2008 annual results Presentation on 18 February 2009
1 2008: Continued growth Sustained business activity Lettings up by 9% in a market down 14%, including the pre-letting of two buildings under construction (33,000 m²) Good operating performance and virtually no tenant default A cash-flow growth, in line with targets, similar to 2007 No revaluation impact on net profit Moderate debt levels and a robust financial structure Pace of development geared to market conditions
2 A good operating performance Rental income : + 7.1 % ( 155.4m) EBITDA: Cash flow : + 6.7 % ( 140.6m) + 7.8 % ( 105.6m) Net profit*: + 3.7% ( 38.9m) Pre-tax ordinary cash flow ( m) 105.6 98.0 +7.8% 2007 2008 Portfolio value and NAV reflect the rise in yields Portfolio value: - 2.5% or - 7.2% like-for-like 3.1bn Portfolio value and NAV (replacement value) 3.18bn 3.10bn 2.82bn 130.48 NAV per share: 118.59 (- 9.1%) (Replacement value) 115.52 118.59 * N.B.: Property portfolio valued at amortised cost 31.12.06 31.12.07 31.12.08 Portfolio NAV ( /share)
3 Lettings up 9.2%: strengths of a diversified property offering in tune with corporate demand Rise in lettings (106,900 m²) despite a 14% (1) decline in take-up in the Paris region Full year rental income of 21.6m ex. T&SC (+ 55% compared with 2007), including 5m contribution in 2008 2 major pre-lettings Grand Axe 2-16,000 m² - completion Q4-2010 tenant Axa France - firm 9 year lease - 6.7m a year ex. T&SC ( 410 per m²) Miami (Orly-Rungis) tenant Ricoh France firm 6 year lease - 17,000 m² - 4.5m a year ex. T&SC ( 254 per m²) (1) Source: Immostat
4 Lettings at market rents +9.2% +55.4% 106,900 97,900 17,600 36,300 4.0 13.9 11.6 21.6 Average rent: 320 /m² ex. T&SC (2007: 227/m² ex T&SC) 80,300 70,600 2007 2008 Space (m²) Relets 9.9 10.0 2007 2008 Rental income ( m a year ex. T&SC) New buildings & acquisitions Average rent: 142 /m² ex. T&SC (2007: 124/m² ex T&SC)
5 Rental income up 7.1% to 155.4m (+4.9% like-for-like) Steady, robust growth in rental income driven by: Improved portfolio operating conditions A robust tenant portfolio Buoyant rental values The average rent on the let portfolio rose by 5.5 % ( 160.9/m² at end 2007 ; 169.8/m² at end 2008) 160 150 140 130 145.0 Growth in rental income 2008 / 2007 ( m) +6.0 +1.2 +3.2 2007 Indexation Occupancy Changes in scope Like-for-like 155.4 2008
6 A very broad client base 750 tenants 960 leases Almost no tenant default (= 0.6 of revenue) Breakdown of client base by business sector (in space) Services 11% 3% Elec./telecoms IT 6% 6% 6% 33% Scientific activities Retailing Industry/Construction 13% Agri-foods/Textile 11% 11% Other Transport Average tenant turnover rate over the last 6 years (2003-2008): 9%/year Lease terminations represent about 30 % of the theoretical exit options (1) (1) End of three-year break period or end of firm commitment period
7 A portfolio of 1,129,000 m² mainly in the three predominantly office areas of the Paris region Total portfolio: 1,129,000 m² Of which non-lettable: 58,500 m² (work in progress or planned) Good occupancy rate in the 3 predominantly office areas at 91.5% Occupancy rate of new or redeveloped buildings completed in 2005-2008 (116,400m²) > 95 % Rise in average occupancy rate: 89.3% vs. 87.7% Trends in occupancy rate (1) 91,4% 91,5% 89,6% 88,7% 87,0% 86,1% 31.12.2006 31.12.2007 31.12.2008 Total portfolio Predominantly office (1) Physical occupancy rate of lettable space
