Today the Board of Directors of IGD -Immobiliare Grande Distribuzione SIIQ S.p.A.(“IGD”or the “Company”), listed on the STAR segment of the Italian Stock Exchange, in a meeting chaired by Gilberto Coffari,examined and approvedthe draft separate and consolidated financial statements at 31 December  2012

“Despite the particularly complex economic and financial environment, the IGD Group closed FY 2012 with core business EBITDA of €85.8 million and a net profit of €11.3 million. These results are even more significant insofar as they were achieved in the most difficult year of IGD’s history: this year, in fact, the economic crisis, which in Italy – our principal market – has persisted almost uninterrupted since 2008, proved to be even more drastic.  The operating results make it possible for us to maintain a solid dividend, in line with the targets found in the 2012-2015 Business Plan approved last October” Claudio Albertini, Chief Executive Officer of IGD – Immobiliare Grande Distribuzione SIIQ S.p.A. stated. “We are, therefore, very proud that we were able to deal with this challenging scenario by leveraging on the good quality of our real estate portfolio which is concentrated in the retail segment and characterized, moreover, by the presence of solid food anchors, long term debt which is largely hedged and the traditional approach to the long term sustainability of our commercial policies. These are elements which have always been part of our business model and which, once again, have proven to be key to the stability of our performance”.

Principal consolidated results at 31 December 2012

At 31 December 2012, the IGD Group’s revenue from core business amounted to  €123.3million, an increase of 1.7%with respect to the €121.2 million posted in 2011.  More in detail, rental income rose 1.9% with respect to 2011, thanks primarily to the acquisitions made in the prior year^[1] which made a full year contribution in 2012 (acquisitions include the remaining two floors of the office building already owned by the Group and where its headquarters are located, the “City Center” building found on Via Rizzoli in Bologna and the hypermarkets in Conegliano and Palermo).

There was also an increase like-for-like of  (+0.52%).

The direct costs pertaining to the core business (including personnel expenses) amounted to €27.7 million at 31 December 2012, an increase of 17.9% with respect to the prior year. This increase is primarily attributable to the increase in costs relating to IMU (a property tax introduced in Italy to substitute ICI) which represents approximately 26% of the total direct costs (versus approximately 19% in 2011), as well as the increase in provisions for doubtful accounts, condominium fees and routine maintenance.  These costs amounted to 22.5% of revenue, an increase with respect to the prior year, but in line with first half 2012, when the IMU was initially applied by the municipalities to commercial real estate. As in prior years, the steps taken to contain general expenses also proved effective in 2012: general expenses for the core business (including payroll costs at headquarters), reached €9.7 million, in line with the €9.6 million posted at 31 December 2011 and stable as a percentage of revenue (7.9%).

Core business EBITDA reached €85.8 million in 2012, a slight drop of 2.6% with respect to the €88.1 million posted in the prior year, while total EBITDA fell 3.1% to €85.7 million.

The IGD Group’s EBITDA margin for the core business reached 69.6% at 31 December 2012, down with respect to 2011 due to the more proportional increase in direct costs with respect to revenue.

The IGD Group’s EBIT at 31 December 2012 amounted to €53.4million, a drop of 27.3% with respect to the €73.5 million recorded at 31 December 2011. The change is explained primarily by the impact of property writedowns and fair value adjustments of €30.6 million which are almost entirely attributable to the Italian portfolio (the appraisals in Romania were, in fact, largely in line with 2011). Direct costs also increased (above all taxes, like IMU) and there was also a slight increase in the average exit cap rate.

The Group’s portion of net profit at 31 December 2012 amounted to €11.3 million, versus €30.1 million in 2011. This result reflects, while EBITDA basically held, the negative impact of the fair value adjustments and an increase in net financial charges explained primarily by an increase in the cost of capital.

More significant is the trend in Funds From Operations (“FFO”)^[2] which at 31 December 2012 reached €35.9 million, versus €42.6 million in 2011, a drop of 15.7% attributable almost entirely to IMU and financial charges^[3].

At the end of 2012 the gearing ratio came in at 1.38, unchanged with respect to 31 December 2011. The average cost of debt (net of the bond’s pro-forma charges) rose to 3.91% from the 3.71% recorded at 31/12/2011.

The IGD Group’s net debt at 31 December 2012 amounted to – €1,089.6 million, an improvement with respect to the – €1,094.4 million recorded at 31 December 2011.

The Real Estate Portfolio at 31 December 2012

Based on CB Richard Ellis’s and Reag’s independent appraisals, themarket valueat 31 December 2012 of the Igd Group’s real estate portfolio reached €1,906.6 million, basically in line with the €1,924.6 million recorded at 31 December 2011, which reflects the stability of the valuations of the hypermarket segment (+0.15%) and the Romanian portfolio (-0.06%).  The mall segment fell by 2.51%. More in detail, thanks to the stepped rents included in the contracts stipulated with the recently opened hypermarkets in Italy and the execution of new contracts (with both step and variable provisions) with international retailers, which improved the revenue outlook for Romania, the IGD Group was able to partially offset the negative impact of IMU (the new property tax) on fixed costs. The occupancy rates in Italy and Romania, 96.3% and 89.4%, respectively, are testimony to the efficacy of the measures implemented by the Group in 2012.

