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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
UNIDENTIFIED COMPANY REPRESENTATIVE: Good morning to everybody. Welcome to the 2006 results presentation of Gecina. We have prepared a presentation that I suppose all of you have, and I think in any case is at the web page of the Company ready, and can be downloaded by any interested person.
So, as you know, we are talking about 2006 results. This has been a very important year for Gecina. It has been, indeed, a year of transformation. Not only in terms of the volume of results and the quality of results but, we will see also, from the point of view of the strategical positioning of the Company.
Let me go directly to slide number three. As we were saying, it has been a very profitable year for Gecina. We are very happy and very proud to present these results in the name of all the Company because, as you can see, net profit growth has gone up to EUR1.78b in 2006, which represents a significant increase compared to 2005 of more than 170% in the year.
Recurring profit, excluding all the effects from value adjustments, either from the rental portfolio or from the financial derivatives portfolio to hedge our interest rate exposure, has gone up more than 50%, or up to EUR392m in -- for the year.
NAV per share, of course reflecting all those impacts, has gone up to EUR124.9 per share, which means also -- almost a 30% increase compared to 2005 closing data.
Stock price, happily, has reflected part of these important increases and enhancements of the Company, not only in the point of view of the value but also from the recurring part of the P&L account. And at the close of 2006 the stock was trading at EUR145 per share, which means almost 50% more than December '05.
But also, and let me go through the following slide, also has been, as we were saying, a year of very important transformations from the positioning -- or in the positioning of the Company. Many of those changes are subtle and not -- probably not very evident to the market but are, in any case, very significant and very deep in the Company.
We could say Gecina has gone from being the biggest owner of property in France to being one of the largest players in the market. Today we are the biggest player in offices and we are beginning to be very important players in logistics, clinics and hotels and, of course, as we will talk later, in the residential market.
So that is a very important change because it's not the same of being just an owner, having the biggest portfolio, but also being in the market and being a representative player. That has been very important for us and I think it's a merit, of course, of all the team of Offices, Residential, Logistics, etc., in Gecina.
It has -- the Company has also changed from being limited to two sectors - Offices and Residential - to being present in a more broad base of products, still keeping the core activities that the Company had, that is Offices and Residential. But today, we are present in a significant way in new products that will give, in the future, diversification of our income and, of course, that are giving us already, in the short term, a higher yield on our investments compared to more conservative products.
But also the Company has changed its focus in terms of how to guide the businesses. We could say Gecina was a company focused on cash flow growth, which is an excellent measure of performance, but today we think we should be more focused on total return of the Company. Today, we are focusing on what is the net yield, on what is the yield you get from increases in capital value of the portfolio, of - put it that way - the total return of the portfolio. In that term, we will see later, the year has been very positive.
On the following slide, number five, and just to go slightly -- or briefly through those points, why we say Gecina is one of the largest players in the market. Well, in any case, Gecina is the largest player in Offices in the French market. Today we have roughly, or slightly more, of 1m square meters in Paris region and 1.2m square meters in the whole of France. And we are the first owner, also an operator, in the residential market, with 17,000 apartments, mostly in Paris region.
But also it's not only that we are a player and that we're playing the game, it's also in 2006 I think the Company has made a big effort to enhance the profile of Gecina as a brand, in terms of a more direct and present and constant relationship with our tenants, and also in the efforts we have made to increase our brand awareness.
Also, as an investor, which is at the end the reflection of all of this, we have been in 2006 the first investor in France. We have invested roughly EUR2b in the whole of the year, which represents more or less 8% of the market. It's not that we want to say we are the biggest investors or we are, etc., it's only that we have been very active and we have been -- we have had an excellent year in terms of volume of operations, not only in Gecina but in the market as a whole. And since we are an important player, we get a piece of that.
But also, we have been very active in terms of partnerships and in terms of agreements with other players in the market, and very significant players. We have had developments and agreements to develop with companies like Hines, Colony or HRO and, as you know, we have arrived to making joint ventures in the healthcare business with General Electric, RBS, SCOR and Lehman Brothers. But also, as we will talk later, there are other potential agreements and potential operations under study, not only in logistics but also in other activities.
About our diversification strategy, we are on slide six. It is not that we want to invest in any product just for the sake of diversification; it's that we want to invest in new products with at least the same potential of the ones that we have, but that can open us new opportunities. We think the diversification increases our flexibility to invest, reduces our dependence on specific sector cycles, and of course the final target is to improve our overall return.
In 2006, as you know, we have entered into logistics, we have entered into clinics or healthcare, and we have entered also, significantly, in hotels. All these assets, of course, they are not changing significantly the mix of the business of Gecina but they already represent 7% of the total portfolio. The aim is not to lose or to -- to lose our core businesses. The aim is to add new businesses and to open to new opportunities and to higher rentabilities.
In 2006, as we were saying, new segments represent 7% of the gross asset value. Residential properties represent 41% and offices 52%. Just as a reminder, in 2010 our target is that residential represents 25%, offices 59% and new segments, as the ones mentioned, 16%.
On what has been our objective, or how we are on our objectives to maximize total return, coming on to slide number seven. We try to achieve a higher total return by the way of more dynamic portfolio management. Of course the aim is to own the assets with -- that are going to be more suited to future value growth and present rentability on rents, and therefore having much more focus on asset quality, location, prospectives and efficiency. And, of course, trying...
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