Aedifica NV/SA

Ladies and gentlemen, welcome to the Adafika half-year 2026 results conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants will be able to ask questions by dialing pound key 5 on their telephone keypad or through the chat box for written questions below the player. Now I will hand the conference over to the speakers. Please go ahead.

Thank you, good morning and welcome to this very first half year webcast for the combined and new Edifica group. As usual, we will walk you through a couple of highlights, financials that will be presented by the CFO. I will dive into the portfolio and hopefully tackle some of the key messages and then we'll switch to the outlook and end with a Q&A. Now, this being said, before Ingrid could start presenting the results for the first half year, perhaps looking at some of the highlights of the first six months of the year, and no surprise of course, a lot of attention went to completing the offer on the Cofinimo shares. and having the merger done by the 1st of July. These are things that you know maybe zoom in into the integration and the synergies which probably will be the main attention points at this point in time. I think there the message is very clear. We are well on track in terms of integration, so EXCOMM and board of directors are in place, country leads have been appointed now for all of the nine countries, our target operating model has been updated and is being rolled out throughout the group. We will be in September start working on the organizational chart meaning that the N-1 layer will be appointed and teams will be designed in the next coming weeks and months. We have selected all IT systems that we are using and will be using within this Thank you very much. Thank you. Other than that, we've not only been working on the IDifica Cofinimo integration. I think that the teams stayed in the market and were also active in terms of new investments, taking into account the summer months during which a couple of these deals have landed. We're now at almost 200 million euros of new investments, combination of standing assets and projects that we're adding to the development. and we've seen 13 projects out of the development pipeline being delivered in the first six months. So this gives you an idea of what we have been doing, switching now to the financial side.

