FIRST HALF 2011 RESULTS

Transcription

1 Paris, August 31, 2011 FIRST HALF 2011 RESULTS Rents up 33%, +12% on a like-for-like basis, ahead of forecasts 15% increase in recurring cash flow EPRA NAV = 40.5 per share Debt ratio of 30% - cash flow at 70 million at end-august Rental income target confirmed for next 3-4 years On the occasion of the publication of the first half 2011 results, Bruno Keller, Chairman of the ANF Executive Board, said: In an uncertain economic environment, the half-yearly results published by ANF Immobilier demonstrate the pertinence of ANF's business model and the quality of its assets. Furthermore, ANF Immobilier continues to innovate by expanding its product range. We are on course to exceed our full-year target of 15% growth in city center rental income on a like-for-like basis, which should enable us to confirm our 3-4 year target of lifting total rental income above 100 million. M Reported Change Reported 2011 like -for H1 Reported like H1 Gross Rental Income % 35.9% B&B % 0.7% Marseille Lyon % 69.6% Recurring GRI % 12.3% EBITDA % % margin 85% % Recurring EBITDA % % margin 82% % Cash Flow % Recurring cash flow % RCF per share % 0.69 Average # of shares Capex Change in fair value (incl KG on disp) Net Income M Reported Reported 30/06/ /12/2010 Real Estate portfolio 1,607 1,573 B&B Marseille Lyon 1,108 1,081 Net Debt EPRA NAV per share EPRA Triple Net NAV LTV 30% 29% The change in fair value includes the proceeds from asset disposals Average number of shares adjusted for bonus issue of 1 share for every 20 held in The half-yearly consolidated accounts have been submitted for a limited audit by the Statutory Auditors. Rents up 33%, +12% on a like-for-like basis, ahead of forecasts ANF Immobilier's rents continued to rise in the first half of 2011, with growth of 33% to 45.2 million, an increase of 12.3% on a like-for-like basis (restatement of exceptional items related to the back payments from Printemps, acquisitions and sales of buildings). As regards city center (Lyon and Marseille) properties, the growth of 23.4% on a like-for-like basis is the result of increases in commercial rents and the reduction in the residential vacancy rate in Marseille. This increase in rents on a like-for-like basis for city center Haussmann-style properties exceeded the targets published by ANF Immobilier, and is testament to the appeal of the company's assets. Rents from the leasing of the 168 B&B hotel properties totaled 16.5 million in the first half of 2011, an increase of 0.7% on a like-for-like basis. These rents are fixed for the 12-year firm duration of the agreements (expiry: 2019), and are linked to the ILC index (Indice des Loyers Commerciaux - Commercial Rent Index). They represented 44% of ANF Immobilier's recurring rental income at the end of the first half of Page 1 of 3

2 FIRST HALF 2011 RESULTS In Marseille, rents totaled 11.6 million in the first half of 2011, an increase of 25.9% on a like-for-like basis. The disposals carried out in 2010 and 2011 led to a reduction in rental income of 0.4 million. Close to 0.7 million in new rents relate to retail premises, representing an increase of 18% for this segment, while rents in the other segments were also up. In Marseille, the residential segment accounts for 31% of rental income, with 37% relating to retail, 23% to offices and 9% to car parks and other. In Lyon, rents totaled 17.2 million in the first half of 2011, an increase of 20.5% on a like-for-like basis. The disposals carried out in 2010 and 2011 led to a reduction in rental income of 0.4 million. The fastest growing segment was retail premises, with growth of 33%. The continued delivery of apartments in the Mansardes project boosted residential rental income by 14%. In Lyon, the retail segment accounts for 61% of rental income, with 16% relating to residential properties and 23% to offices. Rental income for the period includes the back payments of 7.8 million from Le Printemps in Lyon for the period from June 2006 to December This payment followed the ruling by the Lyon District Court, which increased the rent for Le Printemps to 2.1 million per year (from 0.4 million). Le Printemps did not appeal against this decision. In addition to the back payment for rent (covering June 2006-December 2010), ANF Immobilier also received 0.4 million in interest, which was reported under financial income. 15% increase in recurring cash flow EBITDA for the period was 38.3 million. Restated to reflect the exceptional items relating to Le Printemps, EBITDA was 30.5 million, while the EBITDA margin was 81.7%, up 1 percentage point. Current cash flow increased by 15.3% to 21.7 million, or 0.80 per share. EPRA net asset value of 40.5 per share 1 According to an assessment by two independent appraisers, at June 30, 2011 the value of ANF's real estate assets was 1,607 million, up 2% on December 31, 2010, and up 7% compared with June 30, This sum broke down into 453 million in Lyon, 655 million in Marseille and 499 million for the B&B hotel properties. The various developments in Lyon and Marseille were appraised at 155 million as of June 30, 2011, up 1% over the 6 months. EPRA net asset value at June 30, 2011 was 40.5 per share, excluding transfer taxes, compared with 40.3 per share as of December 31, Taking into account the recognition of financial instruments at fair value, EPRA triple net NAV was 39.6 per share ( 39.0 per share at December 31, 2010). Debt ratio of 30% - cash flow at 70 million at end-august At December 31, 2010, ANF Immobilier's net debt stood at million. This mainly includes long-term mortgage debt (maturing in December 2014) of million used to finance the acquisition of the B&B hotel properties and its partnership with B&B, and long-term corporate borrowings (maturing in June 2014) of million used to finance works and projects in Lyon and Marseille. There is no debt to refinance before As of June 30, 2011, 95% of net debt was hedged at a fixed rate, with the average cost of debt at 4.38%. The Loan-to-Value ratio was 30.4% at June 30, 2011, compared with 29.2% at December 31, With regard to its loans, ANF Immobilier keeps well within the limits of its banking covenants (mainly the Loan-to- Value ratio and ICR). As of June 30, 2011, ANF Immobilier held cash of 34.5 million, which had risen to almost 70 million at end- August In addition to this cash amount, the company has available 51 million in undrawn loans. 1 Net asset value, excluding transfer taxes, before fair value adjustment of hedging instruments Page 2 of 3

