2023 first half-year results confirm ARGAN’s operating excellence
at the start of a new cycle
Half-year results – Wednesday July 19, 2023 –
17:45
2023
first
half-year results
confirm
ARGAN’s
operating excellence at the start of a new
cycle
- Net Recurring
Income:
€63
million, up
+8%
- NAV EPRA
NTA per share:
€78.1
- 2023 updated yearly
targets1:
- Rental income revised upwards to €183m
(+10% vs. 2022)
- Recurring net income confirmed at
€124m
(+4% vs.
2022)
- Dividend per share
raised to
€3.15€*
(+5% vs. 2022)
- Strategic plan confirmed:
- Sustained growth over the
2023-2024 period
- Structurally strong debt reduction
Key figures for the first half of
2023:
|
Consolidated income statement |
June 30, 2023 |
June 30, 2022 |
Change |
|
Rental income |
€90.9m |
€81.7m |
+11% |
|
Net Recurring Income – group share |
€62.8m |
€58.2m |
+8% |
|
Net Recurring Income per share |
€2.73** |
€2.56 |
+7% |
|
|
|
|
|
|
Valuation indicators |
June 30, 2023 |
Dec. 31, 2022 |
Change |
|
Value of the portfolio (excl. duties) |
€3.64Bn |
€3,94Bn |
- 8% |
|
NAV EPRA NTA per share |
€78.1*** |
€92.9 |
-
16% |
|
NAV EPRA NRV per share |
€89.3*** |
€104.8 |
- 15% |
|
NAV EPRA NDV per share |
€85.3*** |
€94.2 |
- 9% |
| |
|
|
|
|
|
Debt indicators |
June 30, 2023 |
Dec. 31, 2022 |
Change |
|
EPRA LTV |
49% |
45% |
+400 bps |
|
EPRA LTV (incl. duties) |
46% |
43% |
+300 bps |
|
Cost of debt |
2.1% |
1.5% |
+60 bps |
* Subject to approval during the Shareholders
Annual Meeting of March 21, 2024** Calculated on the weighted
average number of shares of 22,999,955*** Calculated on the number
of shares at the end of June 2023 of 23,079,697On July 12, 2023,
the Executive Board of ARGAN approved the half-year consolidated
financial statement at end-June 2023.
2023 yearly targets
updated, thus
illustrating Group
confidence and the soundness of its business
model:Based
on the first half-year 2023 solid
performance, and
taking into account an
occupancy rate standing
at 100% in a rental market
with very little availability,
ARGAN is updating its
targets for 2023 and is now
aiming for:
|
Indicators |
2023
targets |
Full-year 2022 |
Changevs
2022 |
|
Rental income (revised upwards) |
€183m |
€166m |
+10% |
|
Recurring net income (confirmed) |
€124m |
€119m |
+4% |
|
Dividend per share (raised) |
€3.15 |
€3.0 |
+5% |
Strong growth momentum
Significant rise in rental income:
+11% in the first half-year
of 2023
In the first half-year, ARGAN pursued its growth
with rental income up a steep
+11% to
€90.9m.
This increase was mainly the result of the full-year effect of
rents coming from the developments in 2022, rents of the warehouses
delivered during the first half-year of 2023, as well as the
indexation that took place on January 1, 2023 (+4% on average).
A record development pipeline of over €300m
For the 2023-2024 period, ARGAN is projecting to
deliver 255,000 sq.m in total, with:
- For 2023: four
new development projects and one extension, representing an
investment volume of €135 million for 100,000 sq.m in new spaces.
These include the 38,000 sq.m logistics warehouse delivered in
March to BUT in Janneyrias (38), as well as the logistics warehouse
extension in La Crèche (79) to be delivered in December
to EURIAL (for two new negative cold cells for additional 12,400
sq.m). All these projects are already financed through amortizing
mortgage loans that were taken out in 2022, before interest rates
rose;
- For 2024: the
very strong business momentum recorded in the first half of this
year has already helped secure development projects representing a
volume of over €175m for more than 155,000 sq.m of spaces. These
include the extension of the fulfilment hub in Bruguières (31)
leased to GEODIS, which will increase the site’s size to 13,400
sq.m. Half of investment amounts is already financed through
amortizing mortgage loans and the other half should come from the
sale of warehouses at the end of 2024 or early 2025, depending on
market conditions.