The market value of the IGD Group’s portfolio in Italy at 31 December 2012 on a like-for-like basis was€1,576.6, a drop of– 1.55% with respect to the prior year due to the negative change in fair value as a result of the introduction of IMU in December 2011.  Romania was basically unchanged  (-0.06%).

Other resolutions – Calling of the Annual General Meeting

IGD’s Board of Directors also resolved to convene the Company’s Annual General Meeting in ordinary and extraordinary sessions on 18 April 2013, at 10:00 a.m., at the Company’s headquarters in Bologna, in first call and, if necessary, in second call on 19 April 2013, same time and place.

In light of the quality of the results achieved despite the particularly difficult environment, IGD’s Board of Directors will propose that the shareholders, meeting in ordinary session, approve a dividend, excluding the 10,976,592 treasury shares, of €0.07 per share, in line with the payout policy outlined in the 2012-2015 Business Plan. The dividend yield for those who purchased IGD shares at the end of 2012 (at a price of €0.82) will reach 8.5% and should be even higher for those who in June 2012 took advantage of the Dividend Reinvestment Option and used the 2011 dividend to subscribe new shares at a price of €0.64, with a yield that reached 10.9%.

The dividend will be payable as of 23 May 2013, with shares going ex-div on 20 May 2013. Pursuant to Art. 83-terdeciesof Legislative Decree n.58 of 24 February 1998 n. 58, the shareholders of IGD at the record date (22 May 2013) will be entitled to receive the dividend.

The shareholders, meeting in ordinary session, will also be called upon to approve the financial statements at 31 December 2012 and the allocation of the earnings 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.

–       Treasury shares held by IGD: to date IGD holds 10,976,592 treasury shares or 3.33% of the share capital.

The shareholders, meeting in ordinary session, will also be called upon to resolve on granting the financial audit assignment for the period 2013-2021 as the mandate granted Reconta Ernst & Young S.p.A. will expire upon approval of the financial statements for FY 2012.

The shareholders, meeting in extraordinary session, will also be called upon to resolve on a capital increase of up to 10% of the Company’s pre-existing share capital, pursuant to Art. 2441, paragraph 4(2) of the Italian Civil Code, without pre-emption rights, reserved exclusively for shareholders, coupon holders entitled to receive the 2012 dividend. The shareholders who decide to subscribe will be offered the possibility to reinvest a part, not to exceed 80%, of their dividend.

In greater detail, the transaction to be submitted for the shareholders’ approval, referred to as the Dividend Reinvestment Option, will be structured as follows:

• shareholders holding IGD shares on the above mentioned record date will be given the option to participate in the offering of IGD shares;
• the capital increase will be for a maximum total of 80% of the distributable dividends for 2012 or € 17,866,726.70.
• each shareholder may subscribe to a number of shares, the amount of which does not exceed 80% of their dividend;
• during the Annual General Meeting shareholders will determine the criteria to be used to establish  the subscription price of the new shares on the basis of the BoD’s proposal, market practices for similar transactions, and in light of the average stock price during eight trading sessions prior to the date on which the price is set, less the amount of the 2012 cash dividend and a discount of a maximum of 10%.  The issue price of the new shares, however, may not be below €0.61 (the official average closing price of IGD shares in the six months prior to 28 February 2013 less the amount of the 2012 cash dividend and a discount of a maximum of 15%).  The BoD will subsequently resolve on the final subscription price on the basis of the criteria established during the Annual General Meeting close to the offer launch date.

The details of the transaction will be disclosed to the market after the Annual General Meetingand before the transaction’s launch.

The purpose of this transaction, which is in line with the best practices adopted by a number of European REITs, is to give 2012 dividend recipients the possibility to reinvest in IGD and IGD to recapitalize itself. The Company intends to launch the capital increase, subject to approval by the authorities, on the date as of which the 2012 dividend is payable and, at any rate, by the deadline of 30 September 2013.

IGD has appointed Mediobanca – Banca di Credito Finanziario to act as the financial advisor and Mediobanca – Banca di Credito Finanziario to act as the legal advisor for the transaction.

Lastly, the shareholders of IGD, meeting in extraordinary session, will be called upon to resolve on amendments to Articles 16, 26 and 31 of the corporate by-laws in order to fully comply with the measures introduced in Law n.120 of 12 July 2011 relating to gender equality in the administrative and control bodies of listed companies.

The Board of Directors, in accordance with Borsa Italiana’s Corporate Governance Code, also confirmed whether or not the independent directors still qualified as independent based on the information they provided.

IGD’s Board of Directors approved the Annual 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.

^[1] Please note that, contrary to what was done through  31 March 2012, the provisions relating to the Darsena City rents were offset directly against revenue. The figures, therefore, at 31 December 2011 have also been reclassified.

^[2] A performance indicator commonly used in the analysis of the real estate sector (Siiq and REITS).

^[3] Please note that through 31 December 2011 this figure included the extraordinary items and gains from disposals; in order to highlight the core business (which generates the bulk of the income used to pay dividends) the impact of these items has been excluded. The figure at  31 December 2011 was also adjusted.