Today the Board of Directors of IGD – Immobiliare Grande Distribuzione SIIQ S.p.A. (“IGD” or the “Company”), a leading owner and manager of retail shopping centers in Italy and listed on the STAR segment of the Italian Stock Exchange, examined and approved the draft separate and consolidated financial statements at 31 December 2014 during a meeting chaired by Gilberto Coffari.

“In what continues to be a difficult environment, IGD closed 2014 with a net profit of €7.3 million, an incraese  46.1% against the prior year, and FFO of €35.2 million, which highlights the strong cash flow generated by operations“, Claudio Albertini, IGD – Immobiliare Grande Distribuzione SIIQ S.p.A.’s Chief Executive Officer stated. “In 2014 we focused, above all, on two main areas: on the one hand, core business operations, taking specific steps to optimize the occupancy rates at existing centers, as well as expand our real estate portfolio and generate income from development investments, and, on the other, improve the Company’s financial sustainability through extraordinary transactions.  We believe that overall the results obtained in 2014 strengthened both our operations, as well as our capital structure, and that we are, therefore, ready to proceed with the next growth phase”.

Principal consolidated results at 31 December 2014

Core business revenue amounted €120.5 million, largely in line with the same period of the prior year, while revenue from trading attributable to the Porta a Mare project (the sale of 5 residential units, 3 garages and 1 parking spot) and other income amounted to €1.6 million.

Of note is the 3.4% (including expansions) increase in sales recorded by retailers in the Italian shopping centers while footfalls were stable in 2014, with more than 60 million visitors in Italy and 29.8 million in Romania, testimony to the validity of the shopping center format and IGD’s business model.

Rental income came in at €115.3 million, largely in line with the prior year; the change of -0.2% is explained by:

• an increase in like-for-like revenue in Italy, net of the planned or strategic vacancies, of 0.2%;
• for €2 million, the new openings made in 2014 (expansion of Centro d’Abruzzo, an opening of the first retail area in Piastra Mazzini, Livorno, reformatting of the Le Porte di Napoli center and the acquisition of a portfolio of core real estate assets post-capital increase);
• for €959 thousand, the instrumental vacancies (vacant spaces that have already been pre-let, but where work is underway on new layouts ), net of the increased revenue posted by the Darsena City mall in Ferrara (positive effect of the acquisition of the business unit and, consequently, the direct management);
• for €735 thousand, a drop in revenue in Romania due to the downside of the contracts recorded at year-end 2013 and in 2014, along with the relettings underway (retail and office building), the vacancies instrumental to the investment plan and delay of scheduled openings.

Revenue from services rose 2.9% with respect to the same period of the prior year.

Direct costs pertaining to the core business amounted to €31 million, an increase of 11% with respect to the prior year due, above all, to the increase in rents and lease payments (+29.3%), as a result of the sale of the Le Fonti del Corallo mall in Livorno which is now under management, an increase in condominium fees, as well as property taxes, and the decrease in provisions following a decrease in doubtful accounts and bankruptcy proceedings.Net of the rents and lease payments, direct costs pertaining to the core business increased  + 2.9%.

General expenses (including payroll costs at headquarters) reached €10 million, a slight increase against the prior year due also to the increase in the personnel needed for communication initiatives and events, and 8.4% of core business revenue (basically unchanged).

The core business Ebitda Margin came to 65.8%, while the Ebitda Margin for freehold management reached 77.3%.

EBIT performed well rising 12.9% against the same period of the prior year to €54 million due primarily to a drop in writedowns and negative changes in fair value.

The consolided pre-tax profit for the period amounted to €9.4 million, an increase with respect to the €920 thousand reported in 2013, as a result of fewer writedowns and fair value adjustments, as well as lower financial expense.

The Group’s portion of net profit amounted to €7.3 millionat 31 December 2014, an increase of 46% with respect to the same period 2013; this result, however, was negatively influenced by the one-off tax effect of approximately €6.2 million related to the “Sblocca Italia” Law Decree that became effective in the period .