A solid financial performance
driven by
Premium assets and tight control over
the debt
Ongoing increase of the recurring net
income: up
+8%
The Group share recurring net
income was up
+8%,
to
€62.8
million as at June 30, 2023,
i.e., 69% of rental income for the period.Including the
mechanical effect arising
from portfolio fair value
variation in an amount of
-€332.6
million – on a backdrop of rising
capitalisation rates – the Group share net
income stood at
-€267.0
million in the first six months of the
year.
Premium assets
valued
€3.64
billion at the end of
June 2023 with a
5.0%
capitalisation rate excluding
duties
The delivered portfolio
(excluding properties under development)
represented
3,520,000
sq.m as at
June 30, 2023. Its
valuation stood at
€3.64
billion excluding transfer duties
(€3.85 billion
including duties). The
decrease in valuation compared with December 31,
2022, was driven by the rise in
capitalisation
rates over the same
period: these rose from
4.45%
to
5.0%
excluding transfer duties, i.e., 4.75% including
transfer duties compared to Prime rates at 4.5% (Source: CBRE).
The average fixed-term
residual lease remained stable at
5.5
years at June 30, 2023 with a
portfolio weighted average age
of
10.8
years.
Debt under tight control
amid rising interest
rates
Gross financial debt was virtually stable
compared with December 2022 and thus stood at €2.0 billion. At €1.8
billion, net debt recorded at the end of June 2023 leads to a
net LTV ratio
(net financial debt/appraised value excluding transfer duties)
that rose to 49%, reflecting the
decrease in assets valuation.
At June 30, 2023, the
average rate of the cost of debt remained low
at
2.1%, compared
with 1.5% at December 31, 2022, for a maturity of
5.9
years.ARGAN manages to contain
the impact of rising interest rates on the cost of its debt thanks
to the use of long term financing, with rates that are either fixed
or hedged. As a matter of fact, the Group’s debt is made of:
-
58%
of fixed-rate
loans;
-
30% of
hedged variable-rate loans, with hedging instruments that,
for the most part, are activated when the 3-month Euribor crosses
1.5%;
- Only
12% of
variable rates.
Moreover, and as planned, ARGAN
repaid, on July 4, 2023, its bond in an
amount of €130
million that was issued in June 2017 at fixed rate
of 3.25%. This repayment was made without refinancing needs. The
Group’s debt is mainly made of mortgage
loans
(69% of
our debt as at
June 30,
2023),
which means it is being amortized by
around €100
million each
year.
As a consequence – and despite the current
environment of strong rise in interest rates since the first half
of 2022 – ARGAN is not expecting a significant rise in its cost of
debt. This cost should indeed stand at around 2.4% for 2023 based
on a 3-month Euribor rate of 3.5% for the full year. This scenario
is included in the sensitivity table here below.
Cost of debt
should stand at 2.4% for
an average Euribor of
3.5%
over 2023
|
Euribor |
2023 |
2024 |
2025 |
|
3.0% |
2.2% |
2.2% |
2.1% |
|
3.5% |
2.4% |
2.3% |
2.3% |
|
4.0% |
2.5% |
2.4% |
2.4% |
|
4.5% |
2.7% |
2.6% |
2.5% |
An LTV
ratio well under
Group’s covenant
Additionally, even when assuming a
capitalisation rate of 5.5% at the end of 2023, our LTV ratio
should remain well under our
covenant (for
bonds) of
65%. This means the LTV ratio trajectory for 2030
would remain consistent with a level at or under 35%.
|
Capi rates
(exc.
duties) |
2023 |
2024 |
2025 |
|
4.5% |
45% |
42% |
38% |
|
5.0% |
50% |
46% |
42% |
|
5.5% |
55% |
51% |
46% |
|
6.0% |
59% |
55% |
50% |
NAV EPRA of continuation (NTA)
at €78 per share
The NRV (reconstitution NAV) stood at €89.3 per
share at June 30, 2023 (-15% over six months). The
NTA (continuation
NAV) stood
at
€78.1
per share at June 30,
2023
(-16%
over six months). The NDV
(liquidation NAV) stood at €85.3 per share at June 30, 2023 (-9%
over six months).
Compared with December 31, 2022,
the significant decrease
of
€14.8
for the EPRA NTA
NAV per share mainly comes from the earnings per
share (+€2,7), the change in value of the assets (-€14.3), the
dividend cash payment (-€2.7) as well as in shares (-€0.4).
We confirm our strategic
planthat fits the new
economic cycle
At the start of a new cycle characterized by
higher interest rates, ARGAN
reiterates its full commitment to
roll out its
strategic
plan to create lasting
value. Note that this plan has two
pillars:
An ongoing sustained
growth pace:
- Growth in rental
income will be strong in
2023 with a +10%
increase to
€183
million. This comes from the
indexation effect (+4% on average on our leases), the full year
impact of our investments made in 2022 and our 2023 investments, as
well as an occupancy rate back to 100%.
