the same period of last year.
The favourable change in the Total Net Profit was mainly driven by a 42% increase of the Direct Results. Value Created was positive, in spite of slight yield increases in Portugal and Greece, thanks to good overall operating performance.
In fact, the Direct Income from Investments recorded an 8% increase compared to the first nine months of 2009, mainly due to the increase of the portfolio with the inaugurations of LOOP5 in Germany and Manauara Shopping in Brazil in 2009, and LeiriaShopping, in Portugal, in 2010.
EBITDA recorded a 13% increase, and is now at €89.9 million, compared to the €79.7 million presented in the first nine months of 2009. This increase derives not only from the inaugurations mentioned above, but also from efficiency gains as a consequence of the pro-active and persistent efforts in containing cost increases in all areas of the Company.
Sonae Sierra's portfolio presented a positive performance when compared with the first nine months of last year, with sales growing 6.9% (+1.5% like-forlike) in Europe and 24.6% (+17.8% like-for-like) in Brazil (in Reais). The Total Rents grew 11.2% when compared with the same period of last year (+4.8% like-for-like).
The Occupancy Rate of the portfolio remained high and stable, recording a value of 96.4% at the end of September 2010.
Value Metrics
The Company measures its performance, in a first instance, on the basis of changes in Net Asset Value (NAV) plus dividends distributed. The Company calculates its NAV according to the guidelines published in 2007 by INREV (European Association for Investors in Non-listed Real Estate Vehicles), an association of which the Company is a member.
On the basis of this methodology, the NAV of Sonae Sierra, as of September 30 2010, was €1.25 billion, an increase of 2.0% compared to the value recorded at the end of 2009.
| Net Asset Value (NAV) amounts in € 000 |
30 Sep 10 | 31 Dec 09 (PF) |
|---|---|---|
| NAV as per the financial statements | 1.000.209 | 994.533 |
| Revaluation to fair value of developments | 19.136 | 14.519 |
| Deferred tax for properties | 246.816 | 233.066 |
| Goodwill related to deferred tax | -37.347 | -37.932 |
| Gross-up of Assets | 24.623 | 24.310 |
| NAV | 1.253.438 | 1.228.497 |
| NAV per share (in €) | 38,55 | 37,78 |
New project under construction and several agreements for third party property management and leasing
Sonae Sierra continues with its growth and expansion strategy, although the Company has adjusted its development timings to the evolution of the financial and retail markets.
During the third quarter of this year the Company successfully completed the food-court refurbishment of Centro Vasco da Gama (Lisbon, Portugal), and started the construction of Boulevard Londrina (Londrina, Brazil), a 47.800 m2 GLA shopping centre that represents an investment of €97 million which is schedule to open in 2012.
At the end of the first nine months of 2010, the Company has three new shopping centres under construction and 7 projects in different stages of development in Portugal, Italy, Germany, Greece, Romania and Brazil.
In Italy, Sonae Sierra is currently developing Le Terrazze in La Spezia, which is scheduled to be inaugurated in the third quarter of 2011, representing an investment of more than €125 million. Currently, 65% of its GLA is already let. In Brazil, besides Boulevard Londrina, the Company is developing Uberlândia Shopping (Uberlândia) scheduled to open in 2011, and representing a total investment of €62 million.
During the third quarter of the year the company signed three new service contracts to lease and/or manage third-party shopping centres in Spain, Italy and Greece. Also in the services forefront, Sonae Sierra is currently providing Development services to third-party projects in Portugal, Italy, Romania, Cyprus, Serbia, Morocco and China.
Sonae Sierra sells 100% of LeiriaShopping for €92 million to Sierra Portugal Fund (SPF)
The SPF, seeded in 2008 with eight Portuguese shopping centres, now counts with LeiriaShopping to contribute towards its objective of providing investors with capital growth and income return through the investment in a portfolio of high-quality Portuguese shopping and leisure centres.
With this operation Sonae Sierra's interest in the SPF has increased to approximately 47.5%. This transaction reinforces the Company's goal of increasing its asset management activity, while leveraging its investments through long term partnerships.
International recognition
In September Sonae Sierra received the "Best Retail Developer" award for Portugal, Spain and Italy at the Real Estate Awards, an initiative of Euromoney magazine, a leading international banking and economy publication.
The votes for the Real Estate Awards are cast by the readers of the magazine, and award the "Best Retail Developer" amongst the companies with greater dynamic and innovation ability in the creation of investment opportunities in the retail area.
About Sonae Sierra
Sonae Sierra, www.sonaesierra.com , is the international shopping centre specialist, with a passion for bringing innovation and excitement to the shopping centre industry. The Company owns 51 Shopping Centres in Portugal, Spain, Italy, Germany, Greece, Romania and Brazil, with a total Gross Lettable Area (GLA) of 2 million m2 . Sonae Sierra is also providing services to third parties in Cyprus, Serbia, Morocco, Colombia and China. Currently, the Company has 3 projects under construction and 7 new projects in different phases of completion in Portugal, Italy, Germany, Greece, Romania and Brazil. In 2009 our Shopping Centres had more than 436 million visits.
