Earnings Call: H1 2021

Jul 29, 2021

well. Now our centers are maintained. We are still working on our extension project pipeline. And we always intend to satisfy our clients. Our second pillar is that we want to be the best partner for all of the store and tenants. And we, of course, are completely aware that they intend to move ahead quickly. And we believe that we can contribute a better strategy. The 3rd pillar is 100 percent omni channel, the knowledge and data of our clients, animation for digital communities as well, accompanying the transformation of our stores' boutiques as well and also independent store tenants. And this is borne by innovation and agility. And we, of course, will be able to come back to this in a short while. And we, of course, here intend to maintain this approach. The robust fundamentals of Carmilla has, of course, here 1 French and 1 Spanish person who are close to under 20 minutes from a Carmela center. And second fundamental, 80% of our sites are important as well. And Carmela is 500 odd and, of course, is based on the intermediary metropolises around all of our stores. So our platform is the one I just described. It is not passive. We have worked hard. And we, of course, have made it possible for us to our clients and to be customer centric. We have also worked on becoming the best partner for all of our store owners or tenants. Also, we here also have worked on health. And this is what we have found to be able to implant this strategy in all of our centers. We were struck by how fast they actually leached on to e commerce and physical commerce. And we are working with them as a business partner to look for new banners, also to improve how they can work better and how they can better communicate with their own clientele. We have also enlarged our digital presence. And of course, we also in Spain, for example, have indeed now been spread to Spain and Italy. And this means, of course, that our strategy on Slide 8 with renovations and also for partner banners, we also have now partners that we have been working with to help them out of the crisis as it shaped the world that they knew before the COVID. And of course, here, urban mix city, several projects. And also, we here are developing our tower company and LOU 5 gs. And also, we will here be able to optimize capital equity allocation. And here at L'Oreal Limon and this will help us work on a share buyback. All of this, of course, is happening. And our slogan is here, we are acting in favor of the planet, the territories and our collaborators. And we have recently been rewarded for all of what the work we've done during the year where we also had to face closures. We have, of course, here are looking to implement our CSR strategy as well. And activity this activity will be Thank you very much, Marie. Let's share our comments on the business of the first half year. First half year twenty twenty one was shaped by the 3rd pandemic week, which has reestablished a number of restrictions. Those will be where Camilla operates. These restrictions, depending on the territories and the census, we'll not delve into the explanations of these. In terms of this context, retail stores have opened up, have been shut for 2.8 months over the Q1 of 2021, I. E, a greater length of time, greater than the length of closing down in 2020, where Camilla shops have remained closed for 2 months. So Camilla shops were closed for an average of 2.2 months in France in the first half year, twenty twenty one. Cumulated cumulatively, we are looking at so it's down and so pointed to the center. We are looking at assumption and the reopening of the centers. And the footfall, so we're coming back to levels close to those of July 2020. And see on the curves, right here, you can see the footfall that is has the easing of restrictions occurred. So we're talking 105% in France, 90% in Spain and 93% in Spain. So we're performing, we're exceeding the levels of 2020 and even those of 2019. You can see this on the red curve. We have a plus 5% in June 2021 against June 2019. So clients have come back to Carmilla's centers. So we are this is what we're seeing now. As Marie stated, omni channel plays a key role and is a key pillar for Carmilla's during periods of presumptions and reopenings. The good results have notably been linked to digital in the logic of omni channel initiatives. So B2C to start with, with a drive to store approach where Camilla strengthens its visibility online, engaging and developing a geolocated client database with EUR 3,600,000 of contact in opting with points and something that is essential with this obviously presence on Google and Facebook. And then developing communities, digital communities, resting upon local influences, which numbers of subscribers significantly increased. You can see the evolution of all of these indicators on the Slide 13. And here on the B2B approach as well, Camila develops an omni channel approach for its partners and retailers to support them