9 March 2011 13:37
Price Sensitive economic-financial results

The Board of Directors approves the draft separate and consolidated financial statements at 31 December 2010

All consolidated results for FY2010 show growth[1] (vs. FY 2009):

  • Total revenues[2]: €122.4 million (an increase of 2.3% with respect to the €119.7 million recorded at  31 December 2009)
  • EBITDA: €82.3 million  (up  7.6% with respect to the €76.5 million reported at 31 December 2009)
  • EBITDA MARGIN: 71% (an increase of 3.1 pp versus the 67.9%recorded at  31 December 2009)
  • EBIT: €68.3 million (an increase of  19.14% with respect to the €57.3 million recorded at 31 December 2009)
  • Net profit: €29.3 million (an increase of 43.77% with respect to the €20.4 million reported at December 2009)
  • Net debt: €1.017 billion (an improvement with respect to 31 December 2009 when net debt amounted to €1.028 billion)

Other resolutions:

  • Annual General Meeting called in ordinary and extraordinary session at 10:00 a.m. on 20 April 2011 to be held in Bologna Hotel Savoia, in first call and, if necessary, in second call on 21 April 2011, at the same place and time
  • Dividend of €0.075 per share proposed (an increase of 50% with respect to the €0.05 per share paid in 2009), with shares going ex-div on 23 May 2011 and payable as of  26 May 2011
  • Shareholders will also be called upon to resolve on the authorization to buy and sell treasury shares; on the amendments of Articles 2, 11, 12 and 18 of the Shareholder Meeting Regulations and on the amendments of Articles 13 and 22 of the corporate by-laws.
  • The Annual Report on Corporate Governance and Ownership Structure approved.
[1] In 2010 changes were made to the reclassification of certain cost and income items.  For the sake of consistency, these items were reclassified in accordance with the new criteria and, consequently, the comparison with the financial statements of the prior year is different.
[2] The item “revenues from freehold assets” includes revenues generated by the Katanè Shoppring Center beginning as of 5 May 2009 (the acquisition was completed in October) solely for operational purposes.

Today the Board of Directors of IGD -Immobiliare Grande Distribuzione SIIQ S.p.A. (“IGD”or the “Company”), leading owner and manager of retail shopping centers in Italy and listed on the STAR segment of the Italian Stock Exchange, in a meeting chaired by Gilberto Coffari, examined and approved the draft separate and consolidated financial statements at 31 December 2010 which show a consolidated net profit of €29.3 million (+43.77% vs. 31 December 2009).

 

Principal Results at 31 December  2010

The IGD Group generated total revenues at 31 December 2010 amounting to  €122.4 million, an increase of 2.33% with respect to the €119.7 million recorded in 2009. This increase is primarily attributable to the positive contribution of the rental income from the last two openings, which took place in December 2010, namely of the “Conè” Shopping Center and Retail Park in Conegliano and the “La Torre” Shopping Center in  Palermo, as well as the rise in the rents from the four openings completed in 2009 which contributed for all 12 months of the years. In 2010 the Group also continued with the profound reorganization and consolidation of Romania and the portfolio of brands present in the WinMarkt centers in order improve the quality of future revenue streams.

The IGD Group’s EBITDA at 31 December 2010 amounted to €82.3 million, an increase of 7.56% with respect to the €76.5 million reported in 2009, and 70.97%[1] as a percentage of revenue. This result is largely explained by the opening and acquisition of new shopping centers – with an impressive six new openings over the last two years – which make it possible to allocate operating costs, already subject to significant cost control measures designed to improve efficiency, over a broader revenue base.  Of note is the cost rationalization implemented by the Romanian subsidiary. Direct costs, including direct labor costs, dropped 11.32% with respect to 2009 to €23.8 million. The general expenses, including headquarter personnel, amounted to €10.2 million, an increase of 5.35% with respect to 2009. This increase is attributable, among other things, to the completion of IT projects during the year, as well as to other non-recurring charges. The Ebitda margin, calculated as a percentage of operating revenues, reached 70.97%, an increase of 3.11 pp with respect to the 67.86% reported in 2009, which confirms the solid operating trend.

