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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
ENRIQUE GRACIA, DIRECTOR OF MANAGEMENT CONTROL, AUDIT AND FINANCIAL COMMUNICATION, GECINA: (Interpreted). Good morning. We're very happy to have you here today at Gecina to present the figures for H1. I will now speak English.
ENRIQUE GRACIA: (Started in progress) for being present here today either in the meeting room in Gecina, either in the conference call. We are here of course for the presentation of the first semester results of Gecina, which have been in our opinion quite performing and very good results for these first six months.
I think we could go directly to slide number three, which is the summary of the main relevant data of the semester. The net result of the Group has reached almost EUR1.2b. That's an 80% increase compared to first semester of 2006. That has been, of course, helped quite substantially by the increase in valuation of the portfolio, the mark to market of the property portfolio of Gecina. That, as we will see later, has performed in line with the fundamentals of the market very substantially and very positively.
Recurring net profit of the Company has increased up to EUR180m, or almost 17% when compared to 2006 first semester results.
NAV of the Company has reached EUR141 per share. That's after paying the dividend, the last dividend, of EUR4.2. So gross of dividends, or before dividends, we will be talking about EUR145.8 per share, which means a 38% increase compared to 2006, or 33.7% net of the dividend that we already paid recently.
Let me go now to slide number five, which is beginning to go into the details of the net income or the key parameters of the net income of the Company in this semester. Rental income has reached almost EUR290m, which is 7.2% increase compared to the first semester of 2006. This 7.2% increase is divided on a like for like increase of 5% and the rest, 2.2%, due to investments and new rental activity of the Company.
EBITDA before adjustment in the market value of the portfolio has reached EUR273m, or a 22% increase compared to one year ago, and EBITDA after value adjustments according to the IFRS accounting has reached EUR1.2b, or 80.3% increase compared to 2006 first semester.
Net profit, or net income of the Company, so with that has reached 100 -- EUR1,178m, 80.8% increase compared to last year, and net income before value adjustments, being value adjustments in the portfolio, or value adjustments in the financial hedging portfolio of the Company has reached EUR180.2m, or 16.6% increase compared to 2006, first semester.
On the next slide, number six, you have already detail on what is the EBITDA composition of the Company in this first semester compared to the first semester of 2006. As we said, total rental income has increased by 7.2%. Operating income after general expenses, services, etc., has reached EUR225.3m, or 5.2% increase. Profit, then, we add to that the operating income the profit coming from block disposals and the profit coming from inventory disposal that has reached, in both cases, roughly, in global, EUR48.2m in total profit from all disposals of the Company, and therefore EBITDA after those disposals, has increased by 22% up to EUR273.5m.
Then we add, according to the IFRS accounting, the change in fair value of the assets, EUR938.2m. That's net of the CapEx of the Company, either on maintenance CapEx or on investments made on projects under development. This 90 -- to put in perspective, the EUR938m is due to a 23% increase in like for like valuation compared to June '06 or 10% like for like increased valuation compared to December '06. Therefore, EBITDA, or total EBITDA after all value adjustments and capital gains of the Company has reached EUR1.2b, or 80.3% increase compared to June '06.
On slide number seven you have detail on what is the rest of the income, the P&L account, starting from the EBITDA we just summarized before. Just let me talk to the main figures.
Net financial expenses have reached almost EUR80m, or 21% increase. This increase is due, of course, to the increase of the average volume of debt that the Company has, of course, coming from investments, either on [apparative] assets, either on new developments. Also it's important to -- I'm sorry, also the increasing interest expenses of course is due to the increasing interest rates, the reference interest rates that the Company, or what this Company, as any other company, is suffering in the market.
Also important to mention the change in fair value of the financial instruments, which has been a positive result of almost EUR85m, or a 51% increase compared to last year. This is of course coming from the market -- the mark to market of the hedging portfolio of the Company.
In global profit before taxes reaches EUR1.2b, or 84% increase compared to the first semester of '06.
Other important mentions, corporate tax goes to EUR37m. This increase is basically due to two reasons. First, on the current tax, you have EUR14m, which, most of it, is coming from the disposal of a land project in Lyons called [La Baule]. That is not subject to the SIIC regulation and where we have a tax impact of EUR8m. And then on deferred tax you also have all the taxes linked to non-SIIC companies -- non-SIIC companies, that of course all the increases in market value have deferred tax impact. We're basically talking about two companies called SP1 and SP2 VNC.
Assets, Rue [Guercin] and Saint Germain, all of which are under companies which do not have the SIIC and have -- take most of the amount that we mentioned of EUR22.5m.
