2014-2016 business plan presentation Conference call and Q&A 19th December 2013 Event: 2014-2016 business plan presentation Date: 19th December 2013 Speakers: Mr. Claudio Albertini, CEO Mr. Roberto Zoia, Asset management and development Director Mr. Daniele Cabuli, COO O PERATOR : G OOD AFTERNOON . T HIS IS THE C HORUS C ALL OPERATOR . W E ’ D LIKE TO WELCOME YOU TO IGD 2014-2016 B USINESS P LAN P RESENTATION . A FTER MANAGEMENT ’ S PRESENTATION , THERE WILL BE A Q&A SESSION . N OW , I’ D LIKE TO TURN THE CALL OVER TO C LAUDIO A LBERTINI , CEO OF IGD. P LEASE SIR . C LAUDIO A LBERTINI : G OOD AFTERNOON EVERYBODY . A S YOU PROBABLY KNOW , THIS MORNING IGD’ S B OARD OF D IRECTORS HAS APPROVED THE 2014-2016 B USINESS P LAN , A COPY OF WHICH YOU HAVE ALL RECEIVED ONLINE ALONG WITH THE PRESENTATION OR THE SLIDES THEY WILL BE USING AND TALKING YOU THROUGH AS WELL AS THE PRESS RELEASE . L ET ’ S START ON P AGE 3, WITH THE CAPTION THAT YOU SEE THERE THAT SAYS . W HY A B USINESS P LAN UPDATE ? W ELL , AS YOU KNOW , BACK IN 2009 WE INTRODUCED WHAT BECAME A WELL ESTABLISHED TIME HONORED PROCEDURE TO HAVE A ROLLING PLAN WITH AN ANNUAL UPDATE . T HE ANNUAL UPDATE WILL PROVIDE US WITH MEDIUM TERM STRATEGIC PLAN . L ATELY AND MORE SPECIFICALLY STARTED IN 2009, WE HAVE BEEN SEEING UPHEAVALS AND MAJOR CHANGES AFFECTING BOTH , THE DOMESTIC AS WELL AS THE INTERNATIONAL SCENARIO AND MORE SPECIFICALLY , AFFECTING I TALY . A ND THEREFORE , AS A CONSEQUENCE OF THIS BEING A REAL ESTATE COMPANY , IT IS OUR DUTY WE FEEL TO PROVIDE YOU WITH SUCH A FORECASTING TOOL . I N ADDITION , AND AS YOU CAN SEE IN THE SECOND BULLET POINT ON THIS PAGE , WE WITNESSED DRAMATIC WORSENING OF THE SCENARIO AS WE OUTLINED IT ON PRIOR OCCASION . W E PRESENTED THE PREVIOUS B USINESS P LAN IN O CTOBER 2012, WHICH IS A LITTLE BIT EARLIER THAN THE CURRENT PERIOD OF TIME . A ND WE SAW AS I SAID WORSENING OVER THE COURSE OF 2013, BUT ALSO AFFECTING THE WAY FORWARD , AND THAT ’ S EXPLAINED BY THE GDP INFLATION AND CONSUMPTION TRENDS . Y OU WILL SEE ON THE NEXT PAGE THE MACRO ASSUMPTIONS , AS THEY HAVE BEEN REVISED COMPARED TO LAST YEAR . H OWEVER , HAVING SAID THIS , NONETHELESS THERE ARE A FEW POSITIVE SIGNS . W HAT I MEAN IS THAT , IGD’ S RESILIENCE AND ITS PERFORMANCE HAVE RESTATED AND CONFIRMED THE BEAUTY AND THE EFFECTIVENESS OF OUR B USINESS P LAN DESPITE THE NEGATIVE SCENARIO . A S A MATTER OF FACT , WE HAVE BEEN SEEING RENEWED INTEREST ON THE PART OF INSTITUTIONALS , THAT ARE ATTRACTED TO I TALY . W E HAVE SEEN ESPECIALLY FOREIGN INSTITUTIONALS COMING BACK TO THE SECTOR , BUT ALSO A FEW TIMID
2014-2016 business plan presentation Conference call and Q&A 19th December 2013 WEAK SIGNS OF INTEREST ON THE PART OF DOMESTIC INVESTORS AS WELL . I F WE COMPARE THE FINANCIAL POSITION SO TO SPEAK OR THE WEALTH OF I TALIAN HOUSEHOLDS AND WE COMPARE THAT TO THE REST OF E UROPE OR THE WORLD . W E SEE THAT THERE ARE SOME FEW WEAK TIMID SIGNS OF RECOVERY AND PICK UP , BOTH IN TERMS OF GDP AND ALSO IN TERMS OF CONSUMPTION TRENDS IF WE LOOK AT THE LONGER TERM . N OW , ALL THAT I’ VE MENTIONED IS REFLECTED IN THE NUMBERS AND