The IGD Group’s EBIT at 31 December 2010 amounted to €68.3 million, an increase of 19.1% with respect to the €57.3 million recorded at 31 December 2009.

The tax burden, current and deferred at 31 December 2010 amounted to €2.5 million, reflecting a tax rate of 7.90% which is attributable to the positive effects of the SIIQ regime. Tax fell with respect to the prior year due primarily to the reversal of deferred tax liabilities accrued of approximately €489 thousand related to Irap (regional business tax) for the company Faenza Sviluppo which was adjusted to reflect IGD SIIQ’s Irap rate following the merger in October 2010.

The IGD Group’spre-tax profit at 31 December 31 2010 rose by 40.44% from the €22.6 million reported at 31 December  2009 to €31.8 million.

The IGD Group’s net profit at 31 December 2010 amounted to €29.3 million, an increase of 43.8%with respect to the €20.4 million recorded in 2009. This increase is primarily due to the increase in revenues, improved and more efficient cost control, as well as to a drop in impairment and the change in fair value of the real estate portfolio.

The Funds from Operations (FFO), a significant indicator used in the real estate market to define the cash flow from a company’s operations, rose from €39.4 million at 31 December 2009 to approximately €43 million at 31 December 2010, an increase of 9.06%. This figure is calculated excluding non monetary items and solely on the basis of the current tax burden.

The IGD Group’s net debt at 31 December 2010 came in at €1.017 billion, an improvement compared to the €1.028 billion at 31 December 2009. This improvement shows how, while the value of the IGD Group’s real estate portfolio rose along with its revenues, a balance was maintained between the sources of funding and cost of debt. At the end of 2010 the gearing ratio (debt to equity ratio), in fact, came in at 1.31, compared to 1.37 at 31 December 2009. In 2010 IGD also confirmed its ability to contain its cost of capital, taking advantage of the opportunity not only to restructure the convertible bond, but also to hedge interest rate risk and to close new loan agreements at advantageous rates, of which the net financial income and charges, basically unchanged (+675 thousand with respect to 2009),  are testimony.

 

The Real Estate Portfolio

At 31 December 2010 the market value of the IGD Group’s portfolio was estimated by the independent appraiser CB Richard Ellis at €1,803.98 million. IGD confirms that is the leader in Italy in terms of value. This figure reflects, on the one hand, the disposal of the 50% interest in RGD to Beni Stabili and, on the other, the effects of a vaster portfolio perimeter explained by  the acquisition of the mall in the La Torre Shopping Center in Palermo and the mall and retail park of the Conè Shopping Center in Conegliano Veneto, as well as the 50% of Commerciale Darsena Shopping Center from RGD, which became part of the portfolio just after the completion in 2009 of an impressive four new shopping centers in Guidonia, Catania, Faenza and Asti. At the same time, the pre-existing portfolio held well thanks to the quality of the assets and the stabilizing presence of the hypermarkets.

The portfolio continues to be comprised primarily of retail properties located throughout Italy and Romania and of real estate assets under construction in Italy.

More in detail, the IGD Group’s portfolio at 31 December 2010 includes: “hyper and super” located in 6 regions in Italy with a market value of €470.90 million; “malls and retail parks” located in 11 regions in Italy with a market value of €1,035.07 million; “other properties” annexed to retail properties owned in Italy with a market value of €2.43 million; “assets held for trading” with an estimated value of €86.69 million related to the multi-functional development project in Livorno; “plots of land” located in Italy to be used for future expansion and/or new retail initiatives with a market value of €28.79 million and, through Winmarkt, a portfolio of 16 largely retail properties in Romania with a market value of €180.10 million.

In 2010 the IGD Group continued to devote great attention to the maintenance of its shopping centers.  The greater part of the investments was made in the older properties in order to maintain the high quality of the entire portfolio. The Group also continued with the expansion and restyling of existing centers which is key to maintaining the merchandise mix found in IGD’s centers in line with new consumer trends.

