Ascencio : Half-yearly financial report – 31.03.2024

REGULATED INFORMATION

30 May 2024

HALF-YEARLY FINANCIAL REPORT OF ASCENCIO SA

RESULTS AT 31 MARCH 2024

98.6%

EPRA OCCUPANCY

RATE

7.0%

GROSS YIELD ON THE

PORTFOLIO

-0.2%

CHANGE IN FAIR

VALUE OF THE

PORTFOLIO

90.3%

INTEREST RATE HEDGING RATIO

STRONG EPRA EARNINGS & ROTATION WITHIN THE REAL ESTATE PORTFOLIO

OPERATING RESULTS

• Rental income: €26.3 million, up by 5.1% compared with €25.1 million at 31/03/2023
• EPRA occupancy rate: 98.6%, up from the 97.9% recorded at 30/09/2023
• EPRA Earnings: €18.0 million, up 2.7% as against €17.5 million at 31/03/2023
• EPRA Earnings per share: €2.72 (vs €2.65 at 31/03/2023)
• Net result: €5.7 million (vs €22.2 million at 31/03/2023), the decrease being due to the difference in revaluations (-€12.2 million vs +€4.8 million) between the two periods

BALANCE SHEET INFORMATION

• Fair value of the real estate portfolio: €738.6 million (vs €740.9 million at 30/09/2023)
• Debt ratio (EPRA LTV): 44.8% (vs 43.4% at 30/09/2023)
• Intrinsic value per share (EPRA NTA): €61.88 (vs €63.59 at 30/09/2023)

TABLE OF CONTENTS

1. MANAGEMENT REPORT	3
1.1	GENERAL CONTEXT	3
1.2	SUMMARY OF ACTIVITY DURING THE 1ST HALF OF THE FINANCIAL YEAR	3
1.3	SIMPLIFIED CONSOLIDATED RESULTS AT 31 MARCH 2024	8
1.4	SIMPLIFIED CONSOLIDATED BALANCE SHEET AT 31 MARCH 2024	10
1.5	CONSOLIDATED DATA PER SHARE	12
1.6	CORPORATE GOVERNANCE	12
1.7	SIGNIFICANT EVENTS AND TRANSACTIONS AFTER 31 MARCH 2024	12
1.8	MAIN RISKS AND UNCERTAINTIES	12
1.9	OUTLOOK	13
2.	PROPERTY EXPERTS' REPORT	14
2.1.	PROPERTY EXPERTS	14
2.2.	EXPERTS' REPORT	14
3.	ASCENCIO ON THE STOCK EXCHANGE	17
3.1.	TRENDS IN CLOSING PRICE AND NET ASSET VALUE	17
3.2.	DIVIDEND FOR THE FINANCIAL YEAR 2022/2023	17
3.3.	SHAREHOLDERS OF ASCENCIO SA	17
4.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	18
4.1. CONSOLIDATED BALANCE SHEET AT 31 MARCH 2024	18
4.2. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AT 31 MARCH 2024	20
4.3. CONSOLIDATED CASH FLOW STATEMENT AT 31 MARCH 2024	21
4.4. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	23
	NOTE 1 General information and accounting methods	23
	NOTE 2 Investment properties	24
	NOTE 3 Financial debts	25
	NOTE 4 Financial instruments	25
	NOTE 5 Dividend	25
	NOTE 6 Segment information at 31 March 2024	26
4.5. STATUTORY AUDITOR'S REPORT	27
5.	DECLARATION BY RESPONSIBLE PERSONS	28
6.	INFORMATION ON FORWARD-LOOKING STATEMENTS	28
7.	FINANCIAL CALENDAR	28
8.	FACT SHEET	28
RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES (APMS)	30
EPRA INDICATORS	31

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Press release ● 2

1. MANAGEMENT REPORT

1.1 GENERAL CONTEXT

At the macro-economic level, the first half of the 2023-2024 financial year was characterised by a gradual normalisation of inflation levels, still tinged with high volatility but nevertheless hinting at the beginnings of a policy of interest rate easing by the central banks around the summer of 2024.