with digital transformation and for their independent and franchisees accounting for 40% of the retailers of Camilla's. And it is important to support those. And we've helped them developing Internet websites amongst many other steps. So when it comes to reopening of new retailers, Camilla has strengthened its synergies with Carrefour. We're resting upon the strength of Carrefour, our partner. And in Spain, we've put at this disposal the Carrefour marketplace to some of the retailers. So major point, strong point of this half year has been an exceptional momentum leasing with an unparalleled number of 431 leases have been signed in the first half twenty twenty one, accounting for 9% of the rental base of Skarmila with rental levels higher by 3.9% against the ERVs. So I'd like to highlight that these have been taking place with the traditional lease contract standards and with the traditional duration, traditional classic or standard level. So to insist on this and pilot level, unprecedented level, this is a +3%. So it is plus 40% versus H1 in 2019, plus 140% versus H1 2020. So that's 261 renewals. So we're talking plus 100 signed contracts on and pop up stores and upselling specialty leasing. So the promotion on renewals stands at plus 3%. So we're confident on the continuation of this conversion dynamic because we have a high level of and first from side contracts and the review of FFO and Efficiency Leasing and up 3% across all three countries. And the month of May, as you can see, with 38% plus 38% reflects a very good level of resumption. So these reflect the interest of retailers for Carmilla and the quality of the partnerships with all the shops and retailers. So we capitalized on strengthening the links with between Carmilla and retailers in the wake of COVID. Now beyond these, Carmilla teams are fully engaged in looking at innovative types of partnerships and for things to branding and operations that remain relevant across all segments. So we have the retail brands that are historic. And the likes of Primark, Yabi and likes it is really important to have these. And so because these are what our clients expect. We have the new and up and coming leaders outside, the normal virtual leases. So this allows us to conquer a new generation expecting new generation or new technological products. We also wanted to capture new concepts. As you can see here, examples like of Couture Vio. And L'Econom will talk about this retail brand specifically at a later point in time. We have Happy Cash and Nico. We have locally brewed retailers so as for them to operate in our commercial centers. And you can see such examples of the local retailers here. Let's take a look at some of the key elements of activities. The rental base is on like for like basis, so down 0.6% and versus 31 December 2020, a robust financial occupancy, 95.7%. So we thought the crisis was going to generate a number of collective labor plans and significant so these are the base, the Brenta base in H1 stands at down 1.3% in so limited impact on lease terminations and the impact of an exposure to Fresenius and the limited the impact of insolvency proceedings is limited at 0.5%. When it comes to the mix merchandising economy, as you can see, we've continued to bring down our to reduce our exposure to fashion. So across all of the activities, this stood at 36% in December 2017. It has been brought down to 32.4%. So this 1st year 2021 was also achieved by 2 major projects of extensions and so on the day of the reopening of the commercial centers in France. We see the extension of NICS L'ANGUSTER. So still articulating the commercial dynamic is open to 100% occupancy rate. These centers has plus 50 units. So today, we're talking about 100 shops there. So with leaders brands, H and M, Kia B, Kaltura, this is the first shops in the Nice area. Strategic toys for this brand, Mango and new concepts, the likes of La Poble Popup or Vinod or Aubert Saucier. And some more recent brands are expected by clients. This has been tremendous result of success this opening. So with a footfall of plus 30% between its opening and the 31 June 2021. And furthermore, Camilla has finalized in Canacochel the transformation of the city of Roper. And so we'll have seen June 2021, the Primark opening, and we've developed a city government with leisure and restaurant facilities and complex. And so this center has renewed the its track on now as a shopping destination. And as and with 31 shops opening since 2018, marks with 7 openings Q1 2021. Another so a key success there is we can see we've seen a footfall increasing by 65% from the 19th May to the 30th June 2021 versus 2020. A few wells on the exit pipeline of retail extension projects. Our pipeline comprises 5 major projects: Montesson, Enty, but Toulouse La Berge, Vinicius and Terrasa, ex Barcelona in Spain. So these projects, as we noted, they're all back to very powerful hypermarkets, all very powerful in their local areas. So Camilla has launched a