3 FIRST HALF 2011 RESULTS Rent targets confirmed for next 3-4 years As regards city center Haussmann-style properties, ANF Immobilier is continuing its active management strategy aimed at reducing the residential vacancy rate in Marseille and boosting the potential for rent increases in relation to existing leases. The development of ANF Immobilier's land reserves in Marseille is continuing, with work on the Ilot 34 project starting in the first half of 2011 as scheduled in our plan for increasing the value of vacant land. This a mixed-use project on a 26,000 sqm plot located in the Euroméditerranée area. Despite the uncertain economic environment, our revenue projections for the next 3-4 years are maintained, with growth of 55% forecast for rental income, to 100 million per year. This strong growth should come from the strategy of increasing existing rents and is based on the accurate identification of rents with potential for upward revision. This strategy has already brought about a 59% increase in annual city center rents since ANF Immobilier also intends to continue its cautious debt strategy. The implementation of the investment program under way is not expected to lead to an increase in the debt ratio (LTV) above 35-40% Financial Calendar Presentation of half-yearly results September 1, 2011 (2.30pm Paris time + retransmission available by telephone) rd quarter revenues November 1, 2011 (before the market opens) 2011 results March 15, 2012 About ANF Immobilier ANF Immobilier (ISIN FR ) owns and manages a real estate portfolio worth 1.6 billion, with city center properties located in the Lyon and Marseille and 168 hotel properties in France, all operated by the B&B chain. It is a leading real estate investment company operating under the SIIC regime, specializing in the residential and commercial segments. ANF Immobilier is listed on Euronext Paris Eurolist B, and is part of the Eurazeo Group. ANF Immobilier Press Contact: Grégoire LUCAS Tel : +33 (0) glucas@image7.fr ANF Immobilier Analyst Contact: Jean-Annet de SAINT RAPT Tel : +33 (0) investorrelations@anf-immobilier.com Page 3 of 3

4 HALF-YEAR FINANCIAL REPORT JUNE 30, 2011

5 SUMMARY I HALF-YEAR FINANCIAL REPORT JUNE 30, Management report 2 Related party transactions 4 Declaration by management 4 II CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, Consolidated statement of financial position 6 Consolidated income statement 8 Consolidated comprehensive income 8 Changes in shareholders equity 9 Cash flow statement III STATUTORY AUDITORS REPORT ON THE HALF-YEAR FINANCIAL STATEMENTS 41 IV RISK EXPOSURE 43 Risks Related to the Company s Business 44 Market risks 48 Company-Specific Risks 51 Risks Related to B&B Hotels Group Assets 51

6 HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 RISK EXPOSURE STATUTORY AUDITORS REPORT ON THE HALF-YEAR FINANCIAL STATEMENTS MANAGEMENT REPORT 2 Operations 2 Development 2 Disposals 3 Appraisal 3 Outlook 3 RELATED PARTY TRANSACTIONS 4 DECLARATION BY MANAGEMENT 4 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30,

7 HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 Management report Management report Operations Consolidated rental income rose to 45.2 million, an increase of 12.3% on a like-for-like basis. It breaks down into 28.7 million for Haussmannstyle properties and 16.5 million for hotel properties. The rental income on Haussmann-style properties includes 8.7 million in reminder payments relating to the judgment setting the rent for the lease on Le Printemps department store in Lyon of which 7.8 million is related to previous fi scal years. On a like-for-like basis, and stripping out the impact of the back payments invoiced to Le Printemps in respect of previous fi scal years, rental income for Haussmann-style properties rose by 23.4%. In Lyon, rental demand for retail areas remained buoyant on the Rue de la République. The demand remained high at prime rents of between 2,000 and 2,500/sqm. Offi ce rents also held up well, with rents of about 250/sqm. In residential properties, ANF Immobilier s attic space development program offered exceptional new housing in buildings right at the heart of the Rue de la République. The Lyon District Court set the rent for the Printemps department store at 2.1 million. The previous rent was 0.4 million. The new rent applies retroactively from June 25, 2006, and the reminder payments due for the period from June 2006 to December 2010 total 7.8 million. In Marseille, new commercial leases, notably with RipCurl stores, were signed in the fi rst segment of the Rue de la République. With regard to the Pavillon Vacon project, the entire 1,500 sqm retail area has been leased to Casino Shopping, cafes and restaurants, and home furnishing, kitchen equipment (Kitchen Bazar), and footwear stores (DC Shoes). In residential properties, 54 apartments were rented in the fi rst half of the year at an average rent of 11.58/sqm, thereby reducing the vacancy rate. Other income and service charge income amounted to 3.4 million as of June 30, 2011, of which 2 million for Haussmann-style properties. Property expenses remained stable at 5 million. Property management costs and other income and expenses were 5.5 million as against 5.1 million at June 30, Operating income before changes in fair value stood at 38.6 million, of which 15.4 million for hotel properties and 23.2 million for Haussmannstyle properties (including 7.8 million in back payments relating to Printemps), versus 26.8 million at June 30, Change in fair value rose by 19.8 million, broken down into a net increase of 13.1 million for Haussmann-style properties and of 6.7 million for hotel properties. With fi nancial expenses of 5.8 million for the hotel business and 3 million for Haussmann-style properties, the net fi nancial expenses totaled 8.8 million in the fi rst half of First-half EBITDA was 38.3 million, after deducting net fi nancial expense, with current cash fl ow standing at 29.6 million. Restated to refl ect the back payments due in relation to Printemps, EBITDA was 30.5 million, an increase of 11.4%, and current cash fl ow was 21.7 million, up 15.2%. Consolidated net income came out at 50.1 million, up from 27.6 million in H Development ANF Immobilier continued to invest in the refurbishment of its existing real estate assets and in new developments in Lyon and Marseille. The total amount invested in this regard in the fi rst half of 2011 was 29.5 million. These investments were partly fi nanced via the credit line arranged in July 2007 with a banking syndicate led by CA CIB. As of June 30, 2011, a nominal amount of 250 million had been drawn down. 2