Sonae Sierra's Consolidated Profit and Loss Account and Balance Sheet
| Sonae Sierra | (unaudited accounts) | |||
|---|---|---|---|---|
| Consolidated Profit and Loss Account (€ 000) |
9M10 | 9M09 PF * | 9M09 | % 10/09PF |
| Direct Income from Investments | 167.640 | 154.546 | 225.167 | 8% |
| Direct costs from investments | 77.708 | 74.814 | 93.931 | 4% |
| EBITDA | 89.933 | 79.732 | 131.236 0 |
13% |
| Net financial costs | 32.119 | 38.716 | 61.952 | -17% |
| Other non-recurrent income/cost | -2.843 | -102 | 1.110 | -2693% |
| Direct profit before taxes | 54.971 | 40.914 | 70.395 | 34% |
| Corporate tax | 10.539 | 9.521 | 14.586 | 11% |
| Direct net profit | 44.432 | 31.393 | 55.808 0 |
42% |
| Gains realized on sale of investments | -3.772 | 2.149 | 1.545 | -276% |
| Impairment & Development funds at risk provision | -5.207 | -6.453 | -6.412 | 19% |
| Value created on investments | 7.399 | -151.586 | -243.223 | 105% |
| Indirect income | -1.579 | -155.890 | -248.091 #REF! |
99% #DIV/0! |
| Deferred tax | 27.946 | -30.048 | -48.747 | 193% |
| Indirect net profit | -29.525 | -125.842 | -199.344 | 77% |
| Net profit before minorities | 14.906 | -94.449 | -143.536 | 116% |
| Attributable to : | ||||
| Equity holders | 14.906 | -94.449 | -94.449 | 116% |
| Minority interests | 0 | 0 | -49.086 | -100% |
* 9M09 PF - with all the companies consolidated by the proportional method
Sonae Sierra Consolidated Balance Sheet (€ 000) Investment properties 2.252.899 2.304.609 -51.709 Properties under development and others 230.600 263.801 -33.200 Other assets 177.695 194.266 -16.571 Cash & Equivalents 42.229 28.987 13.242 Total assets 2.703.424 2.791.662 -88.239 Net worth 1.000.209 994.533 5.6760 Bank loans 1.185.428 1.295.221 -109.792 Deferred taxes 296.418 272.232 24.186 Other liabilities 221.368 229.676 -8.309 Total liabilities 1.703.214 1.797.129 -93.915 30-09-10 Var. (10 - 09) 31-12-09 (PF)
Net worth and liabilities 2.703.424 2.791.662 -88.239
Consolidated Profit and Loss Account and Balance Sheet by business
| Sierra Investments | (unaudited accounts) | ||
|---|---|---|---|
| Profit & Loss Account (€ 000) |
9M10 | 9M09 PF * | % 10/09 |
| Retail Net Operating Margin | 79.724 | 79.905 | 0% |
| Parking Net Operating Margin | 1.132 | 1.269 | -11% |
| Co-generation Net Operating Margin | 544 | 504 | 8% |
| Shopping Centre Net Operating Income | 81.400 | 81.678 | 0% |
| Offices Net Operating Income | 54 | 142 | -62% |
| Asset Management Net Operating Income | 2.007 | 3.754 | -47% |
| Net Operating Income (NOI) | 83.462 | 85.573 | -2% |
| Recurrent net financial costs/(income) | 29.589 | 34.349 | -14% |
| Non-Recurring costs/(income) | 4.440 | 3.574 | 24% |
| Corporate Taxes | 8.008 | 8.914 | -10% |
| Direct Profit | 41.425 | 38.737 | 7% |
| Realized Property Profit | (5.001) | (110) | -4428% |
| Non-Realised Property Profit | (7.944) | (113.168) | 93% |
| Deferred tax | 18.306 | (34.216) | 154% |
| Indirect Profit | (31.252) | (79.063) | 60% |
| Net Profit for the Period | 10.173 | (40.326) | 125% |
Sierra Investments
| Consolidated Balance Sheet (€ 000) |
30-09-10 | 31-12-09 (PF) | Var. (10 - 09) |
|---|---|---|---|
| Investment properties & others | 1.903.828 | 1.995.363 | -91.536 |
| Other assets | 170.970 | 157.318 | 13.652 |
| Cash & Equivalents | 85.681 | 61.629 | 24.052 |
| Total assets | 2.160.479 | 2.214.311 | -53.832 |
| Net worth | 694.862 | 688.031 | 6.831 |
| Bank loans | 1.059.775 | 1.139.137 | -79.362 |
| Deferred taxes | 236.047 | 220.369 | 15.678 |
| Other liabilities | 169.795 | 166.774 | 3.021 |