new development clearance for Mortis and with a clearance issued by the committee for commercial developments in May 2021. We know how accomplished it is to obtain such permits. And it has been long road, but Camilla has indeed been initiatives on permits. So we can see just we're talking about plus 60 units and restaurants between now and 2025 within framework of residential units and urban development projects. So the Q1 2021 is shaped by the accelerating expansion of Carmilla Retail Development as a subsidiary of Carmilla to invest on side of innovative and promising retailers. So the 4 major partners of Cara. So far, the barber shops of Balbu Faba, the so timeless fashion and the modal and sigosto and Idean in Spain opened 37 stores in H1 and has planned 44 such openings in H2. And so we're continuing to develop partnership with new brands, and you can see Decapo. Decapo is an Italian restaurant and Lique and Homme is a wine shop that was set to open in the very near future. So I'd like to insist on health care center openings, and we've already mentioned that in the past. But H1 2021 was a key milestone for this activity because we opened our 1st dental practices under the virtual brand in Agis Mont Sartreville, Perpignon Quira and in North Bourgeois. Five new openings are scheduled for H2 2021. And in Spain, we have the opening of 2 Dental Star Center in Q1 2021 in Montecala, in Caprera de Mar. So in total overall and consolidated, so right hand side of the Slide 21 and 2021, all the partners of Camilla, Camilla Retail Development will account for nearly 2 48 stores and dental practices in France and Spain at the end 2021, with which EUR 118,000,000 in the Camilla portfolio, generating EUR 5,000,000 in rental income. And another key point for 2021, H1, has been marked by the capitalization rates that have stabilized. The average capitalization rate is stable at 6 point cap rate at same rate as of the 31st December 2020. So this is the first time that we can see a stabilization of capital ratios. So the strong points that have been reported with regards to Camillus in terms of the what Anders has reported is the core strengths of Camillus, the attractive price rents, its labor, innovative portfolios, stable occupancy, dynamic leasing, it gives us positive reversion. Sort of these points reflect and explain the caution of Camilla and FLY23. Stable appraisal values and the scoring, so they have a portfolio at EUR 6 point 135,000,000. That is market value. So EUR 0.2 percent and again, in as of the 30th June 2021 versus 31 December 2020. And like for like change, minus 0.2%. So let's take a look at the first half year results now. These financial results show that the fundamentals of Carmilla are well under control, thanks to proactive management of crisis by the teams and the solidity of the platform. They include so temporary impacts of the crisis. Why temporary? Because they are reversible once the restrictions will be eased. As the basis is sound, net rental income is SEK 147,500,000,000 in H1, down 13.2%. So that articulates to so organic growth, the impact of the Health Crisis are 12.2%. Organic growth related to the rental base, plus 1.2%, which is a contribution of NIS Lagos Thera in our extensions and other impacts. So down so minus 1.2%, notably include the implementation of the strategic vacancies to put in place the strategic operations and development protection. On Slide 26, we're looking at the estimated impacts of closures in the first half. As recognized in H1 2021, 100 percent of estimated impacts have been accounted for. That was not the case in H1 2021, where only part of the first wave had been accounted for, which was the known impact of first wave, which was for the best part linked to the aid state aid of JPY 41,000,000 impact of first wave of May 2020 was partly accounted for in the second half of twenty twenty, but also was frozen out over. So pursuant to the application of the IFRS 16 standards, the variation net variation is not directly comparable. And as a result of realistic provisions for Renfribut, Camilla did not submit any additional provisions in the first half year twenty twenty one, which is highly satisfactory and demonstrated we've attained the targets when it comes to and these rents and charges, the impact on IFRS down EUR 2,000,000 minus EUR 2,000,000. In full year, that will be that will translate into EUR 6,000,000, so minus EUR 6,000,000. So we have a provision for rent free bills for rents and charges for cash bills in France, minus 17.3% is provisions for rents and charges will allow us to carry us targeted negotiations so as to boost the debt recovery rate in Spain. The franchise were granted for EUR 6,000,000. And so for rent free period, so the adjustment of variable income stands at EUR 7,700,000 The rental base varies. The impact on the rental base stands at EUR 1,500,000, which demonstrates the stability of this base. And the other impacts and extensions contribute for EUR 1,700,000 