Portfolio valued at 3.1bn (1) (-2.5%) Buildings in service 2.7bn 3,177.8m 2,824.5m 147,1 136,7 222,4 68,9 8 3,099.0m 146,2 284,5 Comprising 79% office space La Défense/A86 represents 40% of the buildings in service Average value per m²: 2,450 ( 2,600 at 31.12.2007) 2,618.9 2,808.3 2,668.3 31.12.2006 31.12.2007 31.12.2008 Buildings in service Developments Land reserves Buildings under development 0.28bn An estimated value creation of 154.0m for an investment cost (incl. NBV) of 410.7m Land reserves (1) Replacement value (source: AtisRéal Expertise) 0.14bn Conservative valuation assumptions for the 1,000,000 m² of buildable land at Orly-Rungis 500 400 300 200 100 0 Value creation on projects in progress ( m) 454,3 142,7 110,3 278,7 11,2 68,4 32,9 30,7 Value creation News buildings Redevelopment Construction cost Land/NBV
9 Buildings in service: 2.7bn Average net yield of 6.9%, up 90 bp compared with end 2007 6.2% 6.0% 6.9% 31.12.06 31.12.07 31.12.08 Change like-for-like: -7.2% The impact of the rise in average net yield (-14.0%) was partially offset by growth in rental income (+6.8%) Portfolio in service: 2.7bn Roissy Paris Nord2 343.5m La Défense A86 1,106.4m 40% 13% 11% 36% Other 282.5m Orly-Rungis 935.9m The 90 bp rise in average net yield in 2008 applies to a property portfolio with no significant rental risk: Average rent of 170 per m² per year excl. T&SC A very broad spectrum of tenants Orly-Rungis La Défense / A86 Roissy-Paris Nord 2 Other Total Offices 6.9% 6.1% 7.3% 7.7% 6.6% Multi-purpose 8.0% 7.0% 7.3% 8.2% 7.7% Retail and services 7.6% 5.7% 8.0% - 7.4% Total 7.2% 6.1% 7.3% 7.9% 6.9% 2007 6.4% 5.3% 6.4% 7.2% 6.0%
10 NAV affected by rise in yields Replacement value 118.59 (-9.1% over 1 year, -6.8% in H2-08) 115.52 6.78 0.2 6 7,06* 130.48 5,77* 127.23 7.6 4 2,2 9 118.59 Liquidation value 108.66 10 8.4 8 12 3.4 2 12 1.4 6 10 8.6 6 (excluding tax and after market value of financial instruments) (-12.0% over 1 year, - 10.5% in H2-08) Revaluation of financial instruments has reduced liquidation NAV 31.12.2006 31.12.2007 30.06.2008 31.12.2008 Transfer taxes Impact of valuing financial instruments at market value (*) Transfer taxes net of the impact of valuing financial instruments at market value Trends in replacement NAV 2007/2008 140 130 120 110 130.48-10.51 +2.38-4.00 +0.24 118.59 100 90 80 2007 Potential capital gain Net profit Dividend Other 2008
11 A solid financial profile Moderate debt level: o LTV 31.7 % o ICR 3.37 x 982.5m utilised These ratios provide sufficient leeway compared to the most restrictive of the bank covenants The most restrictive thresholds only apply to a limited proportion of total debt o LTV < 0.40 applies to 24% of credit facilities o ICR > 3 applies to 35% of credit facilities
12 Excellent visibility in the near and medium term Financing resources secured Total authorised Remaining maturity 1,338.9m 5 years ( m) Maturity Mortgage repayment loans 340.4 7.9 yrs Corporate credit lines 920.0 3.9 yrs Total 1,260.4 5.0 yrs Bank overdrafts 78.5 N/A Total 1,338.9 356.4m of available resources, including 310m in confirmed lines Limited refinancing needs Only 9% of facilities will need refinancing in 2009 ( 110m of a total 1,260m) 300 200 100 0 Maturity of credit facilities at 31 December 2008 ( 1,260.4m) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
13 Total cost of finance of 4.77%, lower than in 2007 (4.86%) Impact of hedges offset the rise in E3M 2007 2008 Average 3m Euribor 4.22% 4.88% Margins and fees 0.57% 0.55% Cost of hedging 0.07% (0.66%) Total cost of finance 4.86% 4.77% Debt hedged At 31.12.2008: hedging rate of 100%, Over the next 3 years (2009-2011): Utilised borrowing capacity at end 2008 ( 982.5m) is 95% hedged at an average maximum cost of 4.55% 1600 1200 800 400 0 Debt and interest rate hedging over 3 years T1 09 T2 09 T3 09 T4 09 T1 10 T2 10 T3 10 T4 10 T1 11 T2 11 T3 11 T4 11 Fixed Capped Variable Debt as of 31.12.2008