- The growth in
rental income will then stay at a
sustained pace.
Indeed,
ARGAN is now more
specifically anticipating an average
annual growth rate in its
rental income of
close to +10% over
the
2023-2024
period based on its current
perimeter.
A structurally strong
debt reduction:
- In an economic cycle with a high
cost of debt, ARGAN has
decided to no longer issue debt to finance its
development, all while repaying
its amortizing mortgage loans
for
€100 million per
year.
This policy allows
us to target by 2030 an
LTV ratio standing between
25% for a capitalisation rate (excluding
duties) of
4.5%,
and 35% for a
capitalisation rate (excluding duties) of
6%. Moreover,
the net debt on EBITDA
ratio should stand at 7x.
- To finance
our new developments with no new debt
issuance, we
have two
options:
-
Self-financing, by
selling targeted assets by the end of
2024 or early
2025 depending on market
conditions. This virtuous and
value-creative policy will result in selling assets with moderate
capitalisation rates to, in turn, develop warehouses with more
favourable capitalisation rates and a low carbon footprint;
- Third party
investments, by
offering to a small pool of investors to
provide funding in a dedicated financial
vehicle, which will remain
controlled by
ARGAN. This
second option, currently under review, would help us both maintain
a sustained pace of growth and decrease the debt of our real estate
company.
Moreover,
ARGAN is still pursuing
an ambitious ESG
policy
- After we presented all actions that
were rolled out from 2018 to 2021 in our ESG report released in
September 2022, we are now actively
preparing a complete update of
our ESG strategy for a
release to take
place next
October
in a dedicated report. Our Group will more
particularly present its low carbon trajectory and
detail the trends for specific
indicators over several years.
-
ARGAN is also still
deploying its determined
approach to a
low carbon
footprint by:
- Rolling
out Autonom© –
the warehouse that generates its own green energy for all
new projects;
-
Banning for existing
warehouses, by
2030, all gas
heating (3.5 times more carbon intensive than electricity)
thanks to the deployment of heat
pumps;
- Systematically
using Centralized Technical Management
Systems that help more particularly control
lighting and heating infrastructure, and thus
reduce by 10% energy
consumption.
Financial calendar 2023 (Publication of the
press release after closing of the stock exchange)
- October 2: 2023 3rd quarter sales
Financial calendar 2024
- January 3: 2023 Annual Sales
- January 18: Annual Results 2023
- March 21: Annual General Meeting
About
ARGAN
ARGAN is the only French real estate company
specializing in the DEVELOPMENT & RENTAL OF PREMIUM WAREHOUSES
listed on EURONEXT.As at June 30, 2023, ARGAN’s portfolio amounted
to 3.5 million sq.m, comprising approximately 100 warehouses
located exclusively in France, valued at €3.6 billion. ARGAN is a
listed real estate investment company (French SIIC) on Compartment
A of Euronext Paris (ISIN FR0010481960 - ARG) and is included in
the Euronext CAC All-Share, EPRA Europe and IEIF SIIC France
indices.www.argan.fr
| Francis
Albertinelli – CFO Aymar de Germay – General SecretarySamy Bensaid
– Investor RelationsPhone: +33 1 47 47 47 40 E-mail:
contact@argan.frwww.argan.fr |
Marlene Brisset – Media relationsPhone: +33 6 59 42
29 35E-mail: argan@citigatedewerogerson.com |
|
|
Consolidated income statement
(IFRS)
|
In €m |
June 30, 2022(6 months) |
December 31, 2022(12 months) |
June 30, 2023(6 months) |
|
Rental income |
81.7 |
166.1 |