and other impacts related to strategic vacancies for minus EUR 1,800,000. Slide next slide, 27 here. The collection rate at 69.3 percent as of the 19th July 2021. To be noted, there's strong acceleration to our collection rate against the 30 1st the 30th June and which was starting at we're standing at 63.6% on June 30th since PayPay has reached 86% in the 1st quarter. We can see a good trend, positive trends where it's this reaches the 60%. This is so again, we'll have the impact of the governmental aid. And so this rate, after deduction of franchises that we've mentioned, we're talking about 16% will be collected, which is a key priority for Carmilla in the second half year. The plan of action has already been put in place with the first encouraging results as illustrated by the increase between the 30th June 19th July, we are confident in our capacity to recover these. And as a result of the fixed cost and state aid and the state taking care of the charges and rents, this will allow us to by differentiates to this will accelerate these collection rates of these 16.1%, Slide 26. And I suggest we look at the various I suggest we focus on the recurring results, recurring earnings. So in terms of equity accounted, we're talking EUR 0.9000000000,000,000,000, so savings is a substantial economy, reflecting the healthy management and reasonable management of the CapEx by Camilla. EBITDA EUR 104,700,000 on the period, not directly comparable to the EBITDA of the same quarter 2021. The increase of financial results is the impact of increasing interest expense on bonds at the end of 2020 by CAMERA and the start of 2021 to extend the length of DAPT, which we'll look at later on. So specific impact of IFRS COVID impacts. So EUR 117,100,000 plus 2%. So we entered to build seeing 100% of the impact of first half year related to the health crisis impact related to the first half year. In terms of the earnings per share, recurring earnings, so out of ex IFRS, corporate impacts recurring impact is EUR 17,200,000, so minus EUR 18.9 percent. Recurring earnings per share at EUR 0.52 per share including the IFRS exchange impact and EUR 0.53 per share, excluding IFRS company impact. So the change in the NAV and dividend in 2021 has been remained at and remains at EUR 1 per share, same as 2020. And so with the dilutive impact of dividend of minus 0.16 percent. Today, prior NTA at 30 1 June 2021, 23.16 percent, 69%. Today, prior NTA, fully diluted, 23.69 per share, down 4.2%. So net debt and NTV ratio is a temporary hit from the collection situation related to the first half year, dividend was paid out on the 15th June and came to increase the financial debt by EUR 94,000,000. So investment EUR 110,000,000,000,000,000 for EUR 70,000,000 for EUR 60,000,000. We continue to invest. Net collections contribute to the tune to reduce the financial debt for EUR 60,000,000. So you can see the balance of the ratio for Camilla between the annual dividend of EUR 94,000,000 and the net collection of a half year affected by EUR 60,000,000. Camilla as well as expected itself. So balance equilibriums and we can see the so we can see EUR 40,000,000 of net collections between May June and this brings down the LTV significantly by EUR 38,900,000,000 although it was EUR 39,400,000,000 that's just the June. To wrap up the financial report. So I wanted to focus on the significant work carried out by the teams and the financial positions. We've repaid EUR 600,000,000 of bond and bank loans and to be paid in 2023, 2024 issue 2 bond issues at the end of 2020 March 2021 with so we're looking out to 2027, 2028, 2029. And so we've maintained the average cost of debt at 2%, with average remaining maturity at 4.6 years. So and historically with a curve that was with the maturity was between 2022 and 2023, we've managed to bring this down significantly. There's no major and borrowing falling due before 2023 BBB rating with a negative outlook has been confirmed by NSP in May 2021. And we have significant liquidity greater than EUR 951,000,000. There's no risk in terms of the banking covenants as published, which are the covenants of our banking loans over to Marie for closing remarks. Thank you, Pierre. So we've seen that this crisis, of course, has had a strong impact on the retail sector transformation strategy that we have described And also, in a very demanding context, Carmilla was able to, here, deploy in record time the necessary adjustments for its platform. And this, of course, means that we will not, for the moment, give guidance for this particular the commercialization and also the growth relays also that are enriching our growth and for the months years to come. So investors and the meeting of investors in the fall will be the time to take questions. Right. So thank you very much. And the rotation of assets and for us is in fact deals with mature assets and we are also envisaging within 18 months to be extremely poised to understand and also to give you more explanation