14 Consolidated income statement millions 2008 2007 % Rental income 155.4 145.0 + 7,1 Property operating expenses (4,8) (5,1) - Net rental income 150.6 139.9 + 7,7 Fee income 5.5 6.1 Other administrative expenses (15,5) (14,2) EBITDA 140.6 131.8 + 6,7 EBITDA margin 87.4% 87.2% (EBITDA/rental+fee income) Owner's expenses/rental income 3.1% 3.5% Other administrative expenses/rental+fee income 9.6% 9.4%
15 Consolidated income statement ( millions) 2008 2007 % EBITDA 140,6 131,8 + 6.7 Depreciation, amortisation and provisions (59.8) (57.4) + 4.2 Bank interest (41.7) (37.4) + 11.6 Other components of cost of debt (0.4) (0.4) Change in market value of hedging instruments (4.4) (0.4) Cost of debt (46.5) (38.2) Capitalised interest 4.8 2.1 Net financing cost (41.7) (36.1) + 9.8 Tax (0.2) (0.7) - Net profit 38.9 37.6 + 3.7 Pre-tax ordinary cash flow 105.6 98.0 + 7.8 per share 6.13 5.69 + 7.7 Number of shares in issue at 31.12.n (1) 17 235 862 17 241 231 (1) Excluding treasury shares
16 Development: the investment programme continued according to the 2008-2011 plan 2008 Investments 162.5m (2007: 125.1m) Development 120.1m New buildings o Completion of Olympe building 8.000 m² at Evry o Started in 2007: 45,000 m² 113.5m Orly-Rungis «Miami»: 20,000 m² 85% pre-let (due to completion Q2 2009) Nanterre-Seine «Axe Seine» : 25,000 m² (due to completion Q4 2009) o Started in 2008 : 31,000 m² La Défense Nanterre Préfecture «Grand Axe 2» 16,000 m² fully pre-let (due to completion Q3 2010) Orly-Rungis «Montréal» : 15,000 m² (due to completion Q4 2010) Acquisition of a building at Nanterre-Seine (2,400 m²) 6.6m Existing property portfolio 42.4m Redevelopment and conversion to office space / Refurbishment and maintenance
Land reserves at Nanterre Seine strengthened TODAY 17 69,100 m² built 25,000 m² under development More than 80 tenants companies A workforce of 2 000 Naxos 5,512 m² Nacelle 2,477 m² Axe Seine 25,000 m² under construction Niagara 4,104 m² Total 12,093 m² x 4,6 PROJECTS 60,000 m² + 11,000 m² Narval building
Silic \ Presentation on 18 February 2009 18 A tertiary area with large potential
19 A profitable and secured portfolio development programme A controlled pace of development and risk-taking New buildings are due to start as soon as the buildings under construction have been let Projects in progress are fully financed until completion A spread between gross yield and cost of debt higher than 250 bp 76.000 m² of new buildings under construction at end-2008 Projected investment cost Forecast annual rental income 23.5m Gross return on investment (projected) 8.65 % 43 % of space under development is pre-let 272.0m (including land purchase: 33.5m) The 2 buildings in progress (40,000 m²) no pre-let, represent 3.5% of the total portfolio The project yield on projects in progress (8.65 %) is almost 400 bp higher than the cost of finance
20 Controlled projects ready to be launched between 2009 and 2011, depending on progress in letting the buildings already under construction Orly-Rungis o 6 buildings 118,100 m² o Projected investment cost 328m La Défense Nanterre-Seine o 1 building 11,000 m² o Projected investment cost 35m Lisses o 1 building 7,600 m² o Projected investment cost 15m Villebon Courtaboeuf o 1 building 6,200 m² o Projected investment cost 14m A fully let building for which the purchase undertaking has been signed La Défense Nanterre Préfecture - 5.800 m² - acquisition price: 23,2m excl. Transfer tax. An area with a confirmed potential Continuation of the Saint Denis project A new project on the drawing board Redevelopment of the Fresnes retail park