8 Disposals HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 Management report HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 ANF Immobilier continued its asset disposal program and during the period sold three properties and several apartments, for a total of 16.3 million. Disposals were conducted at prices that were higher than the most recent appraisal values and a gain of 0.8 million was earned. The properties were sold as part of the asset rotation policy. They had low revaluation potential and were not strategic assets. Appraisal The value of ANF Immobilier s real estate assets stood at 1,607 million at June 30, The real estate market was broadly fl at or slightly up, with prime assets still in favor, notably commercial properties. ANF Immobilier s real estate assets benefi ted from this trend, as yields estimated by property experts fell by between 10 and 30 basis points on city center properties, and by 5-10 basis points on B&B hotel properties. The value of properties increased by 34 million over the fi rst half, compared with the values reported at December 31, Outlook CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 Rents will continue to be upgraded for Lyon property assets, which still enjoy high demand in the Rue de la République area. In Marseille, vacancy rates for residential properties are expected to improve with the leasing of student apartments in the second half of the year. The commercial appeal of the lower segment of the Rue de la République will be confi rmed with higher footfall rates that have in fact already been recorded. Construction work on the Ilot 34 project, on a 26,000 sqm plot located in the Euroméditerranée area, is set to continue. ANF Immobilier will pursue its partnership with B&B Hotels to fi nance hotel improvements in the second half of the year. The acquisition of projects developed by B&B is also currently being reviewed. The rotation of ANF Immobilier s property assets should continue in accordance with the established program. Several agreements to sell were signed in the fi rst half of the year, involving a total of 23 million in disposals, which are mainly to be carried out in the third quarter. A number of acquisition projects are also under consideration. RISK EXPOSURE STATUTORY AUDITORS REPORT ON THE HALF-YEAR FINANCIAL STATEMENTS 3

9 HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 Related party transactions Related party transactions Note 14 to the half-year fi nancial statements details the related party transactions that took place over the half year. ANF Immobilier has no fi nancial commitments to related parties other than those indicated in Note 14. Moreover, the 2010 Registration Document lists the fi xed compensation amounts for Executive Board members. Declaration by management To the best of my knowledge, the consolidated fi nancial statements approved at June 30, 2011 have been prepared in accordance with the applicable accounting standards and give a true picture of the assets and liabilities, fi nancial situation and income of the ANF Immobilier Group, and the half-year management report presents a true picture of the information mentioned in Article of the AMF s General Regulations. Bruno Keller Chairman of the Executive Board 4

10 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 RISK EXPOSURE STATUTORY AUDITORS REPORT ON THE HALF-YEAR FINANCIAL STATEMENTS HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 6 Consolidated balance sheet assets 6 Consolidated balance sheet liabilities and equity 7 CONSOLIDATED INCOME STATEMENT 8 CONSOLIDATED COMPREHENSIVE INCOME 8 CASH FLOW STATEMENT 10 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 11 Half-year highlights 12 Events occurring after the balance sheet date 12 Change in method 13 Consolidation principles and methods 13 Managing market risk 22 Additional information 23 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 CHANGES IN SHAREHOLDERS EQUITY 9 5

11 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 Consolidated statement of financial position Consolidated statement of financial position Consolidated balance sheet assets ( thousands) Note 06/30/ /31/ /31/2009 Non-current assets Investment property 1 1,577,383 1,534,423 1,496,316 Property, plant and equipment in progress Operating property 1 2,618 2,691 1,189 Intangible assets Property, plant and equipment Non-current fi nancial assets Investments accounted for by the equity method Deferred tax assets Total non-current assets 1,580,954 1,537,949 1,499,343 Current assets Inventory and work-in-progress Trade receivables 2 12, ,902 Other receivables 2 6,728 2,532 9,436 Prepaid expenses Financial derivatives Cash and cash equivalents 4 34,455 28,325 30,130 Total current assets 54,041 31,949 41,904 Property held for sale 1 26,668 35,863 5,444 TOTAL ASSETS 1,661,663 1,605,761 1,546,691 6

12 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 Consolidated statement of financial position HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 Consolidated balance sheet liabilities and equity ( thousands) Note 06/30/ /31/ /31/2009 Shareholders equity Capital stock 12 27,721 27,454 26,071 Other paid-in capital 321, , ,900 Treasury shares 8 (7,515) (4,281) (4,261) Hedging reserve on fi nancial instruments (25,345) (35,354) (29,645) Company reserves 286, , ,277 Consolidated reserves 434, , ,209 Net income for the period 50,111 74,863 (53,977) Shareholders equity attributable to equity holders of the parent 1,087,565 1,064,859 1,029,574 Minority interests Total shareholders equity 1,087,565 1,064,859 1,029,574 Non-current liabilities Financial debt 3 522, , ,344 Long-term provisions Provisions for pensions Tax and corporate liabilities Deferred tax liabilities Total non-current liabilities 522, , ,402 Current liabilities Suppliers and related accounts 3 11,975 9,259 12,733 Short-term portion of fi nancial debt 3 1,281 5,012 2,106 Financial derivatives 9 24,923 34,982 29,546 Security deposits 3 4,040 3,526 3,589 Short-term provisions Tax and corporate liabilities 3 7,499 2,174 16,798 Other debts 3 1,465 2, Prepaid income ,043 Total current liabilities 51,721 57,710 66,715 Liabilities on properties intended for sale TOTAL LIABILITIES 1,661,663 1,605,761 1,546,691 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 RISK EXPOSURE STATUTORY AUDITORS REPORT ON THE HALF-YEAR FINANCIAL STATEMENTS 7