90.9 |
|
Rebilling of rental charges and taxes |
24.2 |
28.6 |
28.3 |
|
Rental charges and taxes |
-25.5 |
-30.4 |
-29.0 |
|
Other property income |
1.6 |
3.2 |
1.6 |
|
Other property expenses |
-0.3 |
-0.4 |
-0.1 |
|
Net property income |
81.7 |
167.1 |
91.7 |
|
EBITDA (Current Operating Income) |
73.0 |
150.5 |
85.3 |
|
Including impact of IFRS 16 |
1.3 |
2.8 |
1.5 |
|
Change in fair value of the portfolio |
265.9 |
-31.8 |
-331.4 |
|
Change in fair value IFRS 16 |
-1.1 |
-1.2 |
-1.2 |
|
Other operating expenses |
-0.5 |
-0.5 |
- |
|
Income from disposals |
-0.1 |
-0.2 |
-0.2 |
|
EBITDA, after value
adjustments (FV) |
337.1 |
116.8 |
-247.5 |
|
Income from cash and equivalents Cost of
gross financial debt Interest on IFRS 16 lease
liabilities Borrowing costs Change in fair
value of hedging instruments |
0.1 |
0.6 -28.4-1.7- 4.1- 0.9 |
1.4 |
|
-13.0 |
-20.2 |
|
-0.8 |
-0.9 |
|
-2.1 |
-1.9 |
|
-0.5 |
-0.2 |
|
Early repayment penalties |
-6.5 |
- 6.5 |
- |
|
Income before tax |
314.4 |
75.8 |
-269.3 |
|
Other financial expenses |
8.7 |
19.2 |
-0.2 |
|
Tax |
- |
- |
- |
|
Share of profit of equity-accounted companies |
- |
- |
- |
|
Consolidated net incomeNet income - group
share |
323.1 |
94.995.1
|
-269.5 |
|
321.7 |
-267.0 |
|
Diluted earnings per share (€) |
14.2 |
4.2 |
-11.6 |
Recurring net income
|
In €m |
June 30, 2022(6 months) |
December 31, 2022(12 months) |
June 30, 2023(6 months) |
|
Consolidated net income |
323.1 |
94.9 |
-269.5 |
|
Change in fair value of hedging instruments |
0.5 |
0.9 |
0.2 |
|
Change in fair value of the portfolio |
-265.9 |
31.8 |
331.4 |
|
Income from disposals |
0.1 |
0.2 |
0.2 |
|
Other financial expenses |
-8.7 |
- 19.2 |
0.2 |
|
Tax |
- |
- |
- |
|
Share of profit of equity-accounted companies |
- |
- |
- |
|
Early repayment penalties |
6.5 |
6.5 |
- |
|
Allocation of free shares |
1.8 |
3.8 |
- |
|
Other operating expenses non-recurring |
0.5 |
0.5 |
- |
|
Impact of IFRS 16 |
0.5 |
0.1 |
0.6 |
|
Recurring net
Income |
58.4 |
119.5 |
63.1 |
|
Recurring net Income - group
share |
58.2 |
119.2 |
62.8 |
|
Recurring net income per share (€) |
2.6 |
5.2 |
2.7 |
Simplified consolidated balance
sheet
|
In €m |
June 30, 2022(6 months) |
December 31, 2022(12 months) |
June 30, 2023(6 months) |
|
Non-current assets |
4,243.4 |
4,159.6 |
3,909.1 |
|
Current assets |
327.0 |
256.8 |
270.6 |
|
Assets held for sale |
- |
22.8 |
- |
|
Total Assets |
4,570.5 |
4,439.3 |
4,179.7 |
|
Shareholders’ equity |
2,432.8 |
2,217.5 |
1,888.0 |
|
Minorities |
39.2 |
37.6 |
35.1 |
|
Non-current liabilities |
1,895.6 |
1,831.3 |
1,873.0 |
|
Current liabilities |
202.8 |
343.0 |
383.6 |
|
Liabilities classified as held for sale |
- |
9.8 |
- |
|
Total Liabilities |
4,570.5 |
4,439.3 |
4,179.7 |
NAV EPRA
|
|
December 31, 2022 |
June 30, 2023 |
|
|
NRV |
NTA |
NDV |
NRV |
NTA |
NDV |
|
Shareholders’ equity (in €m)Shareholders’
equity (in €/share) |
2,217.596.6 |
2,217.596.6 |
2,217.596.6 |
1,888.081.8 |
1,888.081.8 |
1,888.081.8 |
|
|
|
|
|
|
|
|
|
+ Fair value of financial instruments (in €m) |
-30.8 |
-30.8 |
- |
-30.1 |
-30.1 |
- |
|
- Goodwill in the balance sheet (in €m) |
- |
- 55.6 |
- 55.6 |
- |
- 55.6 |
- 55.6 |
|
+ Fair value of fixed-rate debt (in €m) |
- |
- |
- |
- |
- |
+136.8 |
|
+ Transfer taxes (in €m) |
219.7 |
- |
- |
203.9 |
- |
- |
| |
|
|
|
|
|
|
|
= NAV (in €m) =
NAV (in €/share) |
2,406.4104.8 |
2,131.192.9 |
2,161.994.2 |
2,061.989.3 |
1,802.378.1 |
1,969.185.3 |
1 For more information, please refer the press release published
on January 19, 2023.
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