21 In a broadly unfavourable stock market, Silic shares have outperformed their benchmarks Shares down 33.7% excluding dividend 30.7% dividend reinvested Sharp swings in share price High 105.22 on 2.4.2008 Low 57.80 on 21.11.2008 Silic shares ended the year at 66.54, a discount of 43.9% to replacement NAV ( 118.59) 1 600 000 1 200 000 800 000 400 000 0 31/12 /2007 Share price dividend reinvested and trading volumes (base 100 at 31.12.2007) 31/01 /2008 29/02 /2008 31/03 /2008 30/04 /2008 03/05 /2008 30/06 /2008 31/07 /2008 29/08 /2008 30/09 /2008 31/10 /2008 28/11 /2008 31/12 /2008 Monthly trading volumes EPRA Euro Zone Return Index SILIC Euronext "IEIF REIT Europe" 120 100 80 60 40 20
22 Trading in Silic shares: sharp drop 2008 / 2007 Volume of shares traded - 6.9 % Value of shares traded - 32.7 % 12,500,000 10,500,000 8,500,000 6,500,000 5,305,200 11,287,100 1316.2 10,554,200 885.7 Member of the SBF 120, CAC Mid 100, CAC Mid and Small 190, GPR 250 indices 4,500,000 517.6 3,601,000 5,16 2,639,900 279.0 3,46 2,500,000 157.8 2,03 1,09 0,61 500,000 2004 2005 2006 2007 2008 No. of shares traded Value ( m) Average daily trading ( m)
23 Dividend 4.30 (1) (+ 7.5%) Total dividend payout: 75.0m (1) : 71% of pre-tax ordinary cash flow Annualised yield on Silic shares (sold on 31.12.08): over 3 years: - 0.13 % over 5 years:11.0 % over 10 years:11.5 % 4 3 2 2,36 0,79 2,51 0,83 Trends in dividend payout (adjusted for the new number of shares) 2,66 0,89 2,85 0,95 3,02 0,17 3,17 3,50 3,73 4,00 4,30 (1) 1 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 (1) AGM on 6 May 2009 Dividend payout ( ) 50% tax allowance
24 Outlook In an environment that will remain difficult, Silic will find support in: its high-quality rental offering; its robust financial structure; control over its growth potential Barring any further unexpected deterioration in the environment, Silic expects 2009 growth in rental income, EBITDA and cash flow to be in line with 2008. Under these conditions, the dividend growth policy should be maintained.
25 A P P E N D I C E S
26 Consolidated balance sheets Assets ( thousands) 2008 2007 2006 Investment property 1 701 701 1 658 896 1 628 459 Owner-occupied property 10 707 10 896 Investment property under development 126 636 56 359 18 248 Plant & Equipment 1 286 1 121 692 Intangible assets 100 96 169 Financial assets 1 688 13 264 2 317 Total non current assets 1 831 411 1 740 443 1 660 781 Receivables - Trade receivables 11 499 13 140 10 086 - Over receivables 28 378 20 970 14 194 Cash and cash equivalents 15 413 11 604 9 147 Total current assets 55 290 45 714 33 427 TOTAL ASSETS 1 886 701 1 786 157 1 694 208
27 Consolidated balance sheets Equity and liabilities ( thousands) 2008 2007 2006 Equity Share capital 69 790 69 648 69 868 Consolidated reserves 625 168 704 484 724 632 Net profit for the period 38 940 37 556 43 031 Total Equity 733 898 811 688 837 531 Minority interests Non current liabilities Financial liabilities 1 032 739 863 337 765 897 Security deposits 33 130 31 214 28 835 Provisions for liabilities and charges 1 165 1 378 1 659 Tax and social security liabilities - - Total non current liabilities 1 067 034 895 929 796 391 Trade payables 8 579 8 421 7 345 Tax and social security liabilities 4 597 5 159 4 157 Other current liabilities 72 593 64 960 48 784 Total current liabilities 85 769 78 540 60 286 Total Liabilities 1 152 803 974 469 856 677 TOTAL EQUITY AND LIABILITIES 1 886 701 1 786 157 1 694 208