FACTS SHOWN ON P AGE 4; THAT SLIDE , WHICH IS ABOUT THE MACRO ASSUMPTIONS SPANNING 2014 AND 2016, AND SPANNING NOT JUST I TALY , BUT R OMANIA AS WELL . S O YOU CAN SEE THE NEW ASSUMPTIONS UNDERLYING THREE KEY INDICATORS I . E . INFLATION , GDP AND CONSUMPTION AS REVIEWED . A ND AS FOR INFLATION , WE SAW A SORT OF COOLING OFF SO TO SPEAK , AND BASICALLY WE ARE EVEN BELOW 1.5%, BECAUSE INFLATION IS CURRENTLY STANDING AT A LEVEL BELOW 1%, BUT WE HAVE USED THE FORECAST THAT HAVE BEEN RELEASED BY INTERNATIONAL AS WELL AS DOMESTIC FORECASTING INSTITUTE , AND WE HAVE PICKED THE MID POINT , AND THEREFORE WE HAVE RELEASED THE NUMBER WHICH IS 1.5%. A S YOU KNOW OUR ACCOUNTS ARE DIRECTLY AFFECTED BY INFLATION , SINCE OUR RENTAL CONTRACTS ARE INFLATION INDEXED . I F YOU LOOK BACK AT OUR PREVIOUS INDUSTRIAL OR B USINESS P LAN , WE HAD A HIGHER INFLATION ASSUMPTION , AND WE WERE TALKING ABOUT 2% IN THE PREVIOUS EDITION OF OUR B USINESS P LAN FOR 2014 AND 2015. N OW , WE HAVE OBVIOUSLY PROLONGED OR EXTENDED THE NEW B USINESS P LAN UPDATE INCLUDING 2016. L OOKING AT GDP, WE SAW QUITE A WORSENING IN 2013, THAT ’ S STILL THERE IN 2014, ALTHOUGH TO A LOWER EXTENT 0.5%, 0.6%, AND WE SHOULD BE BACK IN LINE WITH 2015 SLIGHTLY ABOVE 1%, WHILST THE PREVIOUS B USINESS P LAN HAD INCLUDED AN ASSUMPTION OF 1.2%, AND IN 2016, THERE SHOULD BE A PICK UP REACHING 1.7%. C ONSUMPTION HAS AGAIN A DIRECT IMPACT ON OUR BUSINESS AND ESPECIALLY ON OUR OPERATORS BUSINESS . W E SAW AGAIN QUITE A WORSENING ALMOST MORE THAN THE DOUBLE OF WHAT WE HAD EXPECTED AT THE END OF 2012, 2.4% VERSUS 1.1%, WHILST THE 2014 IS FLAT . T HE FIRST HALF OF 2014 WILL STILL BE IN THE NEGATIVE AS FAR AS CONSUMPTION TRENDS ARE CONCERNED WITH THE GROWTH EXPECTED TO TAKE PLACE IN THE SECOND HALF . W E ARE EXPECTED 1% IN 2015; WE EXPECT A POSITIVE SIGN IN 2014 ALTHOUGH BELOW 1%. S O WHEN IT COMES TO CONSUMPTIONS , THEY WILL STILL BE LOWER . A S FAR AS INFLATION IN E UROLAND IS CONCERNED ; PLEASE REMEMBER , FIRST OF ALL THAT R OMANIAN CONTRACTS ARE INDEXED , WE SAW QUITE A SHRINKAGE OVERALL TO A LESSER EXTENDED THAT IN I TALY . A S FAR AS R OMANIA IS CONCERNED , WE SAW A DECLINE IN THESE INDICATORS , ESPECIALLY OF THE GDP. A LTHOUGH THIS DECLINE WILL STILL SEE GDP IN THE POSITIVE 2.3%, 2.5%, AND 2.9% IN 2014, 2015 AND 2016, RESPECTIVELY , THEREFORE WITH STRONGER PICKUP SIGNS THAN IN I TALY , AND WE ALSO EXPECT A MORE ROBUST GROWTH . I N 2013, WE ARE GOING TO SEE A GROWTH OF 2.1% IN 2014 TO 3.2% IN 2015 AND 2016 AND THAT WAS CONSUMPTION . T HAT WAS THE MACRO ASSUMPTIONS WE HAVE MADE . A ND THEN ON P AGE 5, WE WANTED FOR THE FIRST TIME , EMBED OUR SUSTAINABILITY CRITERIA IN THE B USINESS P LAN . Y OU KNOW THAT FOR A NUMBER OF YEARS WE HAVE BEEN PRESENTING TO THE FINANCIAL COMMUNITY OUR SUSTAINABILITY REPORT AS WELL , AND THAT ’ S