13 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 Consolidated income statement Consolidated income statement ( thousands) 06/30/ /30/ /30/2009 Revenues: rental income 45,240 34,004 32,260 Other operating income 3,420 3,299 3,123 Total operating income 48,661 37,303 35,383 Property expenses (5,020) (5,006) (4,987) Other operating expenses (339) (345) (48) Total operating expenses (5,360) (5,350) (5,035) Net operating income from property 43,301 31,952 30,348 Capital gain (loss) from disposal of assets 779 (62) 469 Net operating income from property after disposals 44,080 31,890 30,817 Employee benefi ts expenses (4,340) (4,009) (3,846) Other management expenses (1,711) (1,740) (1,906) Other income ,062 Other expenses (350) (20) (194) Depreciation & amortization (211) (189) (158) Other operating provisions (net of reversals) 295 (15) (542) Net operating income (before changes in fair value of property) 38,578 26,787 25,233 Changes in fair value of property 19,785 9,550 (92,612) Net operating income (after changes in fair value of property) 58,363 36,337 (67,379) Net fi nancial expense (8,785) (8,544) (7,724) Financial amortization and provisions Changes in value of fi nancial instruments 50 (132) 779 Discounting of receivables and liabilities Share of income from entities accounted for by the equity method 518 (95) - Income before tax 50,146 27,567 (74,324) Current taxes (35) (3) - Exit tax Deferred taxes - - (3,022) Consolidated net income 50,111 27,564 (77,346) Of which minority interests Of which net income after minority interests 50,111 27,564 (77,346) Consolidated net income after minority interests per share (2.95) Diluted consolidated net income after minority interests per share (2.95) Earning per share is calculated on the basis of the average weighted number of common shares. Consolidated comprehensive income ( thousands) 06/30/ /30/ /30/2009 Consolidated net income 50,111 27,564 (77,346) Impact of fi nancial instruments 10,009 (14,641) (7,578) Total gains and losses recognized 10,009 (14,641) (7,578) directly in shareholders equity Consolidated comprehensive income 60,120 12,923 (84,924) Of which minority interests Of which net income after minority interests 60,120 12,923 (84,924) 8

14 Changes in shareholders equity CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 Changes in shareholders equity HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 Changes in shareholders equity Shareholders equity December 31, 2010 Appropriation of net income Capital stock Other paid-in capital Treasury shares Consolidated reserves Company reserves Hedging reserve on financial instruments Consolidated income Total 27, ,863 (4,281) 375, ,334 (35,354) 74,863 1,064, ,147 16,716 - (74,863) - Dividends - (7,570) - - (34,553) - - (42,123) Shares in lieu of dividends Capital increase 267 7, ,603 Treasury shares - - (3,234) (3,234) Changes in fair value of hedge instruments ,009-10,009 Stock options, warrants, bonus shares Adjustment of SGIL consolidated reserves Net income for the year (excl. appropriation to reserves) Shareholders equity June 30, 2011 Changes in shareholders equity Shareholders equity December 31, 2009 Appropriation of net income ,111 50,111 27, ,628 (7,515) 434, ,497 (25,345) 50,111 1,087,566 Capital stock Other paid-in capital Treasury shares Consolidated reserves Company reserves Hedging reserve on financial instruments Consolidated income Total 26, ,900 (4,261) 445, ,278 (29,645) (53,977) 1,029, (69,977) 16,000-53,977 - Dividends (3,166) - - (33,944) - - (37,110) Shares in lieu of dividends 76 2, ,512 Capital increase 1,307 (1,307) Treasury shares - - (20) (20) Changes in fair value of hedge instruments (5,709) - (5,709) Stock options, warrants, bonus shares Adjustment of SGIL consolidated reserves Net income for the year (excl. appropriation to reserves) Shareholders equity December 31, ,863 74,863 27, ,863 (4,281) 375, ,334 (35,354) 74,863 1,064,859 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 RISK EXPOSURE STATUTORY AUDITORS REPORT ON THE HALF-YEAR FINANCIAL STATEMENTS 9

15 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 Cash flow statement Cash flow statement ( thousands) 06/30/ /31/ /31/2009 Cash flow from operations Net income 50,111 74,863 (53,977) Depreciation allowances & provisions Capital gains (losses) from disposals (779) (1,621) (2,150) Changes in value of properties (19,785) (35,523) 89,478 Changes in value of fi nancial instruments (50) 3 (902) Recognized revenue and expenses related to stock options Tax expense on capital gains - - 1,902 Cash flow 30,002 38,958 35,502 Changes in operating working capital requirements Operating receivables (15,955) 4, Operating liabilities before SIIC option liabilities 7,832 (10) (1,071) Cash flow from operations 21,879 43,263 34,568 Cash flow from investment activities Acquisition of assets (29,799) (69,984) (116,920) Disposal of property 16,347 37,055 60,548 Payment of exit tax - (14,112) (21,384) Changes in fi nancial assets Cash flow from investment activities (13,448) (46,148) (77,749) Cash flow from financing activities Dividends paid (42,123) (34,599) (6,357) Changes in share capital 7, Purchase of treasury shares (3,234) (20) - Loans and debt taken out 39,927 37,888 73,228 Loans and debt redeemed (3,162) (3,366) (5,419) Cash flow from financing activities (989) (97) 61,452 Changes in cash 7,442 (2,981) 18,271 Opening cash 26,889 29,869 11,598 Closing cash 34,331 26,889 29,869 10

