Foncière des Régions: First-Half Financial Report 2016...

FIRST-HALF‌ FINANCIAL REPORT 6

2016 FIRST-HALF FINANCIAL REPORT

MANAGEMENT REPORT 1

1. Business analysis 2

2. Business analysis by segment 12

3. Financial information and comments 37

4. Net Asset Value (NAV) 44

5. Financial Resources 46

6. Financial indicators of the main activities 50

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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2016 51

1. Condensed consolidated financial

   statements as at 30 June 2016 52

2. Notes to the consolidated

financial statements 59

AUDITORS'

3 STATUTORY REPORT 103

4

CERTIFICATION OF THE PREPARER 105 DEFINITIONS, ACRONYMS AND ABBREVIATIONS USED 107 2016 FIRST-HALF‌

1 MANAGEMENT

REPORT

1. BUSINESS ANALYSIS 2

2. Rental income recognised:

   stable at like-for-like scope 2

3. Lease expirations and occupancy rates 3

4. Breakdown of rental income -

   Group share 4

5. Cost to revenue by business 5

6. Disposals and disposal agreements:

   €399 million Group share 6

7. Asset acquisitions:

   secure €1.0 billion Group share 6

8. Development projects 7

9. Portfolio 10

10. List of major assets 11

11. BUSINESS ANALYSIS

    BY SEGMENT 12

12. FINANCIAL INFORMATION

    AND COMMENTS 37

13. Scope of consolidation 37

14. Accounting standards 37

15. Simplified EPRA income statements Group share 38

16. Simplified EPRA consolidated income statement 41

17. Simplified consolidated balance sheet Group share 42

18. Simplified consolidated balance sheet 43

19. NET ASSET VALUE (NAV) 44

20. Fair value adjustment for the

    buildings and business goodwill 45

21. Fair value adjustment for the car parks 45

22. Fair value adjustment

23. 1.2.1.	France Offices	12	for fixed-rate debts	45
    1.2.2.	Italy offices	21	1.4.4. Recalculation of the base cost
    1.2.3.	Hotels & Service Sector	26	excluding duties of certain assets	45
    1.2.4.	Germany Residential	31
    1.2.5.	Other Activities	34	1.5.	FINANCIAL RESOURCES	46

    1.5.1. Main debt characteristics 46

    1.6. FINANCIAL INDICATORS

    OF THE MAIN ACTIVITIES 50

    2016 FIRST-HALF FINANCIAL REPORT FONCIÈRE DES RÉGIONS

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    2016 FIRST-HALF MANAGEMENT REPORT‌‌

    Business analysis

24. BUSINESS ANALYSIS

    Changes in scope

    Foncière des Régions increased its stake in its subsidiary Beni Stabili in the first half of 2016, owning 52.2% of the share capital at 30 June 2016, vs. 48.5% at 31 December 2015. The ownership rate recorded in the income statement for the first half-year came to 50.12%.

    Foncière des Régions also increased its stake in its hotel subsidiary Foncière des Murs in early 2016, owning 49.6% of the share capital at 30 June 2016, vs. 43.1% at 31 December 2015. The ownership rate recorded in the income statement was 43.15% for the first quarter of 2016, and 47.49% for the second quarter of 2016.

25. Rental income recognised: stable at like-for-like scope

26. (€M)	100%			Group shar			e
    	H1 2015	H1 2016	Change (%)	H1 2015	H1 2016	Change (%)	Change (%) LFL (1) % of rent
    Offices France	125.2	138.4	10.6%	116.5	125.7	8.0%	-0.3%	44%
    Paris	43.2	44.2	2.2%	41.0	41.9	2.2%	15%
    Paris Region	51.9	65.4	26.1%	45.4	55.0	21.0%	19%
    Other French regions	30.1	28.8	-4.1%	30.0	28.9	-3.8%	10%
    Offices Italy	110.5	98.9	-10.5%	53.4	49.6	-7.2%	-0.8%	17%
    Offices - excl. Telecom Italia	43.1	39.3	-8.9%	20.9	19.7	-5.5%	7%
    Offices Telecom Italia	57.0	49.6	-13.0%	27.5	24.8	-9.7%	9%
    Retail & others	10.4	10.0	0.0%	5.0	5.0	0.0%	2%
    TOTAL OFFICES	235.7	237.3	0.7%	169.8	175.3	3.2%	-0.5%	61%
    Hotels and Service sector	98.9	100.9	2.0%	38.9	41.5	6.8%	-2.1%	14%
    Hotels	72.9	75.2	3.3%	27.6	29.9	8.1%	10%
    Healthcare	7.6	7.2	-5.6%	3.3	3.3	-0.9%	1%
    Business premises	18.4	18.5	0.4%	8.0	8.4	5.5%	3%
    Residential Germany	91.6	105.9	15.6%	55.3	65.3	18.0%	2.9%	23%
    Berlin	24.7	41.1	66.5%	14.7	24.6	67.6%	9%
    Dresden & Leipzig	7.7	8.7	12.8%	4.5	5.8	30.2%	2%
    Hamburg	N/A	6.1	N/A	N/A	3.4	N/A	0%
    NRW	59.2	50.0	-15.6%	36.1	31.4	-13.0%	11%
    TOTAL CORE ACTIVITIES	426.2	444.2	4.2%	264.0	282.1	6.8%	0.0%	98%
    Other	11.7	8.2	-30.1%	7.2	5.0	-30.1%	N/A	2%
    Residential France	11.7	8.2	-30.1%	7.2	5.0	-30.1%	2%
    TOTAL RENT (1)	437.9	452.3	3.3%	271.2	287.1	5.9%	0.0%	100%

    (1) Excluding Logistics (€10 million in H1-2015 - €3 million in H1-2016) - classified as discontinued operations.

    Rental income increased by 5.9% (Group share) over one year, including +6.8% for strategic activities. This €15.9 million increase is due primarily to the following factors:

    w an increase in Hotel real estate with a rise in Foncière des Murs' ownership rate in 2016 (+€2.0 million)

    w acquisitions (+€19.4 million), especially in Germany Residential (+€13.3 million), where the Group strengthened its position in Berlin through several asset portfolios with high growth potential

    w deliveries of new assets (+€8.7 million), mainly in France Offices

    w releases of assets intended to be restructured or redeveloped (-€1.1 million)

    w non-core asset disposals (-€16.5 million), particularly in Germany Residential (-€6.0 million)

    w indexation and the mixed effect from departures and re-lettings (-€0.7 million), of which vacating of France Residential (-€0.6 million).

    At like-for-like scope, rental income remained stable in a context of zero inflation. The performance of France Offices was very slightly negative, at -0.3% at like-for-like scope, due to the lack of a general recovery in market rent levels. For Italy Offices, the

    -0.8% decrease is due to the residual effect of the renegotiation of Telecom Italia leases in Italy in 2015 (extension of the leases to a term of 15 years firm in return for a 6.9% decrease in rental income). Rental income increased by 2.6% for Italy Offices, excluding Telecom Italia.

    2016 FIRST-HALF FINANCIAL REPORT FONCIÈRE DES RÉGIONS

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