2014-2016 business plan presentation Conference call and Q&A 19th December 2013 ONE MORE STEP FORWARD WE HAVE BEEN DOING TOWARDS SUSTAINABILITY . O N THIS SLIDE , WE PROVIDE YOU WITH THE SUMMARY OF THREE STRATEGIC GOALS ; THE FIRST BEING AN INCREASE IN THE QUALITY AND EFFICIENCY OF OUR SHOPPING CENTERS . A ND WE HAVE A ROLL OUT PLAN OF ISO 14001, IN ORDER TO GET THE FIRST BREEAM CERTIFICATION OF OUR PORTFOLIO AS SUCH . T HEN WE WILL HAVE SPECIFIC ACTIONS TO CUT DOWN ON ENERGY CONSUMPTIONS . W E SAW ALREADY AN 8% DECLINE IN CONSUMPTIONS OF SHOPPING CENTERS DURING THE CURRENT YEAR . A ND ON TOP OF THIS , AND INCIDENTALLY THIS TOO IS QUALITATIVELY VERY IMPORTANT . W E ARE APPLYING USE ABILITY GUIDELINES FOR DISABLED PEOPLE . I N ADDITION , WE HAVE BEEN SETTING ALSO THE TARGET FOR OURSELVES TO INTERPRET THE INTEREST AND DESIRES OF OUR CUSTOMERS . A ND AT THE SAME TIME , WE WANT TO MAINTAIN AN ONGOING SYSTEM FOR MONITORING THE CUSTOMER SATISFACTIONS OF TENANTS , VISITORS , BANKS AND INVESTORS AND EMPLOYEES BECAUSE THEY HAVE BEEN INVOLVED IN OUR SUSTAINABILITY GOALS . L AST BUT NOT LEAST , WE WOULD LIKE TO REINFORCE THE CONCEPT OF SPACES TO BE LIVED IN . W E STARTED THAT TWO YEARS AGO , SO WE WANT TO INCREASE THE FOCUS ON INTEGRATED COMMUNICATION STRATEGIES OF OUR CENTERS , AND WE WANT TO USE 2.0 COMMUNICATION TOOLS . A LL OUR CENTERS HAVE BEEN EQUIPPED ; HAVE BEEN WIRED WITH W I F I , THEY ALL HAVE THEIR OWN F ACEBOOK PAGE , BUT , AND THIS IS SOMETHING WHICH WE WILL TEST IN THE NEXT FEW MONTHS . A T OUR SHOPPING CENTERS WE WILL ADOPT FULLY DEDICATED APPS , WHEREBY IF YOU HAVE A SMARTPHONE , YOU WILL ACCESS THAT SHOPPING CENTER . A ND THEREFORE , THE WHOLE WORLD OR THAT SHOPPING CENTER WILL BE AVAILABLE ON YOUR MOBILE PHONE . W E ARE NOW ON P AGE 6, AND HERE YOU CAN FIND THE HIGHLIGHTS OF OUR B USINESS P LAN . N OW , AS YOU CAN SEE , IN THE BOXES AT THE TOP AND ON THE BOTTOM WE HAVE PUT THE TARGETS FOR THE 2014-2015 B USINESS P LAN . W E EXPECT HOMOGENEOUS , THAT TO SAY LIKE - FOR - LIKE CAGR CORE BUSINESS REVENUES 2.9% WITH RENTAL REVENUES UP 2.6%, WHILE SERVICE REVENUES ARE EXPECTED TO INCREASE AT A HIGHER RATE BETWEEN 7% AND 8%. W ELL ON A LIKE - FOR - LIKE BASIS , RENTAL REVENUES WILL GROW AT THE SAME PACE AS INFLATION . W E THINK IT ’ S NECESSARY AND QUITE APPROPRIATE TO STRESS A POINT , THAT TO SAY THIS WILL BE MAINLY A BACK - LOADED GROWTH THAT TO SAY WITH A STRONG CONCENTRATION AT THE END OF THE B USINESS P LAN HORIZON . S O WE WILL SEE MODEST GROWTH BELOW 1% AT THE BEGINNING , WHILST THE BULK OF THE GROWTH WILL BE CONCENTRATED IN 2016. A S YOU WILL SEE LATER , WE EXPECT TO INVEST A €195 MILLION OVER THE COURSE OF THE B USINESS P LAN , AND THE RETURN ON THAT WILL BE AS I SAID BACK - LOADED , BY THAT MEANING THE SECOND PART OF 2016. T HEREFORE , WITH AN AVERAGE 2.9% AVERAGE GROWTH RATE , WHICH IS NOT A GOOD PROXY , BECAUSE AS I SAID , THERE WILL BE A STRONG CONCENTRATION IN THE SECOND PART OF THE B USINESS P LAN . A S FAR AS THE EBITDA MARGIN ON OUR FREEHOLD MANAGEMENT IS EXPECTED TO BE UP 3% COMPARED TO WHAT WE EXPECTED TO SEE AT YEAR - END 2013. W E ARE TALKING ABOUT STARTING POINT OF 77%, WHICH IS HIGHER THAN IN 2013 THE GEARING RATIO AT THE END WAS 1.37% AT THE END OF 2013 AND IT ’ S EXPECTED TO GO DOWN TO 1.2%. L OAN - TO - VALUE , AGAIN AT THE END OF THE B USINESS P LAN WILL BE AT ABOUT 54%. I NTEREST COVER RATIO , AGAIN AT THE END OF
Recommend
More recommend