16 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 Detailed summary HALF-YEAR HIGHLIGHTS 12 MANAGING MARKET RISK 22 Judgment setting the rent for Le Printemps department store 12 Investments and disposals 12 Operations 12 Appraisal 12 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE 12 CHANGE IN METHOD 13 CONSOLIDATION PRINCIPLES AND METHODS 13 Accounting basis 13 New standards and interpretations applicable starting January 1, 2010 and January 1, Consolidation principles 14 Segment reporting 15 Real estate assets 15 Operating lease receivables 17 Liquid assets and marketable securities 17 Treasury shares (IAS 32) 17 Debt (IAS 32-39) 17 Derivative instruments (IAS 39) 17 Discounting of deferred payments 17 Due and deferred tax (IAS 12) 18 Lease contracts (IAS 17) 18 Employee benefits (IAS 19) 19 Share-based payment (IFRS 2) 19 Earnings per share (IAS 33) 21 Market risks 22 Counterparty risk 22 Liquidity risk 22 Interest rate risk 22 ADDITIONAL INFORMATION 23 Note 1 Non-current assets 23 Note 2 Receivables maturity schedule 26 Note 3 Debt maturity schedule at end of period 27 Note 4 Cash and cash equivalents 27 Note 5 Accrual accounts assets 27 Note 6 Accrual accounts liabilities 27 Note 7 Contingency and loss provision 28 Note 8 Treasury shares 29 Note 9 Financial instruments 30 Note 10 Covenants 32 Note 11 Off balance sheet commitments 33 Note 12 Movement in share capital and shareholders equity 34 Note 13 Deferred tax assets and liabilities 34 Note 14 Associates 34 Note 15 Income statement and segment information 35 Note 16 Earning per share 36 Note 17 Net Asset Value per share 36 Note 18 Cash flow per share 37 Note 19 Tax calculation 37 Note 20 Interest rate risk exposure 38 Note 21 Credit risk 39 Note 22 Personnel 39 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 RISK EXPOSURE STATUTORY AUDITORS REPORT ON THE HALF-YEAR FINANCIAL STATEMENTS 11

17 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 Half-year highlights Judgment setting the rent for Le Printemps department store On May 31, 2011, the Lyon District Court issued a judgment setting the annual rent payable by Le Printemps to ANF Immobilier at 2,135,650. The previous rent was 402,197. As this new rent applies retroactively from June 25, 2006, the company Le Printemps was ordered to make back payments totaling 8.7 million for the period from June 25, 2006 to June 30, 2011, plus interest on the arrears of 0.4 million. Le Printemps did not appeal against this judgment and paid the sum of 9.1 million to ANF Immobilier in July In the half-year fi nancial statements dated June 30, 2011, 8.7 million of this sum was reported under rent and 0.4 million under fi nancial income. Investments and disposals Investments and works on Haussmann-style properties totaled 10.4 million in Lyon and 18.7 million in Marseille. Three properties and several apartments were sold in Marseille for a total of 16.3 million, generating a gain of 0.8 million on the most recent appraisal values. Several agreements to sell were signed in the fi rst half of the year, involving a total of 23 million in disposals, which are mainly to be carried out in the third quarter. These disposals were carried out at prices that were higher than the most recent appraisal values, and a capital gain of 0.8 million was earned. Operations Rental income amounted to 45.2 million, up 11.2 million on June 30, 2010, for growth of close to 33%. On a like-for-like basis, and stripping out the impact of the back payments invoiced to Le Printemps in respect of previous fi scal years, rental income increased by 12.3% on the fi rst half of 2010, of which 23.4% related to Haussmann-style properties. EBITDA for the period was 38.3 million. After deducting the net fi nancial expense, current cash fl ow stood at 29.6 million. Stripping out the impact of the back payments invoiced to Le Printemps in respect of previous fi scal years, EBITDA was 30.5 million, an increase of 11.4%, and current cash fl ow was 21.7 million, up 15.2%. Appraisal The real estate market was broadly fl at or slightly up, with prime assets still in favor, notably commercial properties. ANF Immobilier s property assets benefi ted from this trend, as yields estimated by property experts fell by % on city center properties, and by % on B&B hotel properties. The fair value of investment properties increased by 19.8 million over the period. The building occupied by Le Printemps in Lyon was appraised by property experts, whose valuation did not take into account the Lyon District Court s judgment, issued after June 30, They estimate that this judgment s impact on the value of the property would be a positive one in the amount of 5.5 million euros. Events occurring after the balance sheet date No signifi cant events have occurred since June 30,