| Net Worth and liabilities | 2.160.479 | 2.214.311 | -53.832 |
| Sierra Developments | (unaudited accounts) | ||
|---|---|---|---|
| Profit & Loss Account (€ 000) |
9M10 | 9M09 PF * | % 10/09 |
| Project Development Services Rendered | 4.896 | 4.044 | 21% |
| Value created in projects | (6.555) | (46.787) | 86% |
| Operating Income | (1.659) | (42.743) | 96% |
| Operating costs | 17.521 | 19.249 | -9% |
| Net Operating Income (NOI) | (19.180) | (61.991) | 69% |
| Depreciation and provisions | 96 | 14 | 577% |
| Net financial costs/(income) | 1.596 | 3.798 | -58% |
| Corporate taxes | (1.349) | 486 | -378% |
| Net Profit for the Period | (19.522) | (66.289) | 71% |
Sierra Developments
| Consolidated Balance Sheet (€ 000) |
30-09-10 | 31-12-09 PF | Var. (10 - 09) |
|---|---|---|---|
| Properties under development | 190.948 | 245.479 | -54.532 |
| Other assets | 102.235 | 109.407 | -7.171 |
| Cash & Equivalents | 5.544 | 2.724 | 2.821 |
| Total assets | 298.727 | 357.610 | -58.882 |
| Net worth | -16.507 | -5.526 | -10.981 |
| Bank loans | 7.466 | 33.315 | -25.849 |
| Shareholder loans | 193.516 | 202.960 | -9.445 |
| Deferred taxes | 3.298 | 4.464 | -1.166 |
| Other liabilities | 110.955 | 122.396 | -11.441 |
| Net worth and liabilities | 298.727 | 357.610 | -58.882 |
| Sierra Management | (unaudited accounts) | ||
|---|---|---|---|
| Profit & Loss Account (€ 000) |
9M10 | 9M09 PF * | % 10/09 |
| Total income from management services | 25.933 | 24.601 | 5% |
| Operating costs | 20.225 | 21.518 | -6% |
| Net operating income (NOI) | 5.708 | 3.082 | 85% |
| Net financial costs/(income) | (585) | (974) | 40% |
| Non-recurring costs/(income) | 616 | 411 | 50% |
| Corporate taxes | 2.183 | 1.419 | 54% |
| Net Profit for the period | 3.494 | 2.226 | 57% |
Sierra Management
| Consolidated Balance Sheet (€ 000) |
30-09-10 | 31-12-09 (PF) | Var. (10 - 09) |
|---|---|---|---|
| Other assets | 33.207 | 34.343 | -1.137 |
| Cash & Equivalents | 33.467 | 28.148 | 5.319 |
| Total assets | 66.673 | 62.491 | 4.182 |
| Net worth | 10.023 | 4.327 | 5.696 |
| Other liabilities | 56.651 | 58.164 | -1.514 |
| Net Worth and liabilities | 66.673 | 62.491 | 4.182 |
| Sonae Sierra Brazil (unaudited accounts) |
|||
|---|---|---|---|
| Profit & Loss Account (€ 000) |
9M10 | 9M09 PF * | % 10/09 |
| Retail Operating Margin | 17.556 | 11.992 | 46% |
| Parking Net Operating Margin | 2.349 | 647 | 263% |
| Shopping Centre Net Operating Margin | 19.905 | 12.639 | 57% |
| Total Income from Services Rendered | 4.889 | 3.511 | 39% |
| Overheads | 6.662 | 4.812 | 38% |
| Net Operating Income (NOI) | 18.132 | 11.339 | 60% |
| Net financial costs/(income) | 317 | 1.541 | -79% |
| Non-recurring costs/(income) | 1.049 | 201 | 421% |
| Corporate taxes | 2.133 | 1.467 | 45% |
| Direct Profit | 14.633 | 8.129 | 80% |
| Realised Property Profit | - | 1.888 | - |
| Non-Realised Property Profit | 14.245 | 15.971 | -11% |
| Deferred tax | 6.447 | 3.614 | 78% |
| Indirect profit | 7.798 | 14.246 | #DIV/0! -45% |
| Net Profit for the Period | 22.431 | 22.375 | 0% |
| Sonae Sierra Brazil | |||
|---|---|---|---|
| Consolidated Balance Sheet (€ 000) |
30-09-10 | 31-12-09 (PF) | Var. (10 - 09) |
| Properties | 389.678 | 328.273 | 61.404 |
| Other assets | 13.286 | 14.112 | -826 |
| Cash & Equivalents | 11.150 | 18.295 | -7.145 |
| Total Assets | 414.114 | 360.681 | 53.433 |
| Net worth | 313.751 | 270.456 | 43.295 |
| Bank loans | 33.630 | 32.768 | 862 |
| Deferred taxes | 57.056 | 47.089 | 9.968 |
| Other liabilities | 9.676 | 10.368 | -692 |
| Net Worth and liabilities | 414.114 | 360.681 | 53.433 |