perhaps on the depth of share buyback. Now as regards the rotation of our assets, we have voted in our General Assembly the major project. And we can't, for the moment, give you more information because we need to work on this further. And I'm talking about the 5 projects. Montesson is one that should become reality in 2025. Okay. So we will now take questions online. Okay. This should take about 1.5 months. And as regards other questions, Carmela is a sick and So of course, it will be exonerated as regards and of course, it's Carmilla itself is an SIC and also this, of course, involves the taxation of our financial strategy as described and essentially associated with the Italian partner. Any other questions online? We have no other questions. In the meantime, I it seems to me that the what the government had proposed to maintain the steadiness and stability of Carmilla. And for the moment, this does not seem to have yet been published. So we haven't yet commented on this particular amount of franchises for France and as we had seen during the preceding negotiations of insolvability? So we would like to know about the financing plan and in terms of up and coming opportunities in terms of acquisitions and sales. Now as I stated, I said that there will be we will be opportunistic. And if these opportunities, if acquisitions come along post acquisitions, we'll be able to finance those. So we are fully maintaining our dynamic, our momentum, and we should look at 4 acquisitions maybe into new assets. What is the maximum level that you're setting yourself at today? And in terms of level of acquisitions, level of investment, I don't want to communicate on a net TV maximum level. And we've talked about our banking covenants. And as Piyush stated, we have some room to maneuver, Some leeway. Thank you very much indeed. So we have another question from him, Henrique. What can we expect for HS2 in terms of the collection efforts and view those collection efforts? Well, to take this question, so we I believe we're very explicit on the first half year, which includes EUR 33,000,000 of the impact of the health gases in the first half year. And for the second half year, we don't know yet the impact of what the impact of these health crisis will be in H2. That's why we didn't give any guidance. But I'd like to recall the fundamental behind all these. The rental base is robust. These effects are temporary and reversible. If there's no crisis, health causes or restrictions in H2, we can find we'll be able to go back to levels that don't build in these temporary impacts. So we no longer have any questions on the call or online. We have one question in the room. As given the strategy described by Carrefour of shopping shop and is this will this be a competitor for you or the new some of your retailers that have gone to shop in sharper. So will this be the 1st crown of Camilla, which will become a 2nd crown around the Carrefour centers? We are not in competition with Carrefour. We are in partnership with Carrefour, and the dynamic is highly promising. And the shopping shop dynamic is not at all compared to CerfCarmilla. And there's room and if there's room around hypermarkets, there's room in our shopping centers and everything that can strengthen the hyper. So the ecosystem around shopping centers is extremely good for Camilla. So today, there's no retailers I would have well, I'm quitting Camilla. I'm leaving Camilla to go elsewhere in a shopping shop to the contrary. So we're mutually strengthening each other. Just to understand, I realize that you have mentioned the extension projects. And today, we have clearly understood that there may not be more room perhaps for a new strategy? And perhaps, say, urban sprawl or and my second question is, how do you see the climate change law arriving today, as we can see? And we ask questions on, are we still allowed to construct or build in France today? And of course, Spain and Italy. And there is a third point, which means that we are also tending towards recharging the energy city and will not oppose the center of town and the with the intermediary cities where the supermarkets are not. And now as concerns the new commercial malls in France, we here are facing the recreation of another form of our shopping centers. And of course, this will allow us to strengthen them, to be able to modernize them. And of course, we need here to take into account the climate change law, and this is what we intend to do on our five extension projects. So in fact, there are here strategies that could be very interesting. And also there are opportunities when we're talking about the restructuration of what we call the shoe boxes at the entrance of some cities. And we are now trying to find how we can rehabilitate these particular boutiques or stores. And this, of course, should be present in the centers of town or also in the suburbs surrounding the cities. So of course, this means more rentals. And now as concerns Spain and Italy and