18 Change in method CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 The accounting policies and methods used for the period are identical to those used for the prior fi scal year. The new standards and interpretations applicable from January 1, 2011 did not have a material impact on ANF Immobilier s half-year consolidated fi nancial statements and are described in the note entitled Consolidation principles and methods. Consolidation principles and methods Accounting basis In line with the provisions of European Regulation (EC) No. 1606/2002 of July 19, 2002 on the application of international accounting standards, the ANF Immobilier Group s consolidated fi nancial statements for the half-year ended June 30, 2011 were prepared in line with the IFRS accounting basis as adopted by the European Union. The consolidated fi nancial statements cover the period from January 1, 2011 to June 30, They were approved by the Executive Board on July 21, The ANF Immobilier Group applies the international accounting standards comprising IFRS, IAS and their interpretations as adopted by the European Union, for which application is mandatory from the fi scal year beginning January 1, Offi cial standards and interpretations that may be applicable subsequent to the closing date have not been applied early. The half-yearly fi nancial statements have been prepared using the historical cost convention, with the exception of investment property and certain fi nancial instruments that are recognized using the fair value convention. In line with the IFRS conceptual framework, preparing the fi nancial statements requires estimates and assumptions to be made that affect the amounts presented in these half-yearly fi nancial statements. Material estimates made by the Group when preparing the fi nancial statements mainly relate to the following: fair value measurement of investment properties and fi nancial instruments; measurement of provisions. Because of the uncertainty inherent in any measurement process, the Group revises its estimates on the basis of regularly updated information. Future results of the operations in question may differ from these estimates. In addition to making estimates, the senior management team makes judgments regarding the appropriate accounting treatment for certain activities and transactions where applicable IFRS standards and interpretations do not specify how the accounting issues should be dealt with. New standards and interpretations applicable starting January 1, 2010 and January 1, 2011 The standards and interpretations applied for the consolidated fi nancial statements at June 30, 2010 are identical to those used for the consolidated fi nancial statements at December 31, The new mandatory standards, revisions and interpretations applicable as of January 1, 2010 have no material impact on the consolidated fi nancial statements at June 30, 2010: IFRS 3R Business Combinations ; IAS 27R Consolidated and Separate Financial Statements ; IFRS 5 Non-current Assets Held for Sale and Discontinued Operations : amendment on sales of controlling interests; IAS 39 Financial Instruments : amendments for eligible hedged items; annual IFRS improvements published in April 2009; IFRS 2 Share-based Payment ; IAS 32 Financial Instruments: amendment on Classifi cation of Rights Issues ; IFRIC 12 Service Concession Arrangements ; IFRIC 15 Agreements for the Construction of Real Estate ; IFRIC 16 Hedges of a Net Investment in a Foreign Operation ; IFRIC 17 Distributions of Non-cash Assets to Owners ; IFRIC 18 Client Asset Transfers. CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 RISK EXPOSURE STATUTORY AUDITORS REPORT ON THE HALF-YEAR FINANCIAL STATEMENTS 13

19 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 The standards and interpretations applied for the consolidated fi nancial statements at June 30, 2011 are identical to those used for the consolidated fi nancial statements at December 31, The new mandatory standards, revisions and interpretations applicable as of January 1, 2011 have no material impact on the consolidated fi nancial statements at June 30, 2011: all standards amended in the context of IFRS improvements adopted by the European Union on February 18, 2011, which have no impact on the accounts; the amendment to IAS 32, Classifi cation of Rights Issues, mandatory from February 1, 2010, which has no impact on the accounts; the amendment to IFRIC 14 The Limit on a Defi ned Benefi t Asset, Minimum Funding Requirements and their Interaction, applicable to fi scal years starting on or after January 1, 2011, which has no impact on the accounts; IAS 24 revised, relating to the information to be disclosed on related party transactions, mandatory from January 1, 2011; IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments, applicable to fi scal years starting on or after June 30, 2010, which has no impact on the accounts. Moreover, ANF Immobilier has not applied prospectively the most recent standards and interpretations published, for which application is only mandatory for fi scal years starting after January 1, These standards and interpretations are: IFRS 9 Financial Instruments, mandatory from January 1, 2013, which has not yet been adopted by the European Union; the amendment to IFRS 7, Disclosures of Transfers of Financial Assets, mandatory from July 1, 2011, which has not yet been adopted by the European Union; the amendment to IAS 12 Recovery of Underlying Assets, mandatory from January 1, 2012, which has not yet been adopted by the European Union; IFRS 13 Fair Value Measurement, mandatory from January 1, 2013, which has not yet been adopted by the European Union; IFRS 10 Consolidated Financial Statements, mandatory from January 1, 2013, which has not yet been adopted by the European Union; IFRS 11 Joint Arrangements, mandatory from January 1, 2013, which has not yet been adopted by the European Union; IFRS 12, Disclosure of Interests in Other Entities, mandatory from January 1, 2013, which has not yet been adopted by the European Union; IAS 27R Separate Financial Statements, mandatory from January 1, 2013, which has not yet been adopted by the European Union; IAS 28R Investments in Associates and Joint Ventures, mandatory from January 1, 2013, which has not yet been adopted by the European Union. Consolidation principles The consolidation methods used by the Group are full consolidation, proportional consolidation and the equity method: subsidiaries (companies in which the Group has the power to direct fi nancial and operating policies to obtain economic benefi ts) are fully consolidated; companies in which the Group exercises joint control are proportionally consolidated; the equity method is used for associates over which the Group has signifi cant infl uence, which is assumed to be the case where the percentage of owned voting rights is 20% or more. Under this method, the Group recognizes its share of income from entities accounted for by the equity method on a separate line in the consolidated income statement. As of June 30, 2011, the subsidiary SGIL was deconsolidated following its liquidation effective January 1, This decision was taken unanimously by the partners, and was the natural consequence of the disposal of the subsidiary s entire property portfolio. During the period, the ANF Immobilier Group consolidated its wholly-owned subsidiary ANF République. This company is fully consolidated. To successfully complete the Fauchier project for the construction and sale of residential units, ANF Immobilier brought on board a number of partners to establish SCCV 1-3, rue d Hozier, in which it holds a 45% interest. As it does not control this company, it has not been consolidated but instead accounted for by the equity method. All internal transactions and balances were eliminated upon consolidation in proportion to ANF Immobilier Group s interest in ANF République. 14