Hello, good morning. So when we have a look on the income statement, you can see that for the first six months, IDV can report an upper earnings brochure of 2.71 euros per share. which is an increase of 5% compared to the first six months of 2025. So this is demonstrating that the combination of Edifica and Cofinimo was EPS-accretive from day one. When we look a little bit more into detail in the income statement, you can see that rental income was up 62%, resulting in an EBIT margin of 86.6%. This EBIT margin is slightly influenced by the fact that some pre-tax items on the Confinimus side dated from the pre-change of control and were not included in the income statement. If we calculate a more normalized EBIT margin, we would come to an EBIT margin of 85.5%. Average cost of debt is still very attractive at 1.9%. Later onwards, when I talk a little bit about the financial debt, I will also give some outlook how we see this evolving in the coming two to three years. Then going from the upper earnings towards the net results, so the main items that are included in that calculation are the changes in fair value of the investment properties. Globally we can say that the valuation of the portfolio is slightly positive, mainly driven by the impact of the UK, the Netherlands and Spain based on strong operator performance but also the indexation. Then we have the contribution of the bargain purchase gain, the so-called badwill, which was already included in the income statement at the end of Q1, and which is actually the difference between the equity value of Cofinimo, including the PPA adjustments, minus the market price of the new issued shares. But in itself, no difference in comparison with the Q1 consolidation. Then we move over to the integration costs which are excluded from the APRA earnings as they are non-recurring and they represent, after the first six months, approximately 5 million. We're looking a little bit more into the rental income. So on the like-for-like basis, there is an increase for the portfolio as a whole of 1.7%. This can be split in 1.9% coming out of the indexation. plus 0.2% coming out of our entry version and minus 0.4% of the ethics impact. When you purely look at the healthcare portfolio, then the like for like stands also at plus 1.9%. But we do see differences between the countries. And we will go a little bit through the different countries in which Edifica is invested. So first of all, when we have a look on Belgium, you can see that the like for like is slightly below what you would expect based on the indexation. And it is slightly influenced by some rent-free negotiations that took place in the Belgium portfolio. Then we move over to Germany. So in Germany, you will see that inflation always kick in with a delay because indexation of the rent We do expect that going forward like for like in Germany will continue to increase, but like it said, it will never be the full impact of the inflation and come with some delay. Then we move over to the Netherlands. So Netherlands a very high like for like 5.1%. This is influence also already mentioned at the end of Q1. There were two assets in the Netherlands where we changed a little bit the business plan, the business model. So we went from a B2B model towards a B2C model. This means that we are leasing directly to the residents and that also means that the rental income goes up. There is also some additional property management costs that are included as well. But what you see here in the top line is the increase of the top line. When we would exclude those two assets, then the like for like of the Netherlands would be slightly below 3%. So more in line with what you would expect based on the inflation. Then we have the UK. So UK like for like of 5%. So this is a market where traditionally you will see a floor at 2% and a cap Still we can show a like for like above the level of the gap and that is based on the profit trends and the hardwiring of some of the profit trends that we can realize in the UK following the strong operator performance. Then we move over to Finland. Finland a low like for like 0.4% related to the fact that almost all these agreements in Finland are indexed at the beginning of the year and January had a very low inflation in Finland. Then we have Ireland and Spain, where we follow the inflation of the country. France is also showing a somewhat lower figure, related as well as Finland to the fact that in France at the beginning of the year there was slightly negative indexation, so gradually we do expect that in the course of the year France will start to improve somewhat. Then you will see that we report a slightly negative like for like on Italy. As a reminder there are only eight assets in Italy and there was a lease extension combined with some limited rent reduction that were applied retroactively since the beginning of the year on one asset in Italy. Then we have the opposites, negative like-for-like of 1.3%, related to some departures and renegotiations. And then finally the distribution networks, so the pubs, that follow the inflation in the easy periods. Moving over towards our debt-to-asset ratio, so at the end of June IDFICA reports a debt-to-asset ratio of 42.7%. This is influenced by the fact that in Q2 there was a payment of the dividend, so the debt-to-asset ratio is a little bit at the higher end where we expect it to be. Having said that, we have a financial policy of keeping the debt-to-asset ratio around the 43%, where we consider 45% as the absolute maximum. Then we will talk a little bit about the financial debt. So in total IDifica has an outstanding financial debt of 5.3 billion. During the first six months we have been very active on the refinancing. In total, refinancing has been completed for more than 900 million. This is including a new syndicated credit facility, Sustainability Link, of more than 600 million. We have also been renegotiating some bilateral credit facilities and we did work on the short-term treasury notes. So anticipating the merger with Cofinimu on the 1st of July, the CP program of Adifica has increased in size from 600 million to 1.8 million. It is our internal policy to have the CP that is outstanding below 20% of the total outstanding debt and the CPB paper is fully covered by committed credit facilities. When we look at the graph, you can see that the combined entity can benefit from diversified sources of funding. So bank financing is representing 44% of our sources of funding, of debt funding, and debt capital markets, so including the short-term treasury notes, stands at 56%. When we look at our financial debt KPIs, so the main points to highlight, first of all, the credit rating. So immediately after the change of control, the credit rating has been increased towards a BBB+. And during the annual review that took place in July, S&P has reconfirmed this credit rating as a BBB+, the disabled output. Now when we look at the interest cover ratio, a very strong interest cover ratio, 7.6 times. Net debt to EBITDA slightly went up following the combination with Cofinimo, so currently at 8.3 times. It is important that I mention here that this net debt to EBITDA is not adjusted for the fact that in the debt there is already debt included for projects that are still under development, under construction. but for which Capex has been spent and funded with debt while the EBITDA is not adjusted for the fact that in the future this will lead to additional rental income. 61% of all of our financial debt is linked to sustainability KPIs or linked to the sustainability financing framework. The debt is on an unsecured basis and the average cost of debt as mentioned stands at 1.9%. When we look at the debt maturity profile, you can see on this slide that we have currently a debt maturity profile of 3.3 years. There's not a lot of refinancing that still needs to be handled in 2026. There is plenty of headroom available on the committed credit facilities that can cover the liquidity needs in the business plan at least up to January 2020. Having said that, we do believe that it is important that we work on the weighted average debt maturity with the intention to extend it further. So we are considering issuing a bond in the second year. Average cost of debt currently of 1.9%. Without taking into account issuing a bond, average cost of debt would stay around 2% in 26 and 27 and then gradually start to increase towards 3%. by the end of 2028-2029. Now, if we start to work on the average debt maturity, that process will go a little bit faster. So that means that the average cost of debt probably already in 2027 will be somewhat above the 2% and that the increase that we are anticipating towards the 3% by the end of 2028 might kick in a little bit faster. On the hedging, so there we can say currently we are well protected with a hedge ratio of 90% and a weighted average head maturity of 3.4 years. We have a policy that we should be covered for at least 60% for the coming two to three years. You can see that we are above the 60% until the end of 2028. So also considering to work a little bit on additional hedging starting from 2029 onwards. Thank you Ingrid.