Net profit after taxes, net financial expenses, etc., as we said, goes to EUR1.178m -- EUR1.178b, where of 80.8% increase compared to last year, first semester.
On next slide, number eight, you have the detail of the breakdown, or the match between what is the net profit, the total net profit, of the Company, and the next profit excluding change in fair value. We take the global net profit, deduct the change in fair value of the fixed assets, deduct the change in fair value coming from financial instruments, and add all the taxes that are not linked -- that are linked to those results, and then we go to the EUR180m we mentioned before.
Also you have on the table, at the bottom of the page, the same breakdown, or the same explanation, between what is the match between the EBITDA and the current cash flow of the Company. We go from the EBITDA before value adjustment. We add back to that EBITDA the impact of the stock options that is not a cash flow impact, and therefore we have to add it back, and we add the net financial expenses, and then we get the, what we call the current pre-tax. So we deduct the net financial expenses and we get to the current pre-tax cash flow, EUR197m, and then we deduct all the taxes linked to the current activity, or the recurring activity, which are EUR14.5m, and go -- or we reach that way recurring tax flow after tax of EUR183m, or 18% above first semester of '06.
On slide number nine, you have the main figures of the Company in terms of data per share. You have the -- we have reached a net earning per share of EUR19.59, or again 80.4 per share -- 80.4% increase to last year. Current earnings per share have reached EUR3, or a 16.3% increase, and pre-tax current cash flow has reached EUR3.28 per share, or 23.5% increase to last year, first semester.
On the next slide you have detail on a very important part of these -- of the results, which is the mark to market of the portfolio. You have on the table, at the top, the detail of gross asset value amounts and changes and variations compared to last semester. As you can see, offices has reached a value in the market, according to the expertise valuation, of EUR7.1b. Residential in unit valuation has reached EUR5.1b. Hotels EUR267m. Logistics EUR508m, and healthcare, or Gecimed participation of Gecina, which I remind you is 38%, is EUR206m. The 206 is, of course, our participation in the gross asset value of that company.
In global, the total market value of the portfolio of Gecina, which is EUR3.2b, which compared to first semester of '06 is a 27% increase, of course, taking account not only the change in fair value but also the investments made by the Company.
In terms of comparable growth, the global portfolio of the Company has increased by 23% compared to last year, or 10.3% compared to December '06, or six months ago.
You can see on the chart at the bottom right the breakdown between the different kinds of products. You have a 3.5% (sic - see Presentation) increase compared to December in offices, 7.1% in residential, 6.8% in new products, basically hotels, logistics, and healthcare.
At the pie chart on the bottom left you have the breakdown of business mix of the Company at the closing of the first semester. Offices, as you can imagine, is the main product in the Company with 54% of the gross asset value, residential 38%, hotels 2%, logistics 4%, and healthcare, our part in the gross asset value of Gecimed, it's 2%.
On the next slide, slide 11, you have the NAV evolution, the detail of the evolution of the NAV in terms of as we said before, gross asset value of EUR3.2b, net asset value EUR141.56 per share, or EUR145.8 before the dividend payment. This is a total year on year increase in terms of NAV of almost 34% increase.
On next -- the slide number 12, you have the detail of what is the current yields and market references of our valuation. In total the global portfolio of Gecina has a yield to date with the expected range for the whole of the year of 2007, the ones that we have in the budget, of 4.8%, compared to the valuation of the first semester, of June, but split in different yields level of course, depending on the product. In offices we're talking today of 5.22%, in residential at unit valuation of 4.12%. There has been a moderate decrease in this first six months. Another segment, because of increases in the budget, in the updated budget, on occupation, etc., and even taking account increasing valuation, the average yield that we expect for this year is 6.33%.
On the tables below you have the references, or some reference, of the valuation of the two main products, offices and residential, by the different locations. You have a reference in yield, reference in price per square meter, and the different ranges in each location.
Let me go now to slide 13, which is a summary of our current financial situation. You can see at the left of the page a detail of, or a summary of what is the look of the balance sheet. At the right, chart you have the evolution of our debt. As you can see at the closing of June we had a total debt of EUR4.4b, which compares EUR4.2b in December '06. This is of course due to the investments made by the Company that we will see later, explained by Regine, and you have on the pie chart the distribution of our financing structure, which is basically, or roughly, the same that it was at the closing of '06.
On the next slide 14 you have the evolution of the -- some important financial ratios. The LTV at the closing of June is at 33.5 compared to block valuation for offices and unit valuation for residential. The cost of that in line with the -- or slightly below the evolution of the market, but of course we're taking some impact from the increase of the reference rates in the market, even we are hedged, more or less, 80%, but of course we take part of the interest. The cost of that has increased to...
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