20 Segment reporting CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 IFRS 8 requires entities whose shareholders equity or debt securities are traded on an organized market or issued on a public securities market to present information by business segment and geographical sector. Segment reporting is prepared on the basis of criteria relating to business activities and geographic regions. Primary segment reporting is business-related, insofar as it represents the Group s management structure and is presented on the basis of the following business segments: operating activity for Haussmann-style properties; hotel rental. The second level of information to be provided is by geographical area. It is applied to Haussmann-style properties only (since the hotels are dispersed throughout France, a geographical distribution is irrelevant): Lyon region; Marseille region. IFRS 8 Operating segments requires that the information published by an entity enable users of its fi nancial statements to evaluate the nature and fi nancial impact of the type of business activities in which it engages and the economic environment in which it operates. The Company has decided to continue presenting its segment reporting as in previous years with a breakdown of business segments into Hotels and Haussmann-style properties and a geographical breakdown of its Haussmann-style properties into two areas, Lyon and Marseille. Real estate assets CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 Investment property (IAS 40) IAS 40 defi nes investment property as property held by the owner or lessee (under a fi nance lease) to earn rental income or for capital appreciation, or both, as opposed to: using this property for the production or supply of goods or services or for administrative purposes; selling it in the normal course of a trading business (property dealing). Assets acquired under credit-leases correspond to fi nance lease contracts and are recognized as assets in the balance sheet, and the corresponding loans are recognized as liabilities under fi nancial debt. Correspondingly, the lease payments are cancelled and the fi nancial expense stemming from the fi nancing along with the fair value of the asset are recognized in line with Group accounting policies and methods. ANF Immobilier Group has opted to appraise its investment properties at fair value. This option does not apply to operating property, which is measured at historical cost less accumulated depreciation and any value impairments. The fair value of non-current assets is determined at each closing date by two independent property experts (Jones Lang LaSalle and BNP Paribas Real Estate), who appraise the Group s real estate assets on the basis of long- term ownership. The fair value is the appraisal value excluding transfer taxes. Their assessments are performed according to the specifi cations set forth by the French Association of Property Appraisers (Afrexim) and the working group chaired by Mr. Barthès de Ruyter, in its February 2000 report on property appraisals for companies making a public offering. The change in the fair value of investment properties is recognized in the income statement. These properties are not therefore subject to depreciation or value impairment. Any change in fair value for each property is recognized in the income statement for the period and is determined as follows: Change in fair value = Market value N - [market value N-1 + capitalized work and expenses for period N]. Investment properties in the process of redevelopment or for which rebuilding is planned are recognized at fair value. Almost all of ANF Immobilier s property assets are recognized as investment property. Properties being restructured and intended to be subsequently re-rented are also kept in the investment property category. Gains (or losses) on disposals of investment properties are calculated with reference to the most recent fair value recognized at the previous balance sheet date. RISK EXPOSURE STATUTORY AUDITORS REPORT ON THE HALF-YEAR FINANCIAL STATEMENTS 15

21 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 Assets held for sale (IFRS 5) In accordance with IFRS 5, when the Group has undertaken to sell an asset or group of assets, it classifi es them as assets held for sale under current assets in the balance sheet at their most recent known fair value. Properties included in this category continue to be measured using the fair value approach. To be classifi ed as an asset held for sale, a property must meet all the following criteria: the asset must be immediately available for sale in its current condition; a sale must be highly likely, formalized through the notifi cation of the Properties Committee, and a decision of the Executive Board or Supervisory Board and an offer to purchase. Properties that are in the process of being sold are presented on a separate line in the balance sheet. As of June 30, 2011, nine properties, appraised at 26,668,000 were held for sale. Depreciation of operating properties valued at amortized cost ceases from the date on which these properties are classifi ed as held for sale. Operating properties and other property, plant and equipment (IAS 16) The Group s operating property is measured at historical cost less accumulated depreciation and any value impairment. Moreover, other property, plant and equipment includes computer equipment and furniture. The following depreciation periods were thus used: Structures: Façades & waterproofi ng: General technical facilities (including lifts): Fittings: Asbestos, lead and energy diagnostics: Furniture, offi ce and computer equipment: 50 to 75 years; 20 years; 15 to 20 years; 10 years; 5 to 9 years; 3 to 10 years. Intangible assets (IAS 38) and impairment of assets (IAS 36) An intangible asset is a non-monetary item with no physical substance that must be both identifi able and controlled by the Company by virtue of past events and from which future economic benefi ts are expected. An intangible asset is identifi able if it can be separated from the entity acquired or it is the consequence of legal or contractual rights. Intangible assets whose useful life can be determined are amortized linearly over periods that correspond to their projected useful life. The following amortization periods were thus used: concessions, patents and rights: 1 to 10 years. IAS 36: Impairment of Assets applies to property, plant, equipment and intangible assets, fi nancial assets and unallocated goodwill. At each balance sheet date, the Group assesses whether there are any indications that an asset has lost value. If an indication of impairment is identifi ed, the asset s recoverable amount is compared to its net carrying amount and an impairment loss may accordingly be recognized. An indication of impairment may be either a change in the asset s economic or technical environment or a decline in the asset s market value. The appraisals carried out make it possible to measure any impairment losses. Expenses related to the acquisition of software licenses are recognized as assets on the basis of the costs incurred to acquire and get the relevant software operational. These costs are amortized over the estimated useful life of the software (between three and fi ve years). 16