All the changes made were done with a view to substantial energy savings thanks to the installation of new systems and the use of high “performing” materials. Further improvements will also be made thanks to the gradual increase of the use of solar energy. Four new systems should be installed in 2011. At the same time IGD also began a process designed to improve operating efficiency by reducing the energy used for heating and cooling systems through careful programming of the hours of operation.

 

Outlook

Despite the persistently complex global market conditions, the IGD Group feels comfortable confirming all the financial-economic targets presented to the market in November 2010, when the 2009-2013 business plan was updated. More in detail, the Group expects to see growth in all the primary indicators such as revenue,  Ebitda, Ebitda margin and average return of the real estate portfolio thanks to the new openings which will be fully operational, and debt with a gearing of less than 1.5x.

“In 2010 the IGD Group reported important economic-financial results, all showing significant growth such as, for example, the increase reported in net profit, funds from operations and the dividend which rose 50% with respect to the prior year,” Claudio Albertini, Igd’s Chief Executive Officer, stated. “These results indicate that our Group is moving forward with determination along the development path outlined in the 2009-2013 Business Plan, despite the market environment which is conditioned by weak consumption and confirm, as we expected, that the strategies implemented are effective in helping us achieve our targets”.

 

Other Resoltuions

IGD’s Board of Directors also resolved to call an Annual General Meeting at 10:00 a.m. on 20 April 2011, to be held in Bologna Hotel Savoia, in first call and, if necessary, in second call on  21  April 2011 at the same place and time.

In ordinary session the Shareholders will be called upon to approve the financial statements at 31 December 2010, the allocation of the net profit, the authorization to buy and sell treasury shares and the amendment of Articles 2, 11, 12 and 18 of the Shareholder Meeting Regulations, in order to comply with the changes introduced to TUF in Legislative Decree n. 27 of 27 January 2010 as per Directive 2007/36/EC of  11 July 2007  relating to shareholder rights ( “Legislative Decree 27/2010”).  The Shareholders will also be called upon, in extraordinary session, to approve amendments to Articles 13 and 22 of the corporate by-laws in order to comply, once again, to the changes introduced to Legislative Decree n. 58/2998 (“TUF”) as per Directive 2007/36/EC of 11 July 2007  relating to shareholder rights ( “Legislative Decree 27/2010”). Amendments to the corporate by-laws  will also be proposed in order to fully recognize the provisions contained in the procedure implemented by the Company pursuant to and in accordance with the Regulations for Related Party Transactions adopted by Consob in resolution n. 17221/2010.

The Board of Directors, pursuant to the Corporate Governance Code adopted by Borsa Italiana, also evaluated whether or not the independent directors still qualified as such on the basis of the information provided by the parties involved.

IGD’s Board of Directors will propose that the Shareholders’ Meeting, in ordinary session, approve payment of a dividend, excluding the 10,976,592 treasury shares held by the Company, of  €0.075 per share, an increase of 50% with respect to the €0.05 per share distributed in 2009, an increase which is even more impressive if we consider that the 2009 dividend was already up 42.9% with respect to the 2008 dividend. The shares will go ex-div on 23 May 2011 and payable as of  26 May 2010.

IGD’s Board of Directors also approved the Annual Report on Corporate Governance and Ownership Structure, included in the Directors’ Report on Operations.

The annual report, along with the draft consolidated and separate financial statements, the Directors’ report on operations, the Board of Statutory Auditors’ report and the external auditors’ reports, along with the directors’ reports on the items included in the Agenda of the Annual General Meeting will be made available to the general public at the company’s registered office, Borsa Italiana S.p.A. and will be published on the company’s website www.gruppoigd.it in accordance with the law .

[1] With respect to the prior directors’ report on operations, a few items not included in the EBITDA calculation, such as bank fees – recognized as financial charges – and a portions of the provisions for general risk – were reclassified under “other provisions”.  These reclassifications, for the sake of consistency, were also recognized in the income statement for FY 2009 which explains the difference in the Ebitda and the financial charges recorded in the FY financial statements for the prior year.