28 Consolidated income statement ( thousands) 2008 2007 2006 Gross rental income 155 378 145 037 120 334 Service charge income 45 475 42 633 34 992 Service charge expense (49 075) (46 900) (40 543) Other property operating expenses (1 169) (830) (85) Net rental income 150 609 139 940 114 698 Fee income 5 506 6 073 5 816 Staff costs (9 327) (8 520) (8 407) Other administrative expenses (6 178) (5 825) (5 254) Other income and expenses 2 90 391 EBITDA 140 612 131 758 107 244 Depreciation of properties (58 880) (56 793) (46 359) Other depreciation, amortisation and provisions (913) (580) (235) Operating profit 80 819 74 385 60 650 Net financing cost (41 697) (36 062) (16 024) Other financial income and expense (1 119) Pre-tax profit 39 122 38 323 43 507 Income tax (182) (767) (476) Net Profit 38 940 37 556 43 031 Attributable to minority interests - - - Attributable to equity holders of the parent 38 940 37 556 43 031
29 Consolidated statement of changes in equity ( thousands) Number of shares issued Shares outstanding Share capital No distributable reserves Distributable reserves and profits Other Total Equity At 1st january 2006 17 371 779 17 337 456 69 487 495 183 273 787 (2 522) 835 935 Fair value adjustments 17 096 17 096 Movements in share capital 95 262 95 262 381 256 3 744 4 381 Dividends paid - On ordinary shares (60 801) (60 801) On treasury shares 131 131 Movements in treasury shares - Acquisitions (92 486) (7 759) (7 759) Sales/Cancellation 50 334 211 4 438 4 649 Stock options 869 869 Net profit for the period (12 992) 56 023 43 031 Other movements 13 (14) (1) At 31 December 2006 17 467 041 17 390 566 69 868 500 636 272 870 (5 843) 837 531 Fair value adjustments 17 404 17 404 Movements in share capital 51 661 51 661 207 138 2 158 2 503 Dividends paid - On ordinary shares (65 152) (65 152) On treasury shares 291 291 Movements in treasury shares - Acquisitions (359 836) (37 696) (37 696) Sales/Cancellation (106 668) 158 840 (427) 225 (9 107) 27 243 17 934 Stock options 1 319 1 319 Net profit for the period (13 849) 51 405 37 556 Other movements (2) (2) At 31 December 2007 17 412 034 17 241 231 69 648 505 873 252 463 (16 296) 811 688 Fair value adjustments (48 738) (48 738) Movements in share capital 35 581 35 581 142 234 1 708 2 084 Dividends paid - On ordinary shares (69 648) (69 648) On treasury shares 655 655 Movements in treasury shares - Acquisitions (339 869) (26 981) (26 981) Sales/Cancellation 298 919 (255) 24 543 24 288 Stock options 1 610 1 610 Net profit for the period (18 841) 57 781 38 940 Other movements 37 (37) - At 31 december 2008 17 447 615 17 235 862 69 790 439 920 242 922 (18 734) 733 898
30 Consolidated cash flow statement Uses (-) and sources (+) ( thousands) 2008 2007 2006 OPERATING ACTIVITIES 106 288 99 812 63 243 Cash Flow Net rental income 150 609 139 940 114 698 Fee income 5 506 6 073 5 816 Operating expenses (15 504) (14 345) (13 661) Other income and expenses 1 90 391 EBITDA 140 612 131 758 107 244 Non-cash staff costs 1 845 1 457 1 125 Net financial expense (36 825) (35 181) (16 480) Pre-tax ordinary cash flow 105 632 98 034 91 889 Non operating income and expense Income tax (182) (767) (476) Net cash flow provided by operating activities 105 450 97 267 91 413 Frais commerciaux et autres charges réparties Exit tax (125) (24 824) Change in w orking capital 963 2 545 (3 346) INVESTING ACTIVITIES (164 364) (120 397) (145 827) Sales of property 1 390 Investment in property (164 723) (119 685) (143 624) Other capital expenditure (915) (722) Impact of change of scope (1 608) Other investment (116) 10 (595) FINANCING ACTIVITIES 79 110 (5 152) 69 928 Increase in equity 1 849 2 365 3 866 Net purchases/sales of treasury shares (2 693) (18 633) (3 111) Dividend payout (68 993) (64 861) (60 670) Increase in borrow ings 148 947 75 977 129 843 CHANGE IN CASH AND CASH EQUIVALENTS 21 034 (25 737) (12 656) Opening cash and cash equivalents (51 780) (26 043) (13 387) Closing cash and cash equivalents (30 746) (51 780) (26 043)