22 Operating lease receivables CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 HALF-YEAR FINANCIAL REPORT JUNE 30, 2011 Operating lease receivables is valuated at the amortized cost and is subject to an impairment test when there is an indication that the asset could have lost value. An individual analysis is conducted on the closing date of each fi nancial period in order to assess as fairly as possible the non-recovery risk of any receivable and any requisite provisions. Liquid assets and marketable securities Marketable securities mainly consist of money market funds and are recognized in the balance sheet at their fair value. All these marketable securities have been deemed cash equivalents. Treasury shares (IAS 32) Treasury shares held by the Group are deducted from the consolidated shareholders equity at its acquisition value. As of June 30, 2011, the Company held 211,337 treasury shares. During the period, 95,345 treasury shares were acquired. Debt (IAS 32-39) Financial debt consists of loans and other interest-bearing liabilities. It is recognized at amortized cost using the effective interest rate method. Loan issue costs are recognized under IFRS as a deduction from the nominal amount of the loan. The portion of debt due in less than a year is classifi ed as current debt. In the case of debt resulting from the recognition of fi nance leases, the debt recognized to offset the item of property, plant and equipment is initially recognized at the fair value of the leased asset or, if lower, the present value of minimum lease payments. Security deposits are deemed to be short-term liabilities and are not discounted. CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 Derivative instruments (IAS 39) IAS 39 distinguishes between two types of interest rate hedging: hedging of balance sheet items, the fair value of which fl uctuates as a result of interest rate risk ( fair value hedge ); hedging the risk of future cash fl ow variability ( cash-fl ow hedge ), which consists of fi xing the future cash fl ows of a variable-rate fi nancial instrument. Certain derivatives associated with specifi c fi nancings qualify as future cash fl ow hedges under accounting regulations. In accordance with IAS 39, only changes in the fair value of the effective portion of these derivatives, as measured by prospective and retrospective effectiveness tests, are recognized in shareholders equity. Any changes in the fair value of the ineffective portion of the hedge are recognized in the income statement. The ANF Immobilier Group uses cash fl ow hedge-type fi nancial derivatives (swaps) to hedge its exposure to risk stemming from interest rate fl uctuations. Discounting of deferred payments The Group s long-term payables and receivables are discounted where the impact is material: security deposits received are not discounted, since the discounting effect is not material and there is no reliable discounting schedule; long-term liability provisions under IAS 37 are discounted over the estimated length of the disputes to which they relate. RISK EXPOSURE STATUTORY AUDITORS REPORT ON THE HALF-YEAR FINANCIAL STATEMENTS 17

23 CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2011 Due and deferred tax (IAS 12) SIIC tax regime The switch to the SIIC tax regime results in a complete exemption from income tax. However, an exit tax at a reduced rate of 16.5% on unrealized gains from properties and interests in entities not subject to income tax becomes immediately due. This tax was fully paid as of June 30, Common law and the deferred tax regime Deferred tax is recognized where there are temporary differences between the carrying amounts of assets and liabilities in the balance sheet and their tax bases, where these give rise to taxable income in the future. A deferred tax asset is recognized where tax losses may be carried forward on the assumption that the relevant entity is likely in the future to generate taxable profi ts, against which these tax losses may be charged. Deferred tax assets and liabilities are measured using the liability method at the tax rate assumed to apply in the period in which the asset will be realized or the liability settled, on the basis of the tax rate and tax regulations that have been or will be adopted prior to the balance sheet date. Measurement of deferred tax assets and liabilities must refl ect the tax consequences that would result from the manner in which the Company expects to recover or settle the carrying amount of its assets and liabilities at the balance sheet date. Current and deferred tax is recognized as tax income or expenses in the income statement, except for deferred tax that is recognized or settled upon the acquisition or disposal of a subsidiary or interest, unrealized gains and losses on assets held for sale. In these cases, the corresponding deferred tax is charged to shareholders equity. All the properties held by ANF Immobilier were included in the scope of the SIIC regime. ANF Immobilier s rental business is thus wholly exempted from income tax, and no deferred tax is recognized. Lease contracts (IAS 17) Under IAS 17, a lease is an agreement under which the lessor transfers to the lessee the right to use an asset for a fi xed period in return for a payment or series of payments. IAS 17 distinguishes between two kinds of lease contracts: a fi nance lease is a lease that effectively transfers to the lessee virtually all the risks and benefi ts inherent in ownership of an asset. Transfer of ownership may or may not in fact happen. For the lessee, the assets are recognized as non-current assets offset by a debt. The asset is recognized at the fair value of the leased asset at the lease start date or, if lower, at the present value of minimum payments; an operating lease is any lease other than a fi nance lease. Treatment of stage payments and rent-free periods Rental income from operating leases is recognized on a straight-line basis over the term of the lease. Stage payments and rent-free periods granted are recognized by staggering, reducing or increasing rental income for the period. The reference period used is the initial minimum period of the lease. Front-end fees Front-end fees received by the lessor are deemed to be additional rent. The front-end fee forms part of the net sum transferred from the lessee to lessor under the lease. In this regard, the accounting periods during which this net amount is recognized should not be affected by the form of the agreement and payment schedules. These fees are staggered over the initial minimum period of the lease. Cancellation fees and eviction compensation Cancellation fees are received from tenants where tenants cancel the lease before its contractual term. Such fees relate to the old lease and are recognized as income in the period recorded. Where the lessor cancels a lease in progress, it pays eviction compensation to the sitting tenant. replacement of a tenant: if payment of eviction compensation makes it possible to alter the level of the asset s performance (a rent increase and hence an increase in the value of the asset), under the revised IAS 16, this expense may be capitalized in the cost of the asset subject to this increase in value being confi rmed by appraisers. Should this not be the case, the cost is recognized as an expense; refurbishment of a property that requires the tenants to be displaced: if the payment of an eviction penalty is part of major refurbishment or reconstruction works for a property for which it is mandatory for the tenants to depart beforehand, this cost is considered to be a preliminary expense that is included as an additional component following the refurbishment operation. 18