Funds From Operations (FFO) amounted to €35 millionat 31 December, largely in line with 2013.

The IGD Group’s net debt at 31 December 2014 amounted to€-942 million, a noticeable improvement with respect to the €-1,084.9 million recorded at 31 December 2013. The loan to value fell from 57.4% to 48.3%. The Group also succeeded in gathering about €240 million in new debt capital (bonds and new bank loans).

The Real Estate Portfolio at 31 December 2014

Based on CB Richard Ellis’s, Reag’s, and Cushman & Wakefield’s independent appraisals, the market valueat 31 December 2014 of the Igd Group’s real estate portfolio reached €1,951.15 million, an increase with respect to the €1,891.3 million recorded at 31 December 2013, thanks also to the completion of development investments in the pipeline and the acquisition of a portfolio of strategic assets for €94.8 million. The change in fair value recognized in the income statement (-€ 20.3 million versus -€33 million in 2013) is attributable primarily to capex that in the appraisals were not viewed as having increased the assets’ value.

The assets’ occupancy rate continues to be high (calculated based on EPRA criteria): the average financial occupancy rate in Italy reached 96.2%, while in Romania it came to 86.4%.

In Italy the gross initial yield reached 6.58% for the malls and 6.52% for the hypermarkets and in Romania it came to 6.72% .

Other resolutions

Calling of the Annual General Meeting

IGD’s Board of Directors also resolved to convene the Company’s Annual General Meeting in on 15 April 2015, at 10:00 a.m., at the Company’s headquarters in Bologna, in first call and, if necessary, in second call on 16 April 2015, same time and place.

IGD’s Board of Directors will propose that the shareholders, meeting in ordinary session, approve adividend of €0.0375 per sharewhich equates to a dividend yield, based on the stock price recorded at year-end, of 5.8%.

The dividend will be payable as from 20 May 2015, with shares going ex-div on 18 May 2015. Pursuant to Art. 83-terdecies of Legislative Decree n.58 of 24 February 1998 n. 58, the shareholders of IGD at the record date (19 May 2015) will be entitled to receive the dividend.

The shareholders, meeting in ordinary session, will first be called upon to approve the financial statements at 31 December 2014 and the allocation of the dividend for the year.

The Shareholders will also be called upon to resolve on the authorization to purchase and dispose of treasury shares as follows:

–       Motivation: to carry out (i) trading and hedging transactions and (ii) invest liquidity and allow for the use of the treasury shares in transactions pertaining to operating activities and business projects consistent with the Company’s strategic guidelines, in relation to which it is beneficial to trade, swap, contribute, or otherwise dispose of the shares;

–       Maximum number of treasury shares which may be purchased: the purchases may be made on one or more occasions up to the maximum allowed under the law;

–       Expiration of the shareholders’ authorization; the authorization to purchase treasury shares is requested for a period of eighteen months as from the date of today’s resolution; there is no time limit on the authorization to dispose of the shares;

–       Methods and purchase price of the treasury shares: the purchases shall be made in accordance with Art. 132 of Legislative Decree 58/1998, Art. 144-bisof the Regulations for Issuers and all other applicable laws and regulations, as well as the accepted market practices recognized by Consob and must be purchased at prices satisfying the provisions of Art. 5(1) of European Commission Regulation EC 2273/2003 of 22 December 2003.

The shareholders will also be called upon to appoint the members of the Board of Directors and the Board of Statutory Auditors for the three-year period.

Corporate Governance and Compensation Reports

The Board of Directors approved the 2014 Report on Corporate Governance and Ownership Structure, which forms an integral part of the annual report, as well as the Board of Director’s Compensation Report the first section of which, pursuant to Art. 123-ter, par. 6 of Legislative Decree. 58/98, will be voted on by shareholders during the next Shareholders’ Meeting.

Evaluation of the qualifications as independent  

IGD’s Board of Directors also confirmed that all the independent directors still qualified as independent.