Against this backdrop, which raised prospects of a recovery in an investment market that had previously slowed sharply, out-of-town commercial property held up well, both in terms of occupancy and investment volumes. The performance was even more remarkable in terms of property valuations, which remained stable on average (unlike the declines observed for other asset classes). This stability is the result of the combined effect of rents holding steady or even increasing, as a result of applied inflation and yields less impacted by the context of high interest rates.

More specifically regarding Ascencio's real estate portfolio, we continue to observe:

• in the food segment, a desire for consolidation among the major players ; the most dominant brands are seeking to increase their market share while optimising their cost structure. This phenomenon was observed in particular from last year with the takeover of the Mestdagh supermarkets by Intermarché, but also this year with the announced takeover of the Casino stores by the Intermarché and Auchan brands ;
• in the retail park segment, the interest of tenants and investors in this asset format, which meets the primary needs of consumers in an environment where purchasing power is under pressure and with a fair economic balance between low rents and high yields. In terms of investment, this interest was particularly evident in Belgium with the acquisition of retail units in the Bellefleur retail park in Couillet and the sale of the Jemappes retail complex.

1.2 SUMMARY OF ACTIVITY DURING THE 1ST HALF OF THE FINANCIAL YEAR

A. OPERATIONAL ACTIVITY

Letting

Ascencio continued the dynamic management of its real estate portfolio by concluding 11 rentals (3 new leases and 8 renewals), covering a total surface area of approximately 9,500 m2, or 2.2% of the total surface area of the portfolio, at rent levels on average 12.2% higher than the estimated rental values and on average 3.9% lower than the previous rents for the areas concerned.

This rental activity was achieved by completing the following transactions :

• Belgium :
• • in Hannut (Orchidée Plaza) : 1 renewal and 1 new lease (Kiabi), bringing the retail park occupancy rate to 100% ;
  • in Genval (Les Papeteries de Genval) : 2 renewals ;
  • in Leuze-en-Hainaut : 2 renewals.
• France :
• • in Saint-Aunès (Les Cyprès) : 1 new lease (Zeeman) ;
  • in Crêches-sur-Saône (Les Bouchardes) : 1 new lease (Jour de Fête).

In addition, Ascencio concluded 10 short-term leases, mostly in Uccle (Belgium), to maintain flexibility of occupancy in this building affected by a planned redevelopment project.

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All of these rentals made it possible to further consolidate the EPRA occupancy rate of the portfolio, which was

98.6% at 31/03/2024 (vs 97.9% at 30/09/2023), broken down by country as follows :

(%)	31/03/2024	30/09/2023	Δ
BELGIUM	97.8%	96.9%	0.9%
FRANCE	99.5%	99.0%	0.5%
SPAIN	100.0%	100.0%	0.0%
TOTAL EPRA occupancy rate	98.6%	97.9%	0.7%

At 31/03/2024, the average residual term of the occupancy contracts in the portfolio was 3.0 years to lease breaks ("WALB") and 7.3 years to lease terms ("WALT").

Acquisition and disposal

The Company acquired 100% of the shares in Holdtub SRL, which owns 3 retail units in the Bellefleur retail park in Couillet (Belgium), totalling almost 3,000 m². These recently developed units are fully leased and occupied by leading brands. This acquisition, for €7.0 million, also generates a positive long-term contribution to the Company's EPRA Earnings.

Ascencio also disposed of its retail complex in Jemappes (Belgium) for a net amount of €8.55 million. This disposal, which has a marginal impact on both the Company's EPRA Earnings and EPRA LTV, took place as part of the proactive management of the real estate portfolio.

Investments

The Company invested €0.6 million in works in its real estate portfolio, mainly in :

• the renovation of roofs (€0.3 million), for the Bruges (Belgium), Ottignies (Belgium) and Marsannay (France) sites ;
• the improvement of technical facilities (€0.2 million) at its headquarters in Gosselies (Belgium) ;
• various works related to the arrival of new tenants (€0.1 million).

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Sustainability

Regarding ESG aspects, Ascencio has notably :

• submitted most of the requests for authorisation for installation of charging stations in its French portfolio ;
• finalised the project to optimise the lighting of its car parks by installing LED lamps. This project covered 15 sites in the Belgian portfolio, for approximately 70,000 m2 of parking space ;
• continued the redevelopment of offices at its headquarters in Gosselies (Belgium) ;
• implemented the new management system for rental, administrative and accounting activities, providing greater fluidity and agility in the day-to-day management of operational tasks ;
• adapted the car policy by providing for the gradual conversion of its fleet of vehicles to 100% electric.

Property valuations

Excluding acquisition, disposal and investments, the stability of the value of Ascencio's consolidated portfolio was confirmed over the past half-year(-€1.9million/-0.2%) in line with the trend already observed during the previous financial year. This stability is even more remarkable given that it is happening in an environment of persistently high interest rates.

However, the experts did apply a few rate adjustments to certain assets, the negative impact of which was generally offset by the increase in market rents over the same period.

The valuations of Ascencio's real estate portfolio are as follows :

		31/03/2024		30/09/2023
		Fair Value		Fair Value		Δ Fair Value
Investment properties	%	Gross yield	Gross yield	2023/2024
(€000s)	(€000s)
				(6 m)
BELGIUM	54%	404,822	7.23%	404,493	7.23%	0.9%
FRANCE	42%	300,038	6.77%	305,863	6.38%	-1.9%
SPAIN	4%	31,025	6.48%	30,500	6.49%	1.6%
TOTAL PROPERTIES AVAILABLE FOR	100%	735,885	7.00%	740,856	6.84%	-0.2%
RENT
Development projects		2,742		0
TOTAL INVESTMENT PROPERTIES		738,627		740,856

www.ascencio.be

Press release ● 5

B. FINANCIAL ACTIVITY

As part of the proactive management of its debt structure, Ascencio has completed several major financing transactions :

• a new bank credit line of €30 million for a minimum period of 4 years (with the possibility of extension) with a new financial partner, which further broadens the circle of credit institutions placing their trust in Ascencio ;
• the issue of €20 million of Medium Term Notes, in two tranches, for an equivalent total amount and an average duration of 3 years, to renew the issue that matured in March 2024. In a context characterised by bond markets with little demand from real estate players, this renewal demonstrates the confidence of institutional investors in the strategy pursued by Ascencio.

Taking these transactions into account, all financing maturing during this financial year has been renewed. Ascencio has also already initiated several discussions with its banking partners for the refinancing of credit lines maturing in the next financial year, the total of which maturing in the next 12 months (i.e. before 31/03/2025) amounts to €60.0 million, spread between several banking partners as well as the institutional market.

At 31/03/2024, Ascencio benefited from unused credit lines for a total amount of around €143.5 million, part of which must be reserved to cover outstanding issues of commercial paper and the pro rata amount of the future dividend. In addition to these reserved amounts, the Company has €87.0 million in cash, enabling it to easily cover its operating needs and the investments to be made in its portfolio, with considerable financial capacity to participate in the financing of any acquisition transactions. At 31/03/2024, the average remaining term of the Company's debt was 3.2 years (vs 3.4 years at 30/09/2023).

In addition to maintaining an average duration of more than 3 years, Ascencio benefits from a good distribution of its financing maturities over the next 7 years, as illustrated by the chart below :

Taking into account the new environment of high interest rates that has emerged over the past two years, Ascencio has reviewed its hedging policy and confirmed its relevance, while extending its scope over time and adjusting the hedging percentage in proportion to the projected debt. As a reminder, the policy applied until now consisted of establishing a 5 years hedging target of 75% of this prospective debt. The horizon is now 7 years and the percentage hedging targets are defined on the basis of decreasing ranges over time, starting from [85% - 100%] over the first years and decreasing to [20% - 70%] over the last year of the period in question. Although the policy pursued in recent years has largely borne fruit, with the average cost of financing remaining under control, this adjustment allows for better long-term management of the hedging volumes to be achieved, while guaranteeing greater flexibility in its implementation.

Continuing to build its hedging portfolio under this extended policy, Ascencio acquired 5 new IRSs, for a total nominal amount of €100 million, covering the period 2027 to 2031.

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In addition, in accordance with the "macro" management of its hedges, aimed at managing its debt portfolio on the one hand and its debt hedges on the other hand, the Company acquired 2 receivers IRSs, for a total amount of €20 million, to vary the interest rates set at the time of the new issue of Medium Term Notes.

Taking into account the refinancing and hedging transactions referred to above, the Company benefits at 31/03/2024 of an average cost of financing of 2.16% (vs 2.02% at 30/09/2023) and a hedging ratio of 90.3% (vs 95.0% at 30/09/2023). Assuming the same projected liabilities, the Company's hedging ratio in relation to the ranges defined in the updated strategy and the resulting additional hedging needs is illustrated in the chart below :

In the first half of the year, the Company's average debt stood at €319.4 million (vs €326.6 million in the same period of the previous financial year) and its average financing cost (including the impact of hedging instruments) was 2.16% (vs 1.90%).

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1.3 SIMPLIFIED CONSOLIDATED RESULTS AT 31 MARCH 2024

(€000s)	31/03/2024	31/03/2023
RENTAL INCOME	26,349	25,066
Rental related charges	-76	-155
Recovery of property charges	438	469
Rental related charges and taxes not recovered	-159	-44
Other revenue and rental related charges	-110	176
PROPERTY RESULT	26,441	25,511
Property charges	-2,303	-2,312
Corporate overheads	-2,434	-2,326
Other operating income and charges	12	1
OPERATING RESULT BEFORE RESULT ON PORTFOLIO	21,715	20,875
Operating margin (*)	82.4%	83.3%
Financial income	3	0
Net interest charges	-3,221	-2,889
Other financial charges	-357	-332
Taxes	-189	-174
EPRA EARNINGS	17,952	17,480
Result on sales of investment properties	1	0
Change in the fair value of investment properties	-1,898	7,438
Change in the fair value of financial assets and liabilities	-10,517	-2,413
Deferred tax	194	-266
NET RESULT	5,731	22,238
EPRA Earnings per share (€)	2.72	2.65
Net result per share (€)	0.87	3.37
Number of shares	6,595,985	6,595,985
(*) Alternative Performance Measure (APM). See page 30.

The rental income for the first half of the financial year amounted to €26.35 million, up by 5.1% compared with the first half of the financial year 2022/2023 (5.1% also at "like-for-like").

The following table shows rental income by country :

(€000s)	31/03/2024		31/03/2023	Δ %
Belgium	57%	14,859	14,126	5.2%
France	40%	10,517	10,091	4.2%
Spain	3%	973	849	14.6%
TOTAL	100%	26,349	25,066	5.1%
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This revenue growth is mainly linked to the still significant impact of the high indexation applied to rents in 2022/2023, as well as the positive effect of the general increase in the EPRA occupancy rate of the portfolio, mainly observed in Belgium and Spain.

As a result, the property result reached €26.44 million at 31/03/2024, an increase of 3.6% compared with the same period of the previous financial year.

After deducting property charges and corporate overheads, the latter of which were remarkably stable compared with 31/03/2023, the operating result before result on portfolio was €21.72 million (vs €20.88 million). The operating margin came to 82.4% (vs 83.3%).

Regarding the financial result, net interest charges increased by 11.5% to €3.22 million at 31/03/2024, compared with €2.89 million at 31/03/2023. This rise is linked to the significant increase in interest rates observed over the past year, but is largely offset by the income generated by the hedging instruments put in place by the Company.

The tax charge relates mainly to the withholding tax applied to French earnings ; the Belgian and Spanish activities benefit respectively from the B-REIT and SOCIMI regimes allowing them, subject to conditions, to be exempt from income tax. At 31/03/2024, the tax charge increased slightly due to the increase in result generated by the Company's French activities.

The EPRA Earnings amounted to €17.95 million at 31/03/2024, an increase of 2.7% compared with 31/03/2023 while, per share, it amounted to €2.72, an equivalent increase compared to the €2.65 of the first half of the previous financial year.

In terms of the change in the fair value of investment properties of the portfolio, it was relatively neutral at -0.2%(- €1.9 million) at 31/03/2024, as against +1.0% (+€7.4 million) at 31/03/2023. Regarding the change in the fair value of financial assets and liabilities (which only include changes in the value of hedging instruments), they fell more sharply (-€10.5million vs -€2.4million), illustrating the slight compression in interest rates observed in recent months. As a reminder, hedging instruments inevitably suffer declines in value but at the same time generate significant financial income enabling the Company to keep its average cost of financing under control. Lastly, deferred tax liabilities decreased due to the negative change in fair value recorded for the French portfolio during the past half-year.

Taking into account the unfavourable impact of these revaluations, although combined with an increasing EPRA Earnings, the consolidated net result for the first half of the year amounted to €5.73 million, down significantly compared with the €22.24 million at 31/03/2023.

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1.4 SIMPLIFIED CONSOLIDATED BALANCE SHEET AT 31 MARCH 2024

(€000s)	31/03/2024	30/09/2023
ASSETS	775,759	786,469
Intangible assets	428	236
Investment properties	738,627	740,856
Other tangible assets	448	49
Non-current financial assets	21,144	30,670
Current financial assets	966	867
Trade receivables	2,675	5,556
Cash and cash equivalents	3,151	5,423
Other current assets	8,320	2,811
EQUITY AND LIABILITIES	775,759	786,469
Equity	423,134	444,763
Non-current financial debts	225,362	262,670
Other non-current liabilities	4,014	2,806
Deferred tax liabilities	6,085	6,085
Current financial debts	103,090	57,829
Other current liabilities	14,074	12,316
Liabilities	352,624	341,706
IFRS NAV (€/share)	64.15	67.43
EPRA NTA (€/share)	61.88	63.59
Debt ratio (in accordance with the Royal Decree)	44.9%	44.0%
EPRA LTV	44.8%	43.4%

ASSETS

95% of the Company's assets are made up of the portfolio of investment properties, with a total fair value of €738.6 million at 31/03/2024 (vs €740.8 million at 30/09/2023). It should be noted that, in accordance with IFRS 16, this heading includes the rights of use held by the Company in the form of emphyteuses, for a value of €4.4 million.

Intangible assets include the costs of acquiring and implementing the new rental and accounting management tool put in place by the Company, while other tangible assets mainly include the costs of refurbishing the new premises at the headquarters in Gosselies (Belgium).

Non-currentfinancial assets mainly consist of the hedging instruments with positive valuations and maturities of more than one year (€20.7 million), while current financial assets include those instruments with positive valuations and maturities of less than one year (€1.0 million).

The balance of trade receivables was €2.7 million at 31/03/2024, significantly lower than the balance at the end of the previous financial year. This decrease is mainly due to the timing of invoicing for property taxes and service charges from tenants just before the annual accounting close on 30 September.

The cash balance was down as a result of careful management of the Company's finances in a context of high interest rates.

Other current assets increased significantly due to the application of IFRIC 21, which requires the full amount of taxes and tax rebates to be recognised in the half-yearly accounts on an annual basis. This increase is offset by an equivalent increase in other current